Legislature(1995 - 1996)
02/12/1996 01:35 PM House FIN
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HOUSE BILL 468
"An Act making supplemental appropriations for the
expenses of state government and making and amending
appropriations; ratifying certain state expenditures;
and providing for an effective date."
Co-Chair Hanley congratulated the Administration for keeping
the supplemental budget under $20 million dollars, although
reminded departments that the supplemental should be
allocated only for unexpected expenditures. Co-Chair Hanley
pointed out that the Governor's budget includes areas for
new programs. He thought those issues would be more
appropriately handled within next year's operating budget.
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, discussed the current
Administration's intent to have the full budget funded at
the beginning of the fiscal year. She advised that the
Administration did hold the departments to tight scrutiny in
the supplemental.
Ms. McConnell explained two solutions which were used in the
supplemental process. The first being internal shifting
within a department and the other, shifted BRU's.
Ms. McConnell addressed two items which entered into the
supplemental. The first was created by the fire and
disaster condition; the second budget was for leasing. She
added that $1.5 million dollars had been designated in
Section #16 for fire and disasters and recommended that
there be a fund established to address those concerns to end
the continual "cash flow crisis".
Ms. McConnell agreed that this concern could be addressed in
next years operating budget. The fire season is expected to
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be particularly bad this year because of a minimal snow
cover in the Interior.
Ms. McConnell noted the anticipated lapse in the school
foundation revenue. The current Administration is proposing
that a portion of that money be used to fix the federal
disparity. She recommended extending the lapse date to deal
with the concern of accumulated back interest.
Ms. McConnell suggested using savings from the Welfare and
Medicaid balance for specific investments in child care and
for the management information system updating.
Co-Chair Hanley commented that language on Page 17, Lines 1
& 2, creates a unique way to fund a fiscal note. He
recommended there be a fiscal note on the bill rather than
pre-funding the bill through a supplemental. Ms. McConnell
agreed, although pointed out that this year the Legislature
is on a fast track supplemental. She emphasized that the
supplemental funding would provide an opportunity to more
quickly finance an important concern.
Co-Chair Hanley interjected that designation would have an
impact on the overall fiscal plan. The funding would
address one time surplus education formula money, showing a
much larger increase the following year. He concluded, the
less money spent this year, the less money taken out of the
Capital Budget Request (CBR). Ms. McConnell asserted that
this was an expenditure which must be made eventually and
encouraged Committee members to choose "good planning" and
"good operational sense".
Additional information relating to these requests are
available to the Legislature from the Office of Management
and Budget (OMB). Ms. McConnell urged the Committee to
consider and pass the proposed supplementals.
DEPARTMENT OF ADMINISTRATION
NANCY SLAGLE, DIRECTOR, BUDGET REVIEW, OFFICE OF MANAGEMENT
AND BUDGET (OMB), OFFICE OF THE GOVERNOR, provided Committee
members with a letter listing technical corrections to the
bill. [Attachment #1].
Section #1(a) addresses the reduced centralized
administrative, Division of Finance services shift to the
Bethel Public Defender Office to meet the increased
caseloads in the amount of $49 thousand dollars.
SHARON BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ADMINISTRATION, explained that the
Public Defender is currently in the process of hiring.
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ALLISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, added that recruitment for that position has
just began. The case load growth in Bethel has always been
bad, although, this past summer the case load "ballooned".
Both offices have suffered a tremendous turnover due to the
extreme caseload responsibilities.
Representative Martin recommended moving public defenders
from a less busy area. Ms. Elgee agreed if there was an
area with an "under" utilized public defender, noting that
the Anchorage section is also growing.
Ms. Slagle spoke to Section #1(b) supplemental budget
request in the amount of $217 thousand dollars to cover the
operating costs shortage for the Public Defender agency
(Rule 39 receipts for representation). There has been a
large increase added to the Anchorage lease concern. Ms.
Elgee clarified that Rule 39 money was that collected from
felons Permanent Fund Dividends (PFD).
Ms. Barton pointed out the 600 case increase this year,
greater than anticipated. Ms. Elgee stated that the fiscal
note added to the past legislation was for Driving While
Intoxicated (DWI) legislation. The case load projections
prepared for that bill were underestimated and created a
serious impact. All agencies impacted by the passage of
that bill are experiencing short funding.
