Legislature(1993 - 1994)
01/26/1994 09:00 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 370 - APPROP: FY 95 OPERATING AND LOAN BUDGET
Presentations were made by Jerry Covey, Commissioner;
Duane Guiley, Director, School Finance; and Joe
McCormick, Executive Directory, Postsecondary Education
Commission, Department of Education.
Presentations were made by Frank Prewitt, Commissioner,
Department of Corrections.
Presentations were made by Paul Fuhs, Commissioner; and
Guy Bell, Director, Division of Administrative
Services, Department of Commerce & Economic
Development.
DEPARTMENT OF EDUCATION OVERVIEW
Co-chair Frank invited Commissioner Jerry Covey, Department
of Education, to come before the committee.
COMMISSIONER JERRY COVEY said he was before the committee to
present the FY95 budget overview for the Department of
Education. He also introduced Joe McCormick, Executive
Director, Postsecondary Education Commission, Department of
Education, and said he would present the Commission's
budget.
Senator Kerttula said of most interest and worry was that
the only local tax payer's group about to be significantly
impacted was property owners. He felt they were already
paying a substantial amount and over the years it had risen
at a factor of 10. Senator Kerttula wanted to know how the
department's budget would impact the local governments.
Commissioner Covey said he would be making comments at the
end of his presentation that might add even more concern in
regard to impacting tax issues on a local area. He said he
did not have a solution but felt there was a better
understanding of the problem and would include that in his
concluding remarks.
Commissioner Covey went on to say that since FY91, the non-
formula portion of the budget had been significantly
reduced. There had been a general fund reduction of over
$2.4M and 37 full time positions had been eliminated since
FY91. As a result, the department has been significantly
restructured, giving the best service it could to students,
school districts, and communities. In the process of
reorganization over the past three years, and with the cuts
that have been made, he felt the department had increased
its fiscal accountability, and had improved working
conditions and morale. The following are a number of
significant items being worked on, many included in the
Alaska 2000 initiative. A series of public hearings are
being held on proposed student performance standards in
math, english and science. Meanwhile, committees are
developing student performance standards in history,
geography, government, citizenship, and skills for healthy
living, which should be available for next year. Three more
standards will follow those. In all, there will be 38
recommendations included in Alaska 2000 initiative. It will
take several years to accomplish those changes.
He went on to say that at the same time, new standards are
being established with the University system for educator
trainer programs. For the first time in recent history, the
backlog in teacher certification has been eliminated and is
operating efficiently. Within the last year, the department
has implemented the Americans With Disabilities Act. A tech
prep plan has been prepared and approved, grants applied
for. In regard to distance education all around the state,
about 38 districts, approximately 150 schools, and over
1,600 students were involved.
Commissioner Covey referred to the handout, Department of
Education, FY95 Budget Overview, dated January 26, 1994
(Attachment A, copy on file). He said the budget is
basically a maintenance one and any changes are described on
pages 4 and 5. He said a few increases in agency operations
are described on pages 11 and 12. The highlights are a
general fund increase of $200,000 for independent living
services for vocational rehab, a $39,000 increase for
publication of the Alaska Bluebook, and some increases in
program receipts. This year, the UCAN network was made
available to all public school students and teachers
throughout the state. He felt it was a great expansion of
services and a successful joint venture with the University.
He also said federal authorization had been increased for
carry forward on grants that cross state and federal fiscal
years, and new federal grants were available for student
performance standards.
Commissioner Covey stated the changes in the formula
programs were described on pages 19 and 20 of the handout.
He pointed out the most significant of those was the fact
that there is no increase for the foundation program with
the exception of $1.7M in general funds to offset the loss
of PL 874 Impact Aid funding, and the decrease in public
school revenues resulting in the proration of the
instructional unit value to $59.8. Additionally, there is a
$1.5M reduction in pupil transportation which would fund
that account at 90 percent. Page 27 shows the detail of
that proration and its effect on different districts.
