HOUSE FINANCE COMMITTEE April 14, 1994 8:30 a.m. TAPE HFC 94-124, Side 1, #000 - end. TAPE HFC 94-124, Side 2, #000 - end. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 8:30 a.m. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf ALSO PRESENT Representative Cliff Davidson; Nancy Bear-Usera, Commissioner, Department of Administration; Nancy Slagle, Director, Division of Budget Review, Office of the Management and Budget, Office of the Governor; Joe McCormick, Executive Director, Postsecondary Education Commission; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Bob Baratko, Director, Division of Administrative Services, Department of Revenue; Judith DeSpain, Deputy Executive Director, Alaska Housing Finance Corporation; Thomas C. Williams, Director, Alaska Permanent Fund Dividend Division; Will Gay, Executive Director, Alaska Housing Finance Corporation; Peter Bushre, Chief Financial Officer, Alaska Permanent Fund Corporation; Craig Tillery, Assistant Attorney General, Department of Law; Cheri Jacobus, Assistant Attorney General, Department of Law; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Steve Rice, Manager, Information Systems, Division of Family and Youth Services, Department of Health and Social Services; George Smith, Deputy Director, Libraries, Archives and Museums, Department of Education. SUMMARY INFORMATION HB 447 "An Act establishing the Afognak Island State Park." CSHB 447 (FIN) was reported out of Committee with 1 a "do pass" recommendation and with three zero fiscal notes, one by the Department of Public Safety, dated 2/4/94, one by the Department of Law, dated 2/4/94, and one by the House Finance Committee for the Department of Natural Resources. HB 535 "An Act making appropriations for capital project matching grant funds and for capital projects; and providing for an effective date." HB 535 was HELD in Committee for further discussion. HOUSE BILL NO. 447 "An Act establishing the Afognak Island State Park." CRAIG TILLERY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW testified in support of HB 447. He explained that the land, proposed for inclusion in the Afognak Island State Park, was originally acquired by the Exxon Valdez Trustee Council for restoration purposes. The Department of Interior subsequently sought the land for inclusion in a nearby national wildlife refuge. At the objection of the state trustees, the Council agreed to give the state of Alaska the first opportunity to acquire the land, on the condition that the land be placed in a state park within one year. The purchase was completed on November 23, 1993. He emphasized that the land must become a state park during this legislative session. He noted that the legislation has wide support. Representative Hanley provided members with AMENDMENT 1 (copy on file). He explained that Amendment 1 would provide that the land use agreement in place, and recognized in the sale agreement, be recognized by the Commissioner of the Department of Natural Resources. In response to a question by Representative Navarre, Mr. Tillery clarified that the road use agreement is between parties on Afognak Island that harvest the timber. The state will be a member of the road use agreement. Representative Hanley MOVED to ADOPT AMENDMENT 1. There being NO OBJECTION, it was so ordered. Representative Hanley MOVED to report CSHB 447 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Co-Chair Larson referred to the $17.0 thousand dollar accompanying fiscal note by the Department of Natural Resources. Mr. Tillery felt that the fiscal note was unnecessary. He suggested that interim 2 operations could be funded through the Exxon Valdez Trustee Council. Representative Hanley AMENDED the MOTION to adopt a zero fiscal note for the Department of Natural Resources. There being NO OBJECTION, it was so ordered. There being NO OBJECTION, CSHB 447 (FIN) was reported from Committee. Mr. Tillery assured, Representative Grussendorf, that the park would be passively managed. CSHB 447 (FIN) was reported out of Committee with a "do pass" recommendation and with three zero fiscal notes, one by the Department of Public Safety, dated 2/4/94, one by the Department of Law, dated 2/4/94, and one by the House Finance Committee for the Department of Natural Resources. HOUSE BILL NO. 535 "An Act making appropriations for capital project matching grant funds and for capital projects; and providing for an effective date." Co-Chair noted that the Department of Transportation and Public Facilities would not be presenting their overview. She further commented that there was no allocation in the capital budget for the Department of Education for school construction and major maintenance priorities. GOVERNORS'S OFFICE NANCY SLAGLE, DIRECTOR OF THE DIVISION OF BUDGET REVIEW explained the capital project requests for the Governor's office. * This budget request of $2,000.0 million dollars is directed towards the continued removal of architectural barriers within buildings occupied by state agencies. Recent federal legislation in the form of the "Americans with Disabilities Act" has imposed a mandate upon all public (governmental) agencies to eliminate those physical and procedural conditions which effectively discriminate against the disabled by January 26, 1995. This allocation would assist in bringing the state into compliance with the Americans with Disabilities Act. DEPARTMENT OF ADMINISTRATION COMMISSIONER NANCY USERA, DEPARTMENT OF ADMINISTRATION, explained capital project requests for the department. 