Legislature(2013 - 2014)HOUSE FINANCE 519
02/04/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB266 || HB267 | |
| Fy 15 Governor's Budget Overview: University of Alaska | |
| Fy 15 Governor's Budget Overview: Department of Administration | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 266 | TELECONFERENCED | |
| += | HB 267 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 266
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, and making
reappropriations; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska, from
the constitutional budget reserve fund."
HOUSE BILL NO. 267
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program."
1:32:08 PM
^FY 15 GOVERNOR'S BUDGET OVERVIEW: UNIVERSITY OF ALASKA
PATRICK GAMBLE, PRESIDENT, UNIVERSITY OF ALASKA, introduced
Gloria O'Neill, Regent, Board of Regents, University of
Alaska (UA) and Courtney Enright, Student Regent, Board of
Regents, UA who were in attendance. He provided a
PowerPoint presentation titled "FY 15 Budget Overview:
House Finance Committee" (copy on file). He communicated
that the university was very budget conscious and had begun
leveling its budget in the past two years. The university
had increased the budget for academic programs 1.8 percent
in FY 13, in FY 14 the increase was 1.7 percent over the
prior year and the proposed FY 15 increase was 0.9 percent.
He utilized the single budget appropriation granted through
legislative authorization to sustain programs during the
lean budget years by internally moving funding to priority
items. He spoke to the university's internal work on the
budget. He pointed out that the university was working to
address and answer the questions about the university's
operations in relation to the budget routinely asked by the
committee members and regents. He highlighted the
governor's proposed budget. The university was currently
responsible for paying 50 percent of benefits. He noted
that the split with the state was 60 percent paid by the
state and 40 percent paid by the university. The university
was working to reign in contractual obligations and pay
increases to very low levels. He discussed that the
university received "good funding" in the past and the goal
was to use the current amount of funding and "level the
program expenses." He noted that even a slight increase in
50 percent of the personnel contractual obligations the
university paid resulted in millions of dollars in budget
increments and impacted the university's programs.
President Gamble continued to discuss the budget. He shared
that his principal concern was related to the state's
budget challenges in FY 16 and FY 17. In FY 15 the
university's budget starting point was a $14.9 million
decrement from the FY 14 budget. The university had not
received a cut of that size since sometime in the 1980s. He
related that the university could absorb the cuts up to the
current year, but it will become harder to achieve much
more belt tightening and efficiencies in the coming years.
He announced that he along with the chancellors were
looking ahead and attempting to deal with what comes next.
He moved to slide 2 that included the university's mission
statement:
The UA Mission
"The University of Alaska inspires learning, and
advances and disseminates knowledge through teaching,
research, and public service, emphasizing the North
and its diverse peoples."
President Gamble turned to slide 3 that depicted the campus
locations, and facilities throughout the state. He relayed
that the campuses' operations were a "fixed cost." The
multiple locations offered Alaskans the "opportunity" to
attend classes on a campus. Electronic learning and
increased bandwidth was changing the paradigm. How the
changes would affect the needs of a fixed campus would be
revealed in the future. He cited slide 4:
Shaping Alaska's Future …
A major institutional push toward increasing
enrollment, retention, and graduation in higher
education and workforce development
President Gamble discussed slide 5:
Shaping Alaska's Future
A solid, balanced university system is crucial to a
state's healthy growth and development.
As a university system, the value we bring to Alaska
depends on the number and quality of our graduates at
every level.
UA's reputation for offering a premier education and a
world-class research opportunity will substantially
drive Alaska's future. To a large degree that is a
choice we can make and an outcome we can control.
President Gamble expounded that the objectives were
established two years ago. The result identified a
"polished draft" of 22 issues comprising academics,
facilities, and services system wide and 22 effects that
the "university would like to create as outcomes." The
issues and questions were addressed and answered and the
"prospects for change were better than they had ever been."
He emphasized that Shaping Alaska's Future was a very
important initiative.
1:42:04 PM
President Gamble turned to slide 6:
FY15 Budget
UA is in year three of a continuous improvement plan…
a comprehensive and collaborative system wide
initiative to:
· expand student access;
· improve student outcomes;
· create greater academic and research value;
· gain a reputation for institutional excellence at
every level.
Accordingly, the FY15 budget is directly aligned with
the UA mission and the anticipated improvements and
outcomes of the system wide change initiative we call
Shaping Alaska's Future.
