Legislature(2015 - 2016)SENATE FINANCE 532
01/22/2015 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Overview Fy 16 Operating and Capital Budgets | |
| Committee Contracts: Angela Rodell and William Streur | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
January 22, 2015
9:04 a.m.
9:04:46 AM
CALL TO ORDER
Co-Chair Kelly called the Senate Finance Committee meeting
to order at 9:04 a.m.
MEMBERS PRESENT
Senator Anna MacKinnon, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Peter Micciche, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
David Teal, Director, Legislative Finance Division
SUMMARY
PRESENTATION: OVERVIEW FY 16 OPERATING and CAPITAL BUDGETS
COMMITTEE CONTRACTS: ANGELA RODELL and WILLIAM STREUR
Co-Chair Kelly introduced the members and staff of the
Senate Finance Committee.
^PRESENTATION: OVERVIEW FY 16 OPERATING and CAPITAL
BUDGETS
9:07:40 AM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
discussed the PowerPoint, "An Overview of Alaska's Fiscal
Situation"(copy on file). He stated that the governor's
budget was currently a "work in progress." He remarked that
the current oil prices were related to the state's budget
deficit.
Mr. Teal looked at the slide titled, "Figure 1.
Unrestricted General Fund Revenue and Budget History." He
felt that the graph reflected all of the issues related to
the budget. He stated that the dark blue portion
represented the agency operations; the light blue
represented the statewide operating; the yellow represented
the capital budget; the red represented the net fund
transfers; and the green portion was the general fund
revenue. He stated that there were substantial deposits to
the savings.
Mr. Teal discussed the slide titled, "Figure 2. Alaska
Unrestricted General Fund Revenue." He stressed that
Alaska's revenue was quite volatile. He stressed that
Alaska's reserves were essential to maintaining a stable
budget.
Mr. Teal displayed the slide titled, "Figure 2a. Alaska
Unrestricted General Fund Revenue (Left Axis) and Average
ANS Price/bbl (Right Axis)." He added a price
representation in order to understand the correlation
between oil price and revenue.
Mr. Teal discussed the slide titled, "Figure 2.
Unrestricted General Fund Revenue and Budget History Agency
Operations." From 1982 peak production to the early 2000s,
revenue was on a downward trend, due to declining
production. The decline was steady up until present day,
and would continue to decline short of additional
investment and production. He stated that price drove the
increases in 2003 to 2006. At that time, the petroleum
profit tax (PPT) was enacted, followed by changes to
Alaska's Clear and Equitable Share (ACES). He remarked that
it was difficult to differentiate the impact of prices
versus the taxation scheme.
9:13:53 AM
Senator Dunleavy observed that the committee would either
accept or reject the projection. Mr. Teal replied in the
affirmative. He explained that the Legislative Finance
Division (LFD) may have an opinion on the direction of oil
prices. There were some forecasters that believed 40
dollars or lower was possible in the near future. He stated
that LFD did not have the data to override the Department
of Revenue (DOR) forecast structure. He stressed that LFD
accepted the DOR forecast, for budget purposes.
Senator Dunleavy stated that the state's current fiscal
situation could be a result of optimistic revenue
predictions.
Mr. Teal presented the slide titled, "Figure 1.
Unrestricted General Fund Revenue and Budget History."
Without expenditure reductions or revenue enhancement, the
state would experience a roughly $1 billion per year
deficit. The growth, which began in 2005, was not
sustainable. The expenditures increased from approximately
$3 billion to $6 billion over ten years. He announced that
many legislators understood that there would be a decline
in revenue, but the deficit was unavoidable. He stressed
that there was a substantial amount of money set aside in
the state's reserves. He pointed out that the red bars at
the bottom of the graph indicated withdrawals from the
state's reserves. He declared that the state was rapidly
withdrawing from the reserves.
9:18:33 AM
Mr. Teal looked at the slide titled, "Figure 3.
