Legislature(2017 - 2018)HOUSE FINANCE 519
01/27/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Fy 18 Budget Overview: Department of Labor and Workforce Development | |
| Fy 18 Budget Overview: Department of Environmental Conservation | |
| Fy 18 Budget Overview: Department of Administration | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 57 | TELECONFERENCED | |
| += | HB 59 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
January 27, 2017
1:32 p.m.
1:32:02 PM
CALL TO ORDER
Co-Chair Seaton called the House Finance Committee meeting
to order at 1:32 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
Representative David Guttenberg
ALSO PRESENT
Heidi Drygas, Commissioner, Department of Labor and
Workforce Development; Paloma Harbour, Director, Division
of Administrative Services, Department of Labor and
Workforce Development; Greg Cashen, Deputy Commissioner,
Department of Labor and Workforce Development; Larry
Hartig, Commissioner, Department of Environmental
Conservation; Sheldon Fisher, Commissioner, Department of
Administration; Cheryl Lowenstein, Director, Division of
Administrative Services, Department of Administration.
SUMMARY
HB 57 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 57 was HEARD and HELD in committee for further
consideration.
HB 59 APPROP: MENTAL HEALTH BUDGET
HB 59 was HEARD and HELD in committee for further
consideration.
FY 18 BUDGET OVERVIEWS:
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
DEPARTMENT OF ADMINISTRATION
1:32:12 PM
Co-Chair Seaton discussed the agenda for the day.
^FY 18 BUDGET OVERVIEW: DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT
1:33:22 PM
Vice-Chair Gara apologized for tardiness.
HEIDI DRYGAS, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT (DLWD), introduced a PowerPoint
presentation titled "FY2018 Department Overview, House
Finance Committee" dated January 27, 2017 (copy on file).
She addressed the department's mission to provide safe and
legal working conditions and advance opportunities for
employment (slide 2). The department accomplished its
mission through key program priorities aimed at protecting
Alaska's workers through statutory and regulatory
consultation and enforcement; developing an Alaskan
workforce for Alaska's jobs; and income replacement for
injured, unemployed, or disabled Alaskan workers. The slide
included website links to the department's mission and key
performance indicators, its proposed FY 18 budget, and
performance measures for its divisions.
Commissioner Drygas turned to slide 3 and addressed a 10-
year lookback slide from the Legislative Finance Division
(LFD), General Fund (GF) only (beginning in FY 08). She
clarified that GF included unrestricted general funds (UGF)
and designated general funds (DGF). The department's DGF
included the State Training and Employment Program (STEP),
the Technical and Vocational Education Program (TVEP), and
revenue generated by fees for service such as Alaska
Vocational Technical Center (AVTEC) tuition and fees. The
department's increase of $5.5 million since FY 08 was
entirely due to increases in DGF.
1:36:02 PM
Commissioner Drygas turned to slide 4 and addressed a 10-
year lookback for all funds. The LFD chart showed the
changes in the department's budget since FY 08 by
expenditure category. Total personal services expenses
increased by $7 million over the timeframe; the increase
was due to wage and benefit adjustments, which include
increasing healthcare benefit costs. She noted the
department had 212 fewer employees (fewer position control
numbers (PCNs)) in FY 18 than in FY 08. She directed
attention to the significant reduction to grants and
benefits of $12.8 million, largely due to the elimination
of multiple UGF-funded workforce development grant
programs.
Commissioner Drygas moved to slide 5 and addressed an LFD
chart related to appropriations within the department by
division. The consolidation of two of the department's
divisions - Business Partnerships and Employment Security -
into the Employment and Training Services Division in FY
17, made the chart difficult to follow. She detailed that
AVTEC's GF increase noted at the top right corner of the
chart was comprised of $1.6 million in DGF and only
$300,000 in UGF, which represented a UGF increase of less
than 1 percent per year. The department was implementing
the second of its two-year tuition and fee increase at
AVTEC in 2018, to reduce the center's reliance on UGF.
Cathy Lacompte was the new AVTEC director beginning in
November 2016; the department would work closely with Ms.
Lacompte to develop a strategic plan for AVTEC that would
continue to increase self-sustainability and reduce
reliance on UGF, while continuing to meet critical state
workforce development needs.
1:37:54 PM
Commissioner Drygas addressed slide 6, which included all
funds. The division's consolidation of two divisions into
one division made the chart difficult to follow. As LFD had
noted on the chart, since FY 08 the department's budget had
increased by less than 1 percent. The chart on slide 7
showed the department's budget by fund group. She reported
that the department's UGF had decreased by $2.3 million or
10 percent from FY 08 levels. The department's DGF (the
only fund group to see an increase over the timeframe)
included STEP, TVEP, and fees for service such as AVTEC
tuition and fees.
1:38:53 PM
Commissioner Drygas moved to slide 8 and explained that the
next several slides reflected the department's budget by
division, broken down by component or program. The
department's rating of importance to the mission was based
on guidance received from the co-chairs. She detailed that
"critical" meant a program that was directly meeting the
department's mission; "important" meant a program providing
indirect support that would need to be reassigned if the
program did not exist; and "status quo" meant a program
that had historically been funded because of a statutory
requirement, but had no real impact on the department's
mission or potentially hampered the department's
functioning. The department had not been given specific
guidance for the rating of effectiveness; therefore, it had
used ratings of high, moderate, and low.
Commissioner Drygas continued that using very strict
criteria for determining what was constitutionally
required, the Office of Management and Budget (OMB) had
informed the department that the Commissioner's Office was
the only thing in the department that was partially
constitutionally required. The Commissioner's Office and
the Administrative Services Division had worked tirelessly
over the past few years to identify significant budget
reductions and operational efficiencies. The list included
considerable lease consolidation efforts, resulting in over
$1 million saved in UGF from FY 15 to FY 18.
Commissioner Drygas turned to slide 9, which reflected
programs within the Workers' Compensation Division. While
the department rated the effectiveness of the division as
high, it recognized there was room for improvement.
Therefore, the department had worked with the governor's
office on HB 79, which had been introduced that week. The
department had rated the importance of the Second Injury
Fund as "status quo" and the effectiveness of the fund as
moderate. While the program worked, many other states had
eliminated their second injury funds - the goal of the fund
was to facilitate the reemployment of injured or disabled
workers - because the Americans with Disabilities Act (ADA)
largely fulfilled the purpose, prohibiting discrimination
based on disability. The sunset of the Second Injury Fund
was included in HB 79. One of the department's highest
legislative priorities was the repeal of the Workers'
Compensation Appeals Commission, which would save $440,000
in DGF annually; legislation had also been introduced in
the current session (HB 69).
1:41:37 PM
Commissioner Drygas turned to slide 10 and relayed that the
programs within the Labor Standards and Safety Division
were critical to the department's mission of protecting
Alaska's workers and were highly effective. According to
statute, the Alaska Safety Advisory Council was responsible
for organizing the annual governor's safety conference in
Anchorage. She characterized the conference as terrific and
noted it was held in April. Members of the council took the
responsibility seriously and did a great job with the
conference every year. The council brought in more in
sponsorship money than necessary to cover the costs of the
conference. The department had ranked the council's
effectiveness as moderate because it felt the group could
be more effective if privatized. The council was interested
in privatization and was currently looking to adopt bylaws,
which was the first step.
