HOUSE FINANCE COMMITTEE April 29, 1996 2:10 P.M. TAPE HFC 96-146, Side 1, #000 - end. TAPE HFC 96-146, Side 2, #000 - end. TAPE HFC 96-147, Side 1, #000 - end. TAPE HFC 96-147, Side 2, #000 - #552. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 2:10 p.m. PRESENT Co-Chair Foster Representative Martin Representative Brown Representative Mulder Representative Grussendorf Representative Navarre Representative Kelly Representative Parnell Representative Kohring Representative Therriault Co-Chair Hanley was absent from the meeting. ALSO PRESENT Alli Gordon, Staff, Senator Frank; Diane Worley, Director, Division of Family and Youth Services, Department of Health & Social Services; Anne Carpeneti, Assistant Attorney General, Criminal Division, Department of Law; Bill Ezzell, Deloitte & Touche LLP, Washington D.C.; Guy Patterson, Fairbanks; Leslie Drumhiller, Fairbanks; Judy Shiffler, Fairbanks; Mark Hickey, Alaska Railroad Corporation; Gary Anglan, American Federation of Government Employees; Senator Johne Binkley, Board Member, Alaska Railroad Corporation; Former Governor Bill Sheffield, Chairman, Board of Directors, Alaska Railroad Corporation; Jeff Cook, Mapco, Anchorage; SUMMARY HB 136 An Act mandating the sale of the Alaska Railroad; and providing for an effective date." CSHB 136 (FIN) was reported out of Committee with "no recommendation" and with a fiscal impact note by the House State Affairs Committee for the Department of Commerce and Economic Development. SB 112 An Act establishing a discovery royalty credit for 1 the lessees of state land drilling exploratory wells and making the first discovery of oil or gas in commercial quantities. SB 112 was rescheduled to another time. SB 186 An Act relating to partnerships; amending Alaska Rules of Civil Procedure 20 and 24; and providing for an effective date. CSSB 186 (L&C) was reported out of Committee with a "no recommendation" and with a fiscal impact note by the Department of Commerce and Economic Development, dated 3/18/96. SB 229 An Act relating to employment contributions and to making the state training and employment program a permanent state program; and providing for an effective date. SB 229 was rescheduled to another time. SB 289 An Act relating to runaway minors and their families or legal custodians. SB 289 was HELD in Committee for further consideration. HOUSE BILL NO. 136 "An Act mandating the sale of the Alaska Railroad; and providing for an effective date." Representative Martin, sponsor of HB 136, spoke in support of the legislation. He noted that the legislation was introduced in recognition of the tenth anniversary of the acquisition of the Alaska Railroad. He emphasized that land is available for transferred to the State of Alaska. He noted that the State paid the federal government $20.0 million dollars for the Alaska Railroad. He maintained that the State should assess what is the value of the railroad. The legislation would provide for a commission to assess the value of the railroad. He noted that the legislation was changed from providing for the sale of the railroad to a commission evaluating the asset. Representative Martin referred to the fiscal note. The fiscal noted by the House State Affairs Committee for the Department of Commerce and Economic Development would provide $250.0 thousand dollars. In response to a question by Representative Brown, Representative Martin noted that other assets are addressed 2 on page 4, lines 17 - 27. Representative Brown asked the status of the accompanying land. She asked if the land would become state land and be under existing procedures for disposal of state land. Representative Martin stated that the intent is to assess the extent of the assets and their current status. Representative Brown suggested that the land would fall under a default status. She expressed concern that the Commission would recommend procedures for the disposal to the State. She thought that the State would already be the owner. She observed that there are existing contracts. She asked if contracts are addressed. Representative Martin referred to a memorandum by George Utermohle, dated 11/9/92. He stated that he did not know the extent of contracts entered into by the Alaska Railroad Corporation. He noted that section (B) on page 5 addresses contracts. He reiterated that the intent is to determine what is there. Representative Brown questioned what would happen to assets that would not be part of the sale. Representative Mulder pointed out that the current version does not mandate a sale. The legislation will created a Commission to provide guidance and counsel. Representative Brown referred to page 4, line 19. She suggested that "recommend procedures for the disposal of" be changed to "inventory real property and contracts of the Alaska Railroad Corporation that are not necessary for the operation of the railroad, and make recommendations for their disposition." She stressed that the amendment would recognize that there are contracts attached to some of the real property that is not necessary for the operation of the railroad. Representative Mulder questioned if the addition of "possible" before disposal would alleviate Representative Brown's concerns. Representative Brown reiterated that her suggested language would clarify the section. She stressed that the current language refers to the specific conditions attached to the sale. Representative Brown MOVED to delete "recommend procedures for the disposal of" and insert "inventory real property and contracts of the Alaska Railroad Corporation that are not necessary for the operation of the railroad, and make recommendations for their disposition." There being NO OBJECTION, it was so ordered. 