Legislature(1997 - 1998)
02/23/1998 03:21 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 400 - DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT Number 0501 CHAIRMAN ROKEBERG announced the committee's next item of business was HB 400, "An Act combining parts of the Department of Commerce and Economic Development and parts of the Department of Community and Regional Affairs by transferring some of their duties to a new Department of Commerce and Rural Development; transferring some of the duties of the Department of Commerce and Economic Development and the Department of Community and Regional Affairs to other existing agencies; eliminating the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; relating to the Department of Commerce and Rural Development; adjusting the membership of certain multi-member bodies to reflect the transfer of duties among departments and the elimination of departments; and providing for an effective date." Number 0520 REPRESENTATIVE VIC KOHRING came forward to present HB 400 as the prime sponsor. Representative Kohring stated HB 400, as many of them had probably heard over the past several weeks, merges two departments of state government: the Department of Community and Regional Affairs (DCRA) and the Department of Commerce and Economic Development (DCED). He referred to the sponsor statement and said he wanted to give the committee an outline of what they were trying to accomplish. The sponsor statement read: Focusing on economic development is the main purpose for merging two existing departments into the new Department of Commerce and Rural Development. The proposed divisional structure will ensure local government assistance continues, infrastructure planning is enhanced, and that economic development strategy and project funding is centralized and optimized. The missions of the departments of Commerce and Economic Development and the Community and Regional Affairs are similar, to promote economic development of Alaskan communities. The two departments compliment one anther, however cross department coordination can be difficult. Two separate management structures and goals result in a scattered development strategy. Having a unified development vision and placing funding resources under one department will better serve all Alaskan communities, and Alaska as a whole. Currently the departments of Commerce and Economic Development and the Community and Regional Affairs have economic development programs, along with job training and child care programs. These non-development, non- commerce related programs will be moved to the departments of Labor and Health and Social Services, respectively. Under the new departments, these important programs can be integrated with existing programs in those departments while providing better service to Alaskans. This reorganization frees the new Department of Commerce and Rural Development to focus on economic development activities. Alaska's fiscal crisis necessitates reengineering government. This merger will eliminate one commissioner's office, but does not eliminate services. While creating budget savings, program delivery and economic development will be enhanced and streamlined in the new Department of Commerce and Rural Development. REPRESENTATIVE KOHRING referred to the majority's five-year plan to reduce spending, noting they were currently entering year three. Representative Kohring indicated programs many people would like to see retained will have to be cut in this budget-cutting effort unless creative ways of reducing government spending are examined. He noted that is essentially what they are doing with this plan, restructuring government: merging and consolidating so that they can run programs more efficiently, reducing the size of bureaucracy, and hence covering for programs they normally would have to cut quite deeply if they continue with their five-year plan. Representative Kohring stated the idea here is to reduce upper management. He said that by virtue of combining these two departments into one government entity, only one upper management structure would be required. He indicated that would mean eliminating one of the two commissioners, and eliminating the various assistants, deputy directors and positions of that nature within one of those two commissioners' offices. Number 0597 REPRESENTATIVE KOHRING stated they were also focusing on development of Alaska's economy with HB 400, it was not just budget-cutting per se. He said their ultimate goal was to enhance economic development throughout the state, and they feel that by streamlining the bureaucracy and focusing resources on these important economic development programs that goal will eventually be achieved. Representative Kohring indicated there are a couple of items within DCRA in particular which would be transferred to other departments through HB 400. The child care assistance programs, including the Head Start Program, would be transferred to the Department of Health and Social Services (H&SS), and the Jobs Training Partnership Act Program (JTPA) would be transferred to the Department of Labor. Representative Kohring said the theory is there are certain programs within certain departments in state government that logically could fit elsewhere. He said, in an effort to streamline these two "divisions" and focus strictly on economic development, they thought they would take a look at transferring out some of the things which would logically fit elsewhere in the budget. Representative Kohring stated, "Also, infrastructure development is the primary focus of what we're trying to ultimately accomplish in the course of developing our economy, and that's part ... of the effort with this bill as well." Number 0654 REPRESENTATIVE KOHRING stated HB 400 creates four divisions: 1) Division of Rural Services, formerly DCRA; 2) Statewide Development Division, formerly DCED; 3) Financial Resources Division, which pulls together all the funding entities like Alaska Science and Technology Foundation (ASTF) and the Power Cost Equalization Program (PCE); and 4) Division of Administration, which would combine the duties of