Legislature(2015 - 2016)HOUSE FINANCE 519
01/29/2016 01:30 PM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Fy 17 Budget Overview: Department of Environmental Conservation | |
| Fy 17 Budget Overview: Department of Labor and Workforce Development | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 256 | TELECONFERENCED | |
| += | HB 257 | TELECONFERENCED | |
| += | HB 255 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 29, 2016
1:32 p.m.
1:32:21 PM
CALL TO ORDER
Co-Chair Neuman called the House Finance Committee meeting
to order at 1:32 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
Representative Steve Thompson, Co-Chair
Representative David Guttenberg
ALSO PRESENT
Larry Hartig, Commissioner, Department of Environmental
Conservation; Thomas Cherian, Director, Division of
Administrative Services, Department of Environmental
Conservation; Heidi Drygas, Commissioner, Department of
Labor and Workforce Development; Paloma Harbour, Director,
Division of Administrative Services, Department of Labor
and Workforce Development; Representative Cathy Tilton.
SUMMARY
FY 17 Budget Overviews:
Department of Environmental Conservation
Department of Labor and Workforce Development
Co-Chair Neuman discussed the meeting agenda.
^FY 17 BUDGET OVERVIEW: DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
1:33:00 PM
LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION (DEC), provided a PowerPoint presentation
titled "Department of Environmental Conservation, House
Finance Committee" dated January 29, 2016 (copy on file).
Co-Chair Neuman asked members to hold questions until the
end of the presentation.
Commissioner Hartig highlighted that DEC's mission was to
protect human health and the environment (slide 2); the
department saw the two items as inextricably linked. He
addressed outcomes the department was aiming for (slide 3):
· Clean water, healthy air, and good management of
hazardous materials and waste
· Safe drinking water and sanitary waste disposal
· Food safe to eat
· Low risk of spills and efficient, effective response
when spills occur
· Wise resource development for a growing state
Commissioner Hartig elaborated on slide 3. He detailed that
outcomes ensured safe drinking water without worry about
things like lead contamination that had occurred in Flint,
Michigan. He furthered that outcomes also meant residents
could put their garbage out without being concerned about
where it would go and could drive to work without worry
about air quality. He noted that there was significant work
that happened behind the scenes that DEC and others did to
ensure the items were provided. He addressed slide 4 titled
"Means":
· Science-based standards
· Permits and authorizations incorporating these
standards
· Monitoring, outreach, compliance assistance, and
enforcement
· Emergency response and oversight of spill clean-up
· Meaningful and effective public processes for
developing standards and permits
· Technical assistance, grants, and loans to
communities for drinking water and wastewater
infrastructure
Commissioner Hartig elaborated on the topic of monitoring
on slide 4. He provided a recent example about the excess
arsenic in the Talkeetna water system. He explained that
the issue was brought to DEC's attention immediately due to
regular reports provided to the department. The department
had samples tested and was able to alert communities if
numbers were higher than normal. The department then worked
with communities to correct the problem and notified the
public if there was a delay resolving the issue. He added
it happened with some regularity. He spoke to emergency
response provided by the department. For example, DEC had
recently responded to a truck spill containing some
hazardous chemicals. He continued addressing slide 4 and
relayed that DEC managed a couple of loan and grant
programs that provided water and sewer to communities
statewide. He briefly highlighted an organizational chart
on slide 5 that included the commissioner, one deputy
commissioner, and five divisions.
Commissioner Hartig addressed the Division of
Administration on slide 6. The division was directed by Tom
Cherian and provided administrative services, information
technology, financial, budget, procurement, and building
management. The division also housed the Environmental
Crime Unit; the unit employed two staff and was independent
of the commissioner's office and of the programs - it
operated across the programs with independence. He
explained that the unit met with the commissioner and
division director at least once a month to go over the
status of all of its cases; the commissioner and director
could provide direction if they chose to.
1:37:11 PM
Commissioner Hartig discussed the Division of Environmental
Health on slide 7. He relayed that it was the department's
largest division and was currently without a director. He
noted that the prior director had retired the past summer;
the department was in the process of revisiting all of the
work done by the division to determine if some efficiencies
and consolidation could occur. The division included food
safety and sanitation, laboratory services (including the
environmental health lab where the state veterinarian
resided), public drinking water systems (e.g. oversight of
the Talkeetna water plant he referred to earlier), and
solid waste management (landfills for communities
statewide).
Commissioner Hartig addressed that the Division of Air
Quality was the department's smallest division (slide 8). A
federally delegated program issued Clean Air Act
construction and operating permits in the state. He
explained that the program had run for over 30 years by a
very experienced group. He shared that earlier in the day
he had been involved in an exercise reviewing the state's
air quality permitting program; the consultant had
communicated that the department may see a 15 percent
improvement resulting from some changes it was considering.
The consultant had communicated that typically the
improvement was closer to 50 to 80 percent; however, the
state's program was already operating very efficiently. He
noted that although the division was small, it was very
effective. The division also did a fair amount of community
work, particularly related to transportation. He mentioned
Anchorage and Fairbanks and explained that the department
received some funding through the Department of
Transportation and Public Facilities to work with local
communities on transportation plans to ensure the plans did
not impact air quality in negative ways. The division also
did some limited air monitoring around the state, primarily
for Environmental Protection Act (EPA) requirements and for
forest fires. He elaborated that DEC supported the
Department of Natural Resources and other agencies in air
monitoring and issuing air alerts relating to human health
concerns associated with forest fires.
1:39:42 PM
Commissioner Hartig moved on to discuss the Division of
Spill Prevention and Response (SPAR) directed by Kristin
Ryan (slide 9). He highlighted that the division had
consolidated several of its programs over the past couple
of years and had been working towards efficiencies. The
division provided spill prevention and response, a
contaminated sites cleanup program, and administered the
Response Fund. He detailed that the fund had previously
been funded by a $0.05 per barrel surcharge on crude oil,
but 2015 legislation had included 0.95 percent surcharge on
refined products as well.
Commissioner Hartig addressed the Division of Water
directed by Michelle Hale (slide 10). The division
contained two parts, the first involved setting water
quality standards and incorporating the standards into
permits. He expounded that the division included the
federally delegated Alaska Pollution and Discharge
Elimination System program, which was based on the federal
Clean Water Act. The second part of the division focused on
facility construction that made loans and grants to
communities of all sizes in order to fund water and sewer
work. Facility construction included the Village Safe Water
Program for communities of 1,000 or fewer residents (75
percent of the money was federal with a 25 percent state
match from the capital budget) and the Municipal Grants and
Loan Program that provided state funds (with a local match
depending on the community size). He noted that the
department was not requesting any new money, but it was
requesting a reappropriation of some leftover funding from
completed projects. He explained that states had been
receiving federal money annually for many years to loan to
their communities at favorable rates (the fund source was a
large percentage of funds for water and sewer plants
nationwide). He furthered that a portion of the amount was
required to be forgiven under federal law; therefore, each
year the department requested a small capital request for
the forgiveness portion. He spoke to the shrinking
Municipal Grant and Loan program, which had caused the
department to consider whether there would be a gap in
funding for communities if the funding was no longer
available in the future. The department was working to
determine whether the existing revolving loan fund program
would be sufficient to cover all needs throughout the state
or whether a gap would occur.
