Legislature(1999 - 2000)
12/13/1999 09:15 AM Senate PRI
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
COMMISSION ON PRIVATIZATION AND DELIVERY OF GOVERNMENT SERVICES
Anchorage, Alaska
December 13, 1999
9:15 a.m.
COMMISSION MEMBERS PRESENT
Representative Cowdery, Co-Chair
Senator Ward, Co-Chair
Senator Adams
Representative Brice
Bill Allen, Former Mayor of Fairbanks
Tom Fink, Former Mayor of Anchorage
Emil Notti
Mike Harper, President, Kuskokwim Corporation (via
teleconference)
Kathryn Thomas, Former Chair of Alaska State Chamber of Commerce
Don Valesko, Business Manager of Public Employees Local 71
George Wuerch, Alaska Municipal League
COMMISSION MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
Discussion and adoption of recommendations regarding the
University of Alaska; the draft transmittal letter, report and
legislation; the Alaska Railroad Corporation; the collection of
Alaska Court System fines; moving the legislative sessions to
Anchorage; and the Department of Administration [Note: Several
items were addressed more than once]
PREVIOUS ACTION
See Commission on Privatization minutes dated 7/20/99, 8/16/99,
9/20/99, 10/28/99, 11/04/99, 11/10/99, 11/18/99, 11/24/99,
11/30/99 12/01/99, 12/07/99 and 12/08/99.
WITNESS REGISTER
MARCO PIGNALBERI, Commission Director and
Legislative Assistant to Representative John Cowdery
POSITION STATEMENT: Answered questions and presented information
on behalf of the commission.
ACTION NARRATIVE
TAPE 99-26, SIDE A
[NOISE INTERFERENCE AT THE BEGINNING OF THE TAPE]
CO-CHAIR WARD called the Commission on Privatization and Delivery
of Government Services meeting to order at 9:15 a.m. All members
were present: Representatives Cowdery and Brice; Senators Ward
and Adams; and Commissioners Allen, Fink, Thomas, Harper, Notti,
Valesko and Wuerch. Marco Pignalberi, Commission Director, was
also present.
APPROVAL OF PREVIOUS MINUTES
CO-CHAIR WARD announced that the minutes had been packed away for
the convening of the legislature and the move to the new office
space. He said the minutes would be forwarded and there would be
ample opportunity for the commissioners to make any comments.
UNIVERSITY OF ALASKA
MARCO PIGNALBERI, Commission Director and Legislative Assistant
to Representative John Cowdery, said he was informed by the
University of Alaska that they will not be able to furnish their
report due to time constraints; however, it will be provided in
the future. Furthermore, the university will not be providing
the Extended Campuses Dollar Per Student Study because it would
be a major project.
DRAFT TRANSMITTAL LETTER
MR. PIGNALBERI read into the record the following draft
transmittal letter, dated December 21, 1999:
Dear Governor Knowles, Madam President Pearce and
Speaker Porter:
Please consider this letter, the accompanying report
and appendices as satisfaction of the requirements of
Chapter 61 SLA (Session Laws of Alaska) 1999.
The Commission on Privatization and Delivery of
Government Services met 13 times over an 18-week
period. We solicited public participants to work in 20
different subcommittees that focused on each department
in state government, the University of Alaska, the
legislature and the court system. Additional panels
focused on state-owned hydroelectric projects, the
Alaska Railroad Corporation and the Alaska Housing
Finance Corporation. Through various stages of
consideration, approximately 250 Alaskans volunteered
to work on the subcommittees. Collectively, they
participated in more than 200 meetings. In all, we
made 400 recommendations concerning privatization and
delivery of government services.
The accompanying report includes a Master List of
Recommendations. They are cross-referenced to each
department and subcommittee report. The full
subcommittee reports are included as appendices.
This volume of work represented by the subcommittee
reports is extraordinary. We have never seen such a
prolific contribution by Alaskan citizens to their
state government. Indeed, while the commission heard a
presentation from each subcommittee and reviewed each
of their reports, it was impossible to assimilate and
debate all the information within the time available.
Therefore, the commission recommends the entire corpus
of work for further consideration by the
administration, legislature and a successor
privatization commission.
In the meantime, the commission adopted 19
recommendations for immediate consideration. These
recommendations were selected in large part because of
a clear consensus among commissioners. These 19
recommendations are attached as Table A.
If there is a consistent theme that resounded from
nearly every subcommittee, it is this: state budget
documents are frustrating and incomprehensible to the
citizens of the state. Subcommittee members and
commissioners wanted to discover what costs accompany
specific activities performed by state government.
They could not. Our budget structure and format do not
serve the public and should be changed or supplemented
to accommodate public interest.
We learned from our review of federal programs that the
most fundamental privatization task is to make a
distinction between "core governmental
responsibilities" and discretionary activities. Core
governmental responsibilities are not candidates for
privatization. All others are. In 1998, Congress
enacted the Federal Activities Inventory Reform Act.
Basically, this law required the executive branch to
make a determination about which of its activities are
not inherently governmental activities. We adapted
this federal law to Alaska Statutes, and it is
presented in a draft bill for which we urge your
support.
We wish to record that the commission and its
subcommittees enjoyed broad cooperation, even
enthusiasm, from many departments in the executive
branch. We commend the departmental liaisons who
enriched the experience of subcommittee members with
their erstwhile responses to our inquiries.
Finally, the commissioners and subcommittee members
wish to express appreciation for the opportunity to
constructively involve themselves in state government.
We view our work as a first, small step toward a state
government that is prepared to meet the challenges of
the impending millennium.
Yours truly,
Senator Jerry Ward, Co-Chair
Representative John Cowdery, Co-Chair
DRAFT REPORT
CO-CHAIR WARD asked Mr. Pignalberi to summarize the draft report
for the record.
