Legislature(2015 - 2016)HOUSE FINANCE 519
02/04/2015 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB72 || HB73 | |
| Fy 16 Budget Overview: Department of Labor and Workforce Development | |
| Fy 16 Budget Overview: Department of Law | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 72 | TELECONFERENCED | |
| += | HB 73 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE BILL NO. 72
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, making
reappropriations, and 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. 73
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:38:45 PM
^FY 16 BUDGET OVERVIEW: DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT
1:38:48 PM
HEIDI DRYGAS, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, introduced her staff and provided a
synopsis of her professional background including her
experience as general counsel to the Alaska District
Council of Laborers for ten years. In her position she
handled negotiations, contract administration, grievance
adjudication, arbitration, hearings before the Alaska Labor
Relations Agency, and the National Labor Relations Board.
Commissioner Drygas began the PowerPoint presentation "FY16
Budget Overview: Department of Labor and Workforce
development (copy on file). She turned to slide 1:
"Department Overview."
MISSION:
· Provide safe and legal working conditions and
advance opportunities for employment.
KEY PROGRAM PRIORITIES:
· Protect Alaska's workers through statutory and
regulatory assistance and enforcement.
· Workforce development to support Alaska hire and
economic development.
· Income replacement for injured, unemployed, and
permanently disabled workers.
Commissioner Drygas advanced to slide 2: "Offices by
Location." She reported that the department provided
services to Alaskans across the state. She relayed that the
red dots on the map indicated the Alaska Job Center network
through which the department provided staff assisted
employment and training services. The blue dots indicated
the locations of the vocational rehabilitation offices
where employment and training services were provided to
disabled Alaskans. The Alaska Vocational Technical Center
(AVTEC) located in Seward was indicated by a purple dot.
She continued that the other programs in green on the map
included unemployment insurance, labor standards and
safety, worker's compensation, and other programs.
Commissioner Drygas reviewed slide 3: "Department
Organizational Chart." She relayed that the chart was
organized by key priority programs. Two of the divisions
had sections that had cross priority program lines; the
Employment Security Division and the Vocational
Rehabilitation Division. She reported that there were some
lines of distinction that were slightly unclear. She stated
that the Worker's Compensation Division had some cross over
in the "Protect Workers" priority because of the efforts
made to ensure employers had worker's compensation
insurance for their employees. Historically, the department
had placed them in the "Income Replacement" area because
they primarily insured benefit payments to Alaska's injured
workers.
Commissioner Drygas turned to slide 5: "Protect Workers."
She reported that the state saw a significant reduction in
the workplace lost time illnesses and injury rate per 100
employees from 1.13 in FY13 to a record low of 0.61 in
FY14. The decrease was a direct result of the Divisions of
Labor Standards and Safety developing a 10-hour
Occupational Safety and Health Administration (OSHA) course
used to improve safety in the target industry of seafood
processing. She was happy to report that the majority of
the decrease happened in the seafood industry.
Commissioner Drygas advanced to slide 6: "Workforce
Development." She reported that the Vocational
Rehabilitation Program performance had remained strong. In
FY 2014 the program had employed 607 upon exit from their
individualized plan, which reflected an increase from 598
in FY 2013. The average wage exiting the program was $14.31
increased from $13.84 in FY 2013.
Vice-Chair Saddler asked whether the chart on slide 5
depicted continued hires or new hires. Commissioner Drygas
answered that the figure represented the newly employed.
1:42:10 PM
Commissioner Drygas pointed to slide 7: "Income
Replacement." She declared that the Department of Labor and
Workforce Development (DLWD) improved the timeliness of
Fisherman's Fund claims from an average of 60 days in FY
2013 to an average of 47 days in FY 2014 due to newly
implemented follow-up protocol and existing public and
private partnerships reviewed in the following two slides.
Commissioner Drygas highlighted slide 8: "State
Partnerships."
Work Readiness Assessments
· Alaska Military Youth Academy
· Department of Corrections
· Department of Education and Early Development
·
Economic and Demographic Data, and Training and
Education Program Outcomes
· Department of Health and Social Services
· Department of Commerce, Community and Economic
Development
· Department of Education and Early Development
· University of Alaska
· Commission on Postsecondary Education
Apprenticeship, Training and Employment Services
· Department of Corrections
· Division of Juvenile Justice
Commissioner Drygas reviewed slide 8: "Private/ non-Profit
Partnerships."
Apprenticeship, Training and Employment Services
· Alaska Employers
· Tribal and Community Vocational Rehabilitation
Programs
· Construction Education Foundation
· Alaska Works Partnership
· Regional Training Centers and Private Training
Providers
Private Sector Membership on Boards and Councils
· Workers' Compensation Boards
· Alaska Safety Advisory Council
· Alaska Workforce Investment Board
· Alaska Labor Relations Agency Board
· Fishermen's Fund Council
Commissioner Drygas added that an example of a partnership
that was not reflected on the slide was the Seafood
Industry Safety program.