Senator Kerttula questioned the funding of only 90 percent
of the students transportation. He stressed this would
effect the local districts that are the most impacted.
Commissioner Covey agreed that local districts would be
impacted. Senator Kerttula went on to say that over the
last couple of years, the MatSu district has been showing
gains in various components of student performance, and less
and less funds will effect those gains. Senator Kerttula
said he would like to see how the decrease in the formula
foundation program and transportation will effect his
district.
Commissioner Covey said the FY95 budget resulted in a
reduction of two full time positions from the FY94 budget.
To date, no one had been laid off because of the previous
year's reduction in staff by 37 full time positions.
Twenty-seven of those positions came between FY92 and FY93,
and another nine between FY93 and FY94. He felt the
department had taken the initiative to trim and reduce the
staff without a lot of external pressure, the department was
acting in a responsible manner, and doing the best it could
with what it had. This year the department had requested 17
position waivers because of the hiring freeze. Nine of
those had been approved (the majority of those from non-
general funds). He stated the Governor's proposed level of
funding is still unknown for the FY95 capital budget but the
department's request had been included in pages 32 through
34. There are no new full or part-time positions requested
in the budget. It requests six non-permanent positions all
related to federal grant programs. Those positions will be
deleted when the projects are completed. A $6.5M
supplemental, based on student enrollment, and a
supplemental of $242.0 to fully fund payments to school
districts for transportation for FY94 has been forwarded to
OMB.
Commissioner Covey concluded his highlights of the budget by
commenting that his $1 billion a year program was running on
about a two percent overhead. He said the department was
about as efficient as it could be and still provide the
services it provides.
In addition, he wanted to comment on three other issues.
The first had to do with the potential for a significant
revenue loss in the state foundation through the federal
impact aid program. He explained that this program is up
for reauthorization this year before Congress and there is a
significant attempt to challenge the method being used to
distribute those funds. It could put a $35-45M "hole" in
the state's foundation if that money was eliminated in the
distribution mechanism. Alaska is one of seven states that
could be effected, and one of two that would be effected the
most. Currently, the department, in conjunction with the
other states and our representatives in Congress, is working
on this issue. He reiterated it was a serious threat.
Commissioner Covey said another issue that is of concern is
the single site issue. The state board has taken a stand
that says if full funding is provided to all other school
districts and there is no proration or withholding of
funding to them, then they would support a legislative fix
to address the single site needs, but only at that point.
The third issue Commissioner Covey spoke to was the migrant
education program which currently provides $12M of revenue
to the state. The federal government is in the process of
reauthorizing this program. Even though that money is not
figured directly into the foundation, it is still
significant. The reauthorization plan could take away about
half of the $12M for the state's use which would impact many
school districts.
In conclusion, Commissioner Covey felt he should comment on
a recent court decision in the Fairbanks busing case. It
could cause far-reaching ramifications in regard to
transporting private school students throughout the state
and may significantly impact transportation budgets.
Senator Jacko asked the effect of the maintenance budget in
the amount of real dollars per instructional unit.
Commissioner Covey said it means a reduction from $61.0 to
$59.8. Senator Jacko asked why there was a reduction of PL
874 funds, and commented that there had been a proposed
change in prior years suggesting that money would go
directly to communities. He commented that some PL 874
money went to Native children in the schools. Commissioner
Covey asked Duane Guiley, Director, School Finance,
Department of Education to speak to Senator Jacko's
questions.
DUANE GUILEY said that the decrease in Impact Aid was due to
the reduction of student enrollment of eligible students.
He pointed out the significant reduction in Adak school
district alone. He also stated that of the $1.7M loss in
the two programs, only $79.3 is related to Impact Aid. The
balance is related to the loss of earnings of the public
school fund, relating to Native students or students that
live on Native lands subject to reauthorization by Congress.