Unrestricted General Fund Revenue and Budget History
Statewide Operations." The slide displayed the agency
operations, which would be considered the cost of running
government. He believed that most Alaskans would think of
the agency operations, when referring to the budget. The
category consisted of formula programs including K-12 and
Medicaid; and consisted of non-formula programs, which were
the funds for the day-to-day activities that did not have
statutory funding rules. He noted that expenditures were
fairly flat for over twenty years. As revenue increased
beginning in 2005, the unrestricted general fund (UGF)
operations spending doubled. That activity reflected the
trend from the first oil production in the 1970s. The
driver of agency operations was not just formula programs.
He remarked that only half of the operation budget
increases were due to formula programs.
Mr. Teal discussed the slide titled, "Figure 4. Cost
Drivers--Agency Operations, Contribution to Budget
Increases FY 06 to FY 15 ($ millions) $1.9 Billion Total
UGF Increase." He stated that approximately two-thirds of
the $1.9 billion UGF increase was due to three different
factors. He stated that K-12 was currently a $1.3 billion
program, took approximately 61 percent of formula funding,
and was approximately 26 percent of the expenditure growth.
The K-12 program was increased by $485 million during that
period, which was a 57 percent growth rate since 2006. This
growth was slower than the non-formula programs. He
stressed that K-12 was formerly 33 percent of the budget in
2006, but that share of the budget was decreased to 30
percent currently. He stressed that K-12 was a driver,
because it was large, not because it was growing rapidly.
Co-Chair Kelly wondered if the K-12 program was 33 percent
of the budget. Mr. Teal responded that K-12 was 33 percent
of the budget in 2006. The K-12 program was now taking 26
percent of the $1.9 billion.
Mr. Teal restated that K-12 had grown at a rate of 57
percent in dollar terms. In 2006, K-12 was 33 percent of
the budget, and the share of the budget had dropped to 30
percent in 2015. He restated that K-12 was 26 percent of
the $1.9 billion increase. He stressed that the cost was
high and growing rapidly. He stated that Medicaid had a
slightly smaller increase than K-12, but together they
accounted for approximately $900 million. Other formula
programs had smaller growth, so Medicaid and K-12 programs
were most often considered the only formula programs. He
remarked that Medicaid was small compared to K-12, but was
growing at a more rapid pace. Medicaid had grown at a 149
percent increase over ten years, from 11 percent of the
budget in 2006 to 15 percent of the current budget.
Medicaid would surpass K-12, if it continued to grow at its
current pace.
9:23:32 AM
Vice-Chair Micciche wondered if there were controlled costs
in each of the categories. He felt that the increased
spending from the two years prior could be seen as
irresponsible. Co-Chair Kelly replied that there would be
hearings related to individuals who were contracted by the
committee to determine the controllable costs.
Mr. Teal furthered that all costs were controllable, but
some were more controllable than others. He remarked that
Medicaid was an entitlement program, so some people thought
that the Medicaid costs were not controllable. He stressed
that the costs were controllable, but the costs were
difficult to control.
Senator Olson noted that the Alaska budget utilized federal
funds. He asked for a comparison of general funds and
federal funds. He wanted to analyze the federal funds, so
he could make an informed decision.
Co-Chair Kelly asked for Senator Olson to restate the
question.
Senator Olson explained that the slide only displayed the
general funds, but the committee also dealt with federal
funds. He understood that all costs were controllable.
Co-Chair Kelly remarked that it was difficult to control
many of the funds, because of the entanglement with federal
dollars. He assumed that doubling Medicaid would be similar
to the total fund for Medicaid. Mr. Teal agreed, and
explained that the UGF was the only fund category with a
surplus or deficit, so it was the main focus of the budget.
He explained that the federal funds were a large portion of
Medicaid and a small portion of K-12. The federal
expenditures and revenues were always balanced, because the
state could only spend as much of the federal money as it
was given. He added that the designated general funds (DGF)
and other state funds had assumptions built into the
spending, so they could only be spent to the extent that
revenues were collected. He restated that there would never
be a deficit in any fund category, except for UGF. He added
that he did not intend to diminish the importance of
federal funds or other funds in the budget process.