President Gamble spoke to the FY 15 budget in relation to
the Shaping Alaska's Future initiative outcomes. He
remarked that the goals were achieved internally and budget
increments were not necessary. He shared that in the past
decision making among the university system was "almost
impossible" and often deferred or avoided. He referred to
the university's Summit Team that included the chancellors
and provosts of the three universities, the vice-president
for academic affairs (the presidents principal academic
advisor), and President Gamble; the group was meeting to
address system wide issues. He believed that the
cooperation and collaboration between the team had never
been better; objective system wide decision making was in
progress. He discussed that the 22 objectives from Shaping
Alaska's Future was a new foundation for the university's
future. The Summit Team's ability to make decisions
facilitated the implementation and progress of the goals
defined in the initiative. He explained that the team
utilized "governance" and decision making to move forward
towards the goals. He stressed that the change was
significant.
President Gamble briefly addressed slide 7;
Inspiring Opportunity
· Access, institutional excellence and
affordability are guiding principals
· 33,000 students; 50 nationalities
· More than 500 degree programs, 125 completely on-
line
· 4,491 degrees, certificates and endorsements
· Research expenditures of $129.8 million
President Gamble pointed to the "FY 13 Report Card" on
slide 9. He communicated that funding appropriated for
advising was delivering results. He informed the committee
that a social education national agenda and major
initiatives for higher education was about to be revealed
by the White House. He did not know if some of the items
needed Congressional approval; however, some items did not
require the approval for implementation and would come
through the federal Department of Education. The university
would be accountable for a certain level of performance
measureable by a set of metrics. He guessed the changes
would occur prior to the next legislative session. He
looked at the university's challenges on slide 10:
Challenges
State and Federal budget reductions
Federal performance expectations
Dynamic higher education environment
Aging infrastructure and need for appropriate, modern
teaching and lab facilities
Online competition
Enrollment growth
President Gamble turned to slide 11:
Commitment to Improvement.
Higher education paradigm shift:
greater value and accountability
less tuition and fees
compete, stay relevant, embrace institutional
excellence Important partnerships:
commercial organizations
non-profits
other universities, K-12 school districts
state and national leaders
Innovative solutions to difficult UA issues likely to
transcend Alaska and gain recognition nationwide
President Gamble discussed that what motivated the
cooperation between the Summit Team was the commitment to
improvement. He wanted to "raise the bar" with regard to
the university system which went beyond a commitment to
improvement. He stressed the university's goal to take
"center stage" in terms of Arctic research and Arctic
policy and related issues: fisheries research, resource
security, Law of the Sea regarding melting ice, climate
change science, and the social impact of climate change on
Alaska. He reported an increased interest in Alaska from
individuals and organizations that want to implement
national Artic policy but had no expertise. The university
was being asked to facilitate the policy making process and
bring Alaskan experts together to help create the policies
and build a "national focus" on the issue. The university
was contacted by the White House Office of Science and
Technology and the State Department requesting assistance
in expertise to help build artic policy. The university
wanted to be "center stage" in Artic policy creation,
especially in relation to Alaska's federal land and federal
offshore issues. If the university was not proactive other
universities would "rush in" to fill the gap. He emphasized
his desire to develop the university's reputation as the
country's Artic and Circumpolar experts.
President Gamble discovered that the university was not
well known nationally. He wanted to attract more students
to UA in order to create an alternative source of income.
He stated that the demographics in Alaska were changing and
the potential Alaskan student pool was decreasing. The
university wanted to attract students, who had not decided
to attend college, to its 2-year program and eventually
matriculate the students into the four year degree program.
In addition, another goal was retaining students in the
four year degree program where the dropout rates were high.
He stressed that going forward; the university would not
depend on receiving increased funding to accomplish its
goals.
1:52:24 PM
MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, STATEWIDE PLANNING
AND BUDGET, UNIVERSITY OF ALASKA, spoke to slide 12:
The Model: Eliminate Cost + Generate Revenue
Reallocating and prioritizing resources
Space utilization, reducing leased space,
consolidation
Systemwide collaboration
Mitigating energy expense
Commercialization and investment
opportunities…unmanned aerial systems, alternative
energy, arctic research, climate research, fisheries,
oceans, natural disasters…have never been better
Long-term facility management plan… Sightlines,
university building fund
Ms. Rizk moved to slides 13:
FY15 Program: Reduced to just the basics
Completes UA mandatory comprehensive advising
Increases high school graduate readiness for
college/workforce through dual credit programs
Strengthens Alaska's teacher education program
Meets strong demand for expanded health/biomedical
education
Responds to requests for greater workforce
professional development from Alaska's major
industries
Engages in badly needed instate research work
Ms. Rizk addressed slide 14. She explained that the
university's FY15 Program GF Increment was $90,000 for the
UAS mining program. The request was included in the budget
last year as one time funding. The increment this year
moved the funding into the base funding in order to
continue the program. She turned to slide 15 that included
a summary of the Governor's proposed FY 15 operating budget
requests. She cited the $14.9 million budget reduction that
represented 4 percent of unrestricted general funds (UGF).