3 * Statewide Administrative Manuals/Training This project request of $380.0 thousand dollars would allow the department to buy professional services to: develope video training programs; write and/or update all section of the Administrative Manual, the AKSAS User Manual; for the development of AKSAS and AKPAY training materials to use in conjunction with the manuals; and a technical and cost benefit analysis to determine the most cost effective format. * Applicant Tracking System - Final Phase This project request of $120.0 thousand dollars is to rewrite the nightly batch system in order to save data conversion costs. It will result in programs converted from COBOL to Natural utilizing of the new file structures. There was general discussion between Rep. Martin and Commissioner Usera regarding leasing practices. Commissioner Usera noted passage of SB 129 enabled the department to save money as a result of its ability to renegotiate costs. DEPARTMENT OF LAW CHERI JACOBUS, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW explained the capital project requests of the department. * This project request of $1,032.0 million dollars is to reauthorize CIP funding for federal litigation. This funding is needed to continue the services of three attorneys and one legal secretary currently funded by the FY 93 federal litigation CIP appropriation. It would also provide for the addition of two attorneys, two senior-level paraprofessionals, and two legal secretaries who will be needed in the litigation progresses. Cheri Jacobus listed the pending cases involving the federal government. Rep. Brown and Co-Chair MacLean questioned why this was a capital request and not in the operating budget. Ms. Jacobus explained that the need for request was not an ongoing operating cost to the department but had a limited use. DEPARTMENT OF REVENUE BOB BARATKO, DIRECTOR OF ADMINISTRATIVE SERVICES DIVISION, DEPARTMENT OF REVENUE explained the capital project request 4 and noted those on teleconference who could address specific areas of the request. WILL GAY, EXECUTIVE DIRECTOR OF ALASKA HOUSING FINANCE CORPORATION (AHFC) addressed the funding requests for AHFC. * Bethel Heights Reconstruction This project request of $5,200.0 million dollars in federal receipts would reconstruct 31 single family houses as one phase of a multi-year program to completely reconstruct a total of 117 single family homes in Bethel in order to bring them into compliance with applicable codes and energy considerations. * Cedar Park Housing Construction This request of $9,000.0 million dollars in state corporation receipts would rebuild the Cedar Park Housing structure. Inspections have revealed considerable evidence of water damage and dry rot, among many other structural problems. * Environmental Cleanup/Abatement This project request of $1,000.0 million dollars in state corporation receipts would provide funding for the removal of the old and deteriorating underground storage tanks (USTs). * Deferred Maintenance - Senior Citizens Housing This project request of $2,000.0 million dollars in state corporation receipts would provide funding for deferred maintenance of AHFC housing units in Fairbanks, Cordova, Seward, and Anchorage. The deferred maintenance would include such items as alarm system upgrades, replacement hardware for windows, deteriorated sidewalks, roof replacement, replacement of window curtains, broken and stained ceiling tile, carpet in community rooms, and elevator overhauls. In response to Rep. MacLean's concern regarding the Cedar Park project Mr. Gay noted that AHFC has to use HUD determined wages and use state procurement purchase requirements which adds 10% to 15% of the total cost of the project. Rep. Martin aired a concern regarding the expansion of Alaska Housing Finance Corp. and its potential interference with private enterprise. 5 * Beringvue Low Rent Housing This project request of $5,700.0 million dollars in federal receipts would place new foundations under the existing structures, renovate the interiors, add floor space, repair the underground utilities as well as meet Alaska Craftsman Home Project energy standards. * Etolin Heights Renovation and Remodeling This project request of $4,000.0 million dollars in state corporation receipts would renovate and upgrade the Etolin Heights Facility. These renovations and upgrades include making at least one unit handicap accessible, repairing of underground utilities, channeling water drainage properly and paving the parking area. * Public Housing Support This project request of $1,000.0 million dollars in state corporate receipts would renovate maintenance facilities in Nome and Juneau. * Energy Conservation Retrofit This project request of $1,000.0 million dollars in state