SENATE BILL NO. 115                                                                                                          
                                                                                                                                
      An Act allowing expenses of the correctional industries                                                                   
      program  that may  be  financed  from  the correctional                                                                   
      industries fund to include the salaries and benefits  of                                                                  
      state employees.                                                                                                          
                                                                                                                                
 JERRY BURNETT,  DIRECTOR, ADMINISTRATIVE  SERVICES DIVISION,                                                                   
 DEPARTMENT OF  CORRECTIONS, stated  that SB  115 would  allow                                                                  
 the  administrative  costs  of the  Correctional  Industries                                                                   
 Program to  be  paid from  product  revenues instead  of  the                                                                  
 general fund.                                                                                                                  
                                                                                                                                
 Currently, 14 correctional  industry positions are paid  from                                                                  
 the general fund.  By  allowing employee salaries to be  paid                                                                  
 from the correctional industries  fund, the Department  would                                                                  
 be taking  the first  step toward  making the  program  self-                                                                  
 sufficient.                                                                                                                    
                                                                                                                                
 Mr.  Burnett  understood  that  Vice-Chair  Meyer  would   be                                                                  
 providing  a  committee  substitute,  which  originated  from                                                                  
 discussions in the House  State Affairs Committee on HB  161,                                                                  
 the  companion   bill.     The  purpose   of  the   committee                                                                  
 substitute, which  the Department would  support, would  make                                                                  
 it clear  that  the correctional  industries  will cooperate                                                                   
 with and  for  the benefit  of  the private  industry.    The                                                                  
 intent is to insure that  revenues could be increased  enough                                                                  
 to make it self-supporting.   Currently,  $960,000 dollars  a                                                                  
 year is paid in salaries.                                                                                                      
                                                                                                                                
 Representative  Stoltze  inquired  the  plans  for   the  Mt.                                                                  
 McKinley meat processing plant.   Mr. Burnett responded  that                                                                  
 at this point,  the Department of  Natural Resources  through                                                                  
 the  Division  of  Agriculture   will  support  the   product                                                                  
 manager's salaries  within  that plant.   The  Department  of                                                                  
 Corrections will  continue  to provide  security  and  inmate                                                                  
 labor.                                                                                                                         
                                                                                                                                
 Co-Chair Harris asked  if it was scheduled  to be shut  down.                                                                  
 Mr. Burnett  replied that  Department of  Corrections has  no                                                                  
 plans to make changes to that operation.                                                                                       
                                                                                                                                
 Co-Chair Harris  noted  that the  $960,000 dollars  would  be                                                                  
 shifted to  the  correctional industry  fund.   He  asked  if                                                                  
 currently,  the  Department   was  making  $960,000   dollars                                                                  
 through that system.  Mr. Burnett replied that at the  end of                                                                  
 FY03, it is expected that there will be approximately  a $400                                                                  
 thousand dollar  balance.  He  added that  the Department  is                                                                  
 looking  at  a  number  of  ways  to  increase  sales.    The                                                                  
 committee substitute  will  provide  more tools  to  increase                                                                  
 revenues.  He listed  measures that the Department  currently                                                                  
 has undertaken.  Recently,  the Department closed the  Juneau                                                                  
 Alaska Correctional Industries office, which consists  of two                                                                  
 people  and a  $50,000  dollar  a  year  grant  and  will  be                                                                  
 avoiding those costs.  He believed that the Department  would                                                                  
 be able to make the projected amount this year.                                                                                
                                                                                                                                
 Co-Chair Harris  reiterated his  question  if the Department                                                                   
 will make the targeted amount of $960,000 dollars this  year.                                                                  
 Mr. Burnett stated  that they  intent to make  that much  "in                                                                  
 the future".   He reiterated  that they  would be increasing                                                                   
 product sales  and would not  be competing  with the  private                                                                  
 sector.     Current   statute  requires   that  correctional                                                                   
 industries will  not compete with  the private  sector.   The                                                                  
 committee substitute makes that a more positive statement  in                                                                  
 regard to the private sector.                                                                                                  
                                                                                                                                
 Representative  Stoltze  asked  what  Mr.  Burnett  meant  by                                                                  
 "avoiding costs".  Mr. Burnett replied that was in reference                                                                   
 to reducing the  lease costs  and avoiding a  cost that  they                                                                  
 currently have been paying at $50,000 a year.                                                                                  
                                                                                                                                
 Co-Chair Williams indicated that the Committee would wait                                                                      
 for the committee substitute to be presented later this                                                                        
 afternoon.                                                                                                                     
                                                                                                                                
 SB 115 was HELD in Committee for further consideration.