She highlighted the 50 percent split between state
appropriations and university receipts for employee
compensation. One significant item included in the $2.1
million for facility costs was for the University of Alaska
Anchorage (UAA) new sports arena. One other increment that
was included in program requests was $51.8 thousand for the
Technical Vocational Education Program.
President Gamble addressed the capital budget on slide 16:
FY15 Capital Request
Deferred Maintenance No. 1 overall priority
UAF Heat and Power Plant Upgrade No. 1 deferred
maintenance project
Engineering Buildings Completion No. 1 academic
project
Research for Alaska UAF's Alaska Earthquake Center
Arctic oil spill response
Statewide Digital Mapping Initiative
President Gamble briefly spoke to two items in the capital
budget. He moved to slide 17:
FY15 Capital Request
DM $37.5
Engineering vs. Heat and Power Plant Upgrade
President Gamble reminded the committee that the governor
requested $37.5 million per year for the previous 5 years
for UA deferred maintenance. The funding had a tremendous
impact on the university. He pointed to projects under
construction that fell into two categories. The funding was
reduced to $30 million last year and FY 15 was the last
year of the governor's program. The university was not
currently planning projects for future large construction.
After the FY 15 deferred maintenance appropriation was
spent, the university planned "a tremendous drop-off" in
capital budget request. The university planned to renovate
and maintain the existing structures and focus on
purchasing new high tech equipment for the engineering
program. He remarked that the program was "doing well" with
a high number of graduates. The demand was high for UA
engineering graduates for jobs on the North Slope. Two
engineering buildings were currently under construction
that would cover the demand. He worried that capital budget
funding would be insufficient for both completing the
engineering buildings and constructing the University of
Alaska Fairbanks (UAF) heat and power plant. He thought
that the two projects intersecting at the same would be a
difficult issue during a "contentious" capital budget
process. He trusted that the legislature was aware of the
importance of both projects.
Ms. Rizk turned to slide 18 that included a summary of the
FY 15 governor's proposed capital budget requests. The
requests included state appropriations of $37.5 million for
deferred maintenance, $10 million for completion of the
engineering buildings and $20 million in receipt authority
for capital projects. She noted that the final slides
contained graphs from the Legislative Finance Division. She
explained that slide 20 depicted the percentage of general
fund received by the university, which steadily declined
[15.85 percent in FY 06 to 13.22 percent in FY 15]. Slide
21 showed a decline in unrestricted general funds over time
[10.89 percent in FY 06 to 8.25 percent in FY 15]. She
pointed to slide 22 that depicted the funding mix for the
university that included federal receipts at 16 percent of
the total budget, designated general funds at 34 percent of
the total budget (including tuition), other state funds at
9 percent of the total budget, and unrestricted general
funds at 40 percent of the total budget. Slide 23 included
a summary of the 10-year fiscal plan. The average rate of
general fund growth had been 3.4 percent in the past; the
university was looking to reduce the growth in the future.
She addressed slide 24 that portrayed the overall annual
growth of the university budget at 2.8 percent, which the
university planned to reduce in the future.
Co-Chair Austerman surmised that attracting more students
and retention had been a problem for the university. He
referred to the governor's scholarship program designed to
attract and retain students. He wondered whether something
was amiss in the entire education system that created the
problem.
President Gamble replied in the affirmative and stated that
the problem was a national issue. He elaborated that
students were bypassing college because of the expense,
debt, and time investment of a degree program. Alaska had
highly paid [non-degree] jobs available, which contributed
to the problem. The argument was; what point was college if
a person could get a good job without a university degree.
The other national issue was that graduation from high
school did not mean readiness for college. The university
was working with members in the state's educational
community to shift the focus on "readiness" instead of
graduation. Youths needed to be ready to go into a
vocational program or into higher education. The issue
needed further work in Alaska. The university provided
workforce training and could expand it; if mines, dams and
pipelines were going to be built in the state it would take
an increased skilled workforce. The university wanted to be
the "significant source" of the workforce. The high schools
and workforce development in the university was the only
path to workforce readiness. The university was not
currently in the position to make enough people ready but
wanted to confront the issue.