corporate receipts would be used to retrofit buildings and utility systems in order to provide a more efficient functioning of utilities and thereby bring down energy costs. * Statewide Renewal and Replacement This project request of $220.0 thousand dollars would provide funds for the replacement and renewal of fire alarm systems, hearing and sight impaired alert system, and elevator repairs. This is an annual supplement to the operating budget of these projects and is based on a nationally recognized formula. Co Chair MacLean asked how the department established a priority list. The department responded by saying the priority list was established by internal discretion with staff determining greatest need. The items in the current request reflect that priority. JUDY DESPAIN, DEPUTY EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE CORPORATION explained the following projects requests for the department: 6 * Affordable Housing and Energy Efficiency This project request of $1,700.0 million dollars in federal receipts and $20,975.0 million dollars in state corporation receipts would be used to finance the Alaska Housing Finance Corporation to fund a weatherization project, using current funds as well as Department of Energy funds to provide these programs. $8.2 million of the $20,975.0 million dollars in corporation receipts would be used as matching dollars to the $41 million of federal funding received through the Regional Housing Authority to complete housing projects in rural Alaska. * Comprehensive Grant Program This project request of $9,500.0 million dollars in federal receipts is received each fiscal year to complete tasks planned for that year. The plan is a five year rolling base with a grant amount that is formula determined by the total number of AHFC units. Projects have begun at Cedar Park Annex, Mountain View in Juneau, Spruce Park in Fairbanks, Schoenbar in Ketchikan, Eyak Manor in Cordova, and Loussac Manor in Anchorage. Work is also anticipated in Wrangell. * Federal Grants and Special Needs Housing Programs This project request of $12,489.0 million dollars in federal receipts and $5,690.0 million dollars in state corporation receipts is to be used by the Alaska Housing Finance Corporation to apply for the U.S. Department of Housing and Urban Development, other state and federal agencies, and the private sector grants. The funds requested would be used as matching dollars for those grants. TOM WILLIAMS, DIRECTOR OF THE PERMANENT FUND DIVISION, DEPARTMENT OF REVENUE explained the capital project requests for the department. * Microfilm Equipment replacement and microfilming of all 1992 - 1990 auxiliary file records This project request of $359.3 in Permanent Fund Dividend Funds would replace microfilm equipment and fund the microfilming of all the divisions 1982 - 1990 auxiliary files. * Child Support Enforcement Information Systems 7 Enhancement This project request of $1,780.9 in federal receipts and $917.5 thousand dollars in general fund match would enable the department to achieve an appropriate level of automated functionality and most specifically, to make system modifications required to meet federal certification mandates by October, 1995. In response to Co-Chair MacLean's comments the department noted the General Fund match would be 90%. In response to Rep. Martin's question, the department said the project would need to be completed by October 1995. Rep. MacLean asked the department to provide justification for the match. In response to Rep. Brown's question the department explained that the wide area network system ties in CSED with the Department of Revenue and allow the division and the department to interface as well as cross check information. The department said that failure to comply with improvement could result in a $1.4 million dollar loss in funding from the federal government. * APFC Electronic Imaging and Document Retrieval PETER BUSHRE, CHIEF FINANCIAL OFFICER, PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE addressed the departments capital project request. This project request of $251.5 would provide for the design, acquisition and installation of electronic imaging software, compatible with existing local area network and accounting system. DEPARTMENT OF EDUCATION GEORGE SMITH, DEPUTY DIRECTOR, DIVISION OF LIBRARIES, ARCHIVES & MUSEUMS, DEPARTMENT OF EDUCATION explained the capital project requests for the division. * Library Materials and Equipment This project request of $200.0 thousand dollars in general fund dollars would purchase, update and maintain library materials such as reference materials, books, and periodicals. 