1:42:38 PM
Commissioner Hartig addressed the department's FY 17 budget
request on slide 11. The department budget was
approximately $84 million, which included $17.7 million
Unrestricted General Fund (UGF) - based on UGF funding DEC
was the smallest of the state's departments. A pie chart on
slide 11 showed the various fund sources including 28
percent federal receipts, 19 percent of the allocated
Designated General Funds went to the Response Fund (funding
derived from the $0.05 surcharge on crude oil production
and $0.95 [$0.0095] per barrel on refined products, which
was projected to bring in about $7.2 million) [an
additional 15 percent DGF went to other purposes], and UGF
accounted for 21 percent of the DEC request.
Commissioner Hartig moved to slide 12 titled "FY 2017
Budget Request by Division." He stressed the importance of
the information and addressed the cuts the state was
facing. The chart helped identify where UGF was allocated
within the department. He began with SPAR and relayed that
if the legislature accepted the governor's proposed FY 17
operating budget there would be no UGF remaining in the
division. He noted that currently there was about $400,000
UGF remaining in the division, which was the last bit of
UGF funding going towards the department's Pipeline
Corrosion and Integrity Program that had been established
in 2006. He furthered that the Response Fund was now
sustainable and the department was proposing using the
remaining UGF to fund the three corrosion engineers.
Commissioner Hartig referred to the bar representing the
Air Quality Division, which used a small amount of UGF. He
explained that the division was small in size and its
largest function was issuing permits under the federal
Clean Air Act, which required the program to be "fee-
supported." He elaborated that it was possible because the
permittees were larger facilities with the capacity to pay
larger permit fees (the method would not work in other
programs, which would require UGF subsidy). He continued
that the UGF in the Air Quality program was essentially
federal match money; it was the minimum needed to run the
division including a permitting program, bring in federal
funds, and collect fees associated with the permits. He
stated that it would be difficult to reduce any more UGF in
the Air Quality Division. He relayed that they had really
leaned the division down to drive it towards efficiencies.
1:46:29 PM
Commissioner Hartig continued to address slide 12. He spoke
to the UGF component of the Division of Administration,
which was similar to any other government division
including information technology and procurement. The
remaining divisions with UGF available for consideration
(total requested UGF was $17.7 million for FY 17) were the
Division of Environmental Health and Division of Air
Quality. He moved to slide 13 titled "Budget Reduction
Criteria." He shared that the budget reduction scenario had
begun in 2014 at DEC; the department had started looking at
the declining oil production at that time because it was
impacting SPAR. He reminded the committee that SPAR was
largely funded by the prevention account, which in 2014 had
only been funded by a 5 percent surcharge on crude oil
production. He detailed that as crude oil production had
declined, the division saw its funding source disappearing.
He elaborated that the division had given up about $500,000
in DGF (the prevention account) in order to lower its draw
on the prevention account and extend the funds. The
department had started developing criteria to determine how
to approach additional cuts in a systematic and thoughtful
way (slide 13) and had started discussing the criteria with
its House Finance subcommittee in 2015. The criteria
focused on preserving core services that could not be
undertaken by the federal government or other agency. The
criteria also considered functions the state had a long-
term investment in that would not be retrieved if they were
given up. He considered the department's large permitting
programs like the air permitting program it had for over 30
years and its APDS program. He stated that the federal
government was no longer set up to handle the programs and
by the time the federal government was able to take on the
work in 5 to 10 years, the state would have lost all of its
experience in the areas. He reasoned that if the state
decided it wanted the programs back it would be close to 20
years before it would get them.
1:49:20 PM
Commissioner Hartig addressed existing budget conditions on
slide 14. He reiterated his earlier testimony that the
department had started tightening the SPAR budget in 2014.
The department had taken a $1.4 million reduction in its
Division of Water. He detailed that the state had been
looking at taking the Clean Water Act 404 program, but the
legislature had decided not to continue the effort, which
meant giving up 5 positions and $1.4 million in FY 15.
Additionally, there had been much higher vacancy rates in
the Division of Water and SPAR where the department knew
there would be reductions. Rather than continuing to fill
positions as they became vacant, the department had left
the positions open, knowing that they would not be able to
afford them in the near future, which allowed them to not
lay off employees. He had heard discussions that the
reductions were not real because employees had not been let
go. He explained that the department had started holding
the positions vacant to prevent having to fire employees;
it provided more flexibility in managing the situation.
Commissioner Hartig continued to address existing budget
conditions on slide 14. He highlighted that cuts mandated
by the legislature began in FY 16; the department had
reduced UGF by 10.6 percent. The department's FY 17
proposal would reduce UGF by another 11.8 percent. He
relayed that factoring in cuts to UGF and DGF the
department's budget had been reduced by approximately 25
percent. In addition to cuts passed by the legislature in
FY 16, DEC could not sustain its 10 authorized positions in
the Division of Water and had given them up through the
management plan. He noted that there had also been an
unallocated cut in 2016 that the department had to absorb,
which had added to the fair number of cuts.
1:52:12 PM
Commissioner Hartig turned to slide 15 and discussed budget
reduction strategies. The proposed budget would reduce UGF
by another 11.8 percent. In addition to cuts, DEC was
continually looking at efficiencies and reorganization; it
was consolidating some programs and eliminating a small
program in the FY 17 budget. The department was looking at
combining lease space, which would likely not occur until
FY 18. He relayed that the department had two statutes
authorizing it to collect fees for services. He elaborated
that the department was only allowed to recoup some of its
direct costs, but not its indirect costs. Additionally,
there were subsidies required for certain smaller companies
(e.g. DEC could not charge the companies for travel out to
their facility and other). He explained that the
department's look at fees was within its statutory
confines; it was not free to just increase fees on people.
Any change had to be done through a fee study. He detailed
that as stipulated in statute, periodically the department
was allowed to revisit its fees and to consider increasing
them to cover more of its direct costs. The Division of
Administrative Services looked through all of the data to
determine whether there was a justification to increase the
fee; if the answer was yes, the department went through a
regulatory process notifying the public and set the
increase by regulation. The process had just concluded in
the Division of Air Quality and DEC was looking at
implementing a fairly modest fee increase that would begin
with the next fiscal year. He added that DEC was just
beginning fee studies in water and food safety programs.
Commissioner Hartig briefly highlighted that the department
planned to continue along the same path in FY 18 and would
continue looking for efficiencies and consolidations (i.e.
consolidations to leases and other) in an effort to reduce
its UGF draw.
He turned to slide 16 and addressed a summary of FY 17
reductions. He pointed to the elimination of a shared
office assistant position and reduction in administrative
services in the department's Fairbanks office. The second
reduction was in Laboratory Services at the Tudor Road lab
in Anchorage, which would replace UGF with increased fee
revenue. The third reduction was in the Air Quality
Division; the department was reclassifying an environmental
program specialist position as a chemist, which was a lower
paid position. Additionally, it was looking at moving the
work of several retirees to lower paid positions.
1:56:23 PM
Commissioner Hartig addressed slide 17 and spoke to a fund
source change in SPAR to the prevention account. Two
corrosion engineers currently funded by UGF, would be moved
over to DGF Response Fund money. He spoke to the
dissolution of the Technical Services program in Water
Quality. He expounded that the program had provided public
outreach and had overseen the preparation of new regulation
packages for the Water Quality Division and had managed the
information technology employees; the services would be
absorbed elsewhere in the Division of Water and the
positions in the technical service program would be
eliminated (6 positions and about $700,000 UGF).
Additionally, there would be a fund source change in Water
Quality to program receipts for increased fee revenue to
generate increased DGF.