MR. PIGNALBERI explained the following major sections of the
draft report:
I. CONTEXT
Section I is simply an overall statement of how
widespread privatization activities are around the
world and the driving forces.
II. INTERNATIONAL PRIVATIZATION
Section II provides examples of international
privatization activities. A host of examples of
international privatization activities in other
countries is yet to be inserted.
III. U.S. GOVERNMENT PRIVATIZATION
Section III includes privatization of activities on the
national level. Other examples will be inserted
including several reports conducted by the General
Accounting Office of Congress and the National
Conference of Legislators.
IV. PRIVATIZATION IN THE 'LOWER 48'
Section IV includes examples of privatization in the
Lower 48.
V. PRIVATIZATION DEFINITIONS
Section V is important for the understanding of a
report on privatization.
VI. PRIVATIZATION IN ALASKA
Section VI refers to the work of this commission.
Included are examples of privatization currently
occurring in Alaskan cities. The second paragraph
talks about contractual expenditures and the state
budget. The dollar figure has yet to be included,
however. In addition, SB 33 specifically required the
commission to look into the state procurement policies
and procedures. Although the commission did not
develop much information, it is necessary to put in the
record what the commission did discover. It also
addresses the process and how the work was
accomplished, including the presentation of reports to
the commission.
VII. RECOMMENDATIONS ADOPTED BY 12/13/99
Section V refers to the number of recommendations
advanced by the subcommittees. One table contains the
19 recommendations that were passed by the commission.
Another table contains the four recommendations that
was failed by the commission. The appendix is the
master list of all the recommendations by the
subcommittees and the commission.
MR. PIGNALBERI noted that the legislative subcommittee
recommendations were accidentally omitted from the master list
but it would be updated today. The full unabridged reports with
attachments will be provided to the governor, Senate President
and Speaker of the House. A report will also be provided for
legislative archives. The term "unabridged" means that the
reports will include all the attachments of the committee
reports. He continued:
VII. UNIQUE ALASKAN SITUATION [Note: The report had
two sections labeled "VII"]
Section VII applies to ongoing work to the unique
Alaskan situation. This also includes rural Alaska
because of the interest shown.
VIII. THE NEXT STEP
Section VIII is simply a three-step process.
IX. BARRIERS TO PRIVATIZATION
Section IX includes articles that have already been
read.
X. RECIPE FOR SUCCESS
Section X includes a general consensus around the
country -six or seven steps that must be performed to
accomplish a successful privatization program.
XI. INTERNAL CRITIQUE
Section XI includes the internal critiques that would
have made the process better. It is up to the
commissioners to decide on whether or not to include
this section.
XII. BIBLIOGRAPHY
Section XII includes all the reports that have been
collected and incorporated into the report.
ALASKA RAILROAD CORPORATION
SENATOR ADAMS made a motion to delete Recommendation 16:
The commission recommends to the legislature that it
consider placing the Alaska Railroad Corporation under the
Executive Budget Act.
UNIDENTIFIED SPEAKER seconded the motion.
CO-CHAIR WARD requested a roll call vote. The motion carried by
a vote of 7-4. Senator Adams, Representative Brice and
Commissioners Allen, Harper, Notti, Valesko and Wuerch voted
"yea." Co-Chairs Ward and Cowdery and Commissioners Fink and
Thomas voted "nay."
COLLECTION OF COURT SYSTEM FINES
SENATOR ADAMS turned attention to Recommendation 9:
The commission recommends issuing a request for proposals
[RFP] for the purpose of all collection of court systems
fines.
SENATOR ADAMS noted that the collection functions of the
Department of Law prepared by Joan Kasson [Special Assistant,
Office of the Attorney General] states that the department does a
cost-effective job of handling thousands of collections for the
state in a wide variety of areas. The department believes it is
unlikely that a private firm would be willing to handle this
service for the state at less cost. Senator Adams expressed his
belief that the statements made in the previous meeting were too
broad. He also thought that the commission was only looking at
child support enforcement collections. He asked the maker of the
recommendation to explain it further.
COMMISSIONER WUERCH said he was among the group that supported
the recommendation. The intent was to take a look at all of the
functions identified by the subcommittees as possible targets for
contract servicing. It appeared that if there were professional
billing agencies and collection firms that could do the same more
cheaply and/or effectively without burdening the regulatory
function, then it should be done. He said the Municipality of
Anchorage is on the threshold of using a private firm to bill
insurance companies for patients who are transported by the
ambulance service. The preliminary indications are that it will
be successful both financially and in equity because everybody
will be treated the same, and everybody will have to pay.
SENATOR ADAMS asked Commissioner Wuerch whether he wants
Recommendation 9 to remain on the list.
COMMISSIONER WUERCH replied yes, because it was worded in the
contents as starting with an RFP.
SENATOR ADAMS announced that he will not be making a motion to
move this recommendation. He added that the state has taken over
some functions of the Municipality [of Anchorage], as well as
functions in corrections and the court system, which need be
looked at.
MOVING THE LEGISLATIVE SESSIONS TO ANCHORAGE
CO-CHAIR WARD made a motion to move the legislative sessions to
Anchorage - Legislative Subcommittee Recommendation 2.
UNIDENTIFIED SPEAKERS seconded the motion.
CO-CHAIR WARD requested a roll call vote. The motion carried by
a vote of 6-5. Co-Chairs Ward and Cowdery and Commissioners
Fink, Notti, Thomas and Wuerch voted "yea." Senator Adams,
Representative Brice and Commissioners Allen, Harper and Valesko
voted "nay."
UNIVERSITY OF ALASKA
Power plant
COMMISSIONER ALLEN referred to Recommendation 6:
The commission recommends determining the true
costs/benefits of selling the power plant and/or privatizing
its operation, and compare to shutting it down and buying
electric power from local utilities.