9:28:54 AM
Co-Chair Kelly felt that the current issue should be
referred to as "shortfalls" rather than a "deficit." Mr.
Teal replied that the terms, "surplus" and "deficit" were
related to cash flow. He stated that Alaska had $2.2
billion in revenue, and was spending more than that,
therefore there was a cash flow deficit.
Co-Chair Kelly remarked that the shortfall was dramatic,
and felt that the federal budget deficit should be
separated from Alaska's current budget situation. Mr. Teal
responded that Alaska established reserves during a cash-
flow surplus. He felt that drawing from reserves during a
cash-flow deficit was a fair way to budget.
Co-Chair Kelly stressed that Alaska's budget shortfall
would result in more dramatic impacts than the federal
government.
Senator Hoffman remarked that the budget should be examined
within the context of each given fiscal year. He stated
that the legislature was required to balance the budget,
but the revenue during a particular fiscal year may not
meet the needs of the operations for the year. Therefore,
the need must be filled by utilizing the reserves.
Mr. Teal furthered that his colleagues in other states
wonder how Alaska can balance its budget, because of its
volatile revenue. He reiterated that Alaska deposits money
in its reserves in times of surplus, enabling a balanced
budget.
9:34:56 AM
Co-Chair Kelly stressed that Alaska's revenues were
volatile, and felt that Alaska could not rely on natural
resource development for the majority of its revenue,
because the political environment had changed so much over
20 years. He remarked that North Dakota was able to see its
financial return over 45 days, but Alaska had to wait 10
years for the return. He explained that the long waiting
period was a result of regulations and permitting.
Vice-Chair Micciche looked at page 77 of the Legislative
Finance Division Revenue Sources Book. The chart compared
the capital budget with the Alaska North Slope (ANS)
average price. He noted from 1985 to 1988, roughly 80
percent of Alaska's budget was reduced. He remarked that
the operating budget at that time remained relatively flat.
He wondered if the legislature of the 1980s believed that
the capital costs were more easily controlled than the
operating costs. He asked if that legislature focused on
keeping operating costs at a minimum, because it understood
the volatility of the oil prices. He noted that from 2005
to 2011, the budget was doubled, which resulted in a more
challenging operating budget task. Mr. Teal responded that
he believed that the legislature at the time understood ANS
price volatility. He remarked that former legislator, Mike
Kelly, believed that state employees were very attached to
their jobs. He furthered that the legislature in the 1980s
was aware that the state used an incremental budget
process, meaning that once money was added to the operating
budget, it became part of the base that remained year after
year. The capital budget, on the other hand, consisted
solely of one-time expenditures. Historically the capital
budget would be increased if the money was available, and
reduced when money was unavailable. The operating budget
was difficult to reduce, because it was difficult to scale
down the growth after it occurred.
9:39:45 AM
Co-Chair Kelly announced that he had served as a legislator
in the 1990s, and shared that the legislature at that time
was faced with a quantifiable shortfall in the future. He
referred from a think tank, which found that in the 1990s
Alaska was unprecedented among the history of all the
states. At that time, Alaska was anticipating a shortfall
that was far into the future, and was applying some
stringent fiscal restraints in preparation for that
shortfall. From 2000 to 2010, the fiscal environment
changed because of the massive amount of revenue that
Alaska received. The legislature at that time filled some
of the needs that it was hoping to get filled at times of
fiscal restraint. He felt that there was currently a
similar situation to that of the 1990s, but the current
predicted shortfall was nearer in the future. He felt that
there were current legislators that understood the need to
respond quickly to the upcoming shortfall.
Senator Dunleavy remarked that there was a pattern of
"partially building" in an effort to spread out the capital
expenditure over the years. Mr. Teal replied in the
affirmative.
9:43:07 AM
Senator Dunleavy surmised that there was a recent effort to
mirror the capital budget efforts with the operating budget
efforts. Mr. Teal agreed. There was a recent philosophy of
phasing the capital projects. The phasing would reduce the
amount of money that was available for new future projects.