Commissioner Hartig moved to slide 18 and continued to
address reductions. He discussed a reduction in the Water
Division in Facility Construction, which would be covered
with increased fee revenue and federal receipts. He
referred to the unallocated cut in FY 16 and FY 17. He
explained that originally the department had been waiting
on the results of the labor negotiations to determine if it
could produce enough savings to absorb the unallocated cut;
however, the timing was not working out and the department
had been directed to identify the exact cuts. The cut would
amount to the reduction of 4 PCNs [position control
numbers] that would be identified in the next month. He
briefly highlighted a table showing a summary of FY 17
budget changes. The table indicated a reduction from
approximately $20 million UGF in FY 16 to approximately
$17.7 million in FY 17.
1:58:44 PM
Commissioner Hartig moved to slide 20 titled "What Alaskans
Get for Their Money." The slide illustrated that it would
cost state workers $0.38 per day for services provided by
DEC (i.e. clean air to breathe, clean water to drink, safe
food to eat, clan land and waters, and responsible resource
development); it would cost $0.17 per day if the state's
total population was factored in.
Commissioner Hartig addressed how DEC spent UGF money
(slide 21). He detailed that $5 million was a required
state match for federal grants. Additionally, some of the
funds went to the environmental health lab, Administrative
Services, and the Office of the Commissioner. He elaborated
that about half of the UGF went to subsidizing fee-based
programs and towards taking care of things like community
complaints and working with communities on capacity
building. He communicated that some of the department's
programs could carry themselves and others could not. He
elaborated that some industries were not at a scale that
enabled them to support the program to give them the
permits they needed to operate.
Commissioner Hartig included a list of the departments
federally delegated and not federally required programs.
Programs that were not federally required were things that
may be handled by the local government in some states such
as restaurant inspections. He detailed that Anchorage was
the only city doing restaurant inspections; DEC was
expected to do inspections in Juneau, Fairbanks, and other
locations. He elaborated that it was unusual; in most
states the state government was not involved in restaurant
inspections. He furthered that rural Alaska did not have
capacity to run those types of programs. He explained that
when DEC sent an inspector out to Nome to inspect the fish
processing plant, the inspector could also look at
restaurants, the school, and other food establishments.
2:01:42 PM
Commissioner Hartig turned to slide 23 titled "DEC Position
History." The table showed the department's position
history by PCN count from FY 07 to FY 17. He detailed that
in FY 17 the number of positions was 518, which was about
what it had been 10 years earlier. He directed attention to
the significant drop in positions between FY 15 and FY 16.
Slide 24 included a summary of unallocated reductions taken
in FY 16. The bulk of the reduction was associated with the
elimination of two engineer positions in the Pipeline
Integrity and Engineering section of SPAR. Other reductions
were associated with a fund switch and efficiencies in
Administrative Services and the Division of Air Quality.
Commissioner Hartig turned to slide 25 and relayed that the
department may submit a FY 16 supplemental budget request
because it may receive additional federal Diesel Emissions
Reduction Act grant money; the money would flow through DEC
to communities for some new diesel generators that were
needed. Money coming into the Division of Air Quality was a
bit unpredictable. The department was considering asking
for an increment for $250,000 federal authority going
forward to be able to absorb the changes. Slide 26 included
performance measures. A table at the top of the slide
indicated that the department was staying pretty up to date
on permits issued. He elaborated that most permits under
federal and state law had to be reissued every five years.
He explained that it was important because many of the
facilities changed their operations in ways that required
permit modifications. A table on the bottom of the slide
showed village homes served by safe water. He pointed out a
dip in the bar [around 2013]. He explained the biggest
reason was related to a different way of accounting;
therefore, he did not know how real the dip was.
Additionally, the department had slowed down taking on new
projects while determining if there was a better way of
spending the money to make it more sustainable, which had
resulted in a pause.
2:04:40 PM
Co-Chair Neuman noted that Representative Cathy Tilton was
present in the room.
Representative Gara spoke to 11 percent cuts in the current
year, 10.8 percent the last year, and 5 percent the year
before. He wondered what would be left of the agency. He
relayed that after the BP oil spill on the North Slope,
former Governor Sarah Palin had started a pipeline safety
and integrity office with the goal of preventing the
occurrence of another spill on the North Slope. He asked
how effective the agency had been and how effective it was
at the current level of staffing. He queried the current
level of staffing compared to its initial level.
Commissioner Hartig replied that in 2006 there had been two
pipeline spills on the North Slope from BP's facilities
from three-phase pipelines. He detailed that the specific
pipelines ran from wellheads to the processing center where
the gas and water was removed and oil was prepared for
sending to pump station 1 and then on to Valdez. He
elaborated that the pipes were older, smaller (not
piggable), and it was difficult to observe corrosion.
Additionally, the pipes were not regulated by the federal
government. At that point there was no state in the country
regulating that type of pipeline. Subsequently, DEC had
implemented regulations relating to a corrosion program
that industry would have to maintain. The legislature also
allocated 5 PCNs and about $600,000 for the pipeline,
corrosion, and integrity program. The department had done a
risk assessment with some outside consultants, hired 5
engineers, and had developed the inspection program. Over
the past few years, as industry had developed its program
and DEC did field and records inspection and review of the
industry's corrosion maintenance program for the three-
phased lines, it started looking like items were being
duplicated in some areas. The department had looked at
efficiencies and had determined it could let two of the
engineers go without hindering the effectiveness of the
program. He was comfortable that letting the positions go
was not creating more risk. He noted that the program was
more about DEC reviewing the industry's program rather than
DEC operating a side-by-side program and trying to do field
inspections.
2:08:49 PM
Representative Gara discussed that for the past three years
the legislature had heard from Kristin Ryan [director,
Division of Spill Prevention and Response] that DEC's food
inspection program was not at a level where the public
could feel safe that food inspections were being conducted
to prevent illness. He recalled that it had already been at
a level that was not particularly safe. He asked for detail
on the program at present.
Commissioner Hartig replied that Ms. Ryan had formerly been
the environmental health director prior to moving to SPAR.
He explained that the statements had been largely based on
federal guidelines for the frequency of inspections for
high and lower-risk facilities. He explained that Alaska
had always been below the federal guideline level. Going
back five years or more the department reported to the
legislature that the state was behind federal guidelines,
but getting to the guideline level would require an
additional 30 PCNs, which was unlikely to occur. The
department had started looking at whether it could
concentrate on the higher risk facilities and to look at
other ways to deal with the lower risk facilities.
Subsequently, the department had either changed its
regulations to exclude regulation of lower risk facilities
or it did inspections less frequently. He confirmed that
there was more risk to the public than in the past, but the
department focused on higher risk facilities. Related to
food safety, lower risk facilities included places where
there was not much processing of the food (e.g. pre-
packaged food from vendors) bake sales, or other places
where it would be easy to determine the origin and stop
continued contamination if a person became ill. Higher risk
facilities included a significant amount of food processing
and mass distribution where it was difficult to track who
was eating the food and how to fix it if something went
wrong. He added that communities could step in to provide
oversight in the lower risk situations, but he did not
believe they would have the capacity. He concluded that it
came down to working on increased public outreach and
education on steps they could take to lower food risk.
2:12:31 PM
Representative Gara wondered if the program was adequately
protecting public safety. He wondered what the department
was going to inform people of in terms of how to protect
themselves.
Commissioner Hartig answered that informing the public on
ways to protect itself included basic things like
communicating to keep food cold or warm if needed and
washing hands prior to serving food.
Representative Gara asked if the program adequately
protected public safety. Commissioner Hartig replied that
he would like the program to do more, but he believed the
department was doing a good job related to higher risk
things. He believed it was important to be vigilant and to
keep pushing out information to the public and to rely on
the public related to the lower risk situations.