COMMISSIONER ALLEN explained that if the state sells the power
plant at the University of Alaska Fairbanks, the heating source
for the Fairbanks campus will be eliminated. He suggested making
a recommendation to explore the total true costs and benefits of
all utility services provided at the campuses in Juneau,
Fairbanks and Anchorage. He also recommended that the property
management functions at the University of Alaska be explored in
terms of the true costs and benefits associated with
privatization. The commission has only scratched the surface of
several functions being handled by the university that are prime
candidates for so-called outsourcing, he said, citing university
housing as an example. It is an unnecessary expense that the
state incurs. Furthermore, the trend in the Lower 48 is towards
privatization.
COMMISSIONER ALLEN made a motion to delete Recommendation 6 and
replace it with the following:
The commission recommends determining the true
costs/benefits of all utilities being provided to the
University of Alaska at the three major campuses.
SENATOR ADAMS noted that Commissioner Allen's motion deals only
with utilities. He asked whether a second motion will deal with
housing.
COMMISSIONER ALLEN replied that he will look at three areas:
utilities, property management and housing.
CO-CHAIR WARD suggested that Commissioner Allen make another
motion combining all three.
COMMISSIONER WUERCH referred to a report that included student
services in relation to privatization; he cited food service and
the bookstore as examples. He asked Commissioner Allen whether
his motion includes those functions as well.
COMMISSIONER ALLEN replied no, that is more detail than he is
willing to bite off at this stage.
CO-CHAIR WARD remarked that there hasn't been a second to the
original motion.
COMMISSIONER FINK seconded the motion.
CO-CHAIR WARD asked Commissioner Allen to restate his motion.
COMMISSIONER ALLEN slightly reworded his motion to substitute
Recommendation 6 with the following:
The commission recommends determining the true
costs/benefits of privatizing utilities on the three main
campuses of the University of Alaska Southeast, University
of Alaska Anchorage, and University of Alaska Fairbanks.
COMMISSIONER WUERCH said he believes the only campus that has its
own utilities is Fairbanks. The University of Alaska Anchorage
is serviced by the municipality, and he believes that the
University of Alaska Southeast is serviced by Juneau.
CO-CHAIR WARD remarked that this recommendation is just for
utilities; it doesn't include water and telephone.
UNIDENTIFIED SPEAKER said telephone service is already covered
with another motion.
COMMISSIONER ALLEN said he is including all utilities: water,
sewer and electricity.
CO-CHAIR WARD commented that it is relevant because it includes
phone service for the other two campuses. It includes all
utilities.
COMMISSIONER ALLEN emphasized that the University of Alaska
Fairbanks is unregulated, and it needs to be regulated. He
indicated that by combining water, sewer and electricity with the
local, regulated utility systems, the delivery of those services
and the maintenance of improvements of the energy structures can
be done at a far less cost as an independent system operated by
the University of Alaska. Furthermore, if this motion passes and
a true costs-benefits study is performed, the results will show a
dramatic savings to the state.
UNIDENTIFIED SPEAKER said he had voted in support of the original
motion based on the wording of the recommendation as a true cost
study. But he is not hearing that now, so he will be cautious in
how he will vote on the motion now.
UNIDENTIFIED SPEAKER reread the motion as follows:
The commission recommends that the University of Alaska
determine the true costs/benefits utilities at the three
main campuses.
COMMISSIONER VALESKO said he doesn't have a problem with it.
CO-CHAIR WARD asked whether there were any objections to the
motion. There being none, the motion was carried.
Building maintenance
COMMISSIONER ALLEN said he believes property management is a
cost-saving endeavor. Improvements at the Fairbanks campus have
deteriorated over the years, and the cost of bringing some of
those buildings back into compliance exceeds $150 million. When
he was involved with the University of Alaska, the funds that had
been provided for maintenance were redirected to other things;
however, he is not sure that is the case now. Furthermore,
outsourcing and requesting a private management company to manage
those properties would get more attention, and the economic life
of those improvements would be extended because of the preventive
maintenance program (indisc.-paper shuffling) that they would
get. Right now, the chancellors have the ability to transfer
funds, but at the same time, when they transfer funds from a
maintenance program to another BRU [budget review unit], or
another category, maintenance continues to decline and the cost
of maintaining those buildings continues to worsen, resulting in
an increased expense to the state. If a third party were
involved, the university management and the legislature would be
more attentive.
CO-CHAIR WARD noted that a certain amount of money has been
provided for maintenance in the last two decades for public
facilities. The university is not alone in this.
COMMISSIONER VALESKO stated concern about the Department of
Transportation & Public Facilities (DOT/PF). Although it is the
department charged with maintenance, its budget has been cut the
most when considering all departments. It has not been the
collective will of the legislature for the last two decades to
put more money into maintenance, and the danger in that, even if
it is privatized, is furthering the leak of money going into
maintenance.
COMMISSIONER THOMAS stated that she would have to support student
housing as a private source because asset managers have the
capability of taking care of their assets. In other words, they
will provide maintenance dollars to take care of maintenance.
Therefore, she would like to see a motion to include privatizing
university housing.
COMMISSIONER WUERCH said he believes this motion may be
consistent with what has been done at the subcommittee level in
the last several months. Circumstances have been reviewed to
find out how other entities have accomplished this. He cited the
success of privatizing housing for the military as an example.
He further mentioned that Fairbanks has had notable successes.
In addition, the model is very similar in that in the university
the land belongs to the university, but the structure and
operation of a housing unit can be privatized on publicly owned
lands. The same is done on military bases where the land belongs
to the United States Department of Defense, while the structure
and the operation of a housing unit belongs to a private
contractor. He cited the Coast Guard base in Kodiak as an
example, which privatizes its entire facility from mowing lawns
to serving food. Philosophically, he said, Commissioner Allen is
proposing a concept that is right in line with the direction of
many of the subcommittees.
COMMISSIONER ALLEN voiced agreement with Commissioner Valesko's
comments regarding DOT/PF. When he was the commissioner of the
Department of Administration, he dealt with that issue daily.