He turned the committee's attention to a handout titled FY95
Impact Aid Program Proposal that gave background on that
reauthorization and would help answer questions for the
committee (Attachment B, copy on file).
Senator Jacko said that this issue put more pressure on the
legislature to change the formula. Mr. Guiley agreed it
would, at least, apply pressure to relook at the public
school foundation formula as a whole, depending on the
outcome of reauthorization.
In answer to Co-chair Frank, Mr. Guiley said that $1,636,100
was the loss in the earnings of the public school fund. The
public school fund is a resource to the foundation formula
and actual earnings only are annually made available to the
formula. Due to a reduction in interest rates nationwide,
that state fund did experience a loss. The balance in the
fund is slightly over $26M. Again in answer to Co-chair
Frank, Mr. Guiley said the fund was established before
statehood, and reestablished and renamed the public school
fund. The new fund receives earnings from certain fees,
registrations, and sale and rents on land and leases that
were previously set aside for public schools. The
Department of Revenue annually provides a statement of
earnings to the Department of Education for utilization in
the budget process. Co-chair Frank asked Mr. Guiley for a
report from the department on long term effects and trends
in regard to the fund.
In answer to Senator Kerttula, Mr. Guiley said that the
states involved in the possible aforementioned reduction of
Impact Aid were Alaska, New Mexico, Arizona, Wisconsin,
Maine, and Nebraska. They all participate through the
recognition of federal dollars received at the local level
in the distribution system of state aid to the same school
districts. One of the items in the reauthorization proposal
is to eliminate that possibility whereby the districts would
continue to receive the money directly but the state would
be barred from taking into account that money received when
determining the level of state aid. He pointed out this
loss to the budget would require an additional allocation of
general fund money. If the legislature did not approve the
supplemental request necessary to fund this loss, the law
provides for additional proration of the instructional unit
value. The proration would approximate another $5,000 per
unit, making it close to a $55,000 value.
Senator Kerttula said that the states effected do not hold
much political clout in Congress, and asked for the
Congressional delegation's evaluation of the issue.
Commissioner Covey said this issue was serious and prospects
of amending it were not great. This movement has grown
significantly in strength over the past four or five years
and is going to be very difficult to offset. Currently,
communication is going on with the Congressional delegation
and a plan is being formulated. In February, a meeting is
being held with all effected delegations so influence can be
maximized. John Katz is involved and helped formulate a
plan. The proration that Mr. Guiley addressed, the
additional $5,000 will further impact those districts that
are not significantly dependent or receiving little Impact
Aid money. He explained that, as the unit value decreases,
the ability to tax themselves locally to contribute to their
school system will be reduced as well.
Senator Salo said that she had a question relating to the
proration of the formula and asked if this year's requested
supplemental accounted for new students, and was the plan
not to request it next year? She also asked Mr. Guiley if
the impact of that decision was equal across the state? Mr.
Guiley said that the impact is not equal in that if the unit
value is prorated (based upon state statute), the proration
comes at the level of basic need, the calculation of basic
need. From basic need, there are two reductions before the
level of state aid is determined. One reduction is the
eligible Impact Aid reduction and the other reduction is the
formula local tax equivalent. The value of that varies
throughout the state. So the proration ranges from
approximately 1.9 percent to 3.9 percent, approximately 2 to
4 percent throughout the state. In the recognition of the
unit value, the unit value is exactly equal from district to
district. The actual reduction in looking at state aid to
state aid varies by 2 percent.
Senator Salo asked, in his opinion, which districts were the
hardest hit. Mr. Guiley said in attachment A, pages 27 and
28, the projected entitlement by district and actual
proration of the unit value as currently estimated, was
listed. He said, by far, Anchorage would absorb most of the
proration with the reduction of $4.4M from entitlement,
Fairbanks $1.5M, Kenai $1M, MatSu $1.2M, and so on. Senator
Salo asked if some districts, such as Kenai and MatSu, were
getting a double cut because of the 10 percent reduction to
transportation. Mr. Guiley said the pupil transportation
reduction by district was also listed on page 27. He said
it showed those districts, such as MatSu and Fairbanks, that
receive a disproportionate share of the pupil transportation
money, also have a significant reduction in that area.
