Legislature(1999 - 2000)

07/20/1999 08:15 AM Senate PRI

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 COMMISSION ON PRIVATIZATION AND DELIVERY OF GOVERNMENT SERVICES                                                                
                       Anchorage, Alaska                                                                                        
                         July 20, 1999                                                                                          
                           8:15 a.m.                                                                                            
                                                                                                                                
                                                                                                                                
COMMISSION MEMBERS PRESENT                                                                                                      
                                                                                                                                
Representative Cowdery, Co-Chair                                                                                                
Senator Ward, Co-Chair                                                                                                          
Representative Brice                                                                                                            
Senator Adams                                                                                                                   
Bill Allen, Former Mayor of Fairbanks                                                                                           
Tom Fink, Former Mayor of Anchorage                                                                                             
Helvi Sandvik, President - NANA Development Corporation                                                                         
Kathryn Thomas, Former Chair of Alaska State Chamber of Commerce                                                                
George Wuerch, Alaska Municipal League                                                                                          
Don Valesko, Business Manger of Public Employees Local 71                                                                       
                                                                                                                                
COMMISSION MEMBERS ABSENT                                                                                                       
                                                                                                                                
William Prosser, Chairman of the Board - Cook Inlet Region, Inc.                                                                
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
Privatization of State Government Services                                                                                      
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
No previous action to record.                                                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
MARCO PIGNALBERI, Legislative Assistant                                                                                         
     to Representative Cowdery                                                                                                  
Alaska State Legislature                                                                                                        
716 West 4th Avenue, Suite 320                                                                                                  
Anchorage, Alaska 99501-2133                                                                                                    
Telephone:  (907) 268-0222                                                                                                      
POSITION STATEMENT:  Provided the commission with information and                                                               
answered questions.                                                                                                             
                                                                                                                                
MIKE ABBOTT, Economic Development Special Assistant                                                                             
     to Governor Knowles                                                                                                        
3601 C Street, Suite 758                                                                                                        
Anchorage, Alaska 99505-5990                                                                                                    
Telephone:  (907) 269-7461                                                                                                      
POSITION STATEMENT:  Offered his services and answered questions.                                                               
                                                                                                                                
ANDY CLARY, Staff                                                                                                               
     to Senator Ward                                                                                                            
Alaska State Legislature                                                                                                        
716 West 4th Avenue, Suite 450                                                                                                  
Anchorage, Alaska 99501-2133                                                                                                    
Telephone:  (907) 269-0106                                                                                                      
POSITION STATEMENT:  Reviewed the commission's website.                                                                         
                                                                                                                                
BRIAN HARRIS                                                                                                                    
7151 Chester Court                                                                                                              
Anchorage, Alaska 99504                                                                                                         
POSITION STATEMENT:  Discussed technology.                                                                                      
                                                                                                                                
ANDREE McLEOD                                                                                                                   
Address not provided.                                                                                                           
POSITION STATEMENT:  Suggested an anonymous mechanism for public                                                                
input.                                                                                                                          
                                                                                                                                
JOSEPH HENRI, Former Commissioner of Administration                                                                             
9921 Mar Point Drive                                                                                                            
Anchorage, Alaska 99507                                                                                                         
POSITION STATEMENT:  Discussed the need to continue the momentum of                                                             
the commission.                                                                                                                 
                                                                                                                                
LEO MARK ANTHONY, Prospector and Miner                                                                                          
Address not provided.                                                                                                           
POSITION STATEMENT:  Commented that this is about cost-benefit                                                                  
analysis.                                                                                                                       
                                                                                                                                
DONN LISTON, ASEA                                                                                                               
400 Willoughby, Number 201                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Commented on honoring contracts.                                                                           
                                                                                                                                
DAN PATTERSON                                                                                                                   
PO Box 512                                                                                                                      
Palmer, Alaska 99645                                                                                                            
POSITION STATEMENT:  Discussed privatization.                                                                                   
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-1, SIDE A                                                                                                               
                                                                                                                                
CO-CHAIR WARD called the Commission on Privatization and Delivery                                                               
of Government Services meeting to order at 8:15 a.m.  Members                                                                   
present at the call to order were Representatives Cowdery, Brice                                                                
and Senators Ward, Adams and Commissioners Allen, Fink, Sandvik,                                                                
Wuerch, Thomas, and Valesko.  Commissioner Prosser was not present.                                                             
                                                                                                                                
CO-CHAIR COWDERY explained that the purpose of the commission is to                                                             
review government overall with the possibility of privatization in                                                              
mind.  Co-Chair Cowdery commended Senator Ward on his work.  He                                                                 
announced that the commission would be reviewing many departments                                                               
through various subcommittees that will be formed.                                                                              
                                                                                                                                
CO-CHAIR WARD noted that his legislation was practically copied                                                                 
word for word from the Alaska State Chamber of Commerce.  This                                                                  
legislation is not new, similar legislation was worked on during                                                                
the Thirteenth Alaska State Legislature.  He thanked everyone for                                                               
their part in this issue.  The committee members introduced                                                                     
themselves and noted their affiliations.                                                                                        
                                                                                                                                