3 Representative Brown referred to page 2, lines 23 and 24. She noted that the contract for evaluation is exempt from AS 36.30, Procurement Code. Representative Mulder asked how long it would take to issue a request for procurement. He questioned if the procurement bid could be finished by the November 1, 1996 target date. Representative Martin stressed that there are a limited amount of people that specialize in railroad properties and functions. Representative Brown noted exceptions for professional services on page 2, lines 16 and 17. She questioned the need for this exception. She noted that (d) is out of railroad receipts, (c) states that it is subject to appropriation. She asked if subject to appropriation includes the $250.0 thousand dollar fiscal note. Representative Martin stated that the reference is to the $250.0 thousand dollar fiscal note. He noted that (c) and (d) would both be covered by the $250.0 thousand dollar fiscal note. Representative Brown asked why it was necessary to give consideration to persons with experience in corporate mergers and acquisitions. She questioned how many individuals would have the required experience. Representative Mulder stressed the logic of having persons with experience in business practices. Representative Brown stated that it would be at least as important to have people who are familiar with the local communities and the issue of land disposition. She emphasized that the needs of communities be taken into account. Representative Martin observed that a wide range of individuals and communities would want to participate. He emphasized that everyone will have opportunities in open meetings to express their concerns. Representative Therriault stated that it was unclear if all the individuals should have experience. He suggested that "at least one person" be inserted. Representative Martin stressed that all user groups cannot be represented on the Commission. He reiterated that all will be able to testify in open meetings. Representative Mulder pointed out that the language does not mandate that all members have experience. 4 Representative Brown questioned how open the Commission's proceedings would be. She noted provisions on page 5 that the Commission could discuss in executive session. She stressed that it could be argued under subsection (1) that the entire conversation has an adverse effect on the Alaska Railroad Corporation's finance. She added that subsection (5) and (6) would cover large portions of the discussions. She maintained that the whole conversation could take place in secret. She asserted that it is a valid concern that public members be involved. She questioned why land acquisition or disposal needs to be included in allowances for executive session. Representative Martin expressed concern that the discussions be open. He pointed out that page 2, line 1 states that the Commission "shall" give consideration to the appointment of persons who have experience involving corporate mergers and acquisitions. Representative Therriault MOVED to delete "persons who have" and insert "at least one person who has" experience on page 2, line 1. There being NO OBJECTION, it was so ordered. Representative Martin emphasized that it is important to know what is available. He observed that the language on page 5, lines 7 - 19 is taken from the Corporation's by laws. Representative Therriault questioned if the Corporation's concerned regarding negotiations currently under discussion for purchase of or disposal of a piece of property. He stated that the language could be expanded to clarify that only those things that are currently in negotiation would be allowed discussion under executive session. Representative Therriault expressed support for the addition on page 5 line 15, of "currently under negotiations." He added that consideration should be given to the customer or customers that pay the majority of the freight costs. Representative Parnell MOVED to adopt Amendment 3 (copy on file). He explained that the amendment would require that reports be given to the Speaker of the House and the President of the Senate as well as the Governor. The amendment would also require that copies of the report be made available for the public. There being NO OBJECTION, it was so ordered. BILL SHEFFIELD, FORMER GOVERNOR, CHAIRMAN, BOARD OF DIRECTORS, ALASKA RAILROAD CORPORATION testified via the teleconference network. He noted that a number of 5 individuals were interested in testifying on the legislation. He gave a brief history of the creation of the railroad. He noted that the State purchased the railroad to obtain ownership of an important transportation corridor in the Interior of Alaska. He noted that the railroad was built to allow expansion where needed. He maintained that the railroad is a performing asset. He observed that the railroad has only lost money in two years while under ownership by the State. He asserted that the railroad will continue to make a profit. He emphasized that the railroad is a major player in the State's economy. (Tape Change, HFC 96-147, Side 2) Mr. Sheffield noted other functions of the Alaska Railroad. He emphasized that the Corporation is developing real estate. He discussed land managed by the Corporation. He observed that all the land was transferred to the State owned Corporation. If the Corporation is disposed of then the land would also have to be disposed. He stressed that the sale raises public questions. Mr. Sheffield stated that he is opposed to the sale of the Alaska Railroad. He maintained that the membership of the Commission is too small. He did not think that a five member commission would allow for sufficient representation. He