1:42:29 PM
Commissioner Drygas addressed the programs within the
Employment and Training Services Division on slide 11. The
programs were critical to the department's mission of
advancing employment opportunities for Alaskans and its
core service of income replacement for temporarily
unemployed workers. The division was relatively new and was
by far the largest division (it represented the
consolidation of two divisions). Through the consolidation
effort, the department had eliminated 10 positions or PCNs,
reduced its UGF by over $300,000, and had reduced
administrative costs, which had put an additional $1
million in STEP funds on the street as grants to train
Alaskans.
Commissioner Drygas discussed the workforce development
component of the Employment and Training Services Division
on slide 12. She relayed the component had a few different
ongoing annual programs (shown on slide 12). The programs
were highly effective and critical to the department's
mission. In accordance with FY 17 legislative intent, the
department had reduced the GF authority supporting the
Alaska Construction Academies (ACA) by another $600,000 UGF
in FY 18. The remaining Construction Academy training
funding totaled $1.26 million UGF; if the legislative
intent language continued, the program would be eliminated
by FY 21. The department was very concerned about
eliminating funding for the ACA and believed it was short
sighted, given the state's aging construction workforce
(particularly as the state worked to advance a gas line
project). Failure to train Alaskans did not mean the jobs
would go away; it meant the jobs would go to outsiders.
1:44:14 PM
Commissioner Drygas spoke about the Vocational
Rehabilitation Division on slide 13. The division was
focused on delivering services to disabled Alaskans. She
detailed that the federally and statutorily required
programs were highly effective and critical to the
department's mission of advancing employment for all
Alaskans and its core service of providing income
replacement for disabled Alaskans. She highlighted the
bottom row pertaining to special projects and explained
that it applied to special federal grants that enhance the
services provided through the Client Services program.
Services included supported employment (allocated to youth
with the most significant disabilities) and assistive
technology, which helped disabled Alaskans test and
identify technology that can assist them in their daily
lives as well as in seeking employment.
1:45:08 PM
Commissioner Drygas discussed the AVTEC program located in
Seward (slide 14). The program was critical to the
department's mission of advancing employment opportunities
for Alaskans. The program was highly effective, with an
average graduation rate of 88 percent over the past five
years. She elaborated that over the past five years, an
average of 89 percent of AVTEC graduates had been employed
in their area of training within one year. The department's
budget included a number of changes to AVTEC's budget. The
department was switching $184,000 in UGF to program
receipts to reflect a 7.5 percent increase in tuition and
fees to support overall programs in FY 18.
She added that it was the second year of a two-year tuition
and fee increase. The department was also switching
$192,000 in UGF to program receipts related to revamping
the culinary arts program. She detailed that one full-time
instructor position would be fully supported with receipts
generated by the program. Plumbing and heating and
construction program offerings were being reduced from
twice per year to once per year, to better align with
demand and realize an instructor workload savings of over
$50,000. The department would be working closely with the
program's new director to develop a strategic plan for
AVTEC to reduce its reliance on UGF.
Vice-Chair Gara asked about the percentage cut to the
department since she had become commissioner. Commissioner
Drygas replied it was roughly 37 percent.
Vice-Chair Gara referred to the Workers' Compensation
Commission. He acknowledged that a cost savings was
important, but he asked if an analysis had been done on
saving $400,000 by eliminating the Workers' Compensation
Appeals Commission. He remarked on the large number of
cases and noted that the cases automatically went to the
court system. He asked if an analysis had been done that
the proposal would not require the state to hire another
superior court judge with a staff member and office. He
remarked that those items would cost $400,000.
1:47:47 PM
Commissioner Drygas corrected that the number of appealed
cases was low and had been decreasing. She would provide
the information to the committee. She explained that the
cases would be absorbed and instead of going through the
appeals commission they would go to superior court. She
believed the Court System had filed a zero fiscal note the
previous year because of the low number of cases. She
reiterated that the Court System believed the cases could
be absorbed.
Co-Chair Seaton asked the department to have the data for
the subcommittee. Commissioner Drygas agreed.
Representative Kawasaki pointed to slide 8 related to
leasing. He asked for detail.
PALOMA HARBOUR, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT,
answered that the leasing component accounted for how the
department paid for its lease costs with state funds. They
offset a portion of all the department's leases across the
state. The department had made considerable efforts and had
cut funding to leasing by over $1 million in the last three
years.
Representative Kawasaki asked if the cuts to leasing had
been related to saving space or not renting buildings.
Ms. Harbour answered that in FY 18 the department was
reducing its total leased space by over 10,600 square feet
for a savings of approximately $272,000. She noted it
reflected the latest reduction, which would occur in
Anchorage; other reductions had been made in Juneau and
Kenai. The department was looking at each of its leases as
they came up to determine if the space was needed or could
be consolidated.
Representative Kawasaki did not recall seeing leasing as a
separate allocation in the other budgets.
Co-Chair Seaton recalled that another department had
reported on leasing the previous day.
Representative Kawasaki noted they were looking at scraping
nickels and dimes together related to the budget. He
recognized that DLWD was not constitutionally required, but
there were myriad federal requirements associated with some
of the work the department had taken on. He asked if there
had been consideration either moving things in or out of
the department. For example, moving AVTEC or adult
education to the Department of Education and Early
Development (DEED). He asked for comment on why it may or
may not be a good idea.
1:51:24 PM
Commissioner Drygas responded related to AVTEC and the
Adult Basic Education programs had been moved from DEED in
the past because they felt DLWD could do a better job
administering the two. The department had looked
considerably at its essential core mission and at its
programs relating to the mission. Going through the process
had been very beneficial in determining what it could do
without. Over the last couple of years, the department had
given up leases, and it had identified the Workers'
Compensation Appeals Commission as something it no longer
needed. She continued that the commission had been
hampering the ability to effectively deal with workers'
compensation appeals. The Independent Living Program had
also been transferred to the Department of Health and
Social Services (DHSS). She remarked that the silver lining
of the state's budget difficulties was the impetus to look
at what departments did well, what they could do better,
what they could do without, and what other departments may
be able to administer better.
Representative Wilson commended the department for the
clarity of its presentation and work. She pointed to slide
4 and asked what had resulted in the increase in the
"services" line.
Commissioner Drygas answered that "it's all of them." She
did not have the specifics on hand and would follow up.
1:54:12 PM
Representative Ortiz spoke to the reduction of 212 PCNs
since FY 15. He asked if the reduction was hampering the
department's ability to accomplish its mission.
Commissioner Drygas replied in the affirmative; it was seen
daily in every division. She elaborated that DLWD had taken
the governor's memorandum seriously about being careful
about what vacancies to fill and making sure it could
distribute the work effectively with existing employees.
The department was significantly short on administrative
staff. It was hard to convey the critical nature of
administrative staff in the process of ensuring the public
was served. She believed the public was beginning to
witness the consequences of significant staff cuts. The
department was doing the best it could with what it had; it
was working to be methodical on how the cuts were made. She
opined it would be rash to make the decisions arbitrarily.
Representative Ortiz asked for some specific examples about
where the public was seeing less services from DLWD.
GREG CASHEN, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, answered that in the last two fiscal
years the department had reduced its job center footprint
by three centers (Kotzebue, Barrow, and Seward). He
detailed that the [Seward] job center had been located at
AVTEC, which was a state-owned facility; therefore, the
facility still had a resource room and access point for job
seekers. Reducing the department's footprint had an impact
on the public. He added that DLWD would have to consider
its lease costs and job centers going forward if further
reductions were made, which would impact service delivery
to the public.