Senator Kerttula said that issue of disproportionate share
is an interesting question. He observed there are a group
of rural systems, and asked how the department was going to
get those children to school. Mr. Guiley said that he did
not mean the word disproportionate as a derogatory comment,
just that, based upon the number of students served, those
districts receive a higher percentage of the pupil
transportation money due to the fact that they have a
greater need for pupil transportation. Senator Kerttula said
he appreciated the clarification of the terminology.
Senator Salo asked, with the reductions listed, what data
had been received from the districts outlining the impact on
their educational programs. Mr. Guiley said the impact on
districts would vary significantly because the proration is
based upon entitlement. Anchorage's actual entitlement, for
example, which is due to receive the greatest level of
proration, is going up to $6.6M. Even after the proration
of $4.4M, they will receive a $2.2M increase in real dollars
in FY95 over FY94. Senator Salo said that might be
acceptable if they did not have new students. Mr. Guiley
said that Anchorage is scheduled to receive 771 new
children. Based on the fact that they receive capital
dollars this year to build the classroom space, and if their
only real need is new teachers, they could pay those
teachers average salaries and benefits of $70,000, and still
meet their need to house and educate their students - if the
only need was a teacher.
Senator Salo said that the frustration was the same as last
year when the budget was passed. She said the state is
asking the children of Alaska to pay for what the
legislature has done (and should not have done) last year.
She stated the reduction in unit value is significant. The
small raise from $60,000 to $61,000 was overdue and only
kept heads above water. She asked how can the state roll
those districts back again? She said she wanted to see
information from the districts and the impact they perceived
because of these reductions.
Senator Kerttula said that this budget was "back to basics"
consideration. He saw his school district terribly impacted
and did not know how roads or airports would be maintained.
Co-chair Frank asked for more questions from the committee.
There being none, he concluded the Department of Education's
portion of the meeting.
RECESS - 9:55 A.M.
RECONVENE - 10:05 A.M.
Log notes of the overview for Postsecondary Education, the
Dept. of Corrections, and the Dept. of Commerce and Economic
Development; handouts distributed by the departments; and
tape recordings of the meeting are on file in the office of
the Senate Finance Committee Secretary, Room 520, State
Capitol Building, Juneau, Alaska, (465-2618) and may be
obtained through that office or the Legislative Finance
Division, P.O. Box 113200, Juneau, Alaska 9811-3200 (465-
3795).
ADJOURNMENT
The meeting was adjourned at approximately 11:15 a.m.
SENATE FINANCE COMMITTEE
JANUARY 26, 1994
9:00 A.M.
LOG NOTES - SFC-94, Tape #13, Side 1 (375)
DOE - POSTSECONDARY EDUCATION COMMISSION
JOE McCORMICK, Executive Director
Postsecondary carries out its role via four functions:
1. Administration of the Alaska Student Loan Program
Current portfolio of over $500 million and awards
$55 million a year in loans to approximately
13,000 students.
2. Provision of a program of consumer protection for
students in oversight of schools that operate in
Alaska.
3. Licensing and institutional authorization.
4. Administer special programs such as WAMI and
WICHE.
The Alaska Student Loan Corporation provides the
funding mechanism for the student loan program by
issuance of tax-exempt bonds. A total of $230 million
in bonds has been issued to date. The plan is to issue
another $40 million this year.
Mr. McCormick provided information on his background in
student loan programs and past experience as president
and CEO of the student loan corporation in Texas.
FY 95 operating budget represents a modest increase of
6.8% over last year. Of that total, 67% is devoted to
student loan administration. None of the funding
derives from general fund revenue. The budget is
funded from corporate receipts of the loan fund, except
for a small amount of federal funds for institutional
review and evaluation.