Ms. Slagle continued, Section #1(c) would provide for $356.4
thousand dollars for operating costs for the Office of
Public Advocacy (OPA). She remarked that budget is case
load driven, and the Administration has little control over
it. Ms. Slagle spoke to the increased case loads resulting
from increased police enforcement.
BRANT MCGEE, (TESTIFIED VIA TELECONFERENCE), OFFICE OF
PUBLIC ADVOCACY (OPA), DEPARTMENT OF ADMINISTRATION, agreed
that the continual increased need of services has resulted
from criminal convictions and from "children in the need of
aid" conditions. He emphasized that the level of increase
is dramatic.
Co-Chair Hanley asked if the Governor intended to provide an
amendment to increase that Office's FY97 request. Ms.
Barton replied that there has not been any discussion
regarding an increase to the OPA FY97 budget. Co-Chair
Hanley pointed out that the combination of last year's
funding and the supplemental request would result in $20
thousand dollars greater budget than last year.
Ms. Slagle continued, Section #1(d) would provide $870
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thousand dollars to fully fund the leasing budget. A $1.2
million dollar shortfall was anticipated during Conference
Committee with a reduced need of $700 thousand dollars; an
additional $96 thousand dollars was allocated to pay the
lease for the Juneau support from the Mental Health Trust
Authority.
Representative Martin suggested cutting that request back
from the Mental Health Trust Authority. Ms. Slagle noted
that the $96 thousand dollars was not money from the Mental
Health budget or an additional cost to the Mental Health.
That money is a payment due by the State to the Mental
Health Trust Fund for leasing their property.
(Tape Change, HFC 96-31, Side 2).
Co-Chair Hanley asked if any leases are prepaid.
DUGAN PETTY, DIRECTOR, DIVISION OF GENERAL SERVICES,
DEPARTMENT OF ADMINISTRATION, responded that in FY96, the
Department prepaid $312 thousand dollars for four leases.
He added, the Department has tried to "manage down" the
shortfall by offering a prepay incentive approach. Mr.
Petty concluded that whatever leverage is available, the
Department will take advantage of it.
Representative Kohring asked why the prepaid are not paid
until the end of the fiscal year. Mr. Petty replied that at
that point, the Department knows if there are funds
available to drive discounts. He explained that the $312
thousand dollar prepay was made through an additional
appropriation received for FY96.
Co-Chair Hanley questioned if the FY97 leasing budget was at
the full level. Ms. Barton stated it was the same as FY96
with the addition of this years supplemental budget request.
Mr. Petty summarized that the Division has a "challenge" to
manage down the existing leases.
Ms. Slagle continued, Section #1(e) supplemental budget
request in the amount of $450 thousand dollars would address
needs for the Retirement and Benefits Program to cover
investment management fees resulting from a higher than
expected asset growth.
Section #1(f) supplemental budget request to ratify a FY95
over expenditure of $23.1 thousand dollars for the longevity
bonus grants from Senior Services. Ms. Slagle indicated
that there was adequate lapse money in other BRU's.
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
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Ms. Slagle explained Section 2 of the supplemental budget
request in the amount of $61.2 thousand dollars which would
cover FY96 and FY97 costs for office space in Tokyo. The
security deposit plus interest for an existing lease will be
refunded and deposited into the general fund.
GUY BELL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, advised
that FY97 budget proposal has budgeted for the reduced cost
office space. The refund deposit will be returned by
December, 1996, and then deposited into the general fund.
Representative Kohring questioned the emergency nature of
the appropriation. Mr. Bell responded that there are two
offices in Tokyo; one for the Division of Tourism and the
other, the Division of Trade and Development, in operation
since 1965. The supplemental would provide funding to co-
locate the two offices, saving $50 thousand dollars per
year. Co-Chair Hanley advised that the Legislature has
suggested closing that office.
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS
Ms. Slagle spoke to Section #3(a) which would provide a
decrease in training and development funds to cover revenue
sharing costs for the Native Village of Kluti Kaah in
northern Alaska. That warrant has been misplaced and the
money continues to be due that village.