1:57:46 PM
Representative Ortiz asked in which areas AVTEC provided
the biggest contribution (e.g. ship building or other).
Commissioner Drygas answered that she wanted more people to
know about AVTEC. She remarked that Representative Wilson
and the DLWD budget subcommittee had discussed AVTEC at
length in past years and about the terrific work it did
training Alaskans. Alaskans from the Interior,
Southcentral, North Slope, and rural areas attended the
program. The center had numerous program offerings for
vocational education. One of its premiere programs was in
maritime training. Other programs included culinary arts,
applied technology (heating, ventilation, air
conditioning), refrigeration, healthcare, and other. She
spoke to the concept of doing more with less and relayed
the goal was to educate more Alaskans about the
opportunities at AVTEC. The program was an affordable way
(there had been necessary tuition increases) for
individuals to seek a career path or train themselves in a
new career path. She underscored that AVTEC was a terrific
educational opportunity for individuals seeking good,
middle class jobs.
1:59:50 PM
Co-Chair Seaton asked how much the Alaska Performance
Scholarship (APS) was used at AVTEC.
Commissioner Drygas could not speak to the specific dollar
amount, but it was underutilized. The department had asked
AVTEC to include the APS badge on the website to ensure
potential students were aware they could use APS funds for
the program. She would follow up with a dollar amount for
the committee.
Co-Chair Seaton asked the department to address the issue
during its subcommittee meetings. He thought it may be a
way to result in increased participation and funding. He
asked the department to look at the proportion of high
school graduates compared to older individuals taking
classes. He noted that individuals coming to AVTEC from the
workforce would not have an opportunity to access [the
APS]. He detailed that high school students would have been
required to graduate and to have taken rigorous courses
with a C+ average. He did not want to compare that group
with older individuals being retrained who lacked the same
opportunity.
2:01:46 PM
Co-Chair Foster relayed he served on the Alaska Workforce
Investment Board when Mr. Cashen had served as the
executive director. He had been given numerous
opportunities to visit AVTEC and learn what the program
offered. He noted the experiences had all been great. He
asked about requirements for the program. He asked if the
classes required to obtain the APS were different if an
individual planned to use the scholarship to attend college
versus AVTEC. He would love to see more rural Alaskans
going to AVTEC. He wondered how he could get rural Alaskans
to take advantage of the opportunity.
Ms. Harbour answered there were different Alaska
Performance Scholarships for advanced education and
vocational/technical programs; the scholarship criteria
were different for the different scholarships.
Co-Chair Foster stated that part of the problem in rural
Alaska was an inability to access the required classes to
qualify for the APS. For example, if a person going to
college, they may be required to take a trigonometry class;
however, perhaps the requirement was different for
individuals planning to attend AVTEC. He furthered that if
the classes were not offered in rural Alaska, there were
broadband issues [preventing online class options]. He
asked how to eliminate barriers to enable more rural
Alaskans go to AVTEC and take advantage of the scholarship
program.
2:04:22 PM
Representative Tilton thanked the department for its work
on looking for efficiencies. She spoke to the 212 position
reductions. She asked if the positions had been vacant or
reflected lost jobs.
Commissioner Drygas replied there had been a combination.
Most of the 212 PCNs had been through attrition or
retirement. There had been a few layoffs.
Vice-Chair Gara referenced Representative Ortiz's earlier
question about whether the loss of employees was impacting
the department. He stated some individuals were starting to
get uncomfortable with the level of cuts the legislature
was adopting. He recalled a grant cut that had not been
reflected in the loss of employees. He referred to a
program that existed two years back that had helped fund
school counselors who helped steer youths towards jobs. The
program had been eliminated and he wondered if its impact
on job opportunity had not been substantial. Alternatively,
he wondered if they regretted cutting the program.
Ms. Harbour responded there had never been an argument
about the effectiveness of the former Alaska Youth First
Program. She reasoned that the state budget [deficit]
situation was a reality and the department had to look at
what was essential to its mission. She explained that there
were some philosophical belief differences about whether
DLWD should be doing adult training, AVTEC, and adult basic
education (things that had been transferred from DEED to
DLWD). She stated the program had been highly effective in
things like healthcare academies and other important ways
to get high schoolers interested in available
opportunities.
2:07:44 PM
Commissioner Drygas added that she believed the department
had to expose young Alaskans to different opportunities in
career and technical education. If youths were not given an
opportunity to explore and interest - whether in
construction, healthcare, plumbing, pipefitting or other -
they did not understand or were not aware of the
opportunities. She underscored that the jobs were not only
fulfilling careers, but good middle-class jobs. She
remarked that it was a problem because more skilled workers
were needed. She believed the department could not do its
job leading the way for workforce development in Alaska if
it did not reach individuals early on in their lives,
including talking to parents and counselors about careers
in career and technical education.
Commissioner Drygas spoke about difficulties related to
budget cuts and referred to Representative Ortiz's question
about the 212 jobs eliminated from the department over the
past ten years. She believed Alaskans who dealt with the
department felt the impact. For example, the department
received numerous complaints about how it did not respond
quickly enough. She underscored that the department was
strapped for funds; the Wage and Hour Administration had
substantial UGF funds and the department was not able to
fill positions as it had in the past. The situation put the
public at risk. She continued that DLWD enforced wage and
hour laws. She detailed that Occupational Safety and Health
kept Alaska's workers safe and conducted investigations
when situations happened at the workplace. She stressed
that cutting government services hampered any department's
ability to offer the services. The department was feeling
the cuts in Workers' Compensation where it had not filled
as many positions as there had been previously.
Additionally, the commissioner's office was half the size
it had been when she began the position, which had been
very difficult given the monumental tasks trying to do as
much as possible with much less. She talked about trying to
manage the workload and determine how best to utilize staff
and the available program funds. She concluded that it had
been difficult.
Representative Wilson remarked that one of the difficulties
was competition within the state between the University,
DLWD, DEED, and the private sector, when it came to
training Alaskans. She stated that how they pulled it all
together is "where we really have the savings and where we
could do the best for those who train." She elaborated that
several budgets were involved, which made things difficult.
She underscored it was necessary to stop competing within
the state, to do what was best for everyone, and to do its
strong programs.
Co-Chair Seaton remarked it was very difficult when a
single department impacted so many other departments. He
mentioned high schools and where the lines were drawn. He
stated that the crossover points were hard for the
subcommittees to address. He pointed to slide 9 related to
the Workers' Compensation Appeals Board and the Second
Injury Fund. He asked where the DGF came from and where the
funds would go if the programs were eliminated.
2:12:04 PM
Ms. Harbour answered that the appeals commission was funded
by the Workers' Safety Compensation and Administration
Account, which brought in funds from workers' compensation
premiums; if the state saved money on the workers'
compensation programs, it impacted premiums. The Second
Injury Fund was also paid through insurance; it was a self-
supported program, but it would save employers money if
they did not have to fund the program.
Co-Chair Seaton asked for verification that the elimination
of the programs would not mean the funding could be
diverted to another critical area within the department.
Commissioner Drygas replied in the negative and explained
that the department referred to the money as WSCAA
[Workers' Safety Compensation and Administration Account]
funds. The account also funded the Workers' Compensation
Division and the Occupational, Safety and Health Section.
Co-Chair Seaton thanked the department for its presentation
and looked forward to additional information during its
subcommittee meetings.