The budget includes:
1. Full funding of an internal auditor position.
2. Three full-time, pre-collect positions.
3. One full-time programmer/analyst.
4. Slight increase in expenses associated with
issuance of tax-exempt bonds.
Budget is intended to assist in addressing deficiencies
in the loan servicing system and provide enhancement of
efficiencies in services to students. It will reduce
loan approval time from approximately 8 weeks to 2
weeks.
Corporation is considering electronic funds transfer to
reduce the cost of issuing and mailing checks to
schools in Alaska.
The budget will upgrade the loan servicing system and
record management process now in place and assist in
resolving telephone problems experienced over the past
several years.
Privatization will also be addressed. A full report
will be presented to the legislature before the end of
the session.
The commission will present a list of proposal for
streamlining administration of the program prior to
conclusion of the session.
The budget represents a firm commitment by both the
commission and corporation to:
1. Provide services to the student.
2. Explore and examine constant innovation.
SEN. KERTTULA - Failure of legislature to fund $10 million
need to
sustain the program and "eventually take us out of
bonding." What is happening here?
MR. McCORMICK - Commission is examining the financial and
actuarial soundness of the student loan program, based
on qualification criteria and track record of
repayment. Fund must be actuarially sound. If the
program continues with no changes, and forgiveness
provisions remain in law, over a ten to fifteen-year
period the fund would deplete itself. The commission
is addressing means by which the legislature can offset
that effect. A deposit of $10 million a year from the
general fund is one possibility. There are other ways
to make the fund whole. The commission will explore
those possibilities and present options to the
legislature.
SENATOR SHARP - Question regarding soundness of receivables
and for an aged-list of those receivables. Net retained
earnings?
MR. McCORMICK - A required surplus is maintained for
bondholders. The net worth of the corporation is sound at
this time.
SENATOR SHARP - Question regarding requested increases in
program
administration.
MR. McCORMICK - Of the 30% increase, almost 77% is $150.0 in
federal funds dedicated to the institutional review
process the commission is required to initiate under
changes to the higher education act of 1965, enacted in
July of 1992. This is strictly federal funds. No
general funds are involved.
SENATOR SHARP - Is contract for loan forgiveness broken by
borrower
default?
MR. McCORMICK - Default breaks the contract, and the
forgiveness provision does not apply.
SENATOR SHARP - Has forgiven amount been reinstated upon
default?
MR. McCORMICK - Not to my knowledge.
End: SFC-94, #13, Side 1
Begin: SFC-94, #13, Side 2
SENATOR SALO - Question
MR. McCORMICK - Recognition of the fact that Alaska has one
of the
oldest loan programs in the country. Over the period
since 1971, the state has changed the provisions of the
program. Some loans are at 5%, some are 8%, etc.
Students thus received different loans with different
provisions. The commission will request that the
legislature amend the law to allow the commission to
offer refinancing or consolidation of different loans
into one new loan that will be easier for the
commission to administer and service and easier for the
student to pay back.
SENATOR KERTTULA - Questioned whether the interest rate
would
increase under refinancing.
MR. McCORMICK - The student would have to volunteer and
weigh the
options presented to him or her. Our intention is to
offer a variable interest rate that floats with the
cost of money. The commission may be required to go
back to the bondholder and seek an amendment to the
indenture to allow refinancing. The commission would
most likely use new bond moneys to pay off older bonds
when refinancing student loans. The refinancing
incentive is generally a lower monthly payment
stretched out over a longer period of time.
DEPARTMENT OF CORRECTIONS
FRANK PREWITT, Commissioner, Dept. of Corrections.
The FY 95 Corrections' budget is maintenance and very
nearly tracks FY 94. It was submitted with a caveat
that the department would not be in position to know
what budget would be adequate until the population
management plan, implemented in July, is applied.
Results of the plan initially indicate that this budget
may not accommodate the current picture much less
additional crime legislation pending in the
legislature.