2:05:34 PM
Representative Gara offered that the university had a range
of students across the achievement spectrum. He understood
that one of the university's problems was student retention
through graduation. He referenced budget appropriations for
student advising and wondered if the advising was aimed at
helping students graduate.
President Gamble answered in the affirmative and explained
that the focus was on "comprehensive advising." The
university had stretched the advising funding throughout
much of the university system and had already experienced
retention and graduation improvement. He noted that
completion rates were low in two year programs where he
believed much of the workforce would come from. Through
comprehensive advising the university had discovered that
students left for a variety of reasons. He exemplified a
story about an Alaska Native engineering student who was a
high achieving student the first couple of semesters.
Through the advising computer system his advisor discerned
that the student was about to drop out due to his father's
job loss. The student was eligible for many types of
scholarships, the advisor was able to help, and the
university retained the student.
Representative Gara asked whether the advising was not
available at all university locations.
President Gamble replied in the affirmative.
Representative Gara asked whether the university had data
regarding graduation and retention rates due to
comprehensive advising. President Gamble replied that he
could provide data, but was uncertain how accurate it was
so early in the program. National data proved comprehensive
advising worked and he believed that it was working in
Alaska.
Representative Wilson cited slide 15 and surmised that the
university budget was approximately $913 million. She
wondered how much it cost the state for each graduate based
on the number of graduates.
President Gamble replied that it cost more in Alaska than
in the Lower 48 and significantly more for the two year
programs than the four year programs. Tuition for the two
year programs cost the same as the four year programs.
Community colleges in the lower 48 cost approximately 50
percent less than UA. He wished to reduce the two year
program tuition. He relayed that employee benefits consumed
60 percent of the university's total budget, which was
consistent with the national trend. The university was the
largest owner of facilities in the state. Paying the bills
for the facilities at each location was very expensive. The
various campus locations offer higher educational
opportunities throughout the state, but at a high cost that
other universities do not have. He concluded that UA was
"more expensive than our counterparts."
Representative Wilson remarked that K-12 education cost the
state $1.4 billion and the university cost almost another
$1 billion. She questioned whether the state education
funding was going to be appropriated based on outcomes. She
wondered what the appropriate measures should be to weigh
the cost of keeping students in Alaska against the total
cost per student and whether it was possible for the state
to afford offering the variety of degree programs in order
to retain students.
2:14:54 PM
President Gamble replied that it would be impossible. One
of the issues facing the state dealt with program review.
He communicated that it was difficult to determine the
value of a program. He related that the university "could
not be all things to all people." The university needed to
define what programs were necessary for workforce
development and degree graduates and avoid "mission creep."
He stated that the accelerated program review process was
currently underway and programs were being consolidated or
dropped. He referred to the report card on slide 9 related
to measurable outcomes. He thought that indicators such as
the rise in Baccalaureate Engineering degrees, in Bachelor
degree students completing 30 credits each year, and
completion times decreasing were important markers of
efficiencies. The changes were a recent occurrence and
important to watch as quality outcomes.
Representative Wilson requested numbers instead of
percentages on slide 9.
Representative Costello informed the committee that she had
met with Dr. Helena Wisniewski from UA on growing Alaska's
economy. She was intrigued by the Seawolf Fund and
subsequently held a hearing where she invited Dr.
Wisniewski to testify. She asked for details on the
university's work on the fund.
President Gamble replied that the fund was an example of
innovation at work. He shared that other universities had
been successful in commercialization of patens and wondered
why the university was not engaged in the work. He
initiated the concept and both UAF and UAA, with the
support of the Board of Regents and the President,
developed the "offices of innovation." The office was a
mechanism that had the capacity to commercialize
intellectual property either through patens or investors
with seed money to start a business and share a portion of
the profits with the university. A large number of patens
had been advanced through both offices and huge potential
existed. He pointed to the University of Wisconsin as a
successful example. In Wisconsin, the venture created jobs,
additional revenue and tax base to the communities,
additional revenue to the university and provided incentive
for growth in the venture fund. The venture brought
attention to the university and would raise the
university's reputation.
Representative Costello believed that innovation was the
number one way to grow the economy and that the university
was an economic driver. She supported the university's
encouragement of innovation.
Co-Chair Stoltze related a prior year's committee meeting
concerning discussions with the three chancellors about
charitable giving and non-governmental private sector
initiatives to the university. He believed that UAS was
lacking in both. He had heard that UAS recently made a
charitable contribution. He wondered whether UAS was giving
money instead of asking for it.
