HOUSE FINANCE COMMITTEE February 18, 1993 1:40 p.m. TAPE HFC 93-26, Side 1, #000 - end. TAPE HFC 93-26, Side 2, #000 - 309. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 1:40 p.m. PRESENT Co-Chair Larson Representative Hoffman Representative Martin Representative Navarre Representative Therriault Representative Grussendorf Representatives Brown, Foster, Hanley, Parnell, Therriault and Co-Chair MacLean were absent from the meeting. ALSO PRESENT Cheryl Frasca, Division Director, Office of Management and Budget, Office of the Governor; Duane Guiley, Finance Director Department of Education; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Jan Hansen, Director, Division of Public Assistance, Department of Health and Social Services; Richard Pegues, Director, Division of Administrative Services, Department of Law; Rod R. Mourant, Special Assistant, Department of Revenue. SUMMARY HB 135 "An Act making supplemental and special appropriations for the expenses of state government; making, amending, and repealing capital and operating appropriations; and providing for an effective date." CHERYL FRASCA, DIVISION DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR noted that the supplemental request totals $40,500.0 million general fund dollars. She reviewed HB 135 by section: DEPARTMENT OF ADMINISTRATION 1 * Sec. 1 Longevity Bonus - $1,340.3 million dollars Additional funds are requested to cover the cost of increased applicants. The Governor's proposal will not decrease appropriations until FY 96. Representative Martin asked that Ms. Frasca identify which supplemental requests have been adjusted into the FY 94 Operating Budget. (FY 93 Authorized and supplemental appropriations have been added together for the FY 94 requested total.) Ms. Frasca noted that sec. 1 has been adjusted for in the FY 94 budget. * Sec. 2 Public Defender - $383.0 thousand dollars This represents operating costs unfunded in the current budget. Sec. 2 has been adjusted for in the FY 94 Operating Budget. Thirty percent of the Public Defender's cases are civil. Criminal cases represent 70 percent of the cases. * Sec. 3 RATNET - $200.0 thousand dollars Anticipated savings were not realized in the FY 93 Operating Budget. Competitive bids for uplink services were delayed. Savings are anticipated in FY 94. If the appropriation is not approved service could be discontinued for the final two months of fiscal year FY 93 or daily service could be drastically curtailed. * Sec. 4 Personnel Board - $64.0 thousand dollars Increased hearings have resulted in a shortfall. This appropriation will pay for special counsel and a hearing officer. * Sec. 5 Office of Public Advocacy - $616.4 thousand dollars The Office of Public Advocacy caseload has increased by 19 percent in FY 93. Sec. 5 has been adjusted for in the FY 94 Operating Budget. Co-Chair Larson noted that 18 percent of the cases are for criminal defense and 82 percent are for child abuse cases. Ms. Frasca observed that HB 65 contains provisions to alter the Office of Public Advocacy's responsibilities. (See section 2.) 2 * Sec. 6 Elected Officials Retirement - $30.4 thousand dollars There has been an increase in former elected officials who have elected to collect retirement. Increased health costs are also included. Co-Chair Larson asked if the Legislators' retirement is based on current salaries. Ms. Frasca was unable to answer. Representative Navarre clarified that only legislators that elected to join the system during the years 1974 -1976 are included. * Sec. 7 Leasing of State facilities - $642.9 thousand dollars Representative Martin pointed out that agencies should be encouraged to seek less expensive leasing space. DEPARTMENT OF LAW * Sec. 8 Prosecution - $400.0 thousand dollars Reductions resulted in the elimination of three prosecutors and three support staff positions. The Governor felt that prosection activities would be adversely affected and elected to seek supplemental funding. Sec. 8 has been adjusted for in the FY 94 Operating Budget. * Sec. 9 Oil and Gas Litigation - $6.6 million dollars Representative Navarre observed that the Permanent Dividend Fund pays 25 percent of litigation costs under the assumption that the Fund will benefit from settlements. He asked if 25 percent of the proceeds are returning to the Fund. Co-Chair Larson asked if additional litigation cases are pending. RICHARD PEGUES, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF LAW replied that all the potential tax cases are not underway. Representative Hoffman noted that the Department of Law has a $8.8 million dollar reduction in FY 94. Ms. Frasca stressed that it is impossible to project the actual level of litigation. She observed that several cases have been resolved. 