CO-CHAIR COWDERY pointed out that Mike Abbott, Economic Development                                                             
Special Assistant to Governor Knowles, was present.  He noted that                                                              
Mr. Abbott would be the contact person for those on the commission                                                              
needing information from the Administration.                                                                                    
                                                                                                                                
MIKE ABBOTT, Economic Development Special Assistant to Governor                                                                 
Knowles, offered his services to those on the commission.  He                                                                   
commented that the Governor is interested in the outcome of this                                                                
process.                                                                                                                        
                                                                                                                                
CO-CHAIR WARD noted that Ketchikan and Juneau were on                                                                           
teleconference.                                                                                                                 
                                                                                                                                
MARCO PIGNALBERI, Legislative Assistant to Representative Cowdery,                                                              
Alaska State Legislature, reviewed the information book provided to                                                             
the commission members.  The first item in the book is the                                                                      
authorizing legislation which in Section 5 specifies the duties of                                                              
the commission to be carried out by January 2000.  The book also                                                                
includes an address section for commission members.  There is a                                                                 
copy of the solicitation that was faxed to 700 individuals across                                                               
the state.  The response from that fax resulted in the member                                                                   
composition of the various subcommittees of the commission.                                                                     
                                                                                                                                
MR. PIGNALBERI turned to Tab 4 of the book which is a bibliography                                                              
list of a few of the many articles discussing privatization.  The                                                               
first article discusses "the depth and breadth of privatization                                                                 
activity not only in the United States, but elsewhere in the                                                                    
world."  The article entitled, "What is Privatization?" includes                                                                
the commonly accepted definitions regarding privatization.  There                                                               
is also an article discussing 12 types of privatization.                                                                        
Privatization is most commonly thought of as contracting out such                                                               
as is the case with the radio maintenance for the state troopers.                                                               
There is a variation of that called management contracts which                                                                  
would be a situation in which the state maintains ownership of a                                                                
facility while its operation is contracted out.  There is also                                                                  
public-private competition.  For example, the Department of                                                                     
Transportation & Public Facilities (DOT/PF) could farm out its                                                                  
design functions.  In such a case, the in-house engineers of DOT/PF                                                             
would have to compete with the private sector engineering firms for                                                             
the design work on projects.  This is being done in the Lower 48                                                                
and with the Army Corp of Engineers.  The Alaska Army Core of                                                                   
Engineers was not aware of management contracts, but will forward                                                               
information regarding the areas where such is practiced.                                                                        
                                                                                                                                
MR. PIGNALBERI moved on to the franchise variation of                                                                           
privatization.  With a franchise, a firm is given exclusive rights                                                              
to provide a service in a geographical area.  It could be utilized                                                              
with road maintenance.  Internal markets are also a variation of                                                                
privatization.  Internal markets involve a state agency competing                                                               
against the private sector.  Vouchers is a form of privatization                                                                
which is being debated statewide with regards to education.                                                                     
Commercialization, another form of privatization, or service                                                                    
shedding can result in the elimination of services.  Another                                                                    
variation of privatization is self-help in which a nonprofit or                                                                 
neighborhood organization takes over a service the government now                                                               
provides.  He cited the Alaska State Fairs as an example of where                                                               
such self-help privatization could be utilized.  Volunteerism is                                                                
also a form of privatization which is illustrated in the litter                                                                 
pickup programs in the state.  Corporatization is another type of                                                               
privatization which the Alaska Aerospace Development Corporation                                                                
will ultimately be an example of as it will be funded privately.                                                                
Mr. Pignalberi stated that the sale of assets or long-term leases                                                               
is another way in which the government can eliminate assets that it                                                             
shouldn't have.  For example, there has been controversy                                                                        
surrounding whether Alaska should own the Alaska Railroad or other                                                              
businesses such as Matanuska Maid which the state inherited due to                                                              
defaulted state loans.  He moved to the final type of                                                                           
privatization, private infrastructure development in which a                                                                    
private entity does something the state would do such as the Knik                                                               
Arm Crossing.                                                                                                                   
                                                                                                                                
MR. PIGNALBERI continued with his review of the commission's book.                                                              
The book contains several articles from the 1999 Privatization                                                                  
Magazine which summarizes privatization activities at federal,                                                                  
state, and local levels.  This would be helpful in performing the                                                               
commission's charge to discover what other levels of government are                                                             
doing.  The book also includes a report requested from the National                                                             
Council of State Governments.  That report is the most                                                                          
comprehensive article on the trends in state government                                                                         
privatization.  The report includes sections with regard to cost                                                                
savings and the decision making process that should be followed by                                                              
governments in determining whether privatization is the best course                                                             
of action.  The report also addresses the barriers to                                                                           
privatization.  There is also an article included which speaks                                                                  
against privatization.                                                                                                          
                                                                                                                                