Ms. Slagle advised that Section #3(b) would provide a lapse
date extension for Rural Development Grants. She noted that
for FY97, the Administration has requested that these grants
be included in the CBR. These are construction grants for
smaller communities. This type of project is often extended
past a single fiscal year. Co-Chair Hanley questioned how
much money would be carried forward.
REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS,
noted that the appropriation would be $906 thousand dollars.
He stated that he would provide information on the carry
forward amount to the Committee.
Ms. Slagle commented that Sections 3(c,d & e) were requested
for capitalization of the Rural Development Initiative Loan
Fund (RDILF). AIDEA would provide $650 thousand dollars to
capitalize that fund. Currently, there are over 400
thousand loan applications. Mr. Henderson added, the amount
of FY97 loan payments estimated to be returned is $115
thousand dollars and the average loan is approximately $35
thousand dollars. The demand for the program has always
exceeded what is available. The supplemental appropriation
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would allow for the continuation of loans to be issued for
that program.
Representative Martin remarked that there will always be a
demand for "free" money. Ms. Slagle replied that the
supplemental request would provide funding to start programs
early, weather permitting.
Mr. Henderson responded to a query of Representative
Mulder's regarding the types of loans funded through the
program. He stated that the loans only go to communities of
less that five thousand people. The loan funds are used to
leverage other funds from banking institutions and private
industry. The loans are for those small business-type
operations that can create economic development and jobs.
He emphasized that these are small scale projects with a
competitive bid process. Mr. Henderson summarized that
AIDEA does support the loans.
Mr. Henderson pointed out the interest rate on the loans was
9.5%; and that to date the default rate has been zero. The
original appropriation in FY92 was for $300 thousand dollars
with an additional deposit from AIDEA of $650 thousand
dollars.
Ms. Slagle continued, Sections 3(f&g) supplemental request
for $200 thousand dollars for the Alaska Legal Service grant
in lieu of pending legal fees. The request provides funding
in anticipation of a federal dollar shortage. Mr. Henderson
noted that funding would cover the costs for a settlement of
a suit.
BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, CIVIL DIVISION,
DEPARTMENT OF LAW, stated that the request would provide
payment of attorneys fees forward funding for three cases.
The request would only resolve the issues between the State
of Alaska and Alaska Legal Services. Ms. Ritchie clarified
these are cases against the State.
Co-Chair Hanley inquired if Alaska Legal Services receives
money other than State money. Ms. Ritchie noted that they
receive mostly federal money through the Legal Services
Corporation Act.
Representative Mulder questioned why the State would fund
Alaska Legal Services in order that they then bring a trial
forth against the State, and then the State pay those legal
fees. Ms. Ritchie agreed that does happen. Representative
Brown inquired if the amount requested in the supplemental
was the Department's best estimation of the amount which
would be due to Alaska Legal Services. Ms. Ritchie stated
it was, given the settlement negotiations resulting from
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those three cases.
Representative Brown stressed that Alaska Legal Services
exists primarily to provide low income citizens access to
the civil courts. She emphasized the importance of that
service.
DEPARTMENT OF CORRECTIONS
Ms. Slagle indicated that Section 4(a & b) supplemental
request would cover the Cleary court fines for FY95 and FY96
contempt case.
DEAN GUANELI, CHIEF ASSISTANT ATTORNEY GENERAL, CRIMINAL
DIVISION, DEPARTMENT OF LAW, stated that the requested
amount would only cover fines through the month of October,
1995. The Department of Corrections has been unable to
comply with the population limits established in the Cleary
order for the past three months; fines have resulted from
that also.
Mr. Guaneli noted that the appropriation would be contingent
on the money being placed back into the general fund. The
plaintiffs believe that the fines should be made available
so as to improve the condition of prisoners statewide. The
court has yet to rule on that issue.
Ms. Slagle commented that the bill only covers the period
through October because of the time when it was drafted.
The amount of fines due are not always agreed upon. Mr.
Guaneli pointed out that each month there is uncertainty
regarding the amount due. He noted that the fines fluctuate
widely. Representative Mulder requested clarification of
the amount fined the Department of Corrections for
overfilling. Mr. Guaneli provided him that amount.