President Gamble replied that he was generally familiar
with the issue. The community event that UAS contributed to
raised $300,000 of charitable giving. He believed that the
contribution was not out of the ordinary and was entirely
reasonable.
2:24:31 PM
Co-Chair Stoltze asked about the announcement from the
Board of Regents regarding a more rigid entrance
requirement in the university. He wondered about the
potential impacts.
President Gamble answered that the discussion centered on
meeting a certain academic requirement to be admitted into
a degree program such as engineering. An unprepared student
could not advance. He related that the university's
approach was to work with unprepared students and place
them into the system where they would succeed and
eventually move them into four year programs. The
university wanted to attract as many students as possible
into the system and help them succeed. Raising academic
standards would not decrease opportunities but actually
increase opportunities with the new approach.
Co-Chair Stoltze asked whether the university had a
committee on community fundraising.
President Gamble answered that the Vice-President for
Advancement system-wide or the advancement office through a
chancellor would decide whether the university wanted to
donate money for a cause.
Co-Chair Stoltze did not believe that the university or
quasi-governmental organizations should be allowed to spend
on charity. He wanted to determine how widespread the issue
was. He was concerned over "appearances." He thought that
the issue warranted further examination.
President Gamble replied that he would look into the issue.
Representative Munoz appreciated the Co-Chair's concerns
related to private events. She clarified that the
fundraiser that UAS contributed to was related to a
publicly and privately funded institution that was involved
in Native language preservation and cultural heritage. She
noted that the committee did approve two separate budget
appropriations for the same project.
2:31:49 PM
AT EASE
2:34:46 PM
RECONVENED
^FY 15 GOVERNOR'S BUDGET OVERVIEW: DEPARTMENT OF
ADMINISTRATION
CURTIS THAYER, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,
introduced Michael Barnhill, Deputy Commissioner,
Department of Administration, and Cheryl Lowenstein,
Director, Division of Administrative Services, Department
of Administration. He provided a PowerPoint presentation
titled "Alaska Department of Administration Department
Overview" (copy on file). He noted that the mission of the
Department of Administration (DOA) was to provide efficient
and consistent support services to state agencies to better
serve Alaskans. He listed the department's core services:
legal advocacy, regulatory services, family support, and
enterprise support services.
Commissioner Thayer discussed slide 2: "Organization
Chart." He reported that DOA organization consisted of two
deputy commissioners (one currently vacant), two special
assistants, ten divisions, and five commissions. Services
to the public included the Division of Motor Vehicles (DMV)
and Public Defenders and services to the state agencies
included General Services. The services the department
provided were diverse.
Commissioner Thayer continued with slide 3: "Service across
Alaska." He related that the department provided services
and had offices throughout the state, primarily for DMV and
the Public Defender's office. The offices were located all
over the state from Barrow to Ketchikan.
Commissioner Thayer turned to slide 4: "Legal, Advocacy and
Regulatory Services." He discussed performance measures.
One target measure for DOA was to serve DMV customers
within 20 minutes of arrival and had met the target 71.8
percent of the time. A second measure was the Public
Defender Agency's cost per criminal case and cost to
represent a client. The costs were continuing to grow even
with attempts to contain the costs. He moved to slide 5:
"Family Support" that addressed family support services. He
noted that the department attempted to shelter public wards
100 percent of the time. Public guardian clients had
shelter 100 percent of the time in 2012 and 99 percent in
2013. He discussed the average personal services cost per
child in need of aid (CINA). The department attempted to
hold down costs but the number had increased since the
prior year. He looked at slide 6: Enterprise Support
Services. The department measured its five year budget
growth trend which was 4.3 percent in 2013 and 3.66 percent
in FY 2014. He added that the current overall increase from
the FY 15 governor's proposed budget to FY 14 management
plan cost growth trend was 1.7 percent. The customer
satisfaction graph measured the department's internal
services. The satisfaction level dipped to 76.6 percent in
2013.