2:13:32 PM
AT EASE
2:16:31 PM
RECONVENED
^FY 18 BUDGET OVERVIEW: DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
2:16:31 PM
Co-Chair Seaton asked members to hold their questions until
the end of the presentation.
2:17:14 PM
LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION (DEC), provided a PowerPoint presentation
titled "Department of Environmental Conservation, House
Finance Committee" dated January 27, 2017 (copy on file).
He reviewed the mission of the department, which was to
protect human health and the environment (slide 3). The
department focused on bringing clean drinking water,
healthy air, safe food, and no harmful contamination of the
environment. The department achieved its goals by setting
standards and incorporating the standards in permits and
plans, compliance assistance and enforcement, and funding
water and sewer infrastructure throughout the state. The
department's total UGF in the governor's proposed FY 18
budget was slightly over $15 million (about one-third of 1
percent of total state UGF). The department's total GF (UGF
and DGF combined) equated to approximately $0.37 per day
for an Alaskan worker or about $0.17 per day per Alaska
resident.
2:18:31 PM
Commissioner Hartig addressed an LFD graph on slide 3 and
reported that the department's peak GF spending occurred in
FY 14 and had subsequently been declining. He noted that
the spending was not adjusted for inflation, which would
make the numbers more dramatic. The decrease was a result
of some efficiencies and consolidations, trimming back some
programs, and making some fund switches. The department had
experienced a 36 percent decline in UGF from FY 14 to the
proposed FY 18 budget. He noted that some of the decrease
had been offset by increased fees or other fund switches.
He detailed that the bar on the right representing FY 18
was comprised of $15 million UGF and $30 million DGF. He
elaborated that about half of the DGF was from the Spill
Prevention and Response (SPAR) Fund (funded by a surcharge
on crude oil production and refined products); the
remaining half was made up of other fees.
2:19:42 PM
Commissioner Hartig turned to an LFD bar chart on slide 4
representing all funds. He pointed out that most of DEC's
budget was for personal services and contract services.
Increases in the budget and areas that may not have
declined as much as one may expect due to cuts, was
partially due to labor contracts and health costs. He
explained that things had not grown, but health costs
continued to rise.
Commissioner Hartig turned to slide 5 titled
"Appropriations within the Department of Environmental
Conservation - All Funds." He pointed to two converging
lines on the lower right and explained that the
administrative services line had increased a bit over the
past year, but it reflected cost savings. He detailed that
the department had been trying to consolidate
administrative services functions within DEC. For example,
some Division of Water administrative staff had shifted
over to the Division of Administrative Services (directed
by Tom Cherian) in an effort to realize efficiencies
through the consolidation of administrative services. The
department had also been consolidating administrative
services at a state level among departments in Shared
Services under the Department of Administration.
2:21:17 PM
Commissioner Hartig advanced to an LFD chart on slide 6
pertaining to GF only. The top line reflected SPAR, which
had remained level over the past couple of years. He noted
that although the division had taken some cuts, it had
remained relatively steady. He elaborated that SPAR was
funded by the response prevention account (and a small
amount of federal funding) and used no UGF. The division
showed a slight increase due entirely to health costs and
salary adjustments resulting from labor contracts.
Commissioner Hartig moved to an LFD graph on slide 7, which
broke down the department's budget by fund source. The
department's total proposed FY 18 operating budget was
slightly under $82 million. Approximately 29 percent or $24
million was federal receipts, about 19 percent was DGF from
the prevention account funded by a surcharge on crude oil,
and UGF accounted for about 19 percent or $15 million or
so. He elaborated that other state funds accounted for
about 16 percent or $13 million, which included
administrative money from loan fund programs, interagency
receipts, and other miscellaneous things.
2:22:46 PM
Commissioner Hartig turned to slide 8, which began showing
the department's various allocations and components as
included in the budget book. He relayed the UGF resided in
different areas of the department (excluding the SPAR
Division). Undesignated General Funds accounted for 11
percent of the Division of Air Quality's budget, 17.8
percent of the Administrative Services budget, 41.83
percent of the Division of Environmental Health, and 29.23
percent of the Division of Water. He stated that because of
the difference in where the UGF resided, it was where the
department had looked for more efficiencies and cuts. Slide
8 pertained to the Division of Administration, which
included the Commissioner's Office. Overall, the division's
funding sources were split equally between UGF, DGF,
federal, and other. He detailed that slightly under half of
the Commissioner's Office was UGF - the remainder was
federal funding. Other components of Administrative
Services had more DGF - portions of DEC's permit programs
relied on information technology (IT) and other services
and paid their way by putting some funds to Administrative
Services.
2:24:36 PM
Commissioner Hartig addressed the Division of Environmental
Health on slide 9. He noted it was one of the divisions
that relied on more UGF and had taken some larger cuts more
recently. The first item related to building maintenance
and operations for the environmental health lab in
Anchorage. The allocation was statutorily required and was
useful for numerous purposes including in emergencies such
as food borne illness outbreaks or disease in animal
populations. The lab necessary to quickly track the items.
The lab was also essential for the seafood industry to
conduct testing of different seafood products (e.g.
shellfish) before they could be sold. The lab also tested
agricultural products sold out-of-state and to federally
funded institutions like schools.
Commissioner Hartig turned to slide 10 and continued to
speak about the Division of Environmental Health. He
addressed food safety and sanitation, which was one of the
department's core components. The division was largely
supported by fees. The first item under the component was
shellfish, which represented one of two areas that was
heavily subsidized by UGF (the fees did not cover the costs
of the program). He detailed that it was a small industry
and the cost of providing the lab and other services to the
industry was high due to the type of testing. The division
was currently doing a seafood and shellfish fee study to
determine if the industry could pay any more - he believed
it would be a subcommittee discussion.
Representative Kawasaki noted there was a shellfish
allocation on slide 10 in addition to a shellfish and food
safety testing allocation on slide 12. He asked if there
was a difference between the two allocations and why they
appeared separately.
Commissioner Hartig answered that the shellfish allocation
on slide 10 referred to program staff and the allocation on
slide 12 was for laboratory services associated with the
testing. The testing was for paralytic shellfish poisoning
(PSP) to determine whether there were paralytic toxins in a
product that was being sold. The toxins were potentially
fatal; therefore, the shellfish had to be checked prior to
being sold into commerce. The two increments cost about
$700,000 total - the fees of about $52,000 represented
about 7 percent of the total cost.
2:27:47 PM
Commissioner Hartig highlighted manufactured food/seafood
processors on slide 10. The allocation required a small
amount of UGF, primarily for the federal match.
Co-Chair Seaton asked about the source of the DGF funding
for the manufactured food/seafood processors. Commissioner
Hartig replied the fund source was fees.
Vice-Chair Gara reasoned that the budget problems should
not be fixed by sloughing state responsibilities off on
municipalities where inappropriate. He spoke to food safety
related to restaurants and bars. He noted the department
had conceded it was not able to meet federal standards in
terms of the restaurant inspections it conducted. He asked
if the department had ever considered transferring the
function over to larger communities. He remarked that
restaurant inspections were done by communities in other
states. He wondered if communities would receive the
federal matching funds if the responsibility was
transferred.