MR. PIGNALBERI pointed out that the book includes a report from                                                                 
Commonwealth North which did a state-owned asset study, about a                                                                 
year ago.  The study intended to develop a set of unifying                                                                      
principles in order to guide the management of Alaska's public                                                                  
assets while maximizing the returns for Alaskans.  In the process,                                                              
an appendices was developed which lists each discreet state asset                                                               
which should be helpful for the commission.  The book includes                                                                  
several articles of general interest and a list of those who have                                                               
volunteered for the various subcommittees.                                                                                      
                                                                                                                                
ANDY CLARY, Staff to Senator Ward, Alaska State Legislature,                                                                    
informed the commission that he was responsible for building the                                                                
web page for the commission.  Mr. Clary demonstrated and reviewed                                                               
what can be found on the web page which can be accessed at                                                                      
www.privatizealaska.org.                                                                                                        
                                                                                                                                
CO-CHAIR WARD invited every commissioner to review the website and                                                              
make any suggestions for changes.                                                                                               
                                                                                                                                
MR. PIGNALBERI commented that the website has been designed such                                                                
that one link can lead to another.  He requested that commission                                                                
members inform Mr. Clary of sites that they find so that those                                                                  
sites can be added to the website.                                                                                              
                                                                                                                                
CO-CHAIR WARD announced that now would be the appropriate time for                                                              
comments and questions.                                                                                                         
                                                                                                                                
SENATOR ADAMS turned to the laws pertaining to privatization.  He                                                               
asked if there is enough political strength to change labor laws                                                                
which he believed to be a large issue.  He suggested that there                                                                 
should be a review of what activities being done by state                                                                       
departments should be done by municipalities and the success and                                                                
failure with privatization in other states.  Senator Adams                                                                      
expressed concern with regard to the delivery of services under                                                                 
privatization.  He was also concerned with the politics of                                                                      
privatization and hoped that if there is to be action with                                                                      
privatization that it be done in the next legislative session.                                                                  
                                                                                                                                
TAPE 99-1, SIDE A                                                                                                               
                                                                                                                                
REPRESENTATIVE BRICE expressed the need to maintain the ability to                                                              
contact a commissioner when the needs of his constituents are not                                                               
met.  Furthermore, the money must be spent in the best possible                                                                 
way.  He noted that the delivery of service, public accountability,                                                             
and the recognition that certain areas should be maintained by the                                                              
state should be addressed.  There should also be review of those                                                                
areas in which the state has been successful with privatization.                                                                
                                                                                                                                
COMMISSIONER ALLEN inquired as to how the subcommittee members were                                                             
selected.                                                                                                                       
                                                                                                                                
CO-CHAIR COWDERY reiterated that more than 700 e-mails were sent                                                                
out seeking subcommittee volunteers.  Anyone who is interested in                                                               
serving should contact the staff.  He commented that he was pleased                                                             
with the current turnout.  He hoped that the commission members                                                                 
will attend subcommittee meetings of interest to them because the                                                               
subcommittee will make a report to the commissioners who will pen                                                               
the final report to the legislature.                                                                                            
                                                                                                                                
CO-CHAIR WARD pointed out that the vast majority of those present                                                               
today have volunteered for subcommittee work and he believed more                                                               
would volunteer.  He thanked all the volunteers.  Co-Chair Ward                                                                 
noted that this process is copied from other states.                                                                            
                                                                                                                                
COMMISSIONER ALLEN expressed interest in the state services                                                                     
provided by sources other than local residents in rural                                                                         
communities.  He cited the various circuit writers that provide                                                                 
services to rural communities. Commissioner Allen inquired as to                                                                
the possibility of out sourcing or contracting such to local                                                                    
village corporations or training and employing local residents.                                                                 
                                                                                                                                
COMMISSIONER SANDVIK said that it would be worthwhile, early on, to                                                             
begin with some views and recommendations from the Administration.                                                              
                                                                                                                                
CO-CHAIR COWDERY noted that he had spoken with the Governor.  As                                                                
the process proceeds, he expected the subcommittee members and the                                                              
commission members to make comments and requests of the                                                                         
Administration.  He reiterated that Mr. Abbott will be the contact                                                              
for the Administration.                                                                                                         
                                                                                                                                
MR. ABBOTT indicated agreement with Commissioner Sandvik's                                                                      
comments.  He said that the departments are prepared to work with                                                               
the subcommittees.  Therefore, he expected such conversations as                                                                
eluded to by Commissioner Sandvik to occur at the subcommittee                                                                  
level.  He noted that there has already been discussion regarding                                                               
a possible overview of the budget for the full commission.                                                                      
                                                                                                                                
CO-CHAIR COWDERY referred to Tab 3 of the commission booklet which                                                              
includes a memorandum from Representative Cowdery to Governor                                                                   
Knowles regarding the development of this commission.  The                                                                      
memorandum requested a list of the agencies with services that are                                                              
already privatized.  The memorandum also suggested that the                                                                     
Governor designate a single point of contact as a liaison to the                                                                
commission which is Mr. Abbott.                                                                                                 
                                                                                                                                
CO-CHAIR WARD noted that there is information available from the                                                                
legislative branch as well.  He acknowledged that this is a large                                                               
task.                                                                                                                           
                                                                                                                                