Commissioner Thayer continued with slide 7 "Department
Level Results" which depicted the satisfaction level for
the following departmental agencies: Division of Finance
(DOF), Division of General Services, Division of Personnel,
Enterprise Technology Services (ETS), and Division of Risk
Management. He noted that the satisfaction level fluctuated
depending on the service or task. He addressed slide 8:
"Share of Total Agency Operations" generated by the
Division of Legislative Finance (LFD), which represented
the department's share of general funds relative to other
agencies. The department received 2.2 percent of total
general funds in FY 15 which increased .01 percent since FY
06. General Funds represented one-third of the department's
budget. The bulk of the unrestricted general funds went to
the Office of Public Advocacy and the Public Defenders
Agency followed by DOF, ETS. He noted that DMV consumed the
largest portion of restricted general funds at $16.429
million followed by the Alaska Oil and Gas Commission
(AOGC) at $7.2 million. He turned to slide 9; "Line Items"
prepared by LFD. He explained that as a service provider
the department's largest expense was contractual service
line items followed by personal services. The total FY 14
budget was approximately $343 million.
Commissioner Thayer pointed to Slide 10: "Total Funding
Comparison by Fund Group" prepared by LFD. He detailed that
most of the items shown on slide 10 were paid for with
other funds. He listed the other funds: Division of
Retirement and Benefit Trust Funds, ISF, and Interagency
Receipts Division of General Services. The majority of UGF
was appropriated to the Office of Public Advocacy and the
Public Defender Agency followed by DOF. The Division of
Motor Vehicles expended the majority of designated general
funds (DGF). Federal funds comprised a very small portion
of the department's budget and were appropriated to the
Office of Public Advocacy (OPA), AOGC, DMV, and the Victims
Compensation Board.
Commissioner Thayer moved to slide 11: Continued Budget
Growth Compared to 10-Year Plan" prepared by LFD. He
expounded that the graph depicted the growth of all budget
funds but did not include personal services growth. The
budget grew 4.7 percent since 2005 compared to 5.5 last
year. He summarized that the graph underscored the
department's challenges in attempting to reduce the budget
growth rate. He declared that the department made progress
in growth reduction. He discussed slide 12: "Continued
Budget Growth Compared to the 10-Year Plan" prepared by
LFD. He reported that the slide graphed the growth in
general funds and grew 5.6 percent since 2005 compared to
7.3 percent last year. In prior years, the general fund
supported divisions grew faster overall. The costs were
"somewhat" contained. He noted that the largest two general
fund supported agencies were the Office of Public Advocacy
and the Public Defender Agency; both agencies had
experienced significant growth. Since 2006 the department
added 80 new positions of which 69 were hired for OPA and
the Public Defenders Agency. He examined slide 13:
Focus on Cost Avoidance
• Labor Contracts - reasonable contracts
• Health Care Spend - reduce the rate of growth
• Reduction of Unfunded Liability - lower future costs
• Utilization of Space - better use our space
• Procurement Savings - lower costs for what we
already buy
Commissioner Thayer indicated that the department was
currently negotiating five labor contracts: Public Safety,
Alaska Vocational Technical Center (AVTEC), and the marine
unions. The marine unions were asking for a 30 percent
increase and the department planned to reduce their
expectations through sharing the results of a cost study.
In addition, the state leased or owned over 5 million feet
of office space and was employing space standards to create
potential savings. The department was also attempting to
reduce procurement costs.
2:45:50 PM
Commissioner Thayer pointed to slide 14:
"Average Yearly Base Salary for FY 13."
Yearly Average Pay*
AVTECTA - Alaska Vocational Technical Teachers
Association - $75,876.24
IBU - Inlandboatmen's Union of the Pacific -
$51,334.92
MEBA - Marine Engineers' Beneficial Association -
$73,228.68
MMP - Masters, Mates and Pilots - $85,077.00
PSEA - Public Safety Employees Association -
$84,632.40 (AA), $70,169.52 (AP) AA - DPS; AP - DOTPF
ACOA - Alaska Correctional Officers Association -
$61,716.48
LTC - Public Employees, Local 71 - $54,697.80
TEAME - Teachers' Education Association of Mt.
Edgecumbe - $64,363.20
ASEA - Alaska State Employees Association - $57,087.72
APEA - Alaska Public Employees Association -
$82,825.68
CEA - Confidential Employees Association - $58,096.20
Non-Covered - Exempt, Partially Exempt and Excluded -
$99,474.48
Average employee benefits percentage is 49%
* Includes geographic differential
SOURCE: Bargaining Unit Profiles, collected June 30,
2013
Commissioner Thayer related that AVTECTA, IBU, MEBA, MMP,
and PSEA were paid very well. The current benefit package
added 49 percent to the base salary. The department was
currently negotiating $100 million in salaries with the
five contracts. He pointed out that 90 percent of Inland
Boatman's Union members resided in Alaska. Thirty-eight
percent of MEBA employees resided out of state and almost
20 percent of the MMP membership resided out of state.