Furthermore, items that favorably impress "politicals" receive
funding, while those such as maintenance fall by the wayside.
Therefore, he is trying to isolate that which is important -
maintenance - and have it be handled by a nonpolitical entity, to
give it its own "life" so that Alaskans can see what is happening
to the state's infrastructure. Typically, deferred maintenance
is not understood until it is time to replace something. The
state should do maintenance better. instead of waiting for
something to collapse like other states do.
COMMISSIONER ALLEN made a motion to adopt the following:
The commission recommends determining the true
costs/benefits of privatizing the property management
function of all state facilities.
UNIDENTIFIED SPEAKER seconded the motion.
COMMISSIONER FINK asked Commissioner Allen whether he is
including the university.
COMMISSIONER ALLEN replied that through discussions he has heard,
he thinks this should be inclusive of all state facilities.
Nevertheless, he wondered whether it is too broad.
COMMISSIONER FINK remarked that it is awfully broad, and there
hasn't been much discussion on it.
CO-CHAIR WARD wondered whether it should include trains, boats,
planes and helicopters.
COMMISSIONER ALLEN replied that those are typically not
considered facilities.
CO-CHAIR WARD asked Mr. Pignalberi to reread the motion on the
table.
MR. PIGNALBERI paraphrased as follows:
The commission recommends determination of the true
costs/benefits to privatize maintenance of all state
buildings.
UNIDENTIFIED SPEAKER interjected to include the following:
the property management functions of all state buildings.
UNIDENTIFIED SPEAKER stated that he is concerned with the motion
because it is too broad, causing the commission to become bogged
down in the identification of buildings. He suggested a motion
to focus on buildings and structures of a capital value of "x"
amount, so that time isn't wasted on trivia.
CO-CHAIR WARD noted that the logic at the legislative finance
committee level will take care of those details, which is not to
say there shouldn't be a dollar value included, however.
REPRESENTATIVE BRICE remarked that there is a pretty clear
understanding of what a facility is. However, he is concerned
about the specialized, state-owned buildings such as the
laboratories. He is concerned about losing the expertise and
understanding of what is needed for those state facilities.
COMMISSIONER ALLEN noted that he was referring to the true
property management functions - the operating components of a
building. In his opinion, program implementation is not a proper
management function.
REPRESENTATIVE BRICE said the requirements for the state labs are
not the same as for other buildings. He is concerned that the
people who are maintaining or managing these facilities ... [ends
mid-speech because of tape change].
TAPE 99-26, SIDE B
COMMISSIONER VALESKO referred to the diverse interests of the
state and asked whether the state wants to "property manage" the
Pioneers Home differently than the state office buildings, for
example. He said he'd originally commented on this subject
because, according to his understanding, the new state office
building is run privately. Therefore, if the motion is to study
and look into the true cost of privatization, then he is in favor
of it. But if the motion is to recommend privatization without
looking into the true cost, then he is opposed to it because the
true nomenclature would be "profitization" - allowing a private
entity to make a profit from state dollars - not privatization.
COMMISSIONER ALLEN said the idea behind this is to determine the
cost per square foot, a property management program - in other
words, the private versus the public sector. The question is:
What will it cost, and what will the benefits be to state
government to privatize?
MR. PIGNALBERI asked the maker of the motion whether it is his
intention to state who should make the determination.
CO-CHAIR WARD said the legislature has the ultimate authority to
make that determination, working in conjunction with the
administration; it doesn't need to be stated.
CO-CHAIR WARD called for the question and asked Mr. Pignalberi to
reread the motion.
MR. PIGNALBERI stated:
The commission recommends determination of the true
costs/benefits to privatize property management of all state
buildings.
COMMISSIONER FINK reiterated that the motion is too broad and the
commission hasn't laid any groundwork for it.
COMMISSIONER THOMAS said she thinks the commission has laid a lot
of groundwork to start looking at this type of thing in a general
form. She agreed that perhaps this motion is a little premature.
COMMISSIONER VALESKO said he looks at it as a sure failure in the
legislature because of the several-million-dollar appropriation
that will have to go along with it.
COMMISSIONER WUERCH also expressed worry that the motion is
overly broad. He made a motion to substitute the following
language:
The commission recommends determination of the true
costs/benefits to privatize property management of all
University of Alaska buildings.
COMMISSIONER ALLEN seconded the motion.
CO-CHAIR WARD asked whether there was any objection to
substituting the new language.
COMMISSIONER NOTTI called for the question.
CO-CHAIR WARD requested a roll call vote. The motion carried by
a vote of 9-2. Co-Chairs Ward and Cowdery, Senator Adams, and
Commissioners Allen, Fink, Harper, Notti, Thomas, and Wuerch
voted "yea." Representative Brice and Commissioner Valesko voted
"nay."
Student housing
COMMISSIONER ALLEN made a motion that the commission recommend
determining the true costs/benefits of privatization of student
housing.
SENATOR ADAMS stated his understanding that "property management"
is broad enough to encompass that.
CO-CHAIR WARD said that is his understanding as well.
COMMISSIONER ALLEN noted that the Department of Administration
does an excellent job on outsourcing; however, the Division of
Retirement and Benefits outsources its claims to a Seattle firm
that probably employs 50 to 75 people. It seems that if the
state is going to outsource and reduce the cost of state
government, it is just as important that the state hire Alaskans
to provide these services, he said. It may be true that the
expertise required is not available in Alaska. But it seems that
if the state is going to contract out work that requires more
than 25 employees, the company that has the expertise should be
able to relocate to Anchorage, Juneau or Fairbanks, and to hire
and train Alaskans.
REPRESENTATIVE BRICE said it is only appropriate to bring those
types of functions back into the state. He commented on the lack
of opportunity for students who graduate from college in-state.