COMMISSIONER THOMAS commented that some subcommittees have lots of                                                              
volunteers while others do not.                                                                                                 
                                                                                                                                
MR. PIGNALBERI informed everyone that there are seven departments                                                               
for which committee membership has not been filled.  Those                                                                      
committees are the Alaska Department of Fish & Game, the Department                                                             
of Corrections, the Department of Labor, the Department of Law, the                                                             
Department of Military & Veterans' Affairs, the Office of                                                                       
Management & Budget, and the Department of Public Safety.  He                                                                   
predicted that those committees would be filled over the next few                                                               
weeks.  Departments such as the Department of Transportation and                                                                
the Department of Health & Social Services have a dozen or more                                                                 
members listed.  That is allowed so that the subcommittee can                                                                   
divide itself further.  For example, there has been a suggestion                                                                
that the Department of Transportation have separate subcommittees                                                               
for the Alaska Marine Highway System, airports, and one for the                                                                 
remainder of DOT/PF issues.  The same scenario would be utilized                                                                
with the Department of Health & Social Services.                                                                                
                                                                                                                                
CO-CHAIR WARD stated that this process is now in the hands of the                                                               
commissioners.  As much participation as possible is necessary.                                                                 
                                                                                                                                
MR. PIGNALBERI commented that he had a list of interested folks as                                                              
well as their phone numbers.  After one person requested that their                                                             
phone number not be publicized, it has been decided to provide the                                                              
contact list of home and work phone numbers, faxes and e-mails of                                                               
the committee members only to those in the committee.                                                                           
                                                                                                                                
CO-CHAIR WARD requested that Mr. Clary contact everyone in order to                                                             
determine who would not want which particulars to be publicized.                                                                
                                                                                                                                
COMMISSIONER THOMAS suggested that a mailing address be added to                                                                
the list because volunteers would probably prefer receiving letters                                                             
of opinion versus phone calls.  Commissioner Thomas commented that                                                              
consideration should be given to the concern regarding "whether                                                                 
business in the private sector is taking an offensive position                                                                  
against government employees and the bureaucracy of government."                                                                
She expressed the need to remember that private sector employees                                                                
view this as an opportunity for jobs.  Some of these jobs may not                                                               
be eliminated, but may merely change ownership.  There may be some                                                              
shifts in the business sector due to privatization.  As a                                                                       
contractor, Commissioner Thomas acknowledged that at times the                                                                  
concept of a project may be different from the scope of the work                                                                
and the ability to build the project.  Upon completion of this                                                                  
task, she emphasized the need to reflect on how it can be                                                                       
successfully implemented.  Although the commission may determine                                                                
what can be privatized, if the scope of the privatization is not                                                                
written correctly it will not happen.  A third party to review or                                                               
help write contract specifications or consult the agencies may be                                                               
a recommendation of the commissioner.                                                                                           
                                                                                                                                
COMMISSIONER VALESKO expressed the need for the commission to be                                                                
cautious in the recommendations that are made.  He commented that                                                               
basically privatization is profitization in that government                                                                     
services are turned over to someone in order to make a profit on                                                                
those services.  Such will not work unless the situation is profit-                                                             
making for private organizations.  He stressed the need for                                                                     
protections to be written in so that Alaskans are not overcharged                                                               
for items.  Commissioner Valesko commented, "My main concern ...                                                                
that the working people of Alaska are protected, the people that                                                                
take these jobs ... that they're able to make a living to support                                                               
their family and educate their kids and we have a standard of                                                                   
living in this state that we can look up to.  And I'm very sad and                                                              
disappointed to say in the last six, seven, eight years the                                                                     
standard of living for Alaskans, and I'm part of the system that is                                                             
trying to do something about it and failing, has gone down hill in                                                              
comparison to ... most of the rest of the states in the United                                                                  
States."  He suggested the need to review legislation because there                                                             
are laws that apply to public employees such as the requirement for                                                             
public employees to receive health insurance and retirement                                                                     
benefits.  If there is to be a change from public sector employees                                                              
to private sector employees, the aforementioned benefits should be                                                              
protected no matter who performs the job.  Commissioner Valesko                                                                 
stressed that he did not want a work force of temporary employees.                                                              
He noted that there are those in privatization who profit                                                                       
tremendously.  Why should one person reap all the profits?                                                                      
Commissioner Valesko used the snow removal system in Anchorage as                                                               
an example of the state working in tandem with the private sector.                                                              
In conclusion, Commissioner Valesko stated that he supported                                                                    
reviewing those places where privatization would make sense.                                                                    
Furthermore, there should be review of those areas where                                                                        
privatization has already occurred in order to determine if it is                                                               
working.                                                                                                                        
                                                                                                                                
COMMISSIONER WUERCH commented that the Alaska Municipal League is                                                               
very appreciative of being included in this commission.  The league                                                             
has offered to be a resource for the commission.  He acknowledged                                                               
the trend of local governments having to provide some of the                                                                    
services previously provided by the state.  Through this                                                                        
commission, there is the opportunity to open up new partnerships                                                                
between state and local government to deliver services.  However,                                                               
there are obstacles.  Therefore, Commissioner Wuerch expressed the                                                              
need to uncover common solutions.  One such solution would be to                                                                
allow local governments to bid on state work.                                                                                   
                                                                                                                                