Co-Chair Neuman noted that the state would have to do less
in many areas due to less funds.
Representative Pruitt referred to slide 23 related to the
department's position history. He referred to the decreased
number of positions between FY 15 and FY 16 and asked how
many positions had been vacant.
THOMAS CHERIAN, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ENVIRONMENTAL CONSERVATION,
answered that the department had eliminated about 25
positions through the budget process; 15 of the positions
had been vacant and 10 had been filled by employees. He
relayed that the department had known it would have to lay
off staff so it had held a number of positions vacant in
order to keep from firing employees.
Representative Pruitt asked for the vacancy percentages in
FY 15 and FY 16. Mr. Cherian answered that in FY 15 the
department had a 13 to 15 percent vacancy rate; the vacancy
rate in FY 16 was slightly over 8 percent. He added that
the department's budget contained a built-in vacancy of 7
percent. He relayed that the current vacancy rate was
slightly over the budgeted vacancy, but they still had to
maintain it to live within the budget.
Representative Pruitt assumed that the vacancy factor for
FY 17 was maintained at about 8 percent.
Mr. Cherian answered that the department would have to
maintain a vacancy rate of 7 to 8 percent to live within
the budget even in FY 17.
Representative Pruitt remarked that the committee kept
hearing from the departments that FY 07 and FY 17 were
about the same. He asked what the department's vacancy
factor had been in FY 07. He wanted to know if it was truly
looking at an apples-to-apples comparison.
Mr. Cherian answered that the department was required to
maintain a vacancy rate of 7 percent. He elaborated that it
was an apples-to-apples comparison. He spoke about laying
off about 47 positions between FY 15 and FY 17; 7 positions
would be reduced in FY 17 and 40 between FY 15 and FY 16.
2:17:49 PM
Representative Pruitt clarified that he was interested in
the vacancy factor in FY 07. He explained that if the
vacancy factor had been 7 or 8 percent in FY 15 it was an
apples-to-apples comparison. He made it clear he was
interested in getting the information from all departments.
Mr. Cherian replied that he would follow up on the
question.
Representative Kawasaki spoke about the restaurant facility
inspections conducted by the department. He remarked that
Anchorage was the only municipality that did its own
inspections; Fairbanks had done inspections in the past,
but they had stopped in the late 1990s in order to save
money, given that DEC already provided the service. He
asked if the department conducted restaurant inspections in
Anchorage. Commissioner Hartig believed Anchorage conducted
all of its inspections. He would follow up on the question
to confirm.
Representative Kawasaki referred to SPAR and the change in
fee in the past year. He remarked that the charge had
appeared on his oil bill in the fall. He asked if the
change was resulting in as much money as predicted.
Commissioner Hartig answered that it had not been a
complete year since the change had been implemented. The
estimate had been $7.2 million to be collected by the
response fund from the 0.95 percent on refined oil and the
$0.05 per barrel charge; it would be necessary to have the
Department of Revenue break out the data to determine how
much the new fee was bringing in. He believed projections
were close to what had been anticipated; although, going
forward he was not sure the state would be able to collect
as much on the refined products as it had thought. He would
follow up with the information.
Representative Kawasaki asked if the additional revenue had
been included when the legislature had passed its budget.
He asked if money would come back from the FY 16 budget
because the bill passed.
2:21:02 PM
Commissioner Hartig asked for clarification.
Representative Kawasaki wondered if the legislature had
budgeted for the UGF and had then passed a bill that would
also fund the amount. He asked there would be money coming
back.
Commissioner Hartig replied that there may be a surplus of
about $200,000 of the amount collected in the prevention
account that would be related to the crude oil surcharge
and the refined product 0.95 percent per gallon, which had
been intended. He explained that the prevention account
money had to be appropriated every year by the legislature;
it was always subject to appropriation. He furthered that
it had been intended to collect a little extra for the
first couple of years because as crude oil declined, the
idea had been that the refined product use would continue
to rise. He explained that combined with the surplus
cushion it would allow the prevention account to be
sustainable for about 10 years.
Representative Kawasaki referred to better alignment of
existing fees mentioned on slide 15. He asked for
verification that the fees were not set by statute.
Commissioner Hartig answered that by statute the department
had to be authorized to impose a fee and the statutes
specified the criteria and limits. The actual number was
not set in statute.
Co-Chair Neuman made a point related to meeting decorum.
Representative Wilson hoped to get heating oil from gas in
the future, which would enable residents to stop paying a
tax on heating oil. She had often heard that DEC had more
stringent regulations than the federal government,
specifically related to water permitting and the mining
industry. She asked which regulations the department may
have that were more stringent than what was federally
required. She pointed to slide 12 and asked about the
"other" fund category.
Commissioner Hartig pointed to the purple section of a pie
chart on slide 11. He elaborated that the category included
the Clean Air Protection Fund, Capital Improvement
Projects, interagency receipts, program receipts, Alaska
Clean Water Fund, and Alaska Drinking Water Fund.
Representative Wilson referred to slide 12 and how much UGF
was required for federal funds. She pointed to
environmental health and asked how much of the figure was
associated with matching funds and what had been left over.
Commissioner Hartig answered that in environmental health
the bulk of the UGF money was related to the Drinking Water
Program and Solid Waste. He elaborated that the federal
government periodically issued drinking water rules, which
were applicable to public drinking water systems. There
were national rules that had to be followed by the people
running the drinking water systems to protect the public
from various contaminates. In the past, DEC would come to
the legislature and communicate it needed primacy of a
federal rule and funds to implement the rule to help
communities meet the rule. He furthered that if that
process did not occur, the federal grant funds coming in
for water projects would be cut off. He would follow up; it
was a significant amount of federal funds that would be
lost. He explained that unless the state had primacy of the
drinking water rules it would not receive the federal
funding coming in for the projects. He could provide the
further detail. The amount of federal funds that would be
lost was significant.
2:27:16 PM
Representative Wilson was trying to determine what the
state was required to do and why it had taken primacy of
some of the rules. She knew the state had received extra
federal funds at one time, but some of the funds had
dwindled. She believed the state was left "holding the bag"
needing to bring everything to a certain level. She
reasoned that there were many communities, which would need
a tremendous amount of money for the work. She wondered
what the state had to do and why it had chosen to do other
programs.
Representative Wilson pointed to slide 22 related to non-
federally required programs. She thanked the department
about loosening up some regulations related to the farmers
markets. She wanted additional detail on how much the state
was paying for the listed items such as solid waste and how
much GF was going towards the items.
Commissioner Hartig would follow up.
Representative Gattis spoke to how many employees had
actually been removed from positions. She commended the
department for taking higher paid staff and lowering
positions. As she approached budgets she was considering
she looked at pay ranges that were not being brought down.
She stated that sometimes high pay ranges could be worth
two people based on the amount of money paid out. She
observed that the issue was bigger than just one position,
it was how much the position had been worth. She commended
the department for cutting costs.
2:30:32 PM
AT EASE
2:31:56 PM
RECONVENED
^FY 17 BUDGET OVERVIEW: DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT
HEIDI DRYGAS, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT (DLWD), began by recognizing the
significant amount of work the budget process was for the
committee and the departments. She thanked the committee
for its effort, questions, and thoughtfulness. She provided
a PowerPoint presentation titled "FY2017 Department
Overview, House Finance Committee" dated January 29, 2016
(copy on file). The department's mission was to protect
workers and advance opportunities for employment. The
department accomplished the mission through its key program
priorities of protecting Alaska's workers through statutory
assistance and enforcement; developing an Alaskan workforce
for Alaska's jobs; and income replacement for injured,
unemployed, and disabled workers.