Reference to FY 94 Population Management Plan,
memorandum from the department to the Criminal Justice
Working Group, current population statistics sheet.
At the close of the session last year, the department
was in an emergency overcrowding situation with a
motion to hold the department in contempt of court,
pending. The department faced need to reduce
institutional population below maximum
capacity. The department identified five strategies:
1. Revising the classification system. This has been
completed and will be implemented over the next
three of four months.
2. Development of a furlough program for graduated
release
toward the end of an inmate's sentence. The new
program was implemented October 1.
3. Addressed intermediate sanctions: electronic
monitoring,
supervision, etc.
4. Implementation of Project Hope--the Pt. MacKenzie
Rehabilitation Program. This effort calls for
development of a program for low-custody inmates
that would accomplish renovation and restoration
of the farms and focus on over-representation of
Alaska's Native inmate population.
5. Focus on the backlog of 2,000 misdemeanants
waiting to
serve sentences. Development of work camps and
programs, furlough beds, etc. The backlog was
eliminated as of December.
When the focus on furlough beds shifted from
misdemeanants to inmates, the backlog accumulated
again. Misdemeanants can be dealt with through work
programs.
Need for achieving compliance with Cleary requirements
relating to parity for female inmates. A program has
been developed at the Lemon Creek Correctional Center
at Juneau.
Under the management plan, the department was "just
keeping up" rather than achieving the goal of reducing
the prison population beneath the maximum. That is due
to population increases.
Data sheets indicate a total population of 2,978 as of
May. Today the number is 3,189. That is a net
increase of 200. The is approximately the average size
of a prison facility. The strategy of using
intermediate sanctions and halfway houses through the
furlough program enabled the department to maintain the
status quo. The department is thus at the same
emergency capacity it was in May even though it has
moved 150 to 200 prisoners into other alternatives.
The population continues to grow.
Reference to line graph showing a 5% increase in the
past projected into the future.
SENATOR FRANK - What percentage is due to a general increase
in incarceration versus accommodation of those on the
backlog list?
PREWITT - Will provide that information as well as analysis
of the
population. Asked that Alaska Judicial Council to
participate in a population management session. One of
the reports presented to committee contains the
findings of the meeting. Statistics will consist of
data from the department, the University of Alaska, and
the Alaska Judicial Council.
The department has made significant strides in terms of
intent language on the furlough program and the Pt.
MacKenzie project. However, facilities at emergency
capacity, a net increase of 200 prisoners, and
projected increases indicate that the department
continues to have a serious population problem. The
system is beginning to scrape the bottom of the barrel
in terms of low-risk offenders that qualify for
intermediate programs.
SENATOR LINCOLN - Question regarding the January 11 report
to the
Criminal Justice Working Group and three rejected
proposals--one of which is concept of a boot camp.
PREWITT - These are the recommendations of the working
group.
Discussion of boot camp involved a presentation that
persuaded the group that a boot camp concept for adult
offenders may not be as effective as previously
believed. Canada has conducted analysis of
effectiveness of intermediate sanctions. That was the
basis of rejection.
SENATOR LINCOLN - Question regarding 23 new troopers. That
will impact the department. Has that, along with
passage of pending crime bills, been taken into
consideration?
PREWITT - Yes. Corrections is impacted. If major crime
legislation is passed, and additional police are added,
it will impact correction. If the front end of the
system is funded, attention must be paid to the rear
end as well.
Much of the pressure on the correctional system now
stems from the fact that the punishment of preference
in Alaska is incarceration. The department is
aggressively pursuing other sanctions to match up with
offenders.
The FY 95 budget does not reflect possible impact of
crime legislation. It also does not reflect the growth
that we are experiencing this month.
SENATOR LINCOLN - Question regarding Native population. Two
years
ago, 47% of the incarcerated population was Native.
Last May, the percentage was 37%. Last month, it
increased to 39%. How is the system dealing with that?