COMMISSIONER FINK disagreed, saying the state should not be
building up business in Alaska based upon a subsidy. The state
ought to compete in the United States, if not the world market.
Subsidies are self-defeating. He said today the finance field is
building in the state and doing business throughout the country
without any subsidies. He certainly is in favor of local hire
and local opportunities, but the competitive, free-market system
will develop that better than any other way. He is opposed to
creating any new preferences.
COMMISSIONER ALLEN said he doesn't disagree with Commissioner
Fink's logic. The free market on a competitive basis could
dictate those terms. He emphasized that in some fashion, whether
it be points on a contract evaluation or whatever, more attention
or credit should be given to a company willing to staff and
handle a particular function with Alaskans, in Alaska, as opposed
to outsourcing to a company that staffs its people outside of
Alaska. He doesn't know that a subsidy is required, however.
COMMISSIONER FINK remarked that as soon as points or price
preferentials are given, it is a subsidy. The free market will
work. If it is an RFP, there is enough discretion among those
who make the decision. He said he might have bought this 25
years ago, but the state is in the process of maturing to the
point of being able to compete in the world market.
COMMISSIONER WUERCH said he doesn't believe in subsidies, but he
believes more can be done to put work in Alaska. For example,
the state convinced the oil industry that modules could be built
in Alaska, and they've been built in Anchorage and the Kenai
Peninsula Borough. Furthermore, financial houses have taken on
the investments of some of the public funds in Anchorage. But
missing in many of the contract awards is the hidden cost of
those who love to travel to the Lower 48 to "administer" a
contract, for example. If every single travel dollar used to
support a contract awarded out-of-state were added to the cost of
the contract, more Alaskan firms would win these types of
contracts.
COMMISSIONER VALESKO pointed out that the state had approximately
60,000 claims pending with NYLCare [health insurance company] one
month ago, which is unacceptable. The state needs something to
keep money here in the state. He appreciates the comments made
by Commissioner Fink regarding subsidies, he concluded, but even
a subsidy creates more of a flow for money to stay in the state.
COMMISSIONER ALLEN said he would like to have the privilege to
come back later with a motion on what was just discussed.
Receipt of 250,000 acres
REPRESENTATIVE BRICE referred to Recommendation 1 and noted that
there is concern with the mining, timber and oil industries about
how it would be conducted. The recommendation read:
The commission recommends giving 250,000 acres to the
University of Alaska.
REPRESENTATIVE BRICE made a motion to add the following clause to
Recommendation 1: "with due consideration of potential impacts
to current economic development".
COMMISSIONER ALLEN seconded the motion.
COMMISSIONER FINK said he is opposed to adding limitations. The
current administration has resisted this issue and has vetoed
three bills that would have made land available to the
university. It is hard to believe that anybody in the mining or
oil industry would object to the university's getting 250,000
acres because they know it will be made available to them. In
addition, one purpose of Recommendation 1 is to say, in effect,
to the state, "Quit fooling around and give them 250,000 acres."
Therefore, he is opposed to any watering down of the
recommendation.
REPRESENTATIVE BRICE replied that a substantial reason why the
current administration has vetoed legislation regarding this
issue is because of the Alaska Miner's Association, as it relates
to the title to the land. Therefore, this recommendation should
reflect those concerns.
SENATOR ADAMS said he supports the amendment to Recommendation 1.
However, there are Native regional corporations that have not yet
finalized their selections. There are people in front of the
university that need to make their selections and finalize them
before the state can look at giving 250,000 acres to the
university.
COMMISSIONER THOMAS stated concern about the amount of work
required if the commission starts "word-smithing" each
recommendation.
COMMISSIONER FINK pointed out that Recommendation 1 doesn't say
this is a priority on any state land; it just says that the
commission recommends giving the university 250,000 acres of
land. In response to Representative Brice's concerns on
restricting the land, he doesn't buy the argument. As mayor [of
Anchorage], he himself dealt with the Alaska Mental Health Trust
Authority to free up a lot of land titles. Even though he is not
a big supporter of the mental health trust concept, he had agreed
to any land in the city because he knew it would be developed.
Similarly, the university is not interested in any land sitting
idle; they want it to produce income.
CO-CHAIR WARD asked Representative Brice to restate the motion.
REPRESENTATIVE BRICE restated the motion as follows:
The commission recommends giving 250,000 acres to the
University of Alaska with due consideration of potential
impacts of economic development.
CO-CHAIR WARD requested a roll call vote. The motion failed by a
vote of 5-6. Senator Adams, Representative Brice, and
Commissioners Allen, Notti and Valesko voted "yea." Co-Chairs
Ward and Cowdery and Commissioners Fink, Harper, Thomas and
Wuerch voted "nay."
DEPARTMENT OF ADMINISTRATION
COMMISSIONER ALLEN moved the following recommendation for the
Department of Administration:
The commission recommends all work considered for
outsourcing wherein the scope of work involved the staff, 25
or more, favorable consideration be given to firms located
in Alaska and for Alaskan residents.
UNIDENTIFIED SPEAKER seconded the motion.
COMMISSIONER FINK reiterated his position on letting the market
operate. He said the way to help Alaskans is to help them be
competitive.
UNIDENTIFIED SPEAKER asked whether "favorable consideration"
means that it must be awarded in the case of a tie?
COMMISSIONER ALLEN replied that favorable consideration would be
all things being equal in the case of a tie.
COMMISSIONER FINK indicated favoritism could be a lot of things
and could apply to more than a tie. In addition, the people who
make these awards and decisions are Alaskans. They perhaps would
naturally help Alaskans, but an Alaskan who didn't cut it in the
competitive process wouldn't get the award.
COMMISSIONER THOMAS stated her concern that the recommendation is
trying to dictate an RFP process before a performance standard
has been set. It is almost the cart ahead of the horse.