Commissioner Drygas addressed the department's
organizational chart on slide 3. The chart organized the
department by key priority program. The Division of
Employment and Training Services and the Division of
Vocational Rehabilitation both had sections that crossed
priority program lines, which was indicated on the chart.
2:34:12 PM
Commissioner Drygas spoke to the protection of workers on
slide 4. The department had continued to provide workplace
safety consultation and enforcement, which kept workers
safe and reduced workers' compensation costs. The
department was proud that its efforts had resulted in the
second lowest workplace lost-time and injury rate on record
in FY 15 at 0.89 per 100 employees. She had recently
requested information from the state's Risk Management
Division regarding the rate of workplace injuries for state
employees and had been alarmed by what she had learned. She
elaborated that in FY 14 the state spent over $27 million
on workers' compensation claims and $28 million in FY 13.
She had followed up with a letter to each state
commissioner offering occupational safety and health
consultation to lower the incidents of workplace injuries
and the associated costs to the state. The department was
also taking on worker misclassification. She furthered that
the department's occupational safety and health, workers'
compensation, unemployment insurance, and wage and hour
staff continued to implement reforms to crack down on
worker misclassification including a multi-departmental
memorandum of understanding establishing a working group.
The achievements translated into higher wages and greater
income security for Alaska's workers.
Commissioner Drygas addressed the Alaska Labor Relations
Agency under the commissioner and Administrative Services
(slide 5). She reported that the agency had a minimal
number of staff to facilitate the resolution of disputes
between organized labor and public employers. Within the
Labor Standards and Safety Division, the wage and hour
administration allocation provided consultation and
enforcement of Alaska's wage and hour Alaska-hire and child
labor laws. She elaborated that annually the program
generated more money than it cost to operate; the revenue
was deposited directly into the UGF and UGF paid for the
program. She communicated that it would require a statutory
change to put the money into a separate account. The
mechanical inspection allocation conducted inspections to
protect workers by ensuring electrical, mechanical, boiler,
pressure vessel, and other similar code compliance. The
costs of the program were covered by fee-for-service
revenue that was deposited into a DGF account, which the
program was paid out of. The occupational safety and health
allocation provided consultation and enforcement for
occupational safety and health. The UGF supporting the
program provided state match to federal funds. The Alaska
Safety Advisory Council organized the governor's annual
safety and health conference in March. The program was
fully funded by the revenue it generated from sponsorships
and attendance fees.
2:37:04 PM
Commissioner Drygas highlighted workforce development on
slide 6. She relayed that in FY 15, 88 percent of Alaska
Vocational and Technical Center's (AVTEC) long-term (longer
than 6 weeks) program students graduated (a total of 341
out of 387 students); the graduation rate exceeded the
target graduation rate of 80 percent set by the Council on
Occupational Education (the accrediting agency for AVTEC).
The center was continuing on a healthy graduation rate
trajectory. Additionally, the department had revamped the
workforce development system by merging two divisions into
the Division of Employment and Training Services. The
merger resulted in reduced staffing and greater
administrative efficiencies, which had allowed DLWD to put
more money out on the streets as grants. The resulting
savings addressed $337,000 of the department's FY 16
unallocated reduction. Meanwhile, the Division of
Employment and Training staff won two highly competitive
federal grants that support registered apprenticeship. The
funding would enable the department to help build the
state's healthcare workforce through apprenticeships and
the new 4 to 6-week pre-apprenticeship programs at AVTEC.
She highlighted that the new programs would help meet the
high demand for entry-level healthcare occupations.
Commissioner Drygas outlined workforce development budget
detail on slide 7. She highlighted that with a minimal
level of staffing support the federally mandated Alaska
Workforce Investment Board (AWIB) provided policy oversight
of state and federally funded job training and vocational
education programs; the board was funded by programs it
oversaw. She pointed to the employment and training
services category and addressed workforce services. She
relayed that the workforce services allocation administered
Alaska's job center network and the online job bank. She
noted that the department would not have to close any job
centers in FY 17. The workforce development allocation
comprised all of the department's workforce development
grant programs, including the State Training and Employment
Program, Technical and Vocational Education Program, pass-
through grants to regional training centers, federally
funded Workforce Innovation and Opportunity Act programs
and UGF pass-through grants for programs like the Alaska
Construction Academies. She addressed the vocational
rehabilitation category and relayed that client services
assisted Alaskans with disabilities to secure and maintain
employment. The special projects allocation consisted of a
few federal grants with some state matching funds, which
provided employment services to individuals with the most
significant disabilities to enter or retain employment and
to provide technology related assistance for individuals
with disabilities.
Commissioner Drygas addressed the Alaska Vocational
Technical Center on slide 7. The center provided vocational
and technical training to prepare Alaskan residents for
jobs.
2:40:18 PM
Commissioner Drygas turned to slide 8 related to income
replacement. The department saw an improvement in the
timeliness of unemployment insurance (UI) claims payment
with 94.3 percent of claims paid within 21 days versus 91.7
percent in the prior year. She detailed that UI claims
continued to be processed at a rate exceeding the federal
benchmark of 87 percent. She moved to income replacement
program detail on slide 9. She addressed the Division of
Workers' Compensation, which aided Alaskans with employment
related injuries by administering the Alaska Workers'
Compensation Act, the Fishermen's Fund, the Workers'
Compensation Benefits Guaranty Fund, and the Second Injury
Fund. The Workers' Compensation Appeals Commission was a
separate division under the department, but was included
for budgetary purposes. She detailed that the commission
adjudicated appeals from disputed Workers' Compensation
Board decisions. She furthered that legislation had been
introduced in both bodies to repeal the commission and move
the appeals back to the courts.
Commissioner Drygas addressed employment and training
services on slide 9. The UI allocation paid benefits to
eligible unemployed workers, in addition to assessing and
collecting employer and employee contributions to the
Unemployment Trust Fund, the State Training Unemployment
Program, and the Technical and Vocational Education
Program. She moved to the vocational rehabilitation
category and relayed that the disability determination's
allocation provided timely adjudication of medical
determinations for persons alleging a disability under the
Social Security Act.
2:42:20 PM
Commissioner Drygas addressed the department's FY 16
operating budget on slide 10. The department's overall UGF
reduction was $7.6 million or nearly 23 percent. She added
that the total included DLWD's share of the unallocated
reduction totaling approximately $418,000. To accommodate
the reductions the department had focused considerable
efforts on reducing administrative and overhead expenses.
She listed where the reductions had been allocated. The
Commissioner's Office and Administrative Services had
eliminated 10 positions including the department's
communications coordinator at a reduction of $600,000.
Additionally, the department had put considerable efforts
into lease consolidation. She noted that department staff
had been moving a lot. Leased space had already been
reduced in Juneau and Kenai and the efforts had helped
address $81,000 of the department's FY 16 unallocated
reduction. Currently efforts were focused on Anchorage,
which would result in a savings of about $100,000 in
reduced leased costs in 2017. The department had
consolidated the Division of Business Partnerships and the
Employment Security divisions into the Division of
Employment and Training Services; the consolidation had
covered $337,000 of the department's FY 16 unallocated
reduction. She reiterated her earlier testimony that AVTEC
had refocused its Allied Health programs away from state-
funded longer-term programs to short-term federally funded
programs for high demand entry-level healthcare
occupations.