Commissioner Hartig pointed to retail food inspections on
slide 11. The department inspected restaurants and other
facilities that processed and served food to the public. He
agreed that in most other states the task was handled at
the county level, whereas in Alaska, the only municipality
responsible for food inspections was Anchorage. Generally,
in outlying areas the department went out for Federal Drug
Administration (FDA) inspections (e.g. seafood processing);
therefore, the trips were not a high cost to the state. He
confirmed that the department did not inspect at the FDA
recommended rate. He characterized the inspection times as
opportunistic. The department tried to target the most at-
risk facilities when it did inspections. He shared that DEC
had considered what it could transfer back to communities.
Commissioner Hartig elaborated when the department made
cuts it considered what risk was created for the public,
whether a community could take the responsibility on, or
whether the public could address an issue. He stated that
it was challenging to evaluate the specific issue because
food borne illnesses were largely unreported and it was
difficult to determine how many food-borne illnesses were
prevented by an inspection because the inspection never
happened. All that could be done was to look at other areas
of the country that did not do inspections, which was
difficult because inspections were done in most other
areas, or the issue could be tracked over time. He believed
the responsibility would be difficult to push back to
communities because if it was not a high priority for the
state it was less likely to be a high priority for
communities. He was concerned that the state would have to
respond when something became a crisis. He reiterated that
when DEC considered making cuts in any area it looked at
what could and could not pushed back to municipalities and
how the risk could be mitigated.
2:31:22 PM
Vice-Chair Gara observed that most of the funding for the
increment was DGF. He asked about the fund source and
remarked that perhaps there was not a significant budget
impact.
Commissioner Hartig asked if Vice-Chair Gara was speaking
about retail food.
Vice-Chair Gara replied in the affirmative. He stated there
was $1.5 million DGF and a low amount of UGF.
Commissioner Hartig believed the DGF was all fees.
Vice-Chair Gara surmised it was largely fee supported.
Commissioner Hartig replied in the affirmative. The
department was looking at outreach and education. He
reiterated his earlier statement that when making cuts, DEC
considered the risk the cuts would create and how it could
be mitigated.
Representative Pruitt asked if the department had the
authority to change fee structures on its own through
regulation or the commissioner's authority (without
legislation).
Commissioner Hartig answered there were two statutes
authorizing the department to create and levy fees; both
had restrictions. Some were restrictions on DEC's direct
cost and the percentage it could recover and sometimes
there were prohibitions on collecting any or a percentage
of the indirect costs DEC could collect. The department had
gone back and evaluated the statutes in the past and it
believed in some areas fees could be increased without
economically impacting the related business. In the past
couple of years DEC had worked with the House and Senate
Finance Committees on draft legislation to address the
issue. He offered to share the draft legislation with the
committee. He relayed that the department was talking with
the subcommittee about the issue. He mentioned that several
years back a bill (HB 140) sponsored by Representative Lora
Reinbold had passed, requiring agencies to take a hard look
at the economics of any new regulations - DEC did so as
part of its fee evaluation and he believed it was getting
much better at the process.
Co-Chair Seaton relayed his expectation that the department
would take up indirect expenditures with the subcommittee.
The subcommittee would come forward with recommendations.
Commissioner Hartig agreed.
2:35:01 PM
Commissioner Hartig addressed slide 11 pertaining to public
facilities including pools, spas, and tattoos and body art
facilities. Funding included a significant amount of
"other" funds, which included RSA [Reimbursable Services
Agreement] funding from the Department of Commerce,
Community and Economic Development (DCCED). He detailed
that DCCED collected licensing fees for tattoo and body
art, which was passed on to DEC to conduct inspections. He
remarked that because it involved needles and contact with
blood, it constituted a high-risk from a human health
standpoint.
Commissioner Hartig turned to slide 13 and addressed the
dairy program. He detailed that program fees did not cover
the service. Costs were approximately $405,700 with
$405,300 UGF. There were only two dairy farms; however,
significant oversight was required. He detailed that milk
was good for human health, but a lot of other things grew
in it, which meant it needed to be carefully watched. The
department's overall UGF was approximately $15 million,
approximately $5 million was required for federal matching
funds, about $4 million went to basic services (providing a
minimum level of service without the ability to charge a
fee), and about $6 million went toward services the
department charged a fee for, but the businesses receiving
the service were not able to pay the entire fee. He
elaborated that the $6 million went towards subsidizing
industries served by the department. He added that the
department did not expect all the businesses would be able
to cover the costs.
2:37:16 PM
Commissioner Hartig addressed the bottom of slide 13
related to fish tissue testing. The allocation included
approximately $307,000 DGF. He considered all the fish
tissue testing to be more than beneficial - the cost was
covered by ocean ranger fees as a result of an action by
the House Finance Committee the previous year (there was no
longer any UGF). He moved to slide 14 and spoke to the
drinking water component, which included public drinking
water systems serving 25 or more people. Over the past
couple of years with cuts to the Division of Environmental
Health, the department had eliminated oversight of drinking
water systems serving less than 25 people. He remarked that
it was a risk that had been passed on to the people running
those systems and the public they served. About $900,000
UGF was matched with federal funds. Of the $4.3 million in
federal funds about $3.5 million was the public water
systems management grant. The division received a fair
amount of money from the federal government including about
$10 million per year to subsidize the drinking water
program.
Co-Chair Seaton asked if the 5 percent recovered by costs
was because most of the systems were municipal or public
instead of private.
Commissioner Hartig answered that there were many small
systems and communities served by the division. Rather than
charging small communities a fee, the department would
prefer for them to use their money on their systems or
landfill. The department had determined the area needed to
be subsidized based on the size of the community and what
they could bear. He highlighted the pesticides allocation
at the bottom of slide 14 that contained no UGF. He
detailed that the program was funded with registration fees
paid for selling or distributing pesticides in the state
(the pesticide had to be approved for use by EPA).
2:39:47 PM
Commissioner Hartig addressed the Division of Air Quality
on slide 15. He pointed out the low amount of UGF funding
and remarked that it was a tight-budget division. There
were numerous division functions that were closely
integrated. He detailed that about $1.4 million of the $1.7
million UGF was for match and maintenance of effort; it was
the minimum amount required by the federal government to
receive matching funds. He explained it left only $300,000
to answer neighborhood complaints, hold workshops on
controversial permits, and to deal with non-permitee
appeals when the department could not recover appeals
costs.
Commissioner Hartig addressed the Division of Spill
Prevention and Response, which used no UGF funding. Most of
the DGF was from the prevention account, which was funded
by a surcharge on crude oil and a small amount on refined
product. He continued that 5 percent of the division's
budget came from the Cruise Ship Passenger Vessel Fund due
to work SPAR did on contingency plans for the vessels.
There was some federal funding that helped support the
department's work related to a number of federal
contaminated sites.
Commissioner Hartig addressed the Division of Water on
slide 17 and pointed to the third row down pertaining to
the Alaska Pollutant Discharge Elimination System. The
department had been asked whether there were federally
delegated air or water programs that DEC could give back to
save money. He pointed out that the system was largely fee
supported, meaning it would not save DEC money to give the
program back. The system received a small amount of federal
funds and $636,000 UGF. He explained that if primacy was
given back to the federal government, a state program would
still be necessary due to state statutes requiring state
issued wastewater discharge permits. Additionally, if EPA
took the program back, the state would still have to
certify the EPA's permits consistent with state law under
Section 401 of the Clean Water Act; it was the only way to
authorize mixing zones. He continued that just about any of
the public's wastewater treatment systems had mixing zones
that EPA could not authorize. He did not believe the
program could be operated at a lower cost.