Commissioner Thayer addressed "Benefits" on slide 15. The
graph showed contributions to active employee health plans.
The cost of healthcare continued to rise. Alaska was only
one of seven states that fully funded family premiums. The
department was looking at strategies to reduce the rate of
growth in health plans. He mentioned that some strategies
utilized were the implementation of the employee wellness
program, improved consumerism, appropriate utilization of
services, plan design changes, new contracting strategies,
and procurement of AETNA as the new third party
administrator.
Commissioner Thayer moved to slide 16:
NEW TPA - AETNA and MODA
•AlaskaCare -- 84,000 covered lives (active + retiree)
•FY13 claim costs: $600mm
•RFP split into 4 major components awarded 3 to Aetna
and one to Moda
•New networks: estimated savings of $50mm/yr.
•Introduction of a dental network
•Revising and updating plan booklets
•Use of data warehouse to inform plan decisions
•Single point of contact concierge team
•Goal: high quality health care at sustainable and
reasonable cost
Commissioner Thayer discussed that when the department
released a request for proposal (RFP) for a new third-party
administrator the goal was to determine which administrator
could save the state the most money in claims costs instead
of which administrator cost less. Aetna believed they could
save the state potentially $50 million. The third-party
contract totaled $100 million and was divided into four
major components. Three of the components had been awarded
to Aetna and one had been given to Moda for dental health
care. He mentioned that the department revised the plan
booklets for active employees and retirees and were
accepting comments. He reported that over 50,000 calls had
been placed by beneficiaries to Aetna and any issues had
been resolved easily thus far. The department's goal was
high quality healthcare at sustainable and reasonable
costs.
Commissioner Thayer moved to slide 17: "Benefits: PERS/TRS"
related to Public Employees' Retirement System (PERS) and
the Teachers' Retirement System (TRS) benefits payments.
The graph depicted benefit payments totaling $140 billion
over the next seventy years. He reported that the Division
of Retirement and Benefits was undergoing reorganization
due to an expected surge in retirement. The current PERS
and TRS account balance was $19.9 billion. He spoke to the
$11.9 billion unfunded liability. The graph on slide 18:
"Benefits: PERS/TRS" showed what a payment under the
percentage level of pay plan would be, which grew to over
$1 billion in 2026. The governor's proposal was depicted on
slide 19: "Benefits: PERS/TRS." The governor's proposal
reduced the overall liability in FY 15 and capped yearly
payments at $500 million through FY 35. He identified
Slide 20:
New Universal Space Standards
Why space standards?
Save the state over $125 million the next 20 years in
reduced lease costs.
Through WSCA contract the state saves significantly on
systems furniture
New space will be better for teamwork and
collaboration among "neighborhoods"
Better airflow with fewer walls
Natural light for everyone with private offices toward
core of building
Shared printers, scanners and copiers reduce the cost
of individual units
Employees can move from one office to another and have
the same working experience in any department
Clean desk policy addresses need for document privacy
in agencies
Commissioner Thayer commented that the department believed
that approximately $137 million or more could be saved
through universal space standards in reduced lease costs.
The clean desk policy had been implemented in order to
avoid leaving out confidential documents. He pointed to the
images on slide 21: "What We Use To have" showing a before
and after of the new space standards. He photographs
depicted the Department of Corrections (DOC) occupying
three floors in the Atwood building in Anchorage and how it
looked before and after. He informed the committee that the
space consolidation, through the new space standards,
reduced DOC's space to one floor. He shared that many
employees had been apprehensive, but many liked the changes
and felt the standards had made a tremendous difference.
2:55:20 PM
Commissioner Thayer turned to slide 21:
Purchasing - FY 13 Savings
The Division of General Services (DGS) awards multi-
department contracts for use by all Executive Branch
agencies and various political subdivisions of the
state.
The total savings realized by DGS for FY13 is
$56,691,337, with $43,258,568 being saved by state
agencies and the remaining $13,553,567 being saved by
political subdivisions of the state.