2:44:16 PM
Commissioner Drygas addressed slide 11 titled "FY2017
Budget: $165,530.8." The governor's requested FY 17 budget
for DLWD totaled $165.5 million; 52 percent of the total
was funded by federal money. The department's UGF in the FY
17 budget totaled $23.9 million, which was down $1.9
million from the current year. The department had 806
employees; the number was down by 209 employees since 2012
(an average reduction of 40 employees per year). Changes to
the department's budget included reducing the amount of UGF
supporting its lease cost by $100,000 and reducing AVTEC's
reliance on UGF by nearly $75,000 (slide 12). She added
that DLWD had proposed a regulation change to AVTEC's
tuition and fees in order to offset the reductions in UGF
and to cover increasing operating costs. She stated that
the increase was overdue given that long-term program
tuition had not been increased since 2010. The department
was reducing the UGF supporting the Alaska Construction
Academies by $600,000 in accordance with legislative
intent. The Independent Living program was being
transferred to the Department of Health and Social
Services; there was a corresponding executive order to
clean up the statutory references to the program within
DLWD. The department reflected the merger of the Business
Partnerships and Unemployment Security Divisions into the
Division of Employment and Training Services in the
operating budget; there was a corresponding executive order
to clean up the statutory references to the Employment
Security Division.
2:46:06 PM
Commissioner Drygas continued to address slide 12. The
department was reversing the FY 16 UGF salary adjustments
in an unallocated lump sum of approximately $235,000.
Depending on legislative actions, the plans could change,
but the decrement would be spread across allocations the
same way the original salary adjustments had been spread.
The change resulted in reduced supply purchases, equipment
replacement and staff training, and further staff
reductions across the agency, which would have direct
service implications. She relayed that DLWD had a
spreadsheet reflecting how the reduction would be spread,
which it would use to work with its legislative budget
subcommittee.
Commissioner Drygas moved to slide 13 and addressed 10-year
projection chart generated by the Legislative Finance
Division (LFD). The chart illustrated the changes in the
department's GF budget since FY 07. She noted that GF
encompassed both UGF and DGF on the chart. 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. The
majority of the department's increase since FY 07 had been
in the DGF area. For example, STEP and TVEP increased by
$6.7 million due to legislative changes and Alaska's
growing workforce.
Commissioner Drygas moved to an LFD chart on slide 14 that
she found slightly confusing. She noted that while total
personal services expenses increased by $6.1 million over
the timeframe (FY 07 to FY 17), DLWD had actually
experienced a loss of 231 employees during that time. The
increase was due to wage and benefit adjustments, which
included increasing healthcare benefit costs.
Commissioner Drygas turned to an LFD chart showing the
department's budget by division (all funds) on slide 15.
The big changes in FY 17 resulting from the division
consolidation made the chart confusing; therefore, DLWD had
prepared another chart, which combined the two merged
divisions over the entire time period (slide 16). The
federal funding within the Division of Employment and
Training Services (top line) made it the department's
largest and most volatile division. The federal funding
going into the division was cyclical; funding levels were
higher when unemployment was high. She detailed that
unemployment was currently lower and funding had decreased.
She relayed that when employment and training services
funding had been at its peak in FY 10, the national
unemployment rate had been 10 percent and Alaska's
unemployment rate had been 8 percent (shown at the top of
the chart on slide (slide 16). Currently, the national
unemployment rate was 5 percent and Alaska's was 6.5
percent; therefore funds had decreased.
Commissioner Drygas addressed a chart showing the
department's GF by division (slide 17). She reiterated that
on the chart the term GF included UGF and DGF. She noted
that due to division consolidation the chart was a little
hard to follow. The department had generated a chart
combining the two merged divisions over the entire time
period (slide 18). The top line represented the Division of
Employment and Training Services (the department's largest
division). The decrease in the division shown in FY 15 to
FY 16 was primarily due to the elimination or significant
reduction to the department's UGF funded workforce
development grants, including reductions to the Alaska
Construction Academy of over $800,000; regional training
centers of nearly $700,000; and the elimination of the
Alaska Youth First, Compass Alaska, Career and Technical
Education, and Oil and Gas training funds at about $2.5
million.
2:50:40 PM
Co-Chair Neuman pointed to slide 9 related to income
replacement. He wondered when the last time the costs had
been reviewed. Commissioner Drygas deferred the question to
her colleague.
PALOMA HARBOUR, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT,
replied that the Workers' Compensation program was funded
by a few on workers' compensation premiums; the percentage
was a relative percentage of workers' compensation premiums
and changed each year.
Co-Chair Neuman asked if the legislature set the rates for
the 5 different funds on slide 9. He asked how the monies
came in.
Ms. Harbour answered that the Second Injury Fund was based
on actual incidents and paid benefits based on demand for
the service. There was a fee paid by all employers
(separate from workers' compensation premiums); the fund
was self-sustaining and the amount fluctuated based on the
actual benefit payments. The Workers' Compensation Benefit
Guarantee Fund was funded by fines on employers that did
not comply with the Workers' Compensation Act; revenue was
generated by collecting the fines. She detailed that the
fund paid benefits to the injured workers who did not have
workers' compensation coverage but should have. Revenue
going into the Fishermen's Fund was generated from
commercial fishing licenses and paid benefits to injured
fishermen; the percentage changed every so often. The only
program with anything but benefit payments was the Workers'
Compensation program that administered the Workers'
Compensation Act, which conducted investigations to ensure
employers were compliant. The cost was paid for by a
percentage of the premiums. She did not know that the
amount had been looked at since 2006, but she would follow
up to confirm her answer.
Co-Chair Neuman spoke to an effort to ensure that funds
were available for the department to do its job. He asked
Commissioner Drygas to make suggestions to the budget
finance subcommittee (Representative Wilson, chair) on
things that could be changed if they had not been looked at
in a while. Commissioner Drygas answered that the
department would be happy to work on the issue and had
continued to do so. She noted that there had been
conversations on the topic the past year during budget
discussions, which the department had taken seriously and
would continue to work on.
2:54:26 PM
Co-Chair Neuman referred to slide 10 related to the FY 16
operating budget. He pointed to information that AVTEC
Allied Health programs had been refocused from state-funded
longer-term programs to federally-funded apprenticeship
type programs. He wondered what state-funded programs the
department was referring to.
Commissioner Drygas answered that the state's Allied Health
program had previously been a very popular program located
at the Muldoon AVTEC campus that had mainly consisted of
registered nurses and licensed practical nurses. She
explained that the program had been very expensive to
operate per student, which had relied heavily on state
funding; there had also been some private funding involved.
When the state funding had been cut, the private sector
could not pick up the slack for the diminishing state
funds. One of the department's concerns was related to
duplication. She elaborated that the University of Alaska
Anchorage already had a terrific registered nurse program,
although there was a significant waitlist. She pointed to
the need for more entry-level healthcare workers in the
state; it was an area that had significant turnover in
Alaska, which impacted the quality of healthcare services.
Commissioner Drygas continued that department had decided
to revamp and refocus the Allied Health program at AVTEC
with grant money to help startup a healthcare
apprenticeship and pre-apprenticeship program with a focus
on entry-level healthcare occupations; there were 9 or 10
positions including a behavioral health aid. The pre-
apprenticeship program exposed young people, veterans, and
underemployed individuals to the healthcare field. The hope
was to alleviate some of the turnover. She explained that
frequently someone went into the healthcare field and it
ended up not being what they wanted to do at all. The
program was much less expensive to administer; the seed
money was from federal funds and the goal was for the
program to be self-sufficient. She furthered that the
program would help individuals determine whether they
wanted to do that kind of work, which was difficult and
strenuous. From that point, individuals could possibly
transition into the apprenticeship programs. She cited an
apprenticeship program at Providence Hospital as an
example; there were other healthcare institutions with
programs as well. The program needed a place where the
curriculum already existed and was working to create a
consortium to get the healthcare program off the ground.