Commissioner Drygas turned to slide 9: "FY2016 Endorsed
Budget: $179,412.8: Budget by Priority Program" She
indicated that 53 percent of the department's budget was
comprised of federal funds at $94.4 million. She detailed
that the department's unrestricted general funds (UGF)
amounted to $29.2 million and was a decrease of $4.2
million from FY 2015 or 12.8 percent reduction. In order to
meet the reduction DLWD would redesign administrative
infrastructure to maintain maximum services delivery and
identify efficiencies, however impacts to services would be
felt.
Commissioner Drygas scrolled to slide 10: "Governor's
Endorsed Budget Overview: Operating Budget."
Operating Budget
One-time and Temporary Increment Reversals
· -$1.4 million UGF for the Alaska Youth
First/Compass Alaska program
· -$150.0 DGF for the Rural Apprenticeship
Outreach program
· -$226.8 UGF and -$100.0 DGF for the Alaska
Vocational Technical Center (AVTEC)
Registered Nurse program
Designated General Fund Increases
· Additional program receipt authority for the
Alaska Safety Advisory Council ($35.0) and
AVTEC ($110.0)
· $429.0 in additional Technical and
Vocational Education Program (TVEP) funding
to regional training centers specified in
Alaska Statute 23.15.835
Known Federal and Other Funding Reductions
· -$3.0 million less in federal and other
funding that supports the state's job center
network
Co-Chair Neuman clarified that the endorsed budget
reflected an 8 percent reduction. Commissioner Drygas
interjected that a 4.8 percent reduction was added to the 8
percent reduction for a total reduction of 12.8 percent.
Commissioner Drygas elaborated that in FY 2016 DLWD would
lose $1.7 million in federal funding for the Alaska Jobs
Center Network. The Network consisted of field stations
staffed in 20 centers throughout the state. The department
was examining alternative solutions to avoid job center
closures. She exemplified a saving measure in the Seward
Job Center where the staffer was retiring and the Alaska
Vocational Technical Center (AVTEC) would take over job
center operation. She furthered that DLWD would utilize
vacancies and attrition to keep job centers open.
1:47:26 PM
Representative Gara referenced the $1.4 million UGF
reduction for the Alaska Youth First program last year that
was restated as a one-time expenditure. He stated that the
money was used for job counseling services. He asked if
there was a way to retain the most effective services as
opposed to cutting the entire program. Commissioner Drygas
felt that the program was "critically important." She
suggested that if the committee wanted to look to other
sources of funding she would welcome keeping the program
but did not think the program would survive the difficult
budget cuts. Representative Gara reminded the committee
that the funding was a recurring item and was reduced to a
one-time appropriation last year.
Commissioner Drygas moved on to slide 11: "Technical And
Vocational Education Program."
Entity
FY2014 FY2015 FY2016
Distribution Distribution Distribution
· University of Alaska
$ 4,842.0 $ 5,226.9 $ 5,630.0
· University of Alaska Southeast
$ 538.0 - -
· Galena Interior Learning Academy
$ 430.4 $ 464.6 $ 500.4
· Alaska Technical Center
$ 968.4 $ 1,045.4 $ 1,126.0
· Alaska Vocational Technical Center (AVTEC)
$ 1,829.2 $ 1,974.5 $ 2,126.9
· Northwestern Alaska Career and Technical Center
(NACTEC)
$ 322.8 $ 348.5 $ 375.3
· Southwest Alaska Vocational and Education Center
(SAVEC)
$ 322.8 $ 348.5 $ 375.3
· Yuut Elitnaurviat, Inc. People's Learning Center
$ 968.4 $ 1,045.4 $ 1,126.0
· Partners for Progress in Delta, Inc.
$ 322.8 $ 348.5 $ 375.3
· Amundsen Educational Center
$ 215.2 $ 232.3 $ 250.2
· Ilisagvik College
- $ 580.8 $ 625.5
· TOTAL
$ 10,760.0 $ 11,615.4 $ 12,510.9
Commissioner Drygas mentioned that the slide depicted the
funding for the Alaska Technical and Vocational Education
Program (TVEP) by location.
Commissioner Drygas looked at slide 12: "Governor's
Endorsed Budget Overview: Operating Budget Continued."