The philosophy worked well for a few years, but at some
point the capital funds were only intended to finish
current projects with no money available to begin new
projects. He explained that the governor's reduction of the
megaprojects was a result of that spending philosophy. He
opined that the revenue earned in the early 2000s was not
enough money to finish six megaprojects. He felt that the
money could have possibly completed one megaproject, had
the revenue continued to increase.
Senator Dunleavy felt that Mr. Teal often had good
opinions. He wondered if the committee should continue to
budget on a $105 barrel of oil assumption. Mr. Teal replied
in the negative.
Senator Dunleavy asked if the committee should continue to
budget on the assumption of a $90 barrel. Mr. Teal replied
in the negative.
Senator Dunleavy queried if the committee should continue
to budget on the assumption of an $80 barrel. Mr. Teal
replied in the negative.
Senator Dunleavy wondered if the committee should continue
to budget on the assumption of a $60 barrel. Mr. Teal
replied that a $60 per barrel assumption was close to his
recommendation.
Mr. Teal continued to discuss the pie chart. The third
budget driver was salary and benefits at $350 million, and
was 18 percent of the $1.9 billion. There were three
aspects to the salary and benefits portion of the chart.
Negotiated salaries accounted for approximately $150
million of that portion. The number could be doubled, when
considering total funds instead of GF. In 2006,
approximately $800 per employee per month was dedicated to
health insurance. Since that time, it had increased to over
$1300 per month, which was approximately $6500 per employee
per year for health coverage. In addition, the number of
employees had increased by approximately 10 percent. The
health premiums had subsequently increased by approximately
$75 million. The retirement costs, were included in the
salary and benefits portion. Those costs did not refer to
the state-assistance to retirement, but referred to the
part of the retirement costs that were built into every pay
roll. The cost was formerly 7 percent of pay roll, but was
currently 22 percent of the pay roll. The retirement
portion of the salary and benefits totaled approximately
$130 million. He reiterated that the main budget drivers
were K-12; Medicaid; and salaries and benefits, including a
portion of retirement costs. The final portion of the
chart, "Other Program Expansion", referred to all of the
remaining operating costs for government.
9:48:32 AM
Mr. Teal displayed the slide titled, "Figure 3.
Unrestricted General Fund Revenue and Budget History Agency
Operations." He pointed out that K-12 remained fairly flat
from the late 1980s to 2005. In 1984, K-12's GF fund was
under $500 million per year. The fund increased to $675
million, which was a 60 percent growth, over a 20-year
period. Medicaid doubled during the 1990s, but was $136
million in 2000. Currently, Medicaid was $700 million per
year. There were no negotiated increases to the salaries
and benefits for most of the bargaining units in 11 of the
20 years preceding 2006. There were also no retirement cost
increases during that time: no unfunded liability and no
benefit increases. There were revenue sharing adjustments:
$125 million in 1982, dropped to $18 million in 2002, and
then disappeared completely. He agreed that there were some
unmet needs during that time, because money was only
available for established and/or needed programs during
that 20-year period.
Mr. Teal looked at the slide titled, "Figure 5.
Unrestricted General Fund Revenue and Budget History
Statewide Operations." Statewide expenditures were once
very low, and almost insignificant. He pointed out that the
statewide expenditures completely disappeared, because the
entire category was composed of debt service. Bonds were
issued at a Prudhoe Bay curve, which required bond payoff
by 2000, when the oil was supposed to run out. After 2000,
the state began issuing general obligation bonds. The debt
service then increased, and was currently approximately
$230 million.
9:51:24 AM
Mr. Teal discussed the slide titled, "Figure 6. Statewide
Operations (UGF $ thousands)." He explained that the bottom
portion of the graph was debt service, but was not a major
piece of statewide operations. He looked at 2006, which was
the first year for state assistance to retirement funds. It
was a small initial cost, with the expectation to increase
to approximately $75 million by 2007 or 2008, and then
decline then disappear by 2020. The economic crash in 2008
resulted in massive losses in the market, which created a
large unfunded liability to the systems. The state began to
assist the Teachers Retirement System (TRS) and the Public
Employees Retirement System (PERS), by capping the rates
the employers paid. The state paid money on top of the
rates to make up the difference, in order to maintain the
full actuarial funding. The cost was then several hundred
million dollars per year, growing to a peak of $634 million
in 2014. He pointed out that the state assistance to PERS
and TRS then completely vanished in 2015, because the
legislature appropriated $3 billion to PERS and TRS from
the Constitutional Budget Reserve (CBR), so it was not
represented in the UGF chart. He noted that 2016 showed a
much lower PERS and TRS assistance than it had been in the
recent past. It was predicted that the PERS and TRS
contribution would remain near the current rate in the
future.
