Legislature(2025 - 2026)ADAMS 519
03/20/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB53 || HB54 | |
| HB10 | |
| HB36 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 53 | TELECONFERENCED | |
| += | HB 54 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 10 | TELECONFERENCED | |
| += | HB 36 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 53
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making supplemental appropriations;
making reappropriations; making appropriations under
art. IX, sec. 17(c), Constitution of the State of
Alaska, from the constitutional budget reserve fund;
and providing for an effective date."
HOUSE BILL NO. 54
"An Act making appropriations, including capital
appropriations and other appropriations; making
reappropriations; making appropriations to capitalize
funds; and providing for an effective date."
2:51:15 PM
Representative Johnson asked if a Committee Substitute (CS)
would be heard.
Co-Chair Josephson responded that it would not be heard
today.
2:51:44 PM
LACEY SANDERS, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
introduced the PowerPoint presentation "Office of
Management and Budget FY2026 Governor Amended Budget,"
dated March 20, 2025 (copy on file). She began on slide 2
and the updated fiscal summary which incorporated the
amendments for FY 25 and FY 26. The summary also
incorporated the updated spring revenue forecast from the
Department of Revenue (DOR). She began by speaking about FY
25. The grand total for supplementals was $460 million, and
$91.4 was Unrestricted General Funds (UGF). The capital
supplementals totaled $500,000 of UGF and $69.9 thousand
for total funds. There was a grand total of $91.4 million
of UGF and $529.8 million for all funds. The surplus
deficit was at the bottom, and with the addition of the
supplementals the overall deficit was just under $165
million.
Ms. Sanders continued that for FY 26, the overall total for
operating amendments was brought to $314.7 million, $46.2
million of which was UGF. For capital amendments, the total
was $12 million, with $11.6 million in UGF. With the
addition of the amendments that had been submitted earlier,
the overall deficit was brought to $1.65 billion.
Ms. Sanders continued to slide 3 to address the newly
submitted amendments. On March 5, there was a packet of
amendments that was submitted to the legislature to address
Executive Order (EO) 136, that would have created the
Department of Agriculture. The amendment packet had
reversed out the total of $2.7 million for the addition of
13 positions and provided a transfer of existing vacant
positions to support the EO.
Ms. Sanders continued that in the March 13 amendments there
were 3 packets of bargaining unit agreements or salary
adjustments. There were three agreements put forward. The
first was under the Department of Corrections (DOC) and
involved the Alaska Correctional Officers Association
(ACOA) had an agreement as a result of an interest
arbitration award that provided an 11 percent increase for
FY 26 that totaled $14.4 million. Under the Department of
Education and Early Development (DEED), the collective
bargaining unit agreement for the Teachers' Education
Association - Mount Edgecumbe (TEAME) resulted in an
increase of a median of 5.46 percent for FY 26. The cost
was $24.2 thousand in General Funds (GF) and a total of
$167.5 thousand.
Ms. Sanders shared that under the University of Alaska (UA)
and United Academics there was a collective bargaining
agreement that was reached and voted upon by the UA Board
of Regents, which included a 2.75 percent increase for FY
26. She noted that the state was working on the remaining 6
collective bargaining unit agreements that were outstanding
as well as one for UA. The amendments for salary
adjustments would be brought to the legislature as the
agreements were signed.
2:56:55 PM
Representative Galvin thought it was important to follow
the information with some analysis. She commented that that
the correctional officers had a salary increase of 11
percent and the one teacher salary adjustments for Mt.
Edgecumbe was 5.4 percent, while the university was at
about 2.7 percent. She noted that throughout the two years
she had been at the legislature, increments had been
approved again and again, but the teachers that served the
children of the state had not received the same sort of
increases.
Representative Johnson responded that she could not comment
because she was seeing a snapshot in time. She did not
think the correctional officers should receive less to keep
them on par. She asked about the 11 percent increase and
asked if there was a change in the number of personnel.
Ms. Sanders responded that the number only affected the 11
percent that was part of the interest arbitration. There
had been an arbitration outcome that resulted in a one-year
increase of 11 percent for FY 26, and the parties would
have to go back to the negotiating table for future years.
Representative Bynum asked for clarification that the
outcome was not tied to any appropriation but was an
agreement put in place regardless of the appropriation that
the legislative body made.
Ms. Sanders responded that an agreement had been reached
for the three increases, which were brought forward to take
action on in the back of the bill. There was also an
appropriation request to fund the costs associated with the
agreements.
Representative Bynum understood that the agreement was
agreed to but still needed approval.
Ms. Sanders answered in the affirmative.