Operating Budget continued
$300.0 Unallocated Unrestricted General Fund
Reduction
· Delete three positions from the
Commissioner's Office and the Administrative
Services Division to attain the Governor's
goal of redesigning administrative
infrastructure to maintain maximum program
and services delivery
8% Unrestricted General Fund ($2.5 million)
Reduction
· Reduce administrative and support positions,
and streamline services to minimize direct
service impacts (-$1,052.2)
· Reduce funding available to offset lease
expenses (-$311.4)
· Closure of the Alaska Vocational Technical
Center's Anchorage Campus , which houses
AVTEC's Allied Health programs (-$478.9)
Commissioner Drygas identified the three positions slated
for elimination in the Commissioner's Office and the
Administrative Services Division: administrative assistant,
accounting clerk, and micro network technician.
1:51:03 PM
Commissioner Drygas looked at slide 13: "Governor's
Endorsed Budget Overview: Operating Budget Continued and
Capital Budget."
Operating Budget continued
8% Unrestricted General Fund ($2.5 million)
Reduction continued
· Reduced Adult Basic Education instructional
hours (-$172.5)
· Eliminate a Wage and Hour Investigator (-
$153.9)
· Less funding for pass-through grants in
support of Alaska Construction Academies and
Rural Training Centers (-$367.6)
Capital Budget
Re-appropriation
· $530.0 unexpended balance of the AVTEC Third
Avenue Dormitory project to provide for the
replacement and upgrading of AVTEC's
information technology (IT) equipment and
infrastructure.
Commissioner Drygas advanced to slide 14: "Share Of Total
Agency Operations." She reported that the next few slides
were historical budget charts provided by the Division of
Legislative Finance (LFD) which portrayed changes in the
DLWD budget since 2007. She emphasized that slide 14 showed
the overall state agency operations and the general fund
(GF) budget as a percentage of the total agency budgets.
The department's general funds had increased at an average
annual growth rate of 3.7 percent. However, the rest of the
state had grown at a faster rate therfore, DLWD represented
a smaller share of the overall statewide budget and
represented six straight years of decline.
Vice-Chair Saddler asked whether the slide included UGF
funds. Commissioner Drygas responded in the affirmative.
Representative Gara cited slide 13 and requested an
explanation for the reduction in the adult basic education
instructional hours totaling $172.5 million and asked
whether there was an alternative for serving the students.
PALOMA HARBOUR, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT,
answered that the total budget had $2 million remaining for
the Adult Basic Education program and was currently $1
million over the required federal match. She felt that the
impacts would be fairly minimal.
Co-Chair Neuman stated that slide 14 compared DLWD to other
state agency budgets. Commissioner Drygas voiced that she
was required to provide the graph.
1:55:47 PM
Vice-Chair Saddler asked for clarification about the Adult
Basic Education program. Commissioner Drygas responded that
the program assisted adults in obtaining their General
Education Diploma (GED). Vice-Chair Saddler asked if there
were other educational resources available. Commissioner
Drygas was not familiar with other resources available.
Vice-Chair Saddler opined that other educational resources
would include the public school system. Commissioner Drygas
replied that adult education was comprised of Alaskans who
dropped out of high school and wanted to "make a go of it."
Representative Guttenberg asked about the reason that the
GED program was under the Department of Labor. He wondered
whether it was considered a part of workforce development.
Commissioner Drygas replied in the affirmative and added
that the basic reason was that it served adults seeking
their GED. Representative Guttenberg cited the example of
of someone aged 19 or 20 and asked where she would go for
GED assistance. Commissioner Drygas answered that Adult
Basic Education served students 16 years old or older.
Commissioner Drygas explained the chart on slide 15:
"General Funds By Appropriation." She detailed that the
graph depicted the departments GF budget changes by
appropriation. She furthered that GF included special
training funds such as the State Training and Employment
Program (STEP), and the Technical and Vocational Education
Program (TVEP), and program receipts from fee-for-service
type activities (i.e., student tuition and fees or
mechanical inspection fees).
Co-Chair Neuman asked about the blue line with the stars
that indicated significant growth in 2008 and 2009 and
wondered why. Commissioner Drygas replied that the TVEP
program increased significantly by statute.
1:59:40 PM
Commissioner Drygas examined slide 16: "Unrestricted
General Funds By Appropriation." She noted the decline in
growth in almost all DLWD programs and components in FY
2015 and FY 2016. She commented that the steeper decline in
Business Partnerships was due to the cut to the Youth First
program. The increase in the Labor Standards and Safety
Division was accredited to the projected shortfall in the
Workers Safety Compensation Administration Account (WSCAA)
that resulted in a fund source change to UGF.
Commissioner Drygas reviewed slide 17: "Change In
Positions." She explained that the chart portrayed the
decrease in positions since 2007.
Co-Chair Neuman asked about the average cost per employee
in FY 2007 versus FY 2016. Commissioner Drygas responded
that she would provide the information.
Commissioner Drygas scrolled to slide 18: "Vision For The
Department."