COMMISSIONER WUERCH thanked all the volunteers and the staff                                                                    
recruiting these volunteers.  He offered his services in helping to                                                             
fill in the gaps.  He asked if there would be a point during which                                                              
the commission would meet with each subcommittee.                                                                               
                                                                                                                                
MR. PIGNALBERI noted that there is a sign up sheet for advisory                                                                 
councils.  It is anticipated that each commissioner will be on at                                                               
least one of the subcommittees.  Therefore, there should be some                                                                
continuity between the work of the subcommittees and the                                                                        
commission.  With regard to Commissioner Wuerch's question, Mr.                                                                 
Pignalberi believed that to be up to the discretion of the                                                                      
commission.  He turned to the outline of subcommittee reports which                                                             
is fairly standard, but can be changed by the commission.                                                                       
                                                                                                                                
COMMISSIONER ALLEN inquired as to the role the commissioners would                                                              
play sitting on the subcommittees.                                                                                              
                                                                                                                                
MR. PIGNALBERI clarified that the commissioners would be a working                                                              
member of the committee.                                                                                                        
                                                                                                                                
CO-CHAIR WARD noted that a proposed schedule was being provided to                                                              
the members and that teleconferencing is available.  He explained                                                               
the need to begin work in the subcommittees as efforts continue to                                                              
fill up those subcommittees not yet full.  He announced that the                                                                
next proposed meeting of the full commission is on August 16, 1999.                                                             
He explained that there should be subcommittee work that happens                                                                
between this meeting and the proposed August 16, 1999 commission                                                                
meeting.  The individual chairs of the subcommittees will decide                                                                
upon a meeting time and utilize the room and teleconference                                                                     
network.  Then the subcommittee representatives would present the                                                               
commission with a progress report at the August meeting.                                                                        
                                                                                                                                
CO-CHAIR COWDERY clarified that there are a few rooms available to                                                              
the subcommittees, but those rooms must be scheduled ahead of time.                                                             
He urged the commissioners to attend as many subcommittee meetings                                                              
as possible.                                                                                                                    
                                                                                                                                
COMMISSIONER WUERCH inquired as to how the subcommittee chairs will                                                             
be chosen.                                                                                                                      
                                                                                                                                
CO-CHAIR WARD informed everyone that names are being accepted for                                                               
more volunteers.  He explained that the first person that requested                                                             
to be the chair of a subcommittee was made so.                                                                                  
                                                                                                                                
CO-CHAIR COWDERY interjected that these positions may change.                                                                   
                                                                                                                                
CO-CHAIR WARD explained that the chair of the subcommittee will                                                                 
decide when meetings occur and conduct those meetings.  The only                                                                
vote that determines what will be recommended to the legislature                                                                
will come from the commission.                                                                                                  
                                                                                                                                
TAPE 99-2, SIDE A                                                                                                               
                                                                                                                                
AN UNIDENTIFIED SPEAKER expressed the need to include topics of                                                                 
interest for the subcommittee on the home page in order to spur                                                                 
subcommittee discussion on those.                                                                                               
                                                                                                                                
CO-CHAIR WARD agreed that would be appropriate and noted that it                                                                
would be up to the subcommittees.                                                                                               
                                                                                                                                
COMMISSIONER THOMAS suggested that the chairs of the advisory                                                                   
councils be used for organizational purposes.  This would allow                                                                 
them to choose their own chair which would be advantageous to all.                                                              
                                                                                                                                
CO-CHAIR WARD stated that nothing precludes the commission from                                                                 
anything.  The subcommittees can break down further, but the                                                                    
current structure allows for the process to begin.  He indicated                                                                
that the subcommittees have much flexibility.                                                                                   
                                                                                                                                
COMMISSIONER THOMAS asked if the commission would have the                                                                      
capability to have listen-only teleconference hook-ups.                                                                         
                                                                                                                                
CO-CHAIR COWDERY answered yes.  He mentioned that the need for                                                                  
those interested in the Alaska Marine Highway to be from Southeast                                                              
Alaska.                                                                                                                         
                                                                                                                                
COMMISSIONER FINK inquired as to when the commission would meet                                                                 
again.                                                                                                                          
                                                                                                                                
CO-CHAIR WARD announced that the intention was for the commission                                                               
to meet once a month.                                                                                                           
                                                                                                                                
SENATOR ADAMS clarified that the commission will be meeting as will                                                             
the subcommittees.  Each commissioner will sign up for an agency                                                                
for which he/she will attend those subcommittee meetings.  He hoped                                                             
that time would be spent on the subcommittee report outline in                                                                  
order to develop an outline format for each agency.                                                                             
                                                                                                                                
The committee took a brief at-ease to 9:50 a.m.                                                                                 
                                                                                                                                
CO-CHAIR WARD called the committee back to order and announced that                                                             
Fairbanks was also on teleconference.                                                                                           
                                                                                                                                