2:42:29 PM
Vice-Chair Gara referred to the two state statutes taking
primacy from the federal government. He recalled that one
of them involved roughly $2 million costs the state
absorbed by taking over primacy. He asked how it would not
save the state money to return primacy.
Commissioner Hartig answered that the details could be
discussed with the division director during subcommittee
meetings. He did not believe returning primacy to the
federal government would save the state money because a
state program would still be required. He continued that
because much of the program was covered by fees and federal
funds, it would not save the state significant UGF funding.
He noted that slide 18 showed additional UGF funding for
compliance. He surmised that if the state gave primacy back
to the federal government, the state could opt to cut back
on compliance to save money. The department was cutting
back compliance to a degree because it was doing less
travel. He pointed out that the proposed FY 18 budget
showed a UGF cut for travel, meaning there would be fewer
inspections. He stated it was a balance and believed it
would take more than merely giving primacy back to the
federal government to cut UGF.
2:44:17 PM
Commissioner Hartig returned to slide 17 and detailed that
the engineering support and plan review component received
$1.4 million UGF. He specified the work for onsite systems
included leach fields and other. The department was trying
to find ways to reduce UGF without impacting the private
sector or the sales of homes needing system certification.
He elaborated that DEC had established a stakeholder group
that would try to identify ways to scale back work done by
DEC, by sending work to the private sector or discontinuing
things that would not create risk or problems for the sale
of properties. The group was actively working on the issue,
but it would be one or two years before savings could be
realized.
Commissioner Hartig moved to slide 18 and spoke about
surface water standards and assessment. The allocation
included $660,000 UGF that was almost entirely matched by
federal funds. The cruise ship allocation was entirely all
DGF supported by the Cruise Ship Passenger Vessel and Ocean
Ranger Funds ($4 per berth).
Commissioner Hartig moved to slide 19 and continued to
address the Division of Water. The division had a facility
construction component, which included the Village Safe
Water Municipal Grant Loan Program and the Revolving Loan
Fund Programs. He detailed that the Village Safe Water
Municipal Grant Loan Program was funded with 75 percent
federal and 25 percent state money. He detailed that the
Revolving Loan Fund Program was larger than most people
realized and housed approximately $700 million, which
included outstanding loans and cash. The state received
grant funds annually from the federal government that the
state used to loan for water and sewer projects around
Alaska. The loans went to all-sized communities and he
noted that Anchorage had relied heavily on the program over
the years.
Commissioner Hartig continued that over the past couple of
years, the department had taken a portion of the loan
receipts it received to cover the administrative costs of
the program, meaning UGF funding had been eliminated and
the funding source had become "other." The Village Safe
Water Municipal Grant Loan Program and drinking water were
funded by the loan programs. He stated that the village
safe water program was doing well - there was no money in
the governor's proposed capital budget for the program,
which meant more communities would be reliant on the
revolving loan fund program. The department was paying
attention to ensure communities did not fall through the
cracks in their ability to receive funds for water and
sewer.
Commissioner Hartig addressed operations assistance at the
bottom of slide 19. The allocation funded remote
maintenance workers that helped communities when their
water and sewer systems began failing (typically in
villages). The allocation was primarily funded with federal
money and had a smaller portion of UGF funds required for
federal match. He elaborated that the allocation also
included the operator certification program, which brought
in some fees.
2:48:05 PM
Representative Ortiz asked if Commissioner Hartig had
testified that it may be a long-term goal to require more
from the farmers to cover the costs of the shellfish
testing conducted by DEC.
Commissioner Hartig replied that the department was
currently doing the economic analysis and it would talk
with the industry, which was small. The industry contained
various components including gooey ducks, farmers, and
people collecting in naturally growing areas. The
department would look at the issue as closely as needed to
avoid hurting the industry.
Representative Ortiz remarked it was a complaint he had
heard from his constituents. He asked for verification that
the testing center was in Anchorage.
Commissioner Hartig replied in the affirmative.
Representative Ortiz stated that there was considerable
turnaround time for individuals harvesting gooey ducks or
other products in Southeast prior to receiving testing
results. He asked if the department had considered looking
at the cost of the testing facility and whether a lab could
be in closer proximity to the industry.
Commissioner Hartig answered there was a lab in Southeast
funded with federal grant money that was trying to
establish a local lab. The department supported the idea.
He elaborated that DEC was providing the service for the
public and it would be great if someone else, private
industry in particular, could provide the service. He
stated that PSP was fairly prevalent throughout Alaska; it
was particularly challenging in some parts of Southeast
near Haines, in Kodiak, and out in the Aleutian Chain. The
poison was seen in butter clams, Dungeness crab, and in
gooey ducks. The poison was unpredictable; it could be
present one day and gone the next. He stressed the
necessity of testing the area when harvesting; it was not
possible to assume that because it was absent the previous
year that it would be absent in the current year. He
underscored the negative impact on Alaska's seafood
reputation that would occur if contaminated seafood was
shipped out and a person became sick and died. He relayed
that the testing was expensive - it required sending a
sample to the Anchorage lab, it was then ground up and
injected into mice to see the effects. He continued that
before farmers could harvest they waited to receive the
results, which made the timeframe tight. The work was
substantial, and DEC collaborated with FDA and industry to
look at alternatives, but they were not there yet; the
alternative had to work, due to the danger of the
situation.
2:51:48 PM
Co-Chair Foster asked if Commissioner Hartig had mentioned
the shifting of paying for the service with cruise ship
funds.
Commissioner Hartig replied in the negative; however, the
department was looking at trying to offset some of the UGF
with Cruise Ship Passenger Vessel Funds, which was DGF.
Representative Thompson asked about how much it cost to do
PSP testing and what portion was covered by the state.
Commissioner Hartig believed the testing was about $140 per
sample. The lab and oversight cost was about 7 percent
overall. The $140 testing cost was covered by the industry.
Co-Chair Seaton thought the state was the largest user of
white mice in the world.
Commissioner Hartig answered that the department used a
substantial number of mice.
Co-Chair Seaton hoped new chemical testing would be
available soon that would enable the state to get out of
the current method.
2:54:05 PM
AT EASE
2:55:40 PM
RECONVENED
^FY 18 BUDGET OVERVIEW: DEPARTMENT OF ADMINISTRATION
2:55:49 PM
SHELDON FISHER, COMMISSIONER, DEPARTMENT OF ADMINISTRATION
(DOA), provided a PowerPoint presentation titled
"Department of Administration Overview" dated January 27,
2017 (copy on file). Relayed his intent to prioritize
slides. He moved to an organizational chart on slide 3. The
department's primary mission was to provide efficient
support services to other state agencies. The boxes
highlighted in green showed services DOA provided to other
state agencies, the blue boxes showed services provided
directly to Alaskans, and the gray boxes reflected boards
and commissions that the department helped facilitate
administration. The department was responsible for the
information technology (IT) function; finance; leasing,
procurement, travel administration, and accounts payable
were performed by General Services and Shared Services,
which were merging into one division; the Division of
Retirement and Benefits provided benefits for active
employees and the retirement plan and program for retirees;
and the Division of Risk Management, which included
insurance, property management, and workers' compensation.