· Streamline programs and revamp the workforce
development system to ensure maximum effectiveness
and efficiency within a sustainable budget
· Increase Alaska resident hire in priority industries
and occupations to ensure Alaskans are getting
Alaska's jobs
· Ensure economic stability for injured, unemployed
and disabled Alaskans
Commissioner Drygas commented on how committed the people
within the department were. She was struck by DLWD
employee's longevity, concern for people's wellbeing, and
good nature. She specifically mentioned the dedication of
the employees working in the Division of Rehabilitation and
commended them for finding disabled people meaningful work.
She revealed that she was reviewing a proposal that would
administer Workforce Development Grants through the
Employment Security Division instead of a separate Business
Partnerships Division, which could result in a savings of
approximately $850 thousand. In addition, she noted that
Alaska had the highest ratios of resident to non-resident
workers in the country which impacted the resident rate of
unemployment.
Vice-Chair Saddler asked the commissioner to define
priority industries in Alaska. Commissioner Drygas deferred
to Deputy Commissioner Cashen.
2:05:55 PM
GREG CASHEN, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, answered that he had just finished
discussions with the Workforce Investment Board on the
topic. He identified that the priority industries in the
state were oil and gas, mining, construction,
transportation, seafood processing, healthcare, and
information technology. He reported that DLWD would be
implementing the new federal Workforce Innovation
Opportunity Act.
Vice-Chair Saddler referred to the Commissioners statement
that Alaska had the highest rate of non-resident
unemployment and wondered whether that was the case in
priority or non-priority industries. Deputy Commissioner
Cashen replied that non-resident employment was focused on
construction, oil and gas, mining, and the seafood
industry. He offered to provide the departments recent non-
resident hire report.
Co-Chair Thompson thought that the tourism industry had a
lot of non-resident hire and supported tourism industry
jobs going to Alaskans. Deputy Commissioner Cashen
responded that he inadvertently missed listing the tourism
industry as having a high rate of non-resident hire.
Co-Chair Neuman stated that recently he had met with the
Commissioner to discuss the future of Alaska. He was
concerned about the lost jobs in communities due to budget
reductions. He stated the importance that DLWD would play
in assisting Alaskans in finding new employment. He
commented that outreach to private industry was essential.
He believed that the state's role in training Alaskans for
industry jobs would need to transfer to the private sector.
He asked the commissioner to address the committee about
the role of the department in the future with further
budget reductions and the partnerships with private
industry.
Commissioner Drygas responded that the Governor directed
commissioners to "dig into budgets" to find reductions.
She believed the department had identified new reductions
by "thinking outside the box" and that DLWD had to "do less
with less." She was very passionate about partnering with
private industry and increasing workforce development
opportunities in the state. She shared that one of the
things the Governor had emphasized in his speeches was
cooperation among the Department of Education and Early
Development (DEED), the University of Alaska, and DLWD to
streamline and make workforce development and career and
technical education more effective and work on identifying
duplications and where the stated needed to improve its
training. She shared that she had productive meetings with
Commissioner Michael Hanley, Commissioner, Department of
Education and Early Development, and President Patrick
Gamble, President, University of Alaska, to discuss ways to
advance the goals and measure results. She discussed her
energy and enthusiasm for her job as commissioner.
2:15:07 PM
Vice-Chair Saddler referred to slide 11 and asked for
information on which TVEP training centers were most
effective at producing jobs and at what cost per student.
Commissioner Drygas answered that a TVEP report was being
published next month.
2:16:08 PM
AT EASE
2:25:32 PM
RECONVEYNED
^FY 16 BUDGET OVERVIEW: DEPARTMENT OF LAW
CRAIG RICHARDS, ATTORNEY GENERAL, DEPARTMENT OF LAW,
introduced the PowerPoint presentation "FY16 Budget
Overview: Department of Law (copy on file).
Attorney General Richards began with slide 2: "Mission."
Mission
· The Alaska Department of Law prosecutes crime and
provides legal services to state government for
the protection and benefit of Alaska's citizens.
Core Services
· Protecting the safety and financial well-being of
Alaskans
· Fostering conditions for responsible development
of our natural
· resources
· Protecting the fiscal integrity of the State of
Alaska
· Promoting good governance
2:27:00 PM
Attorney General Richards moved to slide 3: "Organization
Chart." He thought it would be helpful to include the
organizational chart for the Department of Law (DOL) which
included the Criminal Division, Civil Division, and
Administrative Services.
Attorney General Richards pointed to slide 4: "Protecting
Alaskans: Prosecutions and Convictions in CY13." He
conveyed that the prosecutorial arm for the state was
housed in the Criminal Division within DOL. The data on the
chart showed the number of felony and misdemeanor cases
that were accepted in and subsequently resolved in the last
calendar year. He reported that the statistics did not
include the dismissals that amounted to 16 percent of the
total prosecuted cases; half resulted in plea agreements.