MR. PIGNALBERI explained the subcommittee report outline is based                                                               
on his experience with past reports.  The outline is an attempt to                                                              
place the subject before the subcommittees in order to think about                                                              
what the end product would be from the subcommittees.                                                                           
                                                                                                                                
SENATOR ADAMS referred to number five on the outline which speaks                                                               
to identifying constitutional and statutorial provisions governing                                                              
agency operations.  He agreed that each subcommittee should                                                                     
understand their agency, however statutory changes also need to be                                                              
reviewed because that needs to be included in the recommendation                                                                
from the subcommittee.                                                                                                          
                                                                                                                                
SENATOR ADAMS referred to number nine on the outline which speaks                                                               
to listing existing agency contracts and the procurement methods.                                                               
He recommended the need to have a time line on the contracts and                                                                
the benefits.  He turned to the next number nine which speaks to                                                                
identifying existing privatization practices, if any.  Senator                                                                  
Adams agreed with Commissioner Valesko that review of whether                                                                   
current privatization is working or not should be evaluated by the                                                              
subcommittees.                                                                                                                  
                                                                                                                                
COMMISSIONER WUERCH commented that a question comes to mind                                                                     
regarding the balance of effort;  how much effort will come from                                                                
subcommittee members and from the Administration.                                                                               
                                                                                                                                
MR. PIGNALBERI explained that each departmental commissioner will                                                               
be given this outline so as to provide the subcommittee with the                                                                
information prior to its first meeting.                                                                                         
                                                                                                                                
SENATOR ADAMS anticipated that the co-chairs' staff will obtain the                                                             
resource contact for each agency.  He noted that each agency has                                                                
been audited and therefore, there will be a contact with                                                                        
Legislative Budget & Audit.  He pointed out that each agency has a                                                              
legislative liaison that can be utilized as a resource for the                                                                  
statutory guidelines, missions, goals, objectives, and contracts.                                                               
                                                                                                                                
CO-CHAIR WARD said that he believed there would be a great deal of                                                              
cooperation between the commission and the Administration.                                                                      
                                                                                                                                
COMMISSIONER ALLEN indicated that it would be appropriate for the                                                               
subcommittees to ask departmental commissioners to provide the                                                                  
subcommittee with a briefing on the department.  Furthermore, the                                                               
departmental commissioner could provide any recommendations with                                                                
regards to privatization.  He also agreed with Commissioner                                                                     
Valesko's and Commissioner Sandvik's comments.                                                                                  
                                                                                                                                
CO-CHAIR WARD agreed that could be part of the subcommittee                                                                     
presentation.                                                                                                                   
                                                                                                                                
CO-CHAIR COWDERY interjected that the Governor fully intends for                                                                
the commissioners to fully participate with the subcommittees.                                                                  
                                                                                                                                
COMMISSIONER SANDVIK pointed out that many agency activities are                                                                
governed by their funding sources.  Therefore, she suggested that                                                               
the subcommittees consider the limitations placed on the agencies                                                               
by the funding sources.  That should be included in the                                                                         
subcommittee report as well as recommendations in that area.                                                                    
                                                                                                                                
COMMISSIONER ALLEN commented that those agencies receiving                                                                      
enterprise funds within a department would stand out during                                                                     
subcommittee review.  He hoped those would be highlighted.                                                                      
                                                                                                                                
COMMISSIONER THOMAS suggested that the subcommittee should define                                                               
which grant money could be administered by the private sector.                                                                  
                                                                                                                                
CO-CHAIR COWDERY emphasized that there are certain mandates in the                                                              
union contracts which will be honored, although there could be                                                                  
changes in future negotiations.                                                                                                 
                                                                                                                                
BRIAN HARRIS informed the committee that he is a Communications                                                                 
Engineer with MicroAge Corporation (ph), although he is not present                                                             
representing that corporation.  However, he is present to provide                                                               
the committee with information regarding a report he is doing for                                                               
Commissioner Poe, Department of Administration.  The report is                                                                  
reviewing the infrastructure of the Anchorage based                                                                             
telecommunications system and how to utilize technology to redirect                                                             
some telecommunication costs.  One of the items to be reviewed is                                                               
with regard to who would be the best to manage and run such a                                                                   
system.  He informed the committee that a 1994 Wolfe & Associates                                                               
(ph) study found that the state is basically its own telephone                                                                  
company.  If that is correct, the state would need to be prepared                                                               
to move into the new century with the technology to do so.  As a                                                                
private citizen, Mr. Harris expressed concern with the incredible                                                               
pace of technology.  The state needs to view technology as a                                                                    
potential asset for savings or privatization.                                                                                   
                                                                                                                                
ANDREE McLEOD pointed out that this commission is the Commission of                                                             
Privatization and Delivery of Government Services.  She hoped that                                                              
the delivery of government services is not over looked.  She                                                                    
expressed the need to have a nonretaliatory, anonymous mechanism                                                                
for citizens and employees to provide some information to this                                                                  
commission.  Ms. McLeod was concerned that this is a "top down type                                                             
of commission."  She suggested that viewing this from the bottom up                                                             
may be advantageous.  Ms. McLeod stressed that the outline does not                                                             
include the legislature or the Administration.  Although some                                                                   
services are statutory, some of those services may be privatized.                                                               
Perhaps, the ombudsman's office could be privatized.                                                                            
                                                                                                                                