3 * Sec. 10 FCC Telephone Proceeding - $280.0 thousand dollars The request will pay legal counsel in telecommunications proceedings. Proceedings will decide how long distance rates will be apportioned between outside carriers. * Sec. 11 Subsistence Legislation - $35.0 thousand dollars This will pay for the enactment of subsistence legislation which was paid for during the Second Special Session of the Seventeenth Legislative Session. Regulations will be drafted and implemented to reflect the subsistence legislation. * Sec. 12 Judgement and Claims - $1,087.7 million dollars The Southeast Conference judgement award is included in this request. DEPARTMENT OF REVENUE * Sec. 13 Income & Excise - $325.0 thousand dollars Unallocated reductions resulted in a backlog of cases. Sec. 13 has been adjusted for in the FY 94 Operating Budget. ROD MORANT, ASSISTANT COMMISSIONER, DEPARTMENT OF REVENUE clarified that five positions were eliminated in FY 93. He observed that $50.0 thousand dollars will go to personal services, $25.0 thousand dollars for travel and $250.0 thousand dollars in contractual costs for additional researchers. Returns beyond 1985 and 1986 have not been audited. Issues in oil and gas that need to be researched go back to 1976. Older audits will be forgone without funding. Mr. Morant agreed that there are additional cases to be instigated. DEPARTMENT OF EDUCATION * Sec. 14 Foundation Program - $6,427.1 million dollars This represents an increase in enrollment in grades K - 12. 4 Co-Chairman Larson noted that as enrollment in special education and vocational education increases that school districts enrollments are not being met. DUANE GUILEY, FINANCE DIRECTOR, DEPARTMENT OF EDUCATION noted that the federal definition of special education is expanding. The State of Alaska services gifted and talented and handicapped students as special education students. Increases to the Special Education Program represents $5,184.0 million dollars. Of this amount, $5,141.7 million dollars go to Anchorage, Fairbanks and Juneau. There has been a 184 student decrease in enrollment based upon school district projections. He acknowledged that school districts also receive federal funds directly. * Sec. 15 Postsecondary Commission - $98.5 thousand dollars The WAMI Program is short funded due to an accounting error. A FY 92 billing was paid out of FY 93 accounts. The amount was lapsed from FY 92. * Sec. 16 Ratification and amendment of prior year expenditures - $0 Errors resulting from conversions in the state accounting system in 1985 will be cleared. DEPARTMENT OF HEALTH AND SOCIAL SERVICES * Sec. 17 Aid to Families with Dependent Children (AFDC) - $3,203.5 million dollars This request will cover shortfalls due to caseload increases and the Cost of Living Allowance (COLA). Legislation to suspend the COLA failed to pass the Second Session of the Seventeenth Legislature. JAN HANSEN, DIRECTOR, PUBLIC ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES pointed out that HB 67 contains provisions to suspend the COLA for one year. * Sec. 18 Adult Public Assistance (APA) - $1,671.1 million dollars This request will cover shortfalls due to caseload increases and the Cost of Living Allowance (COLA). Legislation to suspend the COLA failed to pass the Second Session of the Seventeenth Legislature. (Tape Change, HFC 93-26, Side 2) 5 Ms. Hansen interjected that of those receiving AFDC benefits nine percent have been in the State for less than one year. In 1985, six percent of those receiving AFDC benefits had been in the State less than one year. Of those applying for benefits 15 - 20 percent have been in the State for less than one year. She observed that surveys by the Department of Health and Social Services showed that the primary reason new clients moved to the State was to seek employment. Ms. Hansen stressed that funds were not transferred from this BRU to the Commissioner's Office for travel. Ms. Hansen observed that AFDC makes an average of 12,485 monthly payments to households. APA average monthly payments reach 8,908 households. * Sec. 19 Medicaid Facilities - <3,808.9 million dollars> This amount will return to the General Fund due to a caseload decrease. * Sec. 20 Public Assistance eligibility Determination - $77.9 thousand dollars There has been an increase in caseload. * Sec. 21 JOBS Program - $195.0 thousand dollars This request will pay for child-care costs while Public Assistance clients are engaged in education, training and employment related activities. * Sec. 22 Public Assistance Data Processing - $174.0 This is the result of increased use of the State's mainframe computer system as a result of increased caseloads. * Sec. 23 Medical Assistance Administration - $187.5 thousand dollars The State has reduced medicare dollars through increased screening. There has been an increase in administrative costs associated with the screening process. * Sec. 24 Foster Care - $1,100.0 million dollars Four hundred thousand dollars are the result of an 6 increased number of placements. In addition, there has been a delay in the start of anticipated federal programs that will subsidize state costs. Savings will be realized in FY 94. * Sec. 25 McLaughlin Youth Center - $110.0 thousand dollars This request is the result of an increase of contractual costs due to the expansion of facilities. * Sec. 26 Post Mortem Exams - $229.6 thousand dollars This is the result of an increased number of court ordered autopsies. * Sec. 27 Bloodborne Pathogens - $155.9 thousand dollars This is the result of the implementation of federal requirements. HB 135 was HELD in Committee. ADJOURNMENT The meeting adjourned at 2:40 p.m. 7