Co-Chair Neuman stated his concern with child sexual
assault. He recounted a recent event in Wasilla that
resulted in a plea agreement with lessor charges. He
wondered how a plea agreement could happen in child sexual
assault cases. Attorney General Richards replied that he
was not familiar with the circumstances of the case. He
stated that major plea decisions were made with the
prosecutor and the district attorney. He offered to provide
information regarding the particular case. Co-Chair Neuman
responded that his concern was not just that particular
case. He wondered how someone could commit "a tremendous
amount of crime" and could obtain a plea agreement with
lessor charges. Attorney General Richards offered to
provide statistics for the department regarding plea
agreements with multiple charges reduced to one charge.
Attorney General Richards looked at slide 5: "Protecting
Alaskans: Recent Statistics." He explained that the slide
showed the number of violent felony crimes reported in
Alaska. He commented that reported crimes related to the
amount of work for the Criminal Division of the department.
He relayed that reported crimes remained relatively flat.
Co-Chair Neuman cited that 2,672 felonies were reported
[2013] and wondered how many of the crimes were prosecuted.
JOHN SKIDMORE, DIRECTOR, CRIMINAL DIVISION, DEPARTMENT OF
LAW, indicated he would provide the information.
Representative Guttenberg asked how Alaska compared to
other states in relation to violent crimes. Attorney
General Richards was not aware of accurate statistics
available.
2:33:06 PM
Attorney General Richards highlighted slide 6: "Protecting
Alaskans."
Securing safe living conditions for Alaska's children:
· The Alaska Supreme Court resolved 29 appeals in
FY14 relating to child protection cases,
affirming the position taken by OCS in 28 of
those appeals -a 96% success rate.
Safeguarding Alaska's consumers:
· The Commercial and Fair Business section
participated in settlement of 6 major local and
multi-state consumer protection cases, resulting
in almost $6 million to the state. The Regulatory
Affairs and Public Advocacy section yielded
approximately $4.4 million in quantifiable
consumer benefits in FY14.
Prosecuting criminals and shielding Alaska's
vulnerable adults:
· Extraditions, probation revocations, pursuing PFD
and Medicaid fraud cases, and a continued focus
on domestic violence and sexual assault.
Attorney General Richards moved to slide 7: "Fostering
Economic Development."
Ensuring Alaska's Resources are accessible:
· Continued efforts to preserve and enhance access
throughout the state, including the U.S.
Secretary of the Interior's denial of a land
exchange to build a road to Cold Bay.
Defending the Alaska's right to manage its resources:
· Obtained a favorable decision vacating the NMFS
decision, based on projections 100 years into the
future, to list the Beringia population of
bearded seal as threatened.
Representing the state's interests in resource
development:
· Worked with multiple state agencies to provide
comments on the EPA's proposed rule to enforce a
reduction of CO2 emissions from existing power
plants.
Attorney General Richards reported that the state wanted to
defend its right to manage its resources and maintain
accessibility to its resources. He mentioned that a whole
series of cases were related to maintaining the states
interest in resource development and ability to manage its
resources.
Co-Chair Neuman commented that protecting the state's
sovereignty was a huge issue for the state. He informed the
committee that he had requested information regarding what
law suits were filed on behalf of the state that were
attempting to protect the state's rights and list which law
suits were feasible and might proceed with litigation.
Representative Wilson asked how DOL decided which
Environmental Protection Agency (EPA) laws were worth
challenging. She exemplified the air quality issues in
Fairbanks. Attorney General Richards stated that he had not
yet made a decision regarding state's rights. He reasoned
that he would first determine whether the state disagreed
with a federal law and whether or not the state "had a
unique voice" in the issue. He added that there were also
practical considerations that weighed in on the decision of
whether to sue or not. He would provide any information on
a "formal structure on EPA rule charges" if they existed
within the department.
2:38:03 PM
Representative Edgmon asked about Alaska Tribes. He stated
that he did not see any mention of tribes in the
presentation. He asked whether the department was going to
pursue working with the tribes in relation to tribal courts
and the criminal justice system and improving relationships
with tribes. Attorney General Richards responded in the
affirmative. He voiced that he wanted to find the balanced
approach and work with the tribes on offering alternative
criminal justice remedies especially for non-violent
felonies at the local level. He thought that the biggest
challenge was resources and spreading them out over 230
tribes of varying demographics. He thought that the best
approach would consider needs on a case-by-case basis to
see what made sense. Representative Edgmon stated that
"Alaska tribes had been the most litigated than anywhere in
the country" and increasing efficacy at the local level
could bring cost savings to the state. Attorney General
Richards added that federal funds could become available if
the department could "get some of the tribes up and
running."