PREWITT - If there is a bright spot, it is in dealings with
the
Native situation in Alaska's prisons. While Natives
represent 15% of the state's general population, the
Native inmate population ranges from 33% to 40%. Every
racial group has a "certain percentage of predators."
The system reserves its hard beds for these
individuals. The over-representation of Natives in the
prison system should not be construed to assume that
"all of those individuals or even a majority of those
individuals" are predatory. Working with Native
groups, the department is endeavoring to develop a non-
conventional, more culturally relative program at Pt.
MacKenzie. The Native inmate problem involves male
Natives only.
DEPT. OF COMMERCE & ECONOMIC DEVELOPMENT
PAUL FUHS, Commissioner, Dept. of Commerce & Economic
Development, and GUY BELL, Director, Administrative
Services, Dept. of Commerce & Economic Development.
MR. FUHS - Page 17 of the overview documents charts use of
general
funds, program receipts, and other revenues. Downward
sloping line is general fund spending--cut almost in
half over the last four years. Uptrending line is
program receipts which have almost doubled in the same
period.
Banking & Securities, Occupational Licensing, Business
Licensing, handle hundreds of thousands of personal and
confidential transaction. There has never been a
breach of confidence, and there have been very few
complaints. The Banking & Securities section handles
all Native corporation elections in Alaska.
Revenue numbers for FY 94 and FY 95 are "a little bit
conservative." The legislature can count on $32 or $33
million from the department to the general fund. After
expenses are deducted, the department nets an
approximate $17 million profit for the state.
Page 18 charts economic development within the
department and includes costs and funding for the
Commissioner's Office. Lines for ASMI and ATMC are
tending downward. That policy is supported by the
Office of Management and Budget. Reductions in ATMC
does not reflect lack of need for tourism marketing.
The administration and legislature are seeking to
explore ways in which the industry "could pick up more
of these themselves."
Organizational changes include transfer of the energy
division to the Dept. of Community & Regional Affairs,
except for the portion dealing directly with utilities.
That portion remains within AIDEA. The Governor's
Office has proposed two executive orders: one would
move measurement's truck size and enforcement program
to the Dept. of Transportation and Public Facilities,
the second would move the Alaska Science and Technology
Foundation to the Dept. of Commerce & Economic
Development.
Page 19 contains specific program changes from last
year.
1. Occupational Licensing, $235.0 in program receipts
to
pay for boards and their meetings.
2. Alaska Public Utilities Commission, program
receipts
for policy analyst positions.
3. Administrative Services use of CIP moneys to phase
out
existing WANG computers and implement a new, open
architecture, IBM system.
4. The Made-in-Alaska program has been privatized.
5. Office of International Trade. The division of
tourism
transferred some funds to help out with the Korean
trade office.
6. Alaska Energy Authority. Numbers shown evidence
transfer
of the program to Dept. of Community and Regional
Affairs.
7. Division of Investment staff has been reduced by
six
positions.
8. Fisheries enhancement tax receipts are down
because of
lower salmon prices. This is a straight pass-
through program.
9 Tourism Marketing Council. The Governor's budget
reduces
the council by $3 million.
10. AIDEA. Positions relate to AIDEA take over of the
energy
authority.
There are no general fund changes compared to last
year. The total budget request is $61.4 million, down
from $91.7 million the previous year. The budgets
requests $19 million in general funds, down from $24.5
last year. The $19 million includes $1.1 million in
matching funds for $8.5 million in federal funds for
ASMI. A general fund match of $2.8 matches the
industry contribution for ATMC. The $19 million also
includes $1 million for the truck weight and
enforcement division scheduled for transfer under the
associated executive order. The $9.5 million in
general funds relate to direct line level agency
positions.
Under the Clinton administration, the department has
spent an increasing amount of time and effort defending
the rights of existing activities: changes to mining
law, cancellation of Alaska Pulp Company's timber
contract, objections to the central Prince of Wales
timber contracts, changes in the endangered species and
marine mammal protections acts, etc.