(Tape Change, HFC 96-32, Side 1).
Representative Martin commented on the comfortable services
offered offenders. Mr. Guaneli emphasized that the numbers
which drive the fines are the number of prisoners entering
the system not the services. He concluded, regardless of
the fines due, the State needs to have adequate space to
contain the number of prisoners.
DEPARTMENT OF EDUCATION
Ms. Slagle outlined that Section #5 (a & b) supplemental
budget request identifies excess funds in the foundation
program and then appropriates those funds as grants to
school districts in order to address the disparity problem.
Co-Chair Hanley requested further information regarding that
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condition.
KAREN REHFELD, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF EDUCATION, commented that last year
the Department was aware of changes on the federal level
which would affect the impact aid program and the disparity
test. The dollar amounts were not available at that time.
Changes on the federal level resulted from the percentages
of disparity between the wealthiest district and the poorest
district. Disparity has been reduced to a 20% margin level.
Co-Chair Hanley requested a written explanation from the
Department of how disparity works. He thought that there
could be numerous options to deal with that concern. The
federal government has kept decreasing the amount
appropriated with the intention of discontinuing the
program. Representative Mulder asked if the State would
loose the impact aid funds without the disparity test.
EDDY JEANS, PROGRAM SPECIALIST, SCHOOL FOUNDATION, SCHOOL
FINANCE, DEPARTMENT OF EDUCATION, explained that the school
districts would not loose the impact aid funds, but rather,
the State would loose the ability to measure those funds in
the State distribution plan. Mr. Jeans commented that in
FY96, there would be $35 million dollars in the foundation
formula. Impact aid funds come in for military dependent
students and students who reside on Indian lands. Race is
not an factor.
Representative Mulder questioned the net impact should the
disparity test not be in compliance. He was curious if more
money would then go to the above mentioned locations. Mr.
Jeans replied if the impact aid funds are not recognized in
the foundation formula, a $35 million dollar gap would exist
resulting in a proration of the unit value of approximately
$2500 dollars per instructional unit. Representative Brown
requested that a "break down" be provided by the Department
indicating how each school district would be affected if
disparity was not met.
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
Ms. Slagle referenced Section #6(a & b) in the supplemental
budget request noting that the first change indicated in
Attachment #1 reflects this concern. There is need to
change language so that the lapse funds would go to the
Prevention Mitigation Account. The request would provide
for an extension of the funding for the storage tank
assistance program. Co-Chair Hanley asked the amount of
money to be carried forward.
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JIM HAYDEN, PROGRAM MANAGER, UNDERGROUND STORAGE TANK
PROGRAM, DIVISION OF SPILL PREVENTION & RESPONSE, DEPARTMENT
OF ENVIRONMENTAL CONSERVATION, responded that $10 million
dollars has been appropriated over the past years, and that
$2.5 million dollars would need to be extended. Currently,
there are 800 applications in waiting, a demand of nearly
$50 million dollars. The Department is working on ways to
extend the available money which averages around $2 million
dollars per year for clean up. The FY96 grant appropriation
was $2 million dollars.
Representative Brown questioned the delay of implementation.
Mr. Hayden pointed out that the program was fairly new to
the State. It would be used to provide grants and loans to
local government and private sector for the upgrade of
storage tanks and for spill clean up at tank sites. The
Department wants to create a "fair" and conservative way to
determine grant allocation.
DEPARTMENT OF FISH AND GAME
Ms. Slagle stated that Section #7 supplemental budget
request for the Exxon Valdez Oil Spill Trustee Council would
extend the lapse date for approved EVOS projects to the end
of FY97. These lapse dates have been approved by the
Legislative Budget and Audit (LBA) Committee.
Representative Martin stated that there would be an
adjustment to the FY96/FY97 expenditure.
Ms. Slagle continued, Section #8(a) supplemental budget
request in the amount of $32.7 thousand dollars to pay for
increased vendor compensation in increased sales of fish and
game licenses.
KEVIN BROOKS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF FISH AND GAME, advised that late in the
Session last year, the Department knew that sales would be
"off the chart". The Division has been limited with many
restrictions. This request indicates increased license
sales.