8 * Public Library Construction This project request of $140.0 thousand dollars in federal receipts is pass through money used for library construction. This amount is appropriated to the library every year by congress. In response to Rep. Martin's comments regarding the possibility of charging a users fee to cover costs, Mr. Smith noted the fact that the primary users of the library are other government agencies. JOE McCORMICK, EXECUTIVE DIRECTOR, DIVISION OF POSTSECONDARY EDUCATION, explained the project requests for the division. * ACPE Intelligent Phone Dialing System This project request of $185.0 thousand dollars in state corporation receipts would purchase a Voicelink phone system in order to increase efficiency of client contact. * ACPE Expanded System Network and Enhancements This project request of $150.0 thousand dollars in state corporation receipts would provide for program expansion and enhancement of the Student Financial Aid data processing system. These enhancements would include the integration of family education loans, half-time loans, and federal grant assistance loans into the data processing system, refining and automating the deferment, forgiveness and forbearance processing and developing additional enhancements to adapt the system for use with special fees, penalty interest, late payments fees and origination fees. * Microfiche Equipment Replacement This project request of $130.0 thousand dollars in state corporation receipts would allow the Commission to purchase two fiche duplicators, one copier, workstations and partitions for records staff. A recent performance audit cited the Commission for it's failure to maintain and replace the microfiche equipment DEPARTMENT OF HEALTH AND SOCIAL SERVICES JANET CLARK, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES explained the project request of the department. She also noted that of the seventeen projects the department requested, the governor's budget supported two. 9 * This project request of $88.9 thousand dollars in federal receipts, and $800.0 thousand dollars in General Fund Match would fund ongoing renovation, repair, and equipment needs for the Department of Health and Social Services statewide. Specifically, included are twenty five DHSS owned facilities and eighty eight lease sites. Rep. Brown questioned the proposed $1.7 million for the Kenai Public Health Clinic. Janet Clark clarified the situation by explaining that the state currently has a lease with the city of Kenai for the Public Health center building but that building is not in compliance with Americans with Disabilities Act. Rather than renovating and remodeling the old building, the department is looking into purchasing the vacant court building. * Computer Systems Development This project request of $3,617.3 million dollars in federal receipts and $400.0 thousand dollars in general fund matching monies would fund two major DHSS computer systems: Family and Youth Services' MIS upgrade and Public Assistance's Eligibility Information System enhancements. * MIS Upgrade/Network Expansion This project request would purchase approximately 125 additional or replacement PCs, two additional LANS, peripheral equipment and software, software and hardware upgrades and expansion of the QAN to at least one additional DFYS site. This purchase will enable the department to come into compliance with the U.S. Department of Health and Human Services, Administration for Children and Families, new mandatory quarterly data reporting for adoption and methods for data transmission. By being in compliance with the federal requirements, the department is able to receive 75% of federal match funding. STEVE RICE, INFORMATION SYSTEMS MANAGER, DIVISION OF FAMILY YOUTH SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES addressed the $50,000 in personnel/travel expenses. One of the requirements for receiving the federal match is the assessment of other state systems to see if it is possible to transpose an existing system rather than developing from scratch. Travel expenses are to review systems in other states. 10 The $750,000 would address a needs assessment and would also include travel. In response to Rep. Martin's concern regarding the outdated computers and their use, Ms. Clark noted that the state has a surplus property requirement program. * Eligibility Information System Enhancement Project This project request for $2,417,300 in federal receipts would prolong the life of the Eligibility Information System and integrate technology which will increase user productivity and preserve accuracy in the delivery of public assistance benefits and services. These federal funds would not need to be matched with any local funds. * Public Health Lab Plan Implementation This project would begin to implement the recommendation of the 1994 Public Health Strategic Plan. Specifically, the project begins the initial facility planning program confirmation, and detailed financial feasibility analysis portions of the project. * Alaska Psychiatric (95) Stop Gap Repair This project request of $1,032.5 million dollars in GF/Mental Health Trust funds would fund ongoing stop gap repairs to the existing Alaska Psychiatric Institute while the replacement facility planning, design, and construction are underway. Specifically, the project will fund: priority interim fire/life safety; occupational safety and health and minor Americans with Disabilities Act upgrades. The project would also fund ongoing replacement of pipes, finishes , fixtures, fittings, and furniture that are broken or pose hazards to staff, public, and clients. ADJOURNMENT The meeting adjourned at 10:10 a.m. 11