Vice-Chair Saddler referenced the legal challenges against
the Department of the Interior regarding its refusal to
allow 3-D seismic testing in Arctic National Wildlife
Refuge (ANWR) and whether the state was going to pursue
legal action. In addition, he asked whether the department
would continue to challenge the refusal to redraw the
western border of the 10-02 area of ANWR. He hoped that the
department would "vigorously push back against" that type
of issues and would resist in concert with other western
states as well. Attorney General Richards agreed with
working collectively with other western states. He detailed
that as a member of the National Association of Attorney
Generals he was involved in a subgroup of western states
that worked collaboratively on federal land issues.
2:42:33 PM
Representative Pruitt requested that when the information
on the law suits related to state's rights against the
federal government was available the information would be
provided to the committee as a presentation by the attorney
general. Attorney General Richards agreed and warned that
he would have to proceed with caution when providing
information on litigation strategy in a public setting and
would need to find a balance in presenting the information.
Representative Pruitt understood and did not want to
jeopardize the state's position.
Representative Munoz wanted Attorney General Richards to
comment on the Ketchikan educational lawsuit. Attorney
General Richards reported that currently the Superior Court
found that the local contribution portion of school funding
was in violation of the dedicated funds provision of the
Alaska Constitution but did not violate other provisions of
the constitution regarding educational funding provisions.
He elaborated that Ketchikan moved to reconsider the
decisions it lost but reconsideration was not granted. The
final judgement was entered and the state requested a stay.
However, the judge would not accept expedited
consideration. Presently, the department petitioned the
state Supreme Court for an expedited stay of the decision
and regardless of a granted stay the state will appeal the
judgement.
Attorney General Richards examined slide 8: "Protecting
Fiscal Integrity." He explained that the chart depicted the
amount of money DOL brought into the state through various
collections actions and litigation. He revealed that DOL's
budget was approximately $100 million annually and that the
department brought in $400 million in FY 2013. He deuced
that the department was a revenue driver.
Co-Chair Neuman asked what happened in FY 2014
[$23,428,000]. Attorney General Richards stated that the
larger sums had to do with oil and gas cases that happened
to be settled in a particular fiscal year. He surmised that
there was not a large settlement in FY 2014.
2:47:34 PM
Attorney General Richards advanced to slide 9: "Protecting
Fiscal Integrity."
Providing legal support in the development of a
gasline:
· Continued to furnish legal guidance to develop a
gas line to transport Alaska North Slope gas to
markets in and outside of Alaska. The development
of this resource is vital to strengthening
Alaska's economic future.
Collecting on monies owed to the state:
· Represented the Department of Revenue (DOR) in
tax disputes.
·
Securing an equitable share to Alaska for its
resources:
· Monitoring and participating, where appropriate,
in state and federal regulatory oversight of
tariffs on common carrier pipelines in the state.
This vigilance can earn the state millions of
dollars in royalties and production taxes each
year.
Attorney General Richards discussed additional core
functions of the Department of Law in slide 10: "Promoting
Good Governance."
Defending the state's elections process:
· Advised the Office of the Lieutenant Governor
regarding certification of four ballot measures
and a referendum.
Upholding the public interest in programmatic
investments:
· On behalf of DHSS, brought an administrative
claim against Xerox State Healthcare, for the
company's failure to provide a functional
Medicaid Management Information System.
Proceedings will commence in 2015.
Providing consistent legal opinions:
· The department plays an integral role in the
success of many state programs and operations
that are under the purview of our sister
agencies.
Attorney General Richards highlighted that DOL provided
baseline legal services, defended and sued for the state.
Co-Chair Neuman asked for clarification regarding the role
of the attorney general on behalf of the governor. Attorney
General Richards responded that he acted as legal advisor
to the governor and lieutenant governor.
Representative Wilson asked who the legislature would turn
to if they disagreed with a decision by the attorney
general. Attorney General Richards explained that
Legislative Legal Services acted on behalf of the
legislature and could provide legal advice independent of
DOL or any other state entity.
Representative Wilson asked for information regarding the
attorney general's decision on a case involving the Alaska
Industrial Development and Export Authority (AIDEA) and a
private entity. Attorney General Richards indicated that he
had not made any decisions regarding AIDEA. Attorney
General Richards conveyed that he could provide information
regarding the role of the attorney general and the
decisions in the rate cases related to Hill Corp. He
reported that the previous attorney general decided to
proceed with a Regulatory Affairs and Public Advocacy
(RAPA) section lawsuit with the Regulatory Commission of
Alaska (Regulatory Commission of Alaska). He delineated
that a determination had been made that Fairbanks natural
gas should be rate regulated. A concern about the
possibility of a "spin off" of the Pt. McKenzie facility in
order to avoid any rate regulation at the facility or all
the way along the value chain prompted additional legal
action to avoid the scenario that the only rate regulation
would occur at the distribution point. He continued that
RAPA challenged whether the facility should be rate
regulated and whether the facility could be sold should be
delayed until the rate regulation decision was made.