2:58:00 PM
Commissioner Fisher moved to slide 4 and addressed the
department's share of total agency operations, GF only. He
pointed out that GF accounted for slightly over 2 percent
of the department's budget; the funds had peaked in FY 15
at $111 million and were down to about $99.5 million (a
decline of almost $12 million). Slide 5 showed a
combination of UGF and DGF for each of the department's
divisions (ranked by amount). The Office of Public Advocacy
(OPA) and the Public Defender Agency (PD) were at the top
end of the list. The two agencies had remained relatively
flat between FY 15 and FY 18 at about $50 million. He noted
that the department had attempted to protect the two
divisions and believed in the importance of their work. The
UGF portion of the agencies' budget was down by about $2
million between FY 15 and FY 18. He continued that the DGF
portion was up by about $2 million. He added that in FY 18,
the two agencies had about $46.5 million in UGF. He
remarked that the $2.4 million DGF may or may not happen.
He elaborated that the agencies were able to collect fees
in certain circumstances from individuals, but sometimes
the collection of those fees was difficult. The reduction
of the Permanent Fund impacted the situation; if
individuals did not pay their fees the state could garnish
their Permanent Fund, but as the fund declined, the state
struggled to recover the money. He relayed that although it
did not appear there had been a cut, there had been some
reductions to the two agencies.
Commissioner Fisher highlighted the Division of Motor
Vehicles (DMV) as the second item on the list (slide 5).
The DMV was funded entirely with DGF associated with fees
collected by the division. The Alaska Oil and Gas
Conservation Commission (AOGCC) was third on the list and
was funded entirely by industry receipts. The State of
Alaska Telecommunications System (SATS) and the Alaska Land
Mobile Radio System (ALMR) were fourth on the list and were
responsible for providing emergency telecommunication
services to first responders in the state. The two programs
were funded primarily by UGF - the state was able to
collect a small amount from various network users and the
federal government.
3:01:34 PM
Commissioner Fisher continued to address the list on slide
5. He pointed out that the department administered public
television [shown as seventh on the list]. He asked a
colleague to speak to the upcoming slides.
CHERYL LOWENSTEIN, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ADMINISTRATION, addressed slide 6,
which included the department's budget by all funding
sources. She discussed that DOA provided services to state
agencies, the bulk of the department's expenditures
appeared in the contractual line for products and services.
Most of the remaining budget went to personal services for
people helping to provide the services. She moved to slide
7 including GF appropriations only. She pointed to legal
and advocacy services at the top of the appropriation list
and relayed that the component carried the lion's share of
UGF. The second item was DMV, which carried the bulk of
receipts received by the department. Centralized
Administrative Services was the third in line and included
a number of large divisions such as Finance, Personnel and
Labor Relations, and Retirement and Benefits. The AOGCC was
the next in line and was based on receipts.
Ms. Lowenstein turned to slide 8 and addressed the
department's appropriations all funds. Centralized
Administrative Services was at the top of the budget list
because it carried the bulk of services provided by the
department (e.g. personnel, finance, and others mentioned
previously). Shared Services was a new initiative operated
by the department - the bulk of the funding source was
interagency receipts. She detailed that the department
charged agencies for services it provided. Legal and
advocacy were third in line and accounted for the
department's GF. The Office of Information Technology
appeared fourth on the list and was another of the
department's initiatives - it was also a chargeback and
paid with interagency funds.
3:04:19 PM
Ms. Lowenstein moved to slide 9 and addressed DOA funding
comparison by fund group. The department received a small
amount of federal funds, which were hardly visible on the
bar chart. Federal funds were generally for specific
purposes - DMV received a small amount and ALMR received a
small amount to receive funds from the [U.S.] Department of
Defense for the maintenance of the ALMR system. Interagency
receipts made up the "other" state funds. She detailed the
interagency receipts may be something like the Internal
Services or Public Building Fund; it was the mechanism DOA
used to charge and receive from other agencies. The bulk of
the department's DGF was DMV and AOGCC, whereas UGF was
primarily OPA and PD.
Commissioner Fisher advanced to slide 10 pertaining to the
Division of Finance. The division was responsible for
managing the IRIS [Integrated Resource Information System]
accounting system, ALDER [Alaska Data Enterprise
Reporting], and for producing the Comprehensive Annual
Financial Report (CAFR) and various audit compliance
reports as required. He noted the division worked with LFD
to complete the audit. The division's budget was
approximately $10.8 million, split roughly 50/50 between GF
and other funding. He noted that "other" generally referred
to interagency receipts received from other agencies. He
pointed to a column showing the percent of costs associated
with fees and relayed that fees collected by DOA were
typically from other agencies (with the exception of DMV
and AOGCC). The division housed 45 employees who were split
roughly one-third/two-thirds between accounting and
administrative functions respectively.
3:07:24 PM
Commissioner Fisher turned to slide 11 and addressed the
Division of Personnel and Labor Relations. He addressed the
Division of Personnel first and shared that it had a $12
million budget, the majority of which was paid through
interagency receipts (there was only a modest amount of UGF
received). There were about 120 employees, most of whom
were in the Payroll Services section and were responsible
for getting the weekly payroll out. He remarked that the
state's payroll was relatively complicated and included a
number of exceptions. Earlier in the week, DOA had launched
a new HR [Human Resources] module to IRIS and the hope was
to get better information into the system in order to have
less manual processing of payroll, which would hopefully
reduce cost and personnel. The division was also
responsible for performing classifications and conducting
training.
Commissioner Fisher moved to slide 12 and continued to
address the Division of Personnel. The Employee Planning
and Information Center (EPIC) provided record keeping and
reporting. The division also housed the Americans with
Disability Act (ADA) and Statewide Recruitment. The labor
relations portion of the division had a budget of about
$1.3 million (all UGF) and seven staff who were responsible
for maintaining the state's relationship with bargaining
units and for bargaining agreements as they arose.
3:09:37 PM
Commissioner Fisher spoke to the Division of Retirement and
Benefits (DRB) on slide 13. He relayed that the division's
budget was almost $18 million with 115 employees
responsible for handling the benefits for active employees
and retirees. He pointed to the bottom of the slide and
relayed that the department used Aetna to administer the
healthcare plan. He moved to slide 14 and addressed the
Division of Risk Management. The division was responsible
for the administration of the department's insurance
programs for its third-party property insurance (shown in
the second row). The bulk of the division at almost $32
million was workers' compensation and other claims
management functions. The division had a budget of about
$40.8 million, with five staff.
Commissioner Fisher advanced to slide 15, which continued
the Division of Risk Management. The allocation included
0.5 positions with the responsibility of reviewing
contracts to ensure the departments had proper insurance.
Part of workers' compensation involved a Return to Work
program. The program acknowledged that perhaps individuals
could not return to their previous job, but there was
light-duty work that could add value to the state, while
enabling the individuals to be productive.
3:11:35 PM
Commissioner Fisher addressed Shared Services on slide 16.
The department was working to centralize functions
performed by all agencies and to redesign the process to
improve efficiency.
Co-Chair Seaton relayed the component could be addressed
during subcommittee meetings.
Commissioner Fisher moved to slide 17 and discussed the
Office of Information Technology. The department had an IT
initiative underway that was similar to the Shared Services
approach. The two initiatives had not been combined because
of the specialized nature of IT. He reported that DOA had
hired a new CIO who had begun work the previous day. The
total ETS [Enterprise Technology Services] budget was about
$47.5 million. He pointed to the allocation for the new
chief information officer with two staff. He detailed that
IT staff from other departments would be transferred into
the organization beginning in FY 18. The remainder of the
allocations pertained to current operations. The first was
a database function (the mainframe and associated databases
and the Oracle and Sequel databases, in addition to a
number of applications). The allocation included about 18
employees with a budget of about $4.2 million.