maintained that it is wrong to require the Corporation to pay for a fast track appraisal. He noted that the federal government paid $850.0 thousand dollars for the first cut of an appraisal of the fair market value of the Alaska Railroad in 1984. Mr. Sheffield emphasized that money spent for an appraisal will reduce funding available for railroad ties and other expenses. Mr. Sheffield stressed that the Corporation could convene a Committee to address the issue and make recommendations. Mr. Sheffield viewed plans for expansion and improvements. He discussed efforts to obtain federal funds for passenger service. He clarified that the reversionary clause is in relationship to the land ownership. He noted that if there were a sale of the railroad prior to ten years then the difference between what was paid for the railroad and what was received for the railroad would go to the federal government. After ten years any profits would remain with the State. Mr. Sheffield reiterated that the Corporation could appoint a committee consisting of legislators, users and the public to address the issue at no cost to the State. Representative Therriault referred to page 5, line 15. Mr. 6 Sheffield observed that lines 7 - 15 are in the Corporation's by-laws. He acknowledged that some of the items are more important than others in regards to confidentiality. He stressed that matters related to personnel or finances are of most concern. Representative Brown questioned if the discussion of the possible sale of the railroad would have an adverse effect on the finances of the railroad. Mr. Sheffield responded that discussion of the sale could have an adverse effect. Representative Brown observed that the Commission is not the same as the Board of the Alaska Railroad Corporation. She acknowledged that the Corporation would want to keep items (1) - (7) in executive session. She maintained that there should be a different standard for the Commission than for the Board. Mr. Sheffield acknowledged that some of the items could be revised. JEFF COOK, VICE PRESIDENT, EXTERNAL AFFAIRS AND ADMINISTRATION, MAPCO PETROLEUM testified via the teleconference network. He noted that Mapco paid the railroad approximately $23 million dollars in 1995. He stressed the need for efficiency. He expressed concern about any sale of the railroad. He emphasized that Mapco has an excellent relationship with the railroad. He stressed the quality of service and partnership. He expressed concern that the Commission's membership is too small. He questioned if the Commission should first see if it is in the State's best interest to sell. He stated that the provisions of subsection (g) would best be addressed if a decision is made to pursue a sale. He stressed that the Commission should be big enough to represent the diverse users that have an interest in the railroad. He reiterated that he did not see a reason for the sale. JOHNE BINKLEY, EX-SENATOR, BOARD MEMBER, ALASKA RAILROAD CORPORATION testified via the teleconference network. He spoke in opposition to the legislation. He observed that the railroad has been instrumental in the development of Fairbanks. He stressed that the railroad is an important transportation corridor. He maintained that the railroad should not be sold. He asserted that the railroad is an important asset that should be protected. He stated that he has been impressed with the management of the Alaska Railroad. He observed that the railroad made a profit in the current year. He stressed that the Board protects the public's interest. He agreed that the Board should look at the issue. He observed that $250.0 thousand dollars could be used to purchase needed equipment. 7 GARY ANGLAN, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES (AFGE) testified via the teleconference network. He noted that AFGE represents many of the employees on railroad property. He expressed concern with the legislation. He noted that the transfer from the federal government was an agonizing experience for the railroad employees. He noted that employees were retained in the Civil Service Retirement System during the transfer in 1985. He emphasized that the stress and uncertainty that accompanied the transfer resulted in the loss of qualified employees. He noted that there was an unfunded liability for the employees in the Civil Service Retirement System. He emphasized the difficulty of ascertaining the unfunded liability for these employees. He maintained that in the advent of a sale the new owner should assume the cost of the employee's participation in Civil Service Retirement System. He noted that employee unions are actively engaged in collective bargaining. He stated that the discussions regarding sale of the railroad is having a destablizing effect on the negotiation process. He asked if the railroad is currently running okay and what is the potential to Alaska if the railroad was free of legislative interference and regulation. He noted that the railroad received $10.0 million dollars for tie upgrades. He asked the total worth of these improvements for future operations. He observed that Governor Sheffield indicated that the railroad would fall apart if this money is not spent. MARK HICKEY, ALASKA RAILROAD CORPORATION discussed item (6) on page 5, line 15. He stated that the additional language recommended by Representative Therriault should not create a problem. Representative Therriault asked if a problem would be created if (6) was deleted. Mr. Hickey pointed out that the language is not mandatory. He stated that there could be a matter pending that would need to be discussed in executive session. Representative Martin stressed that once the guidelines are placed into