Co-Chair MacKinnon looked at the $260 million proposal for
PERS and TRS in the current year. She remarked that there
was a set of assumptions at a rate of return in a very
robust current market, which was said to stabilize. She
wondered if there should be an analysis of an additional $1
billion deposit, and whether that would relieve the $260
million debt service payment. Mr. Teal replied that only
$700 million of the recent $3 billion was considered a
required contribution. The only additional deposit made was
approximately $2.3 billion. The result was a savings of
approximately $750 million per year, which meant the money
would return to the state in three years. He felt that a
money return in three years under any investment should be
seriously considered. He felt that there would be a benefit
to infusing the liability with an additional $1 billion,
but the question was whether or not the state could afford
that contribution.
9:57:22 AM
Co-Chair MacKinnon remarked that her comments were given
with the respect of those who considered the $3 billion on
one single factor in the budget. She wondered if the large
infusions were a smart choice, if the return occurred
inside of three years. Resulting in an operating budget
savings of $260 million each year. She felt that the option
should be available for consideration. Mr. Teal responded
that he would be willing to discuss the impact of that
option. He agreed to provide that information at a later
date.
Mr. Teal continued to discuss Figure 6. The fund
capitalizations placed money into a fund or a location that
did not require appropriation in order to spend. The major
portions of the fund capitalization was the oil and gas
production tax credit fund, which did not have an
appropriation in 2006 and 2007. The cost of the tax credits
had since increased substantially. The cost of the tax
credits was currently $625 million, and the governor
remarked that the cost of purchasable production tax
credits now exceeded the production tax revenue. The
credits would continue to be a great cost in FY 16 at $700
million, which was $300 million more that the projected
production tax revenue.
Co-Chair MacKinnon shared that she had reviewed the
governor's comments in the op-ed piece. She ran some
preliminary analysis and spoke with the governor to ask for
additional information on the tax credit liabilities. She
remarked that the Cook Inlet tax credits might be included
in that piece, which could have been from the loss carry-
forward credit that was increased under ACES to 45 percent.
She believed that the producers on the North Slope paid and
would continue to pay taxes.
Co-Chair Kelly furthered that individuals in the press and
media aligned the tax credits with the large producers, so
Alaska can be negative with the oil companies. He did not
believe it was fair to assume that the large companies were
not paying taxes. He agreed that the governor's comments
were associated with the smaller producers in Cook Inlet.
10:03:13 AM
Mr. Teal felt that the committee should evaluate other tax
schemes. He offered that, had the oil and gas legislation
passed in 2013 not passed, the situation might be worse in
terms of production tax revenue. The projection for the tax
credits was that they would drop to approximately $250
million at a rapid pace.
Co-Chair Kelly asked if the reduction would begin in 2017.
Mr. Teal replied in the affirmative
Co-Chair Kelly shared that compared to the ACES, larger
credits would have been awarded for reasons that did not
result in production. He stressed that the current credits
exist to encourage more production.
Senator Bishop announced that the credits would eventually
result in a positive cash flow to state.
Senator Dunleavy stressed that there were many economic
impacts that were difficult to predict. He explained that
the recent change in the tax structure was the result of
the predicted continuous oil price increase. He stressed
that the committee should seriously think about how to
budget in the upcoming years.
Co-Chair Kelly stressed that the decisions must be made
based on current situations, and future legislatures may
deal with a different looking economy.
10:07:31 AM
Vice-Chair Micciche shared that conservative revenue
projections helped to make careful spending and budgeting
decisions. Mr. Teal replied that LFD conducted a
sensitivity analysis, so the legislature could determine
the best course of action.