She noted that it was coming together very well so far. She
reiterated that it would move Alaskans through
apprenticeship programs on a career pathway. She stated
that a person would begin in an entry-level position, but
there were plenty of places to advance. The purpose of the
program was aimed at improving Alaska's healthcare
workforce.
Co-Chair Neuman understood the purpose of the nursing
program. He noted that he would never have become a
professional mechanic or woodworker if he had not been
exposed to the professions in high school. He spoke to the
high occurrence of individuals being trained for a position
on the job and then leaving because they did not enjoy the
work. He thought getting exposure to different trades was
very important. He asked if the department planned to reach
out to companies and businesses to ask them to help fund
some of the training programs.
Commissioner Drygas answered that the department had many
partners in the endeavor, including the Southcentral
Foundation, several joint apprenticeship training
committees, Providence Hospital, and others. The process
was a very collaborative effort. Currently, it was funded
by federal grant money specifically for the program. The
department did not want to have a federally funded program
that would eventually require state funding into the
future. She understood that it would not work in the
current budget environment. The idea was to use the federal
seed money to develop the consortium, which was underway.
There would be funding mechanisms, which could include
employers paying in to keep the program going, much like a
joint apprenticeship training community would do with
registered apprenticeship program funding. The department
was working on curriculum and would try to get some
instruction going in March or April [2016].
3:00:46 PM
Co-Chair Neuman remarked that several years earlier he had
worked on legislation related to vocational education
credits where companies could receive credits from the
state towards corporate income taxes if they donated money
to help with vocational education. He asked Commissioner
Drygas to highlight details.
Commissioner Drygas answered that the department had
received specific donations from companies; it had recently
received a donation from Superior Energy for $5 million
worth of equipment. She elaborated that the company was
closing its offices in Anchorage and was donating a marine
simulator and several pieces of computer and construction
equipment to AVTEC. She noted that the donation could not
come at a better time due to a significant number of aging
computers and other items at AVTEC. She was very pleased
with the donation and believed they would put every piece
of equipment to work. Additionally, donations had been
received from Saltchuk in the amount of $60,000. She noted
there were other donations that she would have to follow up
on. She liked the idea of doing some innovative funding -
perhaps giving a company a tax credit for employing
registered apprenticeships. She noted that several states
were looking at the concept and she believed there was
currently legislation in Congress. She spoke to encouraging
businesses to engage in apprenticeship programs, which she
believed was a healthy economic model. She would be happy
to look at the idea in the future or in the current
session. She believed it was a great idea.
Co-Chair Neuman spoke to legislation he had worked on in
the past that would provide a 50 percent credit on
corporate taxes for the first $100,000 and a 100 percent
credit on the second $100,000 donation to a high school.
The catch had been that because it had fallen under federal
tax code under defined public benefit, the donator was also
eligible for an additional $69,000 in federal credits; a
company could get $219,000 credits on a $200,000
contribution into vocational education. The contribution
went directly to schools to teach vocational trades that
were representative of the companies' industries. He added
that it also allowed schools to receive endowments legally
under state law. He spoke to the importance of encouraging
private industry to try to help increase vocational
education opportunities.
3:04:17 PM
Commissioner Drygas believed it was an interesting concept,
which she was willing to look into. She believed it was
almost more tangible to have some skin in the game. She
elaborated that a company could receive a tax credit when
they showed the state the numbers - when they actually had
used training programs and had registered apprentices on
their books. She noted that there were terrific statistics
about how registered apprenticeship improved the lives of
individuals and grows a workforce in any state. She
remarked that she thought of apprenticeship as construction
- she had gone to a White House apprenticeship conference
in September [2015] and had been blown away by the models
of apprenticeship that were completely beyond construction
(e.g. mining, healthcare, insurance, and other). She
continued that there were terrific models used in Europe
that utilized registered apprenticeship to help individuals
determine their career paths. She believed it would be a
great way to encourage the use of registered apprenticeship
for any number of industries. Currently the department was
focusing on increasing the state's healthcare workforce
through registered apprenticeship, but it did not plan to
stop there.
Representative Wilson commended the department for finding
efficiencies in leasing and other. She remarked that
besides matching funds the department used grants. She
spoke to uses for the grants on things like AVTEC, adult
education, GEDs, and the Construction Academy. She noted
that all other budgetary items received matching funds. She
talked about giving grants to schools the state had been
giving grants to because they were there. She spoke to
efforts to be more efficient on utilizing the University
and DLWD. She believed the department was taking the lead,
especially on the courses they had discussed, and letting
the University be the academics. She believed it was how
better programs were found. She spoke to concern about out
of work individuals and believed it was the way to keep
them going. She was proud the department had found federal
funds to start something the state had not done in a long
time. She believed growth would occur in DLWD by locating
funds that specifically fit the department.
3:07:35 PM
Vice-Chair Saddler pointed to slide 12 related to a
reduction to the Construction Academy by $600,000. He asked
how the reduction had impacted the operation. He thought
the intended audience of the academy had been retargeted.
Commissioner Drygas replied that the budget subcommittee
would continue to address the Alaska Construction
Academies. She believed it was important and was a large
part of the department's budget. She explained that the
academies had worked hard to increase the donations they
received (e.g. donated space, instructors, and equipment),
which they had to rely on more heavily given the decrease
in state funding. The reduction had forced the academies to
operate at a much leaner level than in the past.
Representative Munoz asked how the funding worked for the
construction academy. She asked if funds went to secondary
and postsecondary schools. Commissioner Drygas replied that
the funds went to postsecondary adult education as well as
high school students for exposure to the construction
trades. She deferred the question to Ms. Harbour for
further detail.
Ms. Harbour expounded that in FY 14 one-third of the
funding had gone to adult training and two-thirds had gone
towards secondary education. In the past year the
department had retargeted and had taken the majority of the
$800,000 reduction from FY 16 at the secondary level (based
on direction given to the department to focus on adults).
She stated that at present about half of the funding went
to adult education and half went to schools.
Representative Munoz asked if the proposed $600,000
reduction would jeopardize any of the current programs.
Commissioner Drygas answered that the answer was not yet
known. She believed that the Alaska Construction Academies
was a policy question. The subcommittee had been discussing
whether it was the purview of DLWD to have funding that
went towards high school students for construction
training. She believed it absolutely was. She expounded
that the department could not fulfill its mission of
training workers if it did not provide young Alaskans with
exposure to the construction industry. She opined that it
was vitally important. She continued that schools were
doing some of the work, but construction academies were
picking up a significant amount of the work to provide
students with an opportunity to try the trades. She spoke
to the aging workforce in the construction industry; there
would be some significant problems heading into the future,
especially as the state looked at building a gasline. The
department had worked on several presentations regarding
its Oil and Gas Workforce Development Plan, specifically
targeted to gasline workforce development. She was
concerned that as funding was ratcheted back it would make
the department's job much more difficult because it was
necessary to build up the workforce; it did not just
happen. She believed it was critical to expose individuals
to the trade as early as 7th or 8th grade.
3:12:32 PM
Representative Edgmon pointed to the photo on slide 19 and
asked for detail. He wondered if there were other similar
opportunities with the Department of Corrections (DOC) and
other correctional facilities.