Statements regarding the department's efforts to
maintain the Usibelli coal contracts with Korea,
overcome objections to the Healy clean coal project,
initiate feasibility review of converting the Alaska
Pulp Company facility to a medium density fiberboard
plant, deal with EPA in the handling of fish waste at
the Kodiak fish plant, etc. The focus of the tourism
effort is to see that more money stays with Alaskan
businesses. International efforts have focused on
winter and shoulder season visitors.
It is in the public interest for state government to
assist in oil and gas development advocacy. The
industry cannot do this alone. Part of last year's
funding will provide for a competitive analysis of
Alaska; Alberta, Canada; Colombia; Russia, etc.
End: SFC-94, #13, Side 2
Begin: SFC-94, #15, Side 1
Strengths and weaknesses of oil and gas development in
Alaska will be presented to the legislature next
session. Need to become more competitive.
Due to the hiring freeze, the department has been
unable to hire four positions that are needed. The
freeze will definitely have an impact.
GUY BELL - The net position count is down 67 full-time
positions,
largely due to transfer of the rural energy related
employees to the Dept. of Community and Regional
Affairs and reorganization of the Alaska Energy
Authority. The department has added positions in
AIDEA/AEA to accommodate the transfer of operating
facilities. A total of 66 of the 67 positions related
to AEA transfer. AEA employees were also reduced by 20.
MR. FUHS - Chart within "Sustaining Alaska's Economy" shows
private
employment trends in Alaska. The department's program
to diversify and stabilize the economy is working.
Every industry sector, except for pulp mills, has
increased employment in Alaska. Much of the growth
relates to tourism, although many service jobs are
directly related to resource development. Large
retailers investing in Alaska reflect that
diversification and stabilization.
SENATOR SHARP - Commented that tourism focus is still too
much from
the deck of a cruise ship. Problems with expenditure
of $500.0 for a CBS special which will not cover the
state.
MR. FUHS - Those concerns revolve around Alaska Tourism
Marketing
Council programs. ATMC does the travel planner and
generic domestic advertising. The division of tourism
handles international marketing and helps Alaska
businesses develop their products. It also works with
people on the road system through Tourism North--a
joint venture with the Yukon and British Columbia
governments to promote road travel. Staff from the
division also attends tourism trade shows.
SENATOR FRANK - Revamping ATMC to provide greater
diversification
of industry interest on the council?
MR. FUHS - Task force worked on roles and responsibilities
of the
division and ATMC. That needs to be cleared up.
Statutes evidence duplication. Nothing has been done
to change the composition of ATMC.
SENATOR RIEGER - Breakdown of 13% oil and gas industry
increase?
MR. FUHS - Job increases occurred in exploration and gas
reinjection plants.
SENATOR RIEGER - Need to reconcile budget and position
changes
relating to AEA and the department.
GUY BELL - AIDEA has created two organizational units. One
relates to operations and maintenance associated with
ongoing facilities. AIDEA was also given additional
authority relating to financing of energy projects.
AIDEA added two staff positions for that new authority.
The six other positions relate to operation and
maintenance of ongoing projects.
SENATOR RIEGER - Question regarding feasibility work on the
interties.
MR. FUHS - The Dept. of Community and Regional Affairs will
conduct
the study. While AIDEA conducts this type of study,
the Dept. of Community and Regional Affairs is the
entity that actually "puts out the money." The
department is also complying with legislative directive
to transfer these facilities out of state ownership to
local utilities. The Dutch Harbor geothermal project
is the only other large project under review.
Financing within the Dept. of Commerce and Economic
Development relates to large-scale projects. Small-
scale rural projects are all within the Dept. of
Community and Regional Affairs.
SENATOR KERTTULA - Need for greater understanding of all
state
energy efforts.
SENATOR FRANK - Concurred. Will follow up on that.
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