Senator Hoffman shared that the CBR was established in the
1980s and set up the requirement of the savings on
settlements on oil taxes. He stressed that accessing those
reserves required a three-quarter majority. He believed
that the spending pattern would have been much different
during the 1990s, if the CBR was established in a different
manner. Mr. Teal agreed. He felt that legislatures acted
with wisdom in a number of ways over a period of time.
Co-Chair Kelly asked that the presentation conclude in a
timely manner.
Mr. Teal remarked that the fund capitalization was a way to
discuss capital projects.
Mr. Teal addressed the slide titled, "Figure 7.
Unrestricted General Fund Revenue and Budget History
Capital Budget." He noted the correlation between revenue
and capital.
10:14:40 AM
Mr. Teal discussed the slide titled, "Figure 8. Per Capita
Unrestricted General Fund Revenue and Budget History
Adjusted for Inflation (Expressed in 2015 Dollars)." He
remarked that the graph was the same as Figure 1, but was
adjusted to reflect inflation and population growth. He
noted the declining trend in per capita expenditures,
beginning in 2005. He explained the cost driving factors.
Mr. Teal displayed the slide titled, "Figure 9. UGF
Revenue/ Budget (Oil at $60/bbl) (No Growth Scenario) ($
millions)." He stressed that quick action must be taken to
address the possibility that oil prices would remain at $60
per barrel.
Co-Chair Kelly understood that quick action must be taken
within three years. Mr. Teal agreed that the reserves would
deplete within three years. He stressed that there must be
a balanced budget, once the reserves were gone.
10:19:23 AM
Mr. Teal explained the slide titled, "Figure 10. UGF
Revenue/ Budget (DOR Forecast) (No Expenditure Growth
Scenario) ($ millions)." He stated that the reserves would
still deplete significantly, if the oil price began to rise
again.
Senator Dunleavy believed that the slide did not include
production. He understood that the state was financially
saved because of a combination production and price. He
felt that Alaska was in a better situation than 1989, but
Alaska did not have a prediction of vastly increased
production. He reiterated that production must be included
in the conversation, in addition to price of oil. Mr. Teal
agreed, and explained that the problem worsens as
production declines. He stressed that very high prices
would not relieve the current situation.
Mr. Teal discussed the slide titled, "Figure 11.' Hard to
Cut' Items in the Operating Budget":
Debt Service: $230 million
Retirement Assistance: $260 million
Production Tax Credits: $700 million
K-12 Formula: $1.3 billion
Medicaid: $700 million
Total: $3.19 billion
Co-Chair Kelly asked that the committee meet with Mr. Teal
personally to address specific concerns.
10:27:40 AM
AT EASE
10:38:40 AM
RECONVENED
^COMMITTEE CONTRACTS: ANGELA RODELL and WILLIAM STREUR
10:38:55 AM
Co-Chair Kelly discussed the Senate Finance Committee
contracts.
Co-Chair MacKinnon looked at the professional service
contract between the Senate Finance Committee and Angela
Rodell (copy on file). The contract was in an amount not to
exceed $100,000. She stated that the scope of work was
outlined in Clause 1, and the other clauses were fairly
standard for this type of contract.
Co-Chair MacKinnon looked at the list of Ms. Rodell's
credentials (copy on file).
Senator Dunleavy wondered if the $100,000 investment would
result in millions of dollars of realized savings to the
budget process. Co-Chair MacKinnon replied that the state
saved $750 million, with the move of $3 billion from the
CBR for PERS and TRS. She felt that there was great
opportunity for savings.
Vice-Chair Micciche wondered if Ms. Rodell would be
available through the entire session. Co-Chair MacKinnon
replied that the actual contract was for just over $80,000.
She looked at page 2, under the Compensation Clause.
January was pro-rated, and the total contract was $80,710.
The amount would not exceed $100,000, because of possible
additional legislative time that might require Ms. Rodell's
services.