Ms. Slagle noted that Section #8(b) supplemental budget
request would provide for a language change addressing the
scope of the Arctic-Yukon-Kuskokwin salmon fisheries stock
assessment for "equipment" to "projects", thus allowing for
public participation.
Mr. Brooks noted that the original language of the
appropriation was broader. It has always been the intent of
the Department to include all the above mentioned groups and
to encourage public meetings. Co-Chair Hanley asked if to
date any of the funds had been spent. Mr. Brooks replied
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that a large portion of the money would be spent this spring
and summer to implement equipment on the streams.
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
Ms. Slagle introduced the Department of Health and Social
Services (DHSS) Section #9(a/1) supplemental budget request
which would reduce Aid to Families with Dependent Children
(AFDC) in order to fund other welfare reform programs
(Public Assistance eligibility tracking system $3.5 thousand
dollars; child care benefits, Jobs Program for $1 thousand
dollars).
JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that the
case loads for AFDC were less than anticipated when the FY96
budget was put together. FY96 was authorized at $130
million dollars; in FY95, the Department spent $120 million
dollars total funds. Conservatively estimating, changes
will bring this year's program down to a $122 million dollar
projection.
Ms. Clarke noted that Section 9(a/2) for $500 thousand
dollars would be an investment to increased child care
benefits and would be shifted from AFDC. She pointed out
that there has been greater use of child care dollars than
previously anticipated. "Transitional" child care is used
for people who go off of AFDC, but need to continue their
entitlement to child care benefits. She thought that change
reflected "good news" with more people going off of welfare.
Co-Chair Hanley clarified that "transitional" child care was
an entitlement. Day care for the Jobs Program would also
provide monthly "transitional" child care supplements.
JIM NORDLUND, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, noted that the
State is above the federal requirement number of the people
who need to be in the Jobs Program.
Co-Chair Hanley asked if expenditures were being increased
in other portions of the Jobs Program. Ms. Clarke advised
that the Department is "living" within the entire
appropriation, although, the child care portion of that
appropriation surpassed what the Department was capable of
handling.
Mr. Nordlund noted that there has been an increased draw in
both the Department's Job Program and Natives Job Program
for child care monies.
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Mr. Nordlund spoke to the reduced case load to the AFDC
program. He suggested that it could have resulted from the
higher economy within Alaska or from the rate of success in
the Jobs Program.
(Tape Change, HFC 96-32, Side 2).
Ms. Clarke addressed Section #9(b) supplemental budget
request for $3.5 million dollars for the Eligibility
Information System (EIS) which would provide changes to the
main frame system to meet federal welfare reform
requirements. The funds would be shifted from AFDC. Ms.
Clarke provided the Committee with a handout "Department of
Health and Social Services Capital Eligibility Information
Systems Appropriations". [Attachment #2]. Ms. Clarke
interjected that some federal funds would be reimbursable
for the project.
Ms. Clarke spoke to the system currently in use. It was
created in 1984 and currently is not capable of producing
necessary data to keep the Department abreast of essential
information. She noted that the Department has been
successful in receiving appropriations and money from the
federal government to implement changes to the system to
make it more appropriate for the current load. To date, the
Department has received $4 million dollars to upgrade the
system. Ms. Clarke advised that the total cost would be $10
million dollars.
MARGO NASH, DIVISION OF PUBLIC ASSISTANCE, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES, spoke to the Department's
specific plans to implement the EIS program. She provided
the Committee with a handout "Welfare Reform Information
Systems" and provided an overview of that document.
[Attachment #3].
Representative Mulder proposed tracking individuals in the
system using electronic finger printing. Ms. Nash noted
that currently the Department uses the Eligibility
Information System data base with the intent to program that
system to identify when benefits were paid.
Representative Mulder questioned the propriety of the
overall appropriation. He compared other departments
capital project needs, specifying particularly the
Department of Corrections. He argued that this was an
appropriation and not a supplemental request item. Ms.
Clarke pointed out that there are not any requests in the
FY97 Capital Budget for this project.
In response to Representative Martin, Mr. Nordlund discussed
the current tracking system. Ms. Nash concluded testimony,
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providing contracting information.
HB 468 was HELD in Committee for further consideration.
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