CO-CHAIR COWDERY disagreed with the suggestion that comments could                                                              
be anonymous.                                                                                                                   
                                                                                                                                
CO-CHAIR WARD interjected that he sponsored the first whistle-                                                                  
blower law in the 1980s.  There are legitimate circumstances in                                                                 
which people fear reprisal.                                                                                                     
                                                                                                                                
AN UNIDENTIFIED COMMISSIONER said that she did not believe the                                                                  
request for anonymous input to be bad.  There should be a mechanism                                                             
in which people feel comfortable providing ideas.                                                                               
                                                                                                                                
CO-CHAIR WARD acknowledged that anonymous comments and suggestions                                                              
will inevitably be received.  He noted that when he receives                                                                    
anonymous comments and suggestions, he performs a double-blind                                                                  
verification before coming forward.  He also noted that he receives                                                             
comments from those who request that their name not be involved.                                                                
                                                                                                                                
COMMISSIONER WUERCH asked if it was expected that the subcommittees                                                             
would have time to take public comments and input or would the                                                                  
public comment only occur before the commission.                                                                                
                                                                                                                                
CO-CHAIR WARD anticipated that the subcommittees would take public                                                              
comments and hold meetings for such.                                                                                            
                                                                                                                                
JOSEPH HENRI informed the committee that he served as the                                                                       
Commissioner of Administration under Governor Egan's third term.                                                                
With regard to changing statutes, there is less than five months to                                                             
do this job with volunteers.  He doubted if that could be                                                                       
accomplished in the projected time frame.  Mr. Henri hoped the                                                                  
commission would address how to continue this work beyond what is                                                               
currently in statute.                                                                                                           
                                                                                                                                
CO-CHAIR WARD announced that the commission will accomplish what                                                                
the legislature set out for it to do.  At that point, the                                                                       
presentation will be the beginning of another process in which the                                                              
four legislators on the commission will participate with the entire                                                             
legislature on this matter.  This will provide the legislature with                                                             
direction.                                                                                                                      
                                                                                                                                
MR. HENRI commented that there is the danger that some will say                                                                 
that privatization has been reviewed and no more time is to be                                                                  
spent on the issue.  He reiterated the need to continue the                                                                     
momentum of the commission.                                                                                                     
                                                                                                                                
CO-CHAIR COWDERY indicated agreement that this process should be                                                                
ongoing.                                                                                                                        
                                                                                                                                
MR. PIGNALBERI informed the committee that other states which dealt                                                             
with privatization activity had a much longer life cycle than this                                                              
commission.  Most privatization activity was more than a year,                                                                  
often two to three years.  For example, in Arkansas there was a                                                                 
commission for three years and the professional staff was kept for                                                              
two years in order to monitor and follow up on the original work.                                                               
Mr. Pignalberi believed Mr. Henri's concern to be legitimate, but                                                               
he understood Co-Chair Ward to say that it is the responsibility of                                                             
the four legislators on the commission to continue the momentum in                                                              
the legislature.  He assumed that if more work is necessary, there                                                              
would be another bill to continue these efforts.                                                                                
                                                                                                                                
CO-CHAIR WARD indicated agreement.                                                                                              
                                                                                                                                
AN UNIDENTIFIED COMMISSIONER asked if there is staff available to                                                               
assist the subcommittees in writing the report.                                                                                 
                                                                                                                                
CO-CHAIR COWDERY noted that he and Co-Chair Ward's staff are                                                                    
available.                                                                                                                      
                                                                                                                                
CO-CHAIR WARD mentioned that the House and Senate Finance                                                                       
Committees' subcommittee chairs may have staff to help supply                                                                   
information and staff to the commission's subcommittees.  He                                                                    
expected the commission to expand, but perhaps not to the extent as                                                             
in Arkansas where the commission was completely funded by private                                                               
donations.                                                                                                                      
                                                                                                                                
COMMISSIONER ALLEN indicated that there may be enough questions                                                                 
raised and doubt with regard to some of the recommendations that                                                                
would result in a request for the continuance of this work.                                                                     
                                                                                                                                
TAPE 99-2, SIDE B                                                                                                               
                                                                                                                                
MR. HENRI commented that just because some good ideas are provided                                                              
to the legislature, does not mean the legislature will take up                                                                  
those ideas.                                                                                                                    
                                                                                                                                
LEO MARK ANTHONY informed the committee that he has dealt with the                                                              
Department of Natural Resources(DNR) because he is a prospector and                                                             
miner.  Through his experience he has felt that DNR is a good                                                                   
organization.  However, he realized that the legislature is                                                                     
concerned with afford ability.  Therefore, this is about cost-                                                                  
benefit analysis.  Mr. Anthony understood that as a subcommittee,                                                               
the job will be to go through the data and sort it out.  He                                                                     
identified the technical decisions as the responsibility of the                                                                 
subcommittees while the political decisions are left to the                                                                     
legislators.                                                                                                                    
                                                                                                                                