3:14:05 PM
Commissioner Fisher continued to address IT on slide 18. He
detailed that Data Center and Hosting Services hosted
services related to its servers and virtual servers offered
to other departments. The allocation included 29 people and
a budget of about $15 million. Network Services had a
budget of $12 million with 12 employees responsible for the
state's wide area network (connectivity between all the
state offices), which included major and satellite offices
around the state. He moved to the Security allocation with
a budget of $3.3 million and 9 employees. The
administrative allocation was approximately $3 million with
18 employees and included procurement, fiscal, and
leadership functions. He addressed SATS and ALMR on slide
19 with a total cost of about $6.7 million UGF, $1.9
million in federal funds, and a modest amount from other
users. The SATS portion was about $4.4 million and ALMR
accounted for about $3.2 million.
3:15:54 PM
Commissioner Fisher addressed the department's
Administrative Services Division briefly on slide 20. The
division employed 13 individuals with a budget of about
$2.6 million. He turned to the DMV on slide 21. The
division included about $16.5 million DGF (fees collected
from state residents) with 149 full-time and 5 part-time
employees.
Co-Chair Seaton pointed to $151,200 in other funds and a
note on the slide reading that other funds were
uncollectible. He asked for detail.
Ms. Lowenstein answered that it pertained to interagency
receipts. The division thought it had the need for the
funds at one time with an agreement with DMVA [Department
of Military and Veterans Affairs], but the agreement had
not come to fruition and the funds were unrealizable (there
was nothing to bill an agency for).
Commissioner Fisher turned to the Office of Public Advocacy
on slide 22. The office function was approximately 30
percent criminal work and 70 percent civil work. The
criminal work was associated with providing representation
in cases where the public defender was conflicted out.
Civil work was primarily associated with public guardians -
providing a guardian for wards of the state, adults unable
to care for themselves, guardian ad litem, and the Court
Appointed Special Advocate (CASA) program for foster
children. The Court Visitor allocation involved providing
work for the court around the effectiveness of the guardian
program. The Civil Custody program was comparable to the
guardian ad litem program, but it applied when parents were
getting a divorce and the situation became particularly
challenging for children. He addressed the Child in Need of
Aid (CINA) allocation where representation was provided to
parents when there was a question about whether the
children should perhaps be taken out of the home. He noted
that the department's work to provide criminal services was
court mandated (the same applied to guardianship cases).
The department provided some elder fraud support for elders
who had been defrauded of some of their assets - the
department represented individuals in a civil action to try
to recover assets.
3:19:47 PM
Representative Wilson asked for clarification related to
representation for CINA cases. She thought Commissioner
Fisher had mentioned representation for criminal cases as
well.
Commissioner Fisher corrected that he had meant that CINA
cases were similar to the criminal defense cases; the
department was representing a parent as ordered by the
court. He had not meant to imply that the [CINA] cases were
criminal in any nature.
Representative Wilson asked if the work was done by
conflict attorneys. She mentioned public defenders and
guardian ad litem and was trying to determine where "this
fits with the parents."
Commissioner Fisher answered they were civil cases. He
stated it was not only a conflict. The cases involved an
action involving the family; if the family could not afford
an attorney the department would provide one.
Representative Wilson spoke about semantics related to the
terminology. She stated that the public defender
represented one of the parents - she referred to the other
attorney as a conflict attorney. She asked for verification
that "these are the other attorneys that aren't the public
defenders for the other parent in these cases."
Commissioner Fisher replied "right."
Co-Chair Seaton asked for clarification on the term CINA.
Commissioner Fisher replied it stood for Child in Need of
Aid.
Commissioner Fisher addressed the Public Defender Agency on
slide 24. The agency had a budget of nearly $26 million
with approximately 170 employees. The budget was broken
down by criminal trials, civil trials (predominately CINA
cases), and appeals.
3:22:15 PM
Commissioner Fisher relayed that the last slides of the
presentation pertained to boards and commissions. He
suggested skipping the slides and taking questions on the
overall presentation.
Co-Chair Seaton asked about slide 25 under the Office of
Administrative Hearings. He pointed to the WCAC Recruitment
allocation that had been listed as "status quo." He asked
if the designation meant the allocation had not addressed
its mission.
Commissioner Fisher answered that the Office of
Administrative Hearings was tasked by statute to recruit
members of the workers' compensation board and commission.
He surmised the designation indicated that either the
question was not relevant or that it served all Alaskans.
Co-Chair Seaton noted that the allocation only required a
one-tenth of one employee. He asked for verification it was
not interfering with the department's work.
Commissioner Fisher believed the statement was fair,
although the Office of Administrative Hearings would say
that "these kind of little things" are a nuisance factor.
The allocation was listed as one-tenth of an employee, but
it was primarily the director who spent time on the issue.
Representative Wilson remarked that sometimes state
functions were in silos. She referred to CINA cases that
involved DOA, the Court System, and the Department of
Health and Social Services (DHSS). She stated the
administration was spending almost $15 million UGF on the
cases per year.
Commissioner Fisher asked for verification that
Representative Wilson was adding the $5.4 million for OPA
and the $4.8 million for the PD.
Representative Wilson answered that she was also including
the guardian ad litem allocation of $4.6 million.
Commissioner Fisher clarified the guardian ad litem were
not necessarily CINA and were associated primarily with
foster children.
Representative Wilson remarked that every CINA case had a
guardian ad litem. She detailed that once a child was taken
by the Office of Children's Services (OCS), the child was
appointed a guardian ad litem until they were adopted. She
observed that "those all are within that department."
Commissioner Fisher agreed. He specified that it may not be
only in the duration of the CINA case. There was an ongoing
relationship if the child was taken out of their home.
3:25:50 PM
Representative Wilson disagreed. She stated that OCS had
legal custody of a child until they were adopted. She
stated that the guardian ad litem remained with a child
until adoption.
Commissioner Fisher agreed and clarified that he had been
trying to say the same thing. He elaborated that the
representation of a parent may last a shorter timeframe,
whereas, the guardianship emerged from the preceding and
had a longer life.
Representative Wilson stated it was not possible to only
look at the $15 million increment. There would be another
budget amount in DHSS and the Court System.
Co-Chair Seaton agreed that families in disruption were
expensive to the state.
Representative Wilson added she wanted to get them back
together.
Co-Chair Seaton agreed and wanted to take care of the
children. Separately, he noted that healthcare was the
biggest cost driver in almost every department. He expected
DOA to talk with the subcommittee about how it planned to
reduce the cost of healthcare whether through prevention or
other means. He stressed the importance of initiatives to
reduce the poor health of Alaskans.
Commissioner Fisher agreed.
Co-Chair Seaton discussed the schedule for the following
week.
ADJOURNMENT
3:28:33 PM
The meeting was adjourned at 3:28 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFC Department Overview 01.27.17 (reduced file size).pdf |
HFIN 1/27/2017 1:30:00 PM |
DEC Budget Overview HFIN |
| FINAL House Finance DOLWD Overview 01-27-2017.pdf |
HFIN 1/27/2017 1:30:00 PM |
DLWD Budget Overview HFIN |
| Department of Administration HFin Overview FINAL.pdf |
HFIN 1/27/2017 1:30:00 PM |
DOA Budget Overview HFIN |
| DOLWD Response to Inquiry during HFC Overview January 27 2017.pdf |
HFIN 1/27/2017 1:30:00 PM |
DLWD Response HFIN |