REPRESENTATIVE BRICE voiced his opinion that the commission is
establishing sideboards to an RFP process rather than dictating
one, which is perfectly appropriate.
COMMISSIONER WUERCH said that so often contracts are awarded on
the face amount of the bid, without considering the hidden costs.
In fact, some contracts are awarded not realizing that the travel
cost is treated as an advance. Honestly, too often there isn't a
full cost accounting of what a service contract is going to cost
the state. He agreed that this recommendation is trying to
define an RFP process, which is a level of detail this commission
shouldn't get into. He restated that many Alaskans love to go to
Southern California to administer a contract.
CO-CHAIR WARD requested a roll call vote. The motion failed by a
vote of 5-6. Senator Adams, Representative Brice, and
Commissioners Allen, Harper and Valesko voted "yea." Co-Chairs
Ward and Cowdery and Commissioners Fink, Notti, Thomas and Wuerch
voted "nay."
DRAFT TRANSMITTAL LETTER, REPORT AND LEGISLATION
COMMISSIONER FINK referred to the section addressing core
governmental responsibilities in the draft transmittal letter and
suggested making it a recommendation because it relates to the
draft legislation. At first blush, he said, he does not support
it because it sets up another bureaucracy. The concept of making
every department list the core services or "noncore" services is
good, but this sets up an annual report by each department
showing its governmental activities. In the long run, it will be
a huge paper mill, not to mention the review and appeal processes
involved. He called this a million dollar bill. All things
considered, this is another reason why he is opposed to the draft
transmittal letter.
MR. PIGNALBERI replied that a list of core governmental
activities is primary and fundamental before considering any kind
of privatization. A list doesn't require the additional hiring
of personnel or the establishment of a new office. It simply
requires the cabinet-level departmental personnel to come up with
a list of what they consider as their core governmental
activities.
SENATOR ADAMS said the draft letter of transmittal indicates that
the state is going to mirror federal law, not adopt it. He
thought that the commission was going to try to extend itself for
three months so that it can communicate with the administration
and legislators, he added, to see the actual cost of putting
something like this into statute and regulation.
CO-CHAIR WARD invited Commissioner Fink to make a motion
regarding the transmittal letter.
COMMISSIONER FINK said he is opposed to the draft transmittal
letter as it relates to the proposed bill. The bill requires an
annual report by each department of its nongovernmental
activities, which requires a lot of work.
MR. PIGNALBERI clarified that the commission is "adapting" - not
"adopting" - the federal model to fit within the structure of the
state's statutes. Furthermore, the legislature will have its way
with the bill as it goes through the legislative processes, and
changes will be made. The commission members cannot expect the
final version to appear as it is now. Nevertheless, no matter
what successive process finally develops to handle privatization,
this fundamental activity must take place.
COMMISSIONER ALLEN asked Mr. Pignalberi why it is important for
this to be in statute.
MR. PIGNALBERI replied that it is important because otherwise
there is no way to require the administration to do it. In
addition, according to all of the reports that he has read on
privatization, it is important to lay out the process clearly,
with some teeth.
UNIDENTIFIED SPEAKER said he agrees with Senator Adams in that it
probably should be included in the draft report. He also agrees
with Mr. Pignalberi in that what needs to happen is addressed in
the proposed legislation. He would like to see it incorporated
into the report to the governor and to have it highlighted in the
transmittal letter. He doesn't see the necessity of making it
law, however.
CO-CHAIR WARD asked whether the previous speaker was recommending
that this particular item come out of the draft transmittal
letter and go into the draft report as part of a recommendation.
UNIDENTIFIED SPEAKER replied that it should become a part of the
recommendations and be highlighted as part of the transmittal
letter, to call attention to it.
CO-CHAIR WARD asked whether the commission should take any action
on it.
UNIDENTIFIED SPEAKER affirmed that idea.
REPRESENTATIVE BRICE asked Mr. Pignalberi to clarify the notation
of the word "delete" on page 4 of the proposed legislation.
MR. PIGNALBERI replied that the bill drafter had indicated in a
cover letter that the particular section is redundant.
COMMISSIONER WUERCH made a motion to delete the following
paragraph from the draft transmittal letter:
We learned from our review of federal programs that the
most fundamental privatization task is to make a
distinction between "core governmental
responsibilities" and discretionary activities. Core
governmental responsibilities are not candidates for
privatization. All others are. In 1998 Congress
enacted the Federal Activities Inventory Reform Act.
Basically, this law requires the Executive Branch to
make a determination about which of its activities are
not inherently governmental activities. We adapted
this federal law to Alaskan statutes and it is
presented in a draft bill for which we urge your
support.
COMMISSIONER FINK seconded the motion.
UNIDENTIFIED SPEAKER said there is a lot of merit in the concept,
but he believes that in the absence of much discussion at the
subcommittee level, making it a highlighted item at this time is
not giving it its due diligence. He would rather see it
incorporated into the body of the draft transmittal letter.
REPRESENTATIVE BRICE referred to the last line in the paragraph
[ends mid-speech because of tape change].
TAPE 99-27, SIDE A
REPRESENTATIVE BRICE continued, saying he thinks it is
appropriate for the commission to highlight it in the transmittal
letter.
CO-CHAIR COWDERY said he supports the entire paragraph and
suggests including the last sentence of the paragraph in the
other recommendations.
CO-CHAIR WARD asked whether there was any objection to the
motion.
UNIDENTIFIED SPEAKERS replied yes.
CO-CHAIR WARD requested a roll call vote. The motion carried by
a vote of 6-5. Senators Ward and Adams and Commissioners Fink,
Harper, Valesko and Wuerch voted "yea." Representatives Cowdery
and Brice and Commissioners Allen, Notti and Thomas voted "nay."
COMMISSIONER WUERCH made a motion to incorporate the deleted
language into the draft report, to be placed at the direction of
staff.
UNIDENTIFIED SPEAKERS seconded the motion.