3:00:01 PM
Representative Hannan commented that the legislature did
not have the authority to approve an arbitration but had
the authority to appropriate the funding of the settlement.
She clarified that the settlement was reached between the
employees and the administration, who had the authorization
to approve and negotiate. The legislature's authorization
was to fund it.
Co-Chair Josephson relayed that if the legislature had to
approve the agreements, then over the previous 60 meetings
it had missed a lot of meetings.
Ms. Sanders responded that there was a reference at the
back of the operating budget that gave the legislature had
the ability to approve the agreements that had been
reached. She did not have the bill in front of her. She
noted that the reference allowed that the legislature could
make a decision to not include the agreement, and the
agreement would be considered no longer valid. She relayed
that the legislature did have a role, but it was at the end
of the process.
Co-Chair Josephson asked if the legislature had ever asked
for an adjustment in the history of the state. He stressed
that the legislature did not attend the contract meetings
and did not know what was negotiated. He proposed that if
the meeting was voided by the legislature, the parties
would go back to the bargaining table and presumably there
would still be inflationary adjustments and workplace
considerations. He asked if his understanding was correct.
Ms. Sanders said "yes." She responded that the legislature
was not part of the negotiating process, but there was a
role for the legislature to play in the appropriation
process. The language was in the back of the bill to vote
it up or down.
3:02:50 PM
Ms. Sanders continued to slide 4 and the governor's amended
capital requests. She relayed that each year in the
governor's original budget, there was a placeholder for the
Statewide Transportation Improvement Program (STIP) for
both the federal funds as well as the state match required.
In the amendment process, the administration brought
forward the allocations listing out the projects under the
plan. She referenced a large spreadsheet (copy on file)
that listed each of the projects. She noted that it
included advanced construction projects and the remaining
other funds, which were receipts for community
contributions for the projects as well as an additional
$215 million to allocate all of the projects through an
amendment for the committee's consideration.
Ms. Sanders continued to slide 5 and the operating
supplemental requests that were brought forward in the
March 13 package. The first was for DOC for two items for
$4.6 million. The first was for community residential
centers. There were two contracts recently finalized for
the Tundra Center in Bethel and the Seaside Center in Nome,
which resulted in a $2 million increase for FY 25. There
was a corresponding amendment in the governor's FY 26
budget that accounted for the increases in the next fiscal
year, which would bring both years into alignment with the
agreed contracts.
Ms. Sanders explained that the second item had to do with
physical health care within DOC. She relayed that the
number of individuals entering correctional facilities with
complex and fragile medical conditions was increasing,
requiring a higher level of care and more specialized
medical attention. There was a need to have round-the-clock
booking available as well as ensuring that there were
adequate healthcare staff on site to address the increased
needs. Under the Department of Health (DOH) there was a
lapse extension, which showed as a $0 appropriation for the
department's Homeless Information Management System, which
allowed for the multi-year appropriation to be carried into
the next fiscal year to continue the work on the project.
Ms. Sanders listed that lastly, under "special
appropriations," there was an appropriation for $2.7
million to the Division of Retirement and Benefits (DRB).
The item was identified as a fast track supplemental given
the urgency and was related to the security breach that
occurred late the previous year. The breach had delayed
retirement contributions into individuals' accounts, which
had impacted investment returns for participants. To
correct the matter, DRB was depositing the contributions
into the employees' accounts and crediting them for the
lost interest associated with the earnings. The project was
currently underway and was hoped to be processed very
quickly before the close of the fiscal year.
3:06:41 PM
Representative Galvin asked about the security breach and
delayed payment. She wondered if the state had any
insurance to cover the issue. She thought the state paid
for security measures to keep data secure and wondered if
there was any sort of contract or way of paying for the
item through arbitration.
Ms. Sanders was not aware of any insurance policy that
would cover the issue.
Representative Galvin thought it seemed that when the state
purchased technology for help, that there would be some
sort of agreement that nothing would happen. She referenced
individual purchase of identity theft protection.
Ms. Sanders agreed to follow up with the Office of
Information Technology (OIT) to hear about options, and
with DRB to see if such a policy had been considered or
explored.
Representative Allard asked to go back to slide 3. She
asked about the $14 million for DOC and noted that there
was 146 vacant positions. She wondered about the movement
of vacant positions.
Ms. Sanders responded that when there was a vacant
position, DOC had to have a person at the post to cover its
facilities. She explained that it could result in having to
cover the cost of paying overtime, which came at an
increased cost. She thought it was important to remember
that DOC had to have a person filing the role, which could
cost more than having a person that was in the position.
Representative Allard relayed that she would look for more
information and revisit the matter at a later time.