MR. CLARY suggested that he or Mr. Pignalberi should be contacted                                                               
via telephone or e-mail with additional comments that people would                                                              
like to have circulated.                                                                                                        
                                                                                                                                
CO-CHAIR WARD interjected that people could go to the website and                                                               
type their comments to circulate to the commission.                                                                             
                                                                                                                                
COMMISSIONER THOMAS expressed concern with having each member's e-                                                              
mail address on the website because information may not be fairly                                                               
distributed to everyone.  She suggested that it would be helpful                                                                
for all information to first go to Mr. Clary and Mr. Pignalberi to                                                              
be distributed back to the commissioners.  That would avoid time                                                                
spent bringing people up to speed.                                                                                              
                                                                                                                                
COMMISSIONER FINK commented that the purpose of this is to make                                                                 
government more efficient not about decisions as to who should make                                                             
profits.  The authorizing legislation for this commission is driven                                                             
by the fact that there is not enough money.  Therefore, the most                                                                
efficient way to provide government services needs to be                                                                        
determined.  It should also be determined whether a particular                                                                  
government service should even be performed.  Still, it is of no                                                                
concern to this commission whether a contractor makes a profit.                                                                 
                                                                                                                                
COMMISSIONER VALESKO surmised that Commissioner Fink would like to                                                              
see Alaskans at or below minimum wage.  "If we can take nothing for                                                             
the services and get it done that way, then lets have it a                                                                      
citizenship here that is working for nothing ....  I don't believe                                                              
in that.  I believe that we have and we have laws already that says                                                             
if you're going to do a public contract, ..., you will pay what is                                                              
the prevailing wage in an area and that is when we need to look at                                                              
statutory things that say this is the wage that we think is                                                                     
sufficient as citizens of Alaska, as legislators you ought to be                                                                
thinking about this; that says we want a decent standard of living                                                              
for the people that live here.  I would agree, I don't care if they                                                             
make a cent of profit off of it but let's see that the working                                                                  
people, ..., have a decent standard of living in this state."                                                                   
                                                                                                                                
COMMISSIONER WUERCH stated that it is not his intent to take money                                                              
from anyone's pockets.  As a former employer, he paid his employees                                                             
well and provided them with a full benefits package because that                                                                
gives an employer good employees.  He hoped that the commission                                                                 
focuses on the fundamental purposes of SB 33.                                                                                   
                                                                                                                                
CO-CHAIR WARD mentioned that he has spoken with a number of state                                                               
employees who do fear that this is an attempt to take away jobs.                                                                
He did not believe any state employee would lose their job as a                                                                 
result of this, although there will probably be a hiring freeze and                                                             
reorganizational effort.  He pointed out that the legislation                                                                   
includes that the subcommittees identify those state  government                                                                
functions that should be transferred to nonprofit organizations,                                                                
regional profit corporations, profit corporations, federal                                                                      
government, local government, or eliminated.  That is quite a                                                                   
charge.                                                                                                                         
                                                                                                                                
COMMISSIONER (INDISC.) noted that his organization did a report                                                                 
that was distributed to all legislators about four years ago                                                                    
regarding the pitfalls and perils of privatization.  He said that                                                               
he would like to include that in the committee book.                                                                            
                                                                                                                                
CO-CHAIR WARD said that he would be happy to distribute that.                                                                   
                                                                                                                                
CO-CHAIR COWDERY informed everyone that he has information                                                                      
regarding every new program implemented since 1980 which may be                                                                 
helpful to review.                                                                                                              
                                                                                                                                
CO-CHAIR WARD interjected that would also be available to the                                                                   
subcommittees.                                                                                                                  
                                                                                                                                
DONN LISTON, Alaska State Employees Association (ASEA), testified                                                               
via teleconference from Juneau.  He informed the commission that he                                                             
was the business agent for ASEA which was involved in the central                                                               
duplicating fiasco.  When there is a contract, it should be                                                                     
honored.                                                                                                                        
                                                                                                                                
DAN PATTERSON, testifying via teleconference from the Mat-Su                                                                    
Valley, agreed with Commissioner Valesko that there will be a race                                                              
to the bottom in wages.  He did not believe that privatization of                                                               
the correctional system or half-way houses benefit Alaskans.  Mr.                                                               
Patterson emphasized that those departments as well as DOT not be                                                               
privatized.  He requested that the information packet be sent to                                                                
the Mat-Su Legislative Information Office(LIO).                                                                                 
                                                                                                                                
CO-CHAIR WARD agreed that the packet would be made available and                                                                
that information forthcoming will be made available to all LIOs.                                                                
There being no further comments, Co-Chair Ward thanked everyone for                                                             
giving their time.                                                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
There being no further business before the commission, the                                                                      
Commission on Privatization and Delivery of Government Services                                                                 
meeting was adjourned at an unspecified time.                                                                                   
                                                                                                                                

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