law there would be a greater barrier. (Tape Change, HFC 96-147, Side 1) Representative Brown referred to subsection (1) on page 5. She suggested that "except as related to the potential sale," be added to the beginning of line 7. She stressed that it should be clear that discussions should take place in public. Mr. Hickey stated that the intent is clear that to the extent possible the proceedings are to be public. He emphasized that subsection (1) states, would "clearly" have 8 an adverse effect upon the finances of the Alaska Railroad Corporation. He emphasized that assuming that the Commission intends to operate to the extent practical in a public way, that the language is adequate. He observed that the application of the Corporation Act in relating to its work with the Commission needs to be considered. Representative Brown clarified that her concern is that the Corporation, with all its concerns, by laws, and practices will want to go into executive session in its discussions with the Commission. Representative Brown referred to subsection (5) on page 5, line 14. She suggested the addition of "current litigation involving the Alaska Railroad Corporation". She stated that the entire issue addresses the legal position of the Alaska Railroad Corporation. Mr. Hickey stressed that current litigation may be too narrow. He observed that there could be legal matters pending. Mr. Sheffield noted that the Corporation discusses in executive session matters under litigation and matters that may be potential subjects for litigation. Mr. Sheffield noted that $250.0 thousand dollars represents 25,000 railroad ties or 40 miles of track. HB 136 was HELD in Committee for further consideration. SENATE BILL NO. 186 "An Act relating to partnerships; amending Alaska Rules of Civil Procedure 20 and 24; and providing for an effective date." BILL EZZELL, PARTNER, DELOITTE & TOUCHE LLP testified via the teleconference network. He spoke in support of SB 186. (Mr. Ezzell's complete written remarks are on file.) He noted that 41 states have passed limited liability partnership (LLP) legislation. He noted that in a general partnership, all the partners are personally liable for all the obligations of the partnership and for damages caused by the actions of any other partner acting in the scope of the partnership business. In a LLP, a partner is not personally liable for those partnership obligations arising out of negligence, wrongful acts, wrongful omissions, malpractice or misconduct committed by another partner of the partnership. The partnership itself remains fully liable to the extent of its assets, capital and insurance for the obligations of the partnership. Personal assets of the 9 partner or partners directly involved in the negligent acts that cause the obligation are not protected by the LLP status. The legislation provides for insurance or other financial assets to be set aside to substitute for the personal assets of any partner not involved in acts causing the obligation. Mr. Ezzell compared LLP's to limited liability corporations. He maintained that other forms of organization provide greater protections of personal assets of their owners. Representative Therriault observed that similar legislation was passed on limited liability for corporations. Limited liability partnerships were not included. Mr. Ezzell noted that protections offered a partner are not as extensive as protections afforded a share holder in a limited liability company. The legislation would provide a similar form for partnerships. Representative Martin MOVED to report CSSB 186 (L&C) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSSB 186 (L&C) was reported out of Committee with a "no recommendation" and with a fiscal impact note by the Department of Commerce and Economic Development, dated 3/18/96. HOUSE BILL NO. 136 "An Act mandating the sale of the Alaska Railroad; and providing for an effective date." Representative Therriault MOVED to delete subsection (6) on page 5, line 15. There being NO OBJECTION, it was so ordered. Representative Brown MOVED to delete "the legal position of the" and insert "current or potential litigation involving." There being NO OBJECTION, it was so ordered. Representative Therriault MOVED to report CSHB 136 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Brown OBJECTED. She noted that the legislation is structured into two parts. Section (f) provides for a determination of best interest. Section (g) contains the particulars related to the determination to sell. She asserted that subsection (3) on page 4, lines 17 and 18 should be moved under section (f). She noted that subsection (3) allows for a broader 10 interpretation. Representative Therriault WITHDREW his motion to move CSHB 136 (FIN). There being NO OBJECTION, it was so ordered. Representative Brown MOVED to move subsection (3) on page 4, lines 17 and 18 to be placed under section (f) on page 2, line 31. There being NO OBJECTION, it was so ordered. Representative Kohring MOVED to report CSHB 136 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. A roll call vote was taken on the MOTION. IN FAVOR: Kohring, Martin, Mulder, Parnell, Therriault, Foster OPPOSED: Brown, Navarre Co-Chair Hanley and Representatives Kelly and Grussendorf were absent for the vote. The MOTION PASSED (6-2). CSHB 136 (FIN) was reported out of Committee with "no recommendation" and with a fiscal impact note by the House State Affairs Committee for the Department of Commerce and Economic Development. SENATE BILL NO. 289 "An Act relating to runaway minors and their families or legal custodians." Members were provide with a proposed committee substitute, Work Draft 9-LS1635\D, 4/27/96 (copy on