3:10:17 PM
Representative Hannan asked to go back to the special
appropriation for the loss of earnings on retirement
contributions. She referenced a press release that
discussed the effect on the Public Employees' Retirement
System (PERS) and the Teachers' Retirement System (TRS)
Alaska Retirement Management (ARM) Board allocation. She
had heard from constituents that the effect was mostly on
those in the defined contribution (DC) system, in a time of
a booming economy when the contributions should have been
invested with substantial earnings. She asked if there was
a sense of how much of the special appropriation was going
to individual's defined contributions versus into the
PERS/TRS allocations.
Ms. Sanders responded that she could share a detailed
spreadsheet and an analysis on how the calculations were
made. She relayed that the information had been broken down
between PERS and TRS and the supplemental annuity plan
(SBS), but not between defined benefit (DB) and DC plans.
She relayed that the lost interest earnings were generated
using the United States (U.S.) Department of Labor's
voluntary fiduciary correction program calculator. The
calculation had been received for each date to determine
what should have been deposited in each account. She would
follow up to provide the calculation information.
Representative Hannan applauded the administration for its
action on the matter. She had heard from constituents that
they had concerns about missed returns. She understood that
there had been no litigation, and the administration was
taking care of the error. She considered that the situation
was a costly error, but she thought it was the right
decision.
3:13:09 PM
Representative Allard referenced DOC and understood that
the 146 positions that were vacant had to be there by law.
She asked for clarification on Ms. Sander's earlier
comments related to overtime.
Ms. Sanders responded that the term used was staffing
minimums. There were national acceptable levels of staffing
to cover a certain number of individuals in each facility
in the institutions. The staffing levels ensured the safety
of the inmates and the employees. When the department had
vacancies, it had to bring on another officer to fill
staffing minimums to ensure the correct number of people
were in place 24 hours per day.
Representative Allard asked if the individuals being
discussed were already staff and were temporarily holding
an empty spot.
Ms. Sanders responded that the staff in question were
existing employees (correctional officers) that were
already doing the job and generally had a week on and a
week off schedule. The individuals would be paid overtime
when vacancies required the employee to work on their
normal week off. She continued that the department was
trying to fill vacancies so as to not have to pay the
escalated overtime costs.
Representative Allard understood that there were 146 vacant
positions, but they were not being filled. She understood
that there were people already in a position that were
brought back and required $18.6 million in overtime.
Ms. Sanders noted that the $14 million number was the 11
percent increase to pay all employee salaries. She relayed
that Representative Allard was correct in that DOC was
bringing officers already hired to fill vacancies to meet
the minimum standard. She emphasized that the department
was actively working to recruit across the state to fill
the vacancies. She noted that there was constant turnover
and there were constant new hires coming on.
Representative Allard understood that they were not filling
vacancies, but rather there were people already in a
position that were being paid overtime with the funds.
Ms. Sanders responded in the affirmative.
3:17:19 PM
Co-Chair Schrage wanted to follow up on Representative
Hannan's remarks to commend the administration for making
the employees whole with respect to delayed contributions
and earnings. He referenced reporting in the Anchorage
Daily News and thought the Alaska Municipal League (AML)
had expressed concern that while the employees had been
made whole, the state's unfunded pension liability had been
negatively impacted by the delayed contributions. He asked
Ms. Sanders to comment. He understood that the state would
have paid down unfunded the liability earlier if the breach
and subsequent delay had not happened.
Ms. Sanders responded that she was not aware of the
comments in the article referenced. She relayed that she
had not made a connection between the delay and the
unfunded pension liability. She offered to follow up at a
later time.
Co-Chair Schrage wanted to note the concern.
Ms. Sanders continued to slide 6 and the capital
supplemental request. There was one amendment submitted for
the Department of Military and Veterans Affairs (DMVA) for
a scope change for an older capital project of
approximately $90,000 for the Interior Alaska Veterans'
Cemetery in the Fairbanks area. The appropriation was
originally to address ditch mitigation, and was no longer
required. The amendment requested an adjusted scope so the
funds could be used on work to establish the cemetery.
Representative Tomaszewski clarified that the original
funds were for ditch mitigation for the former site of the
cemetery, and the amendment proposed to shift the funding
to the new cemetery site.
Ms. Sanders responded in the affirmative.
Co-Chair Josephson thanked Ms. Sanders.
HB 53 was HEARD and HELD in committee for further
consideration.
HB 54 was HEARD and HELD in committee for further
consideration.
3:20:39 PM
AT EASE
3:21:05 PM
RECONVENED
Co-Chair Foster took over chairing the meeting. He relayed
that he would try to get through the agenda quickly.