UNIDENTIFIED SPEAKER objected.
COMMISSIONER FINK explained that he objects to the motion because
he doesn't really know where it will go in the report or how it
will work. If it is going to be another recommendation, then he
understands the motion.
MR. PIGNALBERI explained that if it is going to be another
recommendation, it will simply be the next number.
COMMISSIONER ALLEN asked whether the federal law is being adapted
since the paragraph has been deleted.
MR. PIGNALBERI said according to his understanding, the amendment
is conceptual and staff will work on the appropriate language.
COMMISSIONER ALLEN said he is interested in laying the
groundwork, but he doesn't think that it requires a statute to be
enacted.
COMMISSIONER FINK stated that if the deleted paragraph is adopted
as a recommendation, he will make a motion to strike the last
sentence.
UNIDENTIFIED SPEAKER announced that would work for him.
COMMISSIONER WUERCH referred to the draft report and asked Mr.
Pignalberi whether Article X, "Recipe for Success," is the
appropriate place to insert the adoption of the statute.
MR. PIGNALBERI replied that it is an excellent place to put it.
COMMISSIONER WUERCH indicated the suggestion now removes the
question of whether it will be a recommendation.
CO-CHAIR WARD asked Commissioner Wuerch whether his motion
includes the last sentence in the paragraph.
COMMISSIONER WUERCH replied yes, but he would accept an amendment
to delete the last sentence. In addition, the word "adapted"
just means the taking of federal law and recasting it into state
statute; it doesn't mean that "we" voted for it.
COMMISSIONER FINK made a motion to delete the last sentence,
which read:
We adapted this federal law to Alaskan statutes and it is
presented in a draft bill for which we urge your support.
UNIDENTIFIED SPEAKER seconded the motion.
CO-CHAIR WARD asked whether there was any objection [to the
amendment to Commissioner Wuerch's motion]. There being none,
the motion carried.
CO-CHAIR WARD asked whether there was any objection to the motion
[to incorporate the deleted language, as amended]. There being
none, the main motion carried as well.
COMMISSIONER FINK stated, in relation to the draft report, that
it is too long. It ought to be an appendix. There ought to be
an executive summary at the beginning of the report listing those
things that have been adopted, illustrating the standards used,
and illustrating what is attached. The recommendations are the
most important thing that the commission has done, while the list
that the commission members have done is the second-most
important thing; therefore, it ought to be attached. The
subcommittee reports and the memberships of the subcommittees
ought to be attached as well so that the people who read [the
report] realize who came up with the ideas. He passed out to
members an example of what he is talking about and read the
following into the record:
FINDINGS AND RECOMMENDATIONS TO THE GOVERNOR AND THE
LEGISLATURE
Pursuant to CSSB 33, the Commission on Privatization
and Delivery of Government Services makes the following
report. CSSB 33 states that the annual cost of state
government is exceeding the annual revenue and that our
commission is to study government services and make
determinations along the following lines:
1. Services that should be eliminated.
2. Services that ought to be
contracted out to private
organizations.
3. Services that ought to be performed
by local government or regional
service organizations.
4. Services that ought to be performed
by the federal government.
5. Services that ought to be
consolidated for efficiency
purposes.
6. Services that can most effectively
and efficiently be delivered by the
state.
This commission appointed 20 subcommittees to review
the various elements of state government. There were
about 250 people active on these subcommittees. Each
subcommittee returned a report and, in the aggregate,
made 291 recommendations for changes. The commission
considers most of the recommendations to be very valid
and ought to be followed by the state government.
In an attempt to zero in on a limited number of those
recommendations, each commissioner was asked to prepare
a list of recommendations that he or she wanted to take
up in the full committee. The committee then took up,
discussed, and voted upon those recommendations that
each committee member put forward during our meeting.
The commission members did not put forward all of the
items which were listed on each of their personal
privatization recommendations list.
The following 19 recommendations received majority
approval of the commission members:
(List 19 recommendations)
Also attached to this report are the individual
commissioners' lists of recommendations, a list of the
291 recommendations made by all the subcommittees with
the backup material, a copy of each ... subcommittee's
full report, and a list of the subcommittee members and
chairman.
We did not vote on all the subcommittees'
recommendations as time did not permit a full review.
The Privatization Committee did meet with each of the
subcommittees to receive their written and oral
reports.
We recommend that the administration and the
legislature follow through on the recommendations of
this commission and that the appropriate legislative
committees review all of the recommendations of the
subcommittees.
This commission expires on January 1, 2000, but all the
members of this commissions and the members of the
subcommittees are available to the legislature or the
Governor.
Signed,
[Co-Chair] Cowdery
[Co-Chair] Ward
COMMISSIONER FINK said something like the above would more likely
be read, and would allow the reader to zero in on the various
segments. He made a motion to adopt the above summary.
CO-CHAIR COWDERY pointed out that certain things require a
lengthy report because of their complexity.
CO-CHAIR WARD noted that there will be a space for individual
reports by commissioners, which will be highlighted.
REPRESENTATIVE BRICE seconded the motion for discussion purposes.
COMMISSIONER WUERCH said this type of summary will go a long way
towards getting the recommendations read, whether it is in the
form of an executive summary or incorporated into the transmittal
letter. The question is: How much time will people spend
reading a 20-page document verses a 2-page document?
MR. PIGNALBERI said it would be appropriate to attach an
executive summary to the front of the report. However, his job
as staff is to ensure that the commission complies with statute,
which should be illustrated in a report.
COMMISSIONER FINK suggested that doesn't have to be recited in an
executive summary but could be in the appendix, which would
include the draft report.
COMMISSIONER ALLEN stated that there appears to be a lot of
duplication between the transmittal letter and Commissioner
Fink's recommended executive summary. He would like to see the
two incorporated, with the draft report as the appendix.