file). JUDY SHIFFLER, FAIRBANKS testified via the teleconference network. (Ms. Shiffler's written testimony is on file.) She expressed concern that section 6 of the proposed committee substitute on page 5 would not adequately slow down or stop the revolving door. She stated that SB 289 needs to provide clear and immediate consequences. She stressed that the section allows to much time to pass before consequences occur. She maintained that the bills should be designed as an early intervention measure. She emphasized that the bill does not replace other facilities that troubled kids can turn to on a voluntary basis. GUY PATTERSON, FAIRBANKS testified via the teleconference network. He observed that there are two classes of children. The abused child that is running from an abusive situation and those that are out on the street because they 11 do not want to follow their parent's rules. He maintained that children are encouraged to run away by other kids. He suggested that the process be simplified. He emphasized that it should not be assumed that the parents are at fault. He stated that when the State takes custody the State should provide a safe place. He maintained that the State should know where the child is in the middle of the night. He spoke to the expense of lock up facilities. He asserted that children would not leave home if they knew that they would be placed in lock up facilities. In response to a question by Representative Brown, Mr. Patterson clarified that Fairbanks does not have children on the streets that are under 12 years old. LESLIE DRUMHILLER, FAIRBANKS testified via the teleconference network. She noted that she is the parent of a 15 year old runaway. She recounted experiences with her child. She emphasized that early intervention can protect children. She stressed that the threat of lock up can persuade children to seek help. (Tape Change, HFC 96-147, Side 2) ALLISON GORDON, STAFF, SENATOR FRANK testified in support of SB 289. She observed that the legislation was introduced to address the growing concern among parents for the safety of their runaway children. She maintained that: "The runaway epidemic is a significant problem in our communities that needs serious consideration. The overwhelming frustration parents currently feel can be best attributed to the lack of support they receive from the government. Parents are held accountable for their children's actions yet they are not given the necessary tools to exercise authority and instill guidance in their children's lives. Current law provides minors with the ability to thumb their noses at figures of authority, whether they be parents, teachers, law enforcement or otherwise. Their freedom is guaranteed and they have learned how to exploit and manipulate the system in order to get what they want. We feel that parents should be the ones who should decide what is best for their children and be able to nurture and guide them in a manner they see fit until the child is old enough to make their own decisions, support themselves, and be on their own. Senate bill 289 tightens existing law in an attempt to close the revolving door that currently allows runaways the freedom to avoid having to abide by rules and parental authority." Ms. Gordon noted that the legislation strengthens the language within AS 11.51.130 regarding contributing to the delinquency of a minor. "By discouraging people from harboring runaways, it will compel these children to take 12 advantage of available services that are necessary for assessing the individual's situation and beginning the process of reconciliation with the child's family." Ms. Gordon stressed that the legislation clarifies that a police officer's first course of action, after picking up a runaway, will be to take that child back to his or her parents unless the officer believes that there has been abuse to the minor. If the parent will not accept the child, then the second course of action will be to take the minor to a safe place agreed to by the parent. If this cannot be accomplished then the police officer must take the child to a semi-secure shelter for assessment of the child's situation and determination of the course of action that is in the best interest of the child. Ms. Gordon noted that various ways to address the secure placement of a minor who is a habitual runaway were addressed. The version that passed the Senate would place runaways who run from placement in semi-secure shelters into secure placements. This provision jeopardized OJJDP funding from the federal government in the amount of $600,000. The Department of Health & Social Services also attached an extremely high fiscal note. Ms. Gordon noted that members were provided with a proposed committee substitute, Work Draft 9-LS1635\D, dated 4/29/96. This version authorizes law enforcement to temporarily detain a minor who has fled from a semi-secure shelter pending a court hearing to ascertain whether probable cause exists to conclude that the child is a child in need of aid. At the hearing the court is required to determine placement of the minor and to order that minor to remain in that placement. If the minor runs from placement they will be in violation of a court order and will be picked up and detained in a secure environment, thus shutting the revolving door. ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW expressed concern with revisions to the Contributing to the Delinquency of a Minor statute on page 3. She urged the Committee to change this provision to make it easier to prosecute individuals who contribute to the delinquency of a minor and encourage children to be absent from the custody of their parents. She stressed that "just cause" needs to be defined. She observed that new language on page 3, line 30 - page 4, line 1 is not clear enough. She noted that it is easier to prove lack of knowledged than lack of permission. She suggested that on page 3, line 1 after "custodian" that "or without the knowledge of the parent, guardian or custodian" be added. Representative Parnell pointed out that Representative Kelly has an amendment to 13 that effect. Ms. Carpeneti referred to page 6, lines 10 and 11. She noted that the Court can order the child to remain in the custody of the parents or another party without a finding of probable cause if the child is a child in need of aid. She stated that this language is problematic. Under AS 47.10.010(A)(2)(a) a finding of probable cause is needed for the court to have jurisdiction over the issue and child. Ms. Carpeneti observed that page 4, lines 21 - 25 takes away the provision that the sole fact that the child is a runaway is not enough to justify emergency custody. She stated that it is unclear of the effect of this deletion. Ms. Carpeneti suggested that on page 6, line 9 that the court when making its order, should specify the terms and conditions that must be followed by the minor and the parent or guardian. She observed that there are cases where the parents are as much of the problem as the child. DIANE WORLEY, DIRECTOR, DIVISION OF FAMILY AND YOUTH SERVICES clarified that the Division supports the House Judiciary version of SB 289. She expressed concerns with the proposed committee substitute. She acknowledged the need for legislation. She stated that the Division supports parents having more control over their children. She asserted that some of the new amendments are going to complicate the issue and set up false expectations. She emphasized that the State cannot make children follow the rules any more than the parents can. The State can provide early intervention, counseling and support. Ms. Worley referred to page 2, lines 12 - 14. She emphasized that the requirement that the Division take emergency custody of a minor who has previously left a semi- secure program without permission would take away any discretion from the Department. She noted that there are no cases where the Division is currently required to take a child into custody. She observed that language on page 5, lines 27 - 30 also removes discretion from the Division. Ms. Worley expressed concern that if children know that they will be detained and taken into state custody if they run from semi-secure shelters that they will not use the shelters. She acknowledged frustration of parents with the revolving door syndrome. She emphasized that semi-secure shelters provide safety for children that would be on the streets. Children have the opportunity for counseling and intervention services in the semi-secure shelters. Representative Therriault noted that children often go to 14 shelters only after being picked up by enforcement officers. Ms. Worley agreed and added that the police will have to take the child home. Children will only go to a shelter if the parent refuses to accept the child. She maintained that many children use the Family Focus shelter in Fairbanks on a voluntary basis. She noted that all the children at Covenant House in Anchorage are voluntary. Ms. Worley observed that the legislation will only apply to children that are running from a semi-secure facility. Only five facilities around the State would be under the mandate to become semi-secure. She observed that children in other parts of the State will not be affected by the law. Ms. Worley referred to page 7, lines 9 - 12. She observed that Covenant House operates on a voluntary basis. This language would exempt Covenant House from the provision to maintain a semi-secure facility. She noted that Covenant House stated that they would end operations if they were forced to operate a semi-secure facility. She pointed out that Covenant House serves 84 percent of the State's runaways. Ms. Worley summarized that the Division supports tougher consequences for adults that harbor runaways and more parental involvement and responsibility. The Division has concerns regarding the mandate to take runways into protective custody. Representative Mulder asked if the fiscal note would change. Ms. Worley estimated that it would cost $250.0 thousand dollars to implement the proposed work draft. This represents an increase of three social workers, two in Anchorage and one in Fairbanks. Representative Martin spoke in support of the provision exempting Covenant House. Ms. Gordon noted that language on page 2, lines 13 - 15 was a drafting oversight based on a previous version. She observed that the requirement that the Division take children into emergency state custody was removed. She observed that this provision should be deleted. She added that the Department of Health & Social Services is instructed to file a child in need of aid petition with the court. The legislation requires that a law enforcement officer take into protective custody a minor that has fled from a semi-security shelter. A minor that has fled a semi- secure shelter after placement could be arrested as a delinquent and could be detained under AS 47.10.080. Representative Therriault noted Representative Kelly's 15 intent to delete (4) on page 2, lines 3 - 5 and lines 12 - 15. Ms. Worley clarified that the requirement to file a petition is a higher standard than the Division is currently under for child in need of aid cases. Ms. Gordon responded that the sponsor feels that something needs to be done to require the Department to take action in these situations. SB 289 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 5:02 p.m. 16