Some examples of state savings:
PC Contracts (WSCA-NASPO) - annual savings
$7,918,550
Office Supplies - annual savings $7,276,928
Travel - annual savings $6,994,179
Software - annual savings $5,613,726
Fuel: Heating, Diesel, Unleaded, Jet A, etc. -
annual savings $5,031,115
Systems Furniture - annual savings $2,727,574
Commissioner Thayer reported that the Division of General
Services strove to achieve savings each year. He pointed to
Slide 23:
Operating Increments
APOC: Program receipts for lobbyist registration,
$75.2 GF/PR
AOGCC: Petroleum Measurement Technical Support, $750.0
AOGCC receipts
DRB/HPA: Third Party Administrator Contract Costs,
$5.5M DRB Funds
DGS Lease Admin: Transition from GF to I/A, $130.4 GF
--> I/A
DGS Facilities: Transition from I/A to GF, $130.4 I/A
--> GF
DGS Facilities: Transfer Nome SOB from DOT, $201.1 GF
DGS NPBF Facilities: Transfer I/A receipts for General
Services Facilities Maintenance Component, $39.7 I/A
DGS Facilities Maintenance: Transfer out I/A receipts,
-$39.7 I/A
DMV: Vehicle Identification Number Decoder, $28.0
GF/PR
DMV: Knowledge Test System Maintenance, $50.0 GF/PR
OPA: Training for Defense Attorneys, $15.0 MHTAAR
PDA: Social Services Specialist, $138.8 MHTAAR
Commissioner Thayer understood that any budget increase was
discouraged and would discuss the increments in
subcommittee. He Moved to slide 24:
Deferred Maintenance
•DGS: Deferred Maintenance Public Building Fund,
$3,250.0 GF, $3,000.0 other •DGS: Deferred
Maintenance Non-Public Building Fund, $1,000.0 GF
•ETS: SATS Deferred Maintenance year 5 of 5, $3,000.0
GF
Capital Requests
•DMV: Replace Outdated information Technology
Infrastructure, $900.0 GF/PR
•DMV: Real Time Driving Records, $350.0 GF/PR
•ETS: UPS Replacement for Juneau Data Center, $1,200.0
GF
Commissioner Thayer relayed that DOA had $80 million in
internal deferred maintenance and capital requests and
reduced the amount to $10 million. He looked at slide 25:
Other Issues
Bargaining Unit Negotiations Marine Units Masters,
Mates and Pilots (MMP)
Inlandboatmen's Union of the Pacific (IBU)
Marine Engineers' Beneficial Association (MEBA)
Public Safety Employees Association (PSEA)
Alaska Vocational Technical Teachers Association
(AVTECTA)
Legal & Advocacy Appropriation
- Plea Policy Change
IRIS Transition
Broadband Access in Rural Alaska
Commissioner Thayer qualified that the Department of Law's
(DOL) change in plea policy affected DOA via the Public
Defenders Agency and OPA. He added that the Integrated
Resource Information System (IRIS) transition cost $80
million and replaced the statewide integrated systems of
accounting and payroll and a new procurement system and was
scheduled to begin on July 1. 2015. The transition was on
budget and on time. The department through ETS continued to
look at bandwidth concerns in rural Alaska. Other ETS
issues were security, mobile device strategy, identity
management, the enhanced base rate and base rate setting in
the budget process, and merging ETS facilities into one
state of the art facility in Anchorage.
Representative Gara discussed foster youths. He stated that
the number of fostered youth had increased and he wondered
whether the number of guardian ad litems increased.
MICHAEL BARNHILL, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, explained that he did not have the data to
answer the question. The primary way OPA managed case
growth load in the past was through the CASA program where
volunteers serve as guardian ad litems. He supported the
idea of utilizing volunteers whenever possible. He offered
to follow up with more specific data.
Representative Gara requested the follow up.
Representative Edgmon discussed the problems with bandwidth
in rural Alaska and encouraged the department to continue
its work.
Commissioner Thayer replied that he would follow up with
bandwidth statistics across the state. The department had
been watching Dillingham specifically and thought the
information would be useful.
Representative Costello understood that the commissioner
had a tough job. She commended the commissioner and his
staff on the innovative way they approach the work of
creating efficiencies in state government. She asked about
the customer service survey and wondered if other
departments could employ the survey.
Commissioner Thayer replied that the department relied
heavily on the use of surveys for feedback.
Mr. Barnhill replied that the department used Survey
Monkey. He believed it was important for any service based
organization to touch base with customers to determine what
the department was doing right, wrong, and could be
improved.
HB 266 was HEARD and HELD in committee for further
consideration.
HB 267 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| UOA FY15 HFIN-Overview.pdf |
HFIN 2/4/2014 1:30:00 PM |
UOA Budget Overview HFIN |
| DOA-DeptOverview2014(02-04-14) HFin-Final.pdf |
HFIN 2/4/2014 1:30:00 PM |
DOA Budget Overview HFIN |