Commissioner Drygas replied that the women in the photo had
been incarcerated at the Highland Mountain Correctional
Center. The women had engaged in a program, which she could
have her colleague provide information on if desired. She
communicated that the department did significant work with
the Highland Mountain Correctional Center. She noted that
there were some terrific women at the facility. She
elaborated that the department had been tasked with doing
its part to reduce recidivism in Alaska. She paraphrased
Governor Bill Walker's statement that when a person had a
job they tended to commit fewer crimes. She stated that
when a person had a job they had something to do, had self-
worth, and had a purpose - all of which reduced recidivism.
She would love to expand programs like the one highlighted
on slide 19. She pointed to a great collaboration with the
iron workers apprenticeship program with Highland Mountain
Correctional Center, which she would love to expand, but it
was a matter of locating funds. She concluded that it was
the type of work that really mattered.
Representative Edgmon asked if the Highland Mountain
Correctional Center offered advantages for the department
to do programs like the one highlighted on slide 19. He
had heard a reference (possibly from DOC staff) to
advantages of moving the inmates to the Palmer Correctional
Facility.
Commissioner Drygas could not speak to the difference
between the Palmer and Highland Correctional Facilities.
One of the reasons the department was engaged with the
incarcerated individuals at Highland was because they are
women. One of the things the department was trying to do
through several initiatives was to increase the number of
women and minorities in the construction industry as well
as an apprenticeship.
3:15:43 PM
Representative Gara turned to slide 18. He asked about
employment and training services related to the
Construction Academy. He observed there had been a $5
million cut from the prior fiscal year from $23 million to
$18 million. He remarked that $800,000 had been cut from
the Construction Academy the previous year.
Commissioner Drygas answered that the reduction had been
$835,800 from the Construction Academy. There were three
regional training centers that received UGF funds, which
had been cut in half to $678,300. Additionally, the Alaska
Youth First Compass Alaska, Career and Technical Education,
and Oil and Gas Training Grants programs had all been
eliminated at a total of $2.4 million.
Representative Gara asked if the cut to the Youth First
program had occurred the previous year or the year before
that. Ms. Harbour answered that two years earlier the
program had been cut in half and funded as a one-time item.
The program had then ended in FY 15.
Representative Gara referred to the three grants that had
been cut the prior year. He noted that Youth First and Oil
and Gas Training grants had been cut. He asked about the
third program.
Commissioner Drygas answered that the third program was the
Career and Technical Education program.
Representative Gara asked for the total for the three grant
cuts. Commissioner Drygas replied that the total cut was
$2,421,300.
Representative Gara understood the proposal to cut the
Construction Academy by another $600,000 in the coming
year. He asked if there were any other proposed cuts to
training in the coming year. Commissioner Drygas replied in
the negative.
Representative Gara asked how much had been remaining in
the Youth First program the previous year that was
subsequently cut. Commissioner Drygas replied $1.4 million.
Representative Wilson spoke to the Construction Academy.
She asked if it would be a benefit to have a grant that
could be tailored to changing programs instead of having a
pass-through grant for one industry (i.e. nursing,
restaurant, and others). She elaborated that there were
many other career paths outside of construction. She
remarked that a significant amount of the construction
unions had their own apprenticeships. She asked what would
the benefit of limiting the grant to construction versus
tailoring the program to be more like the State Training
Employment Program where a grant could go to provide
training in many different areas.
3:20:08 PM
Commissioner Drygas answered that the idea was interesting
and she believed it was a policy question for the
legislature. She believed the Construction Academy was good
because there was an existing structure in place.
Additionally, there was a need for more construction
workers in the state, especially as the state geared up
towards building one of the largest projects in North
America [gasline]. She hesitated to say that it would be
prudent to move the money someplace else at present. She
was not trying to say that the mining industry, healthcare,
or fisheries industries were not important. There were so
many places that needed focus; the department was taking on
one chunk at a time. She reiterated her hesitation at doing
something else with the funding or using it as a fund to do
all types of different programs. She would love to have
more funding for things like that, but she did not
anticipate receiving additional funds. She relayed that the
Alaska Construction Academy model was a good one; it
exposed individuals to the construction trades. Many of the
adults or high school students receiving the exposure, went
on to healthy careers in the construction industry. She
stated that the academy was a terrific feeder for the
construction industry that she would be remiss to cut off.
Representative Wilson agreed that it was a good program.
She reasoned that if the academy was that good it would
have the ability to compete for funds competitively. She
stated that it would be a policy decision about why the
state was favoring one group over all other needs in the
state. She stated that it was a pass-through grant and it
was difficult to measure. She reiterated that if the
program was competitive and able to meet the criteria
funding would not be discontinued, but others would also
have the same opportunity. She remarked that she wanted to
expose high school students to all kinds of trades;
however, the larger policy question was whether DLWD
continued to do what it was doing and send a bill to the
Department of Education and Early Development or schools
for partial payment. She remarked that schools had CTE
funding within the education foundation formula. She stated
that it was not really about whether the state believed the
opportunity should be in the high schools - it was more
about who paid. She noted that the discussion would be
continued in subcommittee. She reasoned that it was a
broader policy call about where services belonged when one
department could not get the money from their area and
hoped another department would take it on. She was not
saying the Construction Academy was bad, but she believed
the state was basically favoring one group over another.
She remarked that the state brought in employees to the
seafood and mining industry for very high paying jobs. She
spoke about a DLWD trends report, which showed construction
was falling off because there was not funding for it; it
was not a large demand compared to other areas. She
stressed that the state's children were missing out on high
paying jobs.
3:24:45 PM
Vice-Chair Saddler noted that the jobs that would come from
the gasline were not in the short-term time horizon.
Representative Gara stated that he did not see the
Construction Academy as favoring construction workers over
other people; he saw it as all that was left. He detailed
that the Youth First Program had been deleted, which had
addressed the goal of getting youth into all sorts of
careers. He countered that the legislature was not favoring
construction; the academy was all that remained out of what
used to be a much bigger job training pipeline. He asked if
there was a significant portion of private funding for the
Construction Academy.
Commissioner Drygas answered that it had always been the
case that private funds were primarily donated to the
Construction Academy in the form of equipment, instructors,
and space from school districts.
Representative Gara asked for information about the Youth
First program that had been eliminated. He recalled that
the program had enabled students to meet with job
counselors to help them locate available resources, which
would enable them to get into professions they were
interested in.
Ms. Harbour replied that there had been two different parts
to the Youth First program. A portion had gone through the
job centers for employees to work directly with youth to
interest them in different career opportunities.
Additionally, there had been competitive grants awarded
annually for youth training activities. For example, there
had been a healthcare academy at the King Career Center in
Anchorage that had been funded with the grants. She did not
recall all of the work related to the healthcare academy.
Vice-Chair Saddler discussed the schedule for the following
meeting.
ADJOURNMENT
3:27:39 PM
The meeting was adjourned at 3:27 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| House Finance DOLWD Overview 01-29-2016.pdf |
HFIN 1/29/2016 1:30:00 PM |
|
| HFC- DEC Overview 01.29.16 (reduced file size).pdf |
HFIN 1/29/2016 1:30:00 PM |
|
| HFIN DOLWD Overview 1-29-2016 Inquiry Responses.pdf |
HFIN 1/29/2016 1:30:00 PM |
|
| Enclosure to HFIN DOLWD Overview Letter.pdf |
HFIN 1/29/2016 1:30:00 PM |