COMMISSIONER ALLEN made a motion to amend the initial motion to
incorporate the two with one transmittal letter, including the
findings and recommendations, and the report to the Governor, as
the appendix.
UNIDENTIFIED SPEAKER seconded the motion.
UNIDENTIFIED SPEAKER objected.
COMMISSIONER VALESKO explained his opposition to the amendment to
the motion. He said the draft report has not been thoroughly
discussed and considered; otherwise, he supports combining the
executive summary and the draft transmittal letter.
SENATOR ADAMS said he understands the draft transmittal letter
and will go along with what staff and Co-Chair Ward have
recommended.
CO-CHAIR WARD requested a roll call vote. The motion, as
amended, failed by a vote of 4-7. Senator Ward and Commissioners
Allen, Fink and Wuerch voted "yea." Senator Adams,
Representatives Cowdery and Brice, and Commissioners Harper,
Notti, Thomas and Valesko voted "nay."
UNIDENTIFIED SPEAKER suggested, as a friendly amendment to
Commissioner Fink's executive summary, to correct the number of
recommendations to reflect the actual number, and to include the
individual reports made by the commissioners.
CO-CHAIR COWDERY commented that he thinks the individual reports
are part of the report.
UNIDENTIFIED SPEAKER said there is room in the executive summary
to include a list of the recommendations but not individual
reports by the commissioners.
COMMISSIONER FINK said he would accept the suggestion as a
friendly amendment.
CO-CHAIR WARD asked Commissioner Fink to restate the original
motion.
COMMISSIONER FINK made a motion to include, in addition to a
transmittal letter, the findings and recommendations to the
governor and the legislature, as amended.
SENATOR ADAMS objected. He said he is happy with the report that
staff has prepared because no matter how a report is presented,
it will be thick but people interested in privatization will read
it.
CO-CHAIR COWDERY agreed.
COMMISSIONER ALLEN asked where the findings and recommendations
would go.
COMMISSIONER FINK said those would go behind the letter of
transmittal, titled "The Findings and Recommendations to the
Governor and the Legislature."
SENATOR ADAMS said he would like to see an area for each
commissioner to put a report, in order to express the minority
opinion, for example.
COMMISSIONER WUERCH made a motion to title the recommended report
by Commissioner Fink as "Summary of Findings and
Recommendations."
COMMISSIONER FINK accepted that as a friendly amendment.
SENATOR ADAMS objected.
CO-CHAIR WARD requested a roll call vote. The motion carried by
a vote of 9-2. Senator Ward, Representative Brice, and
Commissioners Allen, Fink, Harper, Notti, Thomas, Valesko and
Wuerch voted "yea." Representative Cowdery and Senator Adams
voted "nay."
[An unidentified speaker made a motion to adopt the draft report,
which was seconded by another unidentified speaker.]
CO-CHAIR WARD asked Mr. Pignalberi to address the concerns of the
gaps in the draft report.
MR. PIGNALBERI said the gaps in the draft report are information
that will come from the articles provided earlier to the
commissioners: for example, the pitfalls of privatization;
examples of privatization that have occurred in other cities,
states and countries; a budget number for procurement; and a
table illustrating the number of meetings that each subcommittee
held. The gaps would not include editorial comments. It is
simply a fleshing out of the material in order to give readers a
broader picture.
CO-CHAIR WARD announced that there is still a motion pending to
adopt the draft report as the appendix to the final report.
COMMISSIONER ALLEN stated that he fully supports the draft report
and asked that the commissioners adopt it. It is more along the
lines of information rather than any editorial comments, he
added.
CO-CHAIR WARD asked whether there was any objection.
UNIDENTIFIED SPEAKER objected.
COMMISSIONER VALESKO referred to Article VIII of the draft report
and asked for clarification on the second step. He thought the
commission had just taken action not to require the executive
branch to identify activities which are inherently governmental
and to privatize those that are not, he said.
CO-CHAIR WARD asked Mr. Pignalberi to comment on the discrepancy.
MR. PIGNALBERI said he will reconcile any inconsistencies in the
draft report with the actions of the commission. The commission
has voted to take that paragraph out of the transmittal letter,
he noted, but has not voted on the proposed legislation.
CO-CHAIR COWDERY stated that staff has put a lot of effort into
the draft report; therefore, the commission should just adopt it,
especially in light of the fact that staff will not be available
after today.
REPRESENTATIVE BRICE announced that his "no" vote on the adoption
of the draft report does not reflect his appreciation for the
work done by staff. However, in response to the concern
regarding Article VIII, the third step should be under the
recommendation section rather than included in the body of the
report. Otherwise, he supports a lot of what has been written.
COMMISSIONER FINK commented that there are a lot of things going
into the appendix that he and Representative Brice probably would
not approve of.
REPRESENTATIVE BRICE clarified that he thinks two of the
statements in Article VIII should be in the recommendations
section rather than in the body of the report. They are two
steps that he disagrees with.
CO-CHAIR WARD asked for a roll call vote. The motion carried by
a vote of 9-1. Senators Ward and Adams, Representative Cowdery,
and Commissioners Allen, Fink, Notti, Thomas, Valesko and Wuerch
voted "yea." Representative Brice voted "nay." [Commissioner
Harper was off-line.]
[The commissioners expressed appreciation to staff, each other,
and the public for their time and commitment to the issue of
privatization.]
CO-CHAIR WARD announced a press conference tomorrow [December 14,
1999] conducted by Mr. Pignalberi.
COMMISSIONER ALLEN suggested that the commission's time would be
wasted unless this issue is continued by the legislature.
COMMISSIONER VALESKO pointed out that the commission had only
looked at the state services that are not being provided by the
private sector. He suggested looking into state services that
are being performed by the private sector at an additional cost
to government.
TAPE 99-27, SIDE B
There being no further business before the commission, the
Commission on Privatization and Delivery of Government Services
was adjourned.
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