Vice-Chair Micciche looked at Clause 3, and felt that the
day rate of $870 was extremely competitive. He stressed
that the contract was non-political, and would provide the
person with the most experience in the desired scope of
work.
Senator Bishop queried the name of the project director.
Co-Chair MacKinnon replied that the project director would
be her staff, Laura Pierre.
10:48:07 AM
AT EASE
10:48:23 AM
RECONVENED
Senator Dunleavy stated that he could not vote on the
issue, because he was ill during the swearing in ceremony
of the current Senate.
Co-Chair MacKinnon MOVED to AUTHORIZE the Co-Chairs as
procurement officers to enter into a contract with Ms.
Angela Rodell for professional services regarding matters
related to fiscal and investment strategies, not to exceed
a total contract amount of $100,000 provided through April
19, 2015. There being NO OBJECTION, it was so ordered.
10:49:50 AM
AT EASE
10:50:21 AM
RECONVENED
10:50:33 AM
Co-Chair Kelly referred to a final slide from the LFD
presentation. The slide outlined the items that were
difficult to eliminate. He shared that the items were very
sensitive, and historically there was no expertise to
analyze the possibility of reductions in the programs. He
remarked that the political environments affected those
discussions and decisions on the program's retention.
Therefore, the legislatures often deferred the decision to
future legislatures. Medicaid was extremely complicated and
affected peoples' lives dramatically. He felt that it did
not matter whether people were supposed to use Medicaid
services or abuse the services. He stressed that many
people rely on Medicaid, and wanted to proceed in a fashion
that affects Alaskans.
Co-Chair Kelly looked at the contract between the Senate
Finance Committee and William Streur. He stated that there
were no arrangements for ongoing work with Mr. Streur,
after the legislative session ended. He echoed Co-Chair
MacKinnon's earlier comments.
Co-Chair Kelly presented the contract for the committee's
consideration.
10:55:17 AM
Co-Chair MacKinnon stressed that expertise was essential
when considering the governor's desire to expand Medicaid.
Mr. Streur would fully vet the governor's proposal to
ensure that there would be new cost savings to the state.
Co-Chair Kelly remarked that there were members of the
committee who had made strong statements about Medicaid
expansion. He felt that a consultant would help the
committee make an unbiased decision.
Senator Hoffman felt that there were strategies to save
money through Medicaid expansion. Co-Chair Kelly agreed.
Vice-Chair Micciche looked at items C through E, which
outlined the scope of work. He asked for an explanation of
those items.
Co-Chair MacKinnon looked at page 2, item C, under the
"Scope of Work", which identified the statutory and
programmatic changes to Department of Health and Social
Services (DHSS) that could result in savings; consult with
DHSS and the mental health budget; provide a written report
on the mental health budget, and programs in funds; and
coordinate with the committee and the House Finance
Committee as needed.
Co-Chair Kelly pointed out that the outline was a portion
of the work, and Mr. Streur may be expected to or assigned
other related tasks.
Co-Chair MacKinnon MOVED to AUTHORIZE the Co-Chairs as
procurement officers to enter into a contract with Mr.
William Streur for professional services regarding matters
related to health and social services, not to exceed a
total contract amount of $45,000 provided through April 30,
2015. There being NO OBJECTION, it was so ordered.
Senator Olson wondered if there were provisions to ensure
the retention of Mr. Streur during a possible special
legislative session. Co-Chair Kelly replied that there
would probably be an addendum to outline a day rate for Mr.
Streur's services.
ADJOURNMENT
11:00:58 AM
The meeting was adjourned at 11:00 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012215 LFD SFC Overview.pdf |
SFIN 1/22/2015 9:00:00 AM |
Budget Overviews |
| SFIN Contract DRAFT - William Streur.pdf |
SFIN 1/22/2015 9:00:00 AM |
Budget Contracts |
| SFIN Contract Draft - Angela Rodell - 2.pdf |
SFIN 1/22/2015 9:00:00 AM |
Budget Contracts |
| SFIN Contract Rodell Resume.pdf |
SFIN 1/22/2015 9:00:00 AM |
Budget Contracts |