Co-Chair Neuman refocused members' attention to the budget
overview.
Attorney General Richards scrolled to slide 11: "Status of
FY15 Increments." He explained that typically the
legislature appropriated large oil and gas funds as
increments rather than GF dollars. The slide showed the
increments for FY 2015 that totaled $3.8 million for
litigation and $1.5 million for gasline efforts.
2:53:57 PM
Attorney General Richards explained slide 12: "Facing Tough
Times."
· We plan to continue to meet our core functions
· The department is committed to delivering the
same level of excellent service
· We can't define the details for all operations in
a reduction environment at this time
· Maintain current flexibility in our budget allows
movement to respond to the state's priorities
Attorney General Richards indicated that the governor
directed the agencies to find 5 percent to 8 percent
reductions and that the department identified an 8 percent
reduction.
Attorney General Richards looked at slide 13: "Current
Budget is not all GF."
Operating reductions by sister agencies may impact
Law:
· 34% of the Department's budget is funded from
sources other than undesignated general fund.
Substantially all of those funds are from other
agencies.
· As other departments draw down or eliminate
programs, the amount of legal support required
may be reduced. However, past experience
indicates that program elimination or downsizing
generally has a short-term uptick in level of
legal work that is necessary.
· Legal efforts required by other agencies are not
predictably parallel to reductions -an area of
concern is that sister agencies may "cut corners"
when seeking Law's expertise, potentially leading
to greater legal trouble in the future.
2:58:47 PM
Attorney General Richards explained slide 14: "Current
Actions."
· Working with the Alaska Court System (48-hour notice
on arraignments) to eliminate Fairbanks and
Anchorage overtime
· Reviewing current cases to determine if there are
any that shouldn't be pursued
· Establishing a protocol to fill positions as they
become vacant
· Reviewing existing structure at Law -does it make
sense to look at a re-organization
· Restructure of Anchorage criminal cases (potentially
eliminate the pre-indictment hearing process)
Attorney General Richards revealed that the Anchorage pre-
indictment hearing process was costly and the department
was considering sending cases directly to the Grand Jury as
a cost saving measure.
Vice-Chair Saddler asked whether there was any
restructuring within DOL due to passage of the Marijuana
referendum and whether the department would realize
additional expenses or net savings due to the referendum.
Attorney General Richards deduced that the general
consensus was that there would be a net increase in costs
due to driving under the influence (DUI) scenarios but he
had not seen any data.
Attorney General Richards discussed slide 15: "FY16 Budget
- Key Personnel Statistics." He pointed out that DOL had
300 employees in the Civil Division, 232 in the Criminal
Division, and 23 in Administrative Services. He summarized
that the reductions in personnel would be even between both
divisions and even among attorney and support staff.
Representative Munoz asked where the reduced positions were
located. Attorney General Richards did not know where the
positions would be specifically located at this time.
Vice-Chair Saddler wondered whether the department could
experience more cost savings by employing more support
staff and less attorneys. Attorney General Richards
reported that he had asked the same question. He was a
proponent of shifting more work to paralegals if possible
to realize cost savings.
Co-Chair Neuman suggested that DOL take a harder look at
making more personnel reductions which was currently under
2 percent. Attorney General Richards indicated that DOL was
examining more reductions in the event more were necessary.
3:04:54 PM
Attorney General Richards turned to slide 16: "FY 16
Governor's Budget (in thousands)." He mentioned that the
slide depicted the relative expense between the Civil
Division at $52 million versus the Criminal Division at $32
million. He noted that the Civil Division received a large
share of funds from other revenue sources besides GF.
Attorney General Richards moved to slide 17: "FY 15
Management Plan to FY 16 Governor's Request Line Item
Detail - All Funds."
Representative Munoz asked about the travel line which had
increased from FY 2015 to FY 2016. Attorney General
Richards stated that he was uncertain about the increase.
He believed that downsizing was not only a function of
reducing travel but also reducing personnel and core
services. Therefore, he did not focus on specific
priorities in finding reductions. He thought that
reductions in travel could inhibit the department's ability
to prosecute criminal cases.
Co-Chair Neuman pointed out the travel figure was
mistakenly depicted as a decrement on the slide and was
actually an increase.
Representative Wilson asked about the potential use of
video for the department as a cost saving measure. Attorney
General Richards responded that DOL was exploring having
more flexibility using video under the constitutional
constraint of the criminal defendant's right to
confrontation which presented a challenge. Representative
Wilson thought that it could possibly be used in pretrial
instances. Attorney General Richards agreed with her
statement.
Co-Chair Neuman mentioned legislation from a prior year
that looked at the costs to the state from organizations
that sue the state. He thought that the legislation was
meant to reduce costs for DOL. He was not familiar with the
details of the bill but wondered whether it had an effect
on the department's budget. He believed that the
legislation was important.
3:09:36 PM
JOHN SKIDMORE, DIRECTOR, CRIMINAL DIVISION, DEPARTMENT OF
LAW, reported that he had a recollection of the issue but
did not remember specifics and was unaware of any effects
so far.
Co-Chair Neuman requested information regarding the bill
and its effects on the department and asked that regarding
any legislation meant to reduce costs he would like
information about the agencies implementation and results.
Attorney General Richards agreed to provide the
information.
Attorney General Richards continued with slide 17. He
summarized that the department's budget was "largely people
driven" from Personnel Services.
Attorney General Richards discussed slide 18: "FY16
Reductions (in thousands)" and noted that it highlighted
the department's strategy to achieve the targeted
reductions of $6.2 million. He spoke to the largest
reductions that were: reduced use of outside council and
staff reductions. He detailed that the use of outside
council was cyclical and mostly related to oil and gas
cases. He pointed to the $916 thousand reduction in
personnel achieved through realignment of attorneys in
rural offices. He reported that the roughly $2.5 million in
staff reductions would be achieved through attrition due to
the 10 percent turnover rate within the department.
Vice-Chair Saddler asked for clarification regarding the
reduced use of outside council and wondered whether the
appropriation would be increased by any new oil and gas
cases in the future. Attorney General Richards delineated
that there were 3 reductions related to outside council:
$800 thousand for oil, gas, and mining; $800 thousand for
the gasline; and $300 thousand for the Endangered Species
Act. He elaborated that regarding the Endangered Species
Act the reduction was due to development of "very
sophisticated in-house expertise." He added that gasline
demand for DOL assistance was less than anticipated and oil
and gas litigation was low due to the cyclical nature of
oil and gas cases. Vice-Chair Saddler asked whether the
reductions were "structural" in nature. Attorney General
Richards answered that the oil, gas, and mining reduction
in outside council was not structural.
3:15:20 PM
Attorney General Richards advanced to slide 19: "Department
of Law Salary Adjustment Increases and Personnel Services
Costs (All Funds) ($ Thousands)." He indicated that the
chart depicted a $24.1 million increase in the personal
services budget, which $18.9 million was "driven by
contractual and statutory increases in wages or burdens,"
and was essentially due to inflation. He mentioned the $5.2
million growth directly related to staff increases. He
surmised that most of the department's growth was due to
inflation and that staff reductions would generate the
largest budget reductions.
Attorney General Richards revealed slide 20: "Department of
Law Share of Total Agency Operations (GF Only) ($
Thousands)." He remarked that the department's
approximately $100 million budget represented 1.1 percent
to 1.5 percent of total agency operations and was
relatively flat.
Attorney General Richards turned to slide 21:
"Appropriations within the Department of Law (GF Only) ($
Thousands)." He highlighted that a large part of the growth
in the department's budget over the last 10 years was
driven by inflation, particularly in the Criminal Division.
Attorney General Richards skipped slide 22: "Appropriations
within the Department of Law (All Funds) ($ Thousands)."
Attorney General Richards turned to the remaining slide 23:
" Appropriations within the Department of Law (UGF Only)($
Thousands)." He relayed that the last slide showed the
amount of UGF for DOL and noted that a small amount of
designated funds for consumer protection, RAPA, and
Department of Environmental Conservation (DEC) clean-up
were appropriated to the department.
3:18:59 PM
Vice-Chair Saddler cited the following language from slide
9, "…securing an equitable share to Alaska for its
resources." He asked whether DOL interpreted the Alaska
Constitution regarding resources in the manner that
resources should be developed for the maximum benefit of
the people of Alaska and what the attorney general's
definition of maximum value was. Attorney General Richards
stated that he was unaware of any definition within the
department and thought that the interpretation was "very
issue specific." Vice-Chair Saddler asked whether "the
maximum value was not necessarily the maximum tax rate."
Attorney General Richards replied that the maximum tax rate
was "certainly" not the maximum benefit.
Co-Chair Neuman discussed the following day's agenda.
| Document Name | Date/Time | Subjects |
|---|---|---|
| House Finance DOLWD Overview 2-4-2015.pdf |
HFIN 2/4/2015 1:30:00 PM |
|
| LAW_FY16_HFIN-Full_AG_Dept_Overview_2-4-15.pdf |
HFIN 2/4/2015 1:30:00 PM |
|
| DOL 07-128 HFC Overview Response.pdf |
HFIN 2/4/2015 1:30:00 PM |