the two merged departments, running the entire new department. Representative Kohring said, "So it's - it's an effort not only at saving money and focusing on enhancing the economy, but also taking a department and making one that's relatively simple, that's not a big, complex, gigantic colossus of a department out there, it's just four simple, straight-forward divisions." Also, Representative Kohring stated he wanted to point out the state currently does not have any kind of rural development plan. He said, "Where do we want to go as far as developing the economy of rural Alaska?" noting they feel this provides the framework so they can start the process of putting together an overall plan and then implementing it. Representative Kohring stated he feels HB 400 has a great deal of support, commenting that it has been cosponsored by ten Representatives, over one-third of the House majority. He indicated HB 400 was also a culmination of a two-year effort: taking the initial concept Representative Kelly had two years ago with his 150-page bill, working with it and refining it into the current, approximately 68-page version of HB 400 before the committee. He stated, "So it might look like a big bill, and it is, but it's far less than what we originally started with, 'cause our effort is trying to make this thing as simple as we can," indicating most of the legislation was statutory changes associated with the merger. Number 0754 REPRESENTATIVE KOHRING stated he wanted to thank the members of the Administration who had worked well with him and his staff. He said he and his staff made a concerted effort to reach out to staff at DCRA, DCED and the Governor's Administration on the third floor of the Capitol Building. Representative Kohring indicated they wanted to let these groups know it was an effort to work together, that they felt it ought to be a nonpartisan attempt to run these economic development programs much more effectively and efficiently. He said it is not simply a budget-cutting effort, it is a recognition of their responsibility to do what they can to enhance Alaska's economy. Representative Kohring noted they are not trying to destroy either one of the existing departments, they are trying to make them work better. He said they are trying to protect services with HB 400, focusing more on streamlining the bureaucracy, namely the upper management of the new department. Representative Kohring referred to an outline he said was not in the committee members' packets, noting he would like to briefly go over some additional major points. He noted that, again, they were focusing on economic development in the delivery of these programs, mentioning they had already discussed infrastructure. Representative Kohring stated the committee was probably already familiar with the ARDOR Program [Alaska Regional Development Organization Program, DCRA], which he said was contained within the DCED's budget. He referred to the January 1998 ARDOR Annual Report and commented that ARDOR recognizes the need to develop Alaska's economy and also the infrastructure. He quoted Donna Tollman, president of the ARDOR Association, "Economic development is not simply creating a business or a job and the term means something different in each region of Alaska." He said Ms. Tollman goes on to say, "When infrastructure is in place, new business starts and job creation is the translation. Where little infrastructure exists, economic development means developing the water, energy and transportation systems and workforce, translated creating an environment in which economic development can occur." Representative Kohring noted ARDOR recognized the importance of developing Alaska's infrastructure, which he said is the foundation for a strong economy. He stated that is what HB 400 achieves as well. Number 0853 REPRESENTATIVE KOHRING stated HB 400 contains the concept of "one- stop funding." He indicated all the financial-related entities like ASTF, PCE, the Alaska Industrial Development and Export Authority (AIDEA), and also revenue sharing and municipal assistance, would be grouped under one "management auspices" in the new Financial Services Division. He said they feel that would make it easier for grant and loan applications for local communities to occur and it would also enable the new department to identify optimum funding for each project. Representative Kohring said that currently the different financial entities are scattered among different agencies; by consolidating these entities they think they will be able to achieve greater efficiencies. Representative Kohring commented that then there is, of course, the cost associated with this whole effort. He stated, "Is it really worth [it] to do this? Are we really saving money? And we feel the answer is - is yes. We feel that HB 400 will create immediate cost savings, both in the short and long term. He indicated the primary short-term cost savings would come from the elimination of one of the two upper management structures. Representative Kohring said they feel that number would be approximately $1 million right from the start, noting he had specific information he could circulate to the committee. Representative Kohring said he'd like to point out another report, one prepared by DCED in 1994. He stated this report was done by a local consultant; it identified the existence of duplicating functions of these two departments and multiple statutes which basically result in two economic development entities. Representative Kohring said that report recommended examining those and considering merging the two departments together. He said he would spare the committee the precise legal verbiage but noted he had a quote there with him to that effect. Representative Kohring stated, "So the department itself actually, by virtue of commissioning this study, recognized that there is, in fact, benefit to be gained by doing this merger here." Number 0956 REPRESENTATIVE KOHRING also noted the presence of his finance staff aide, Mike Krieber, who would provide detail and technical information as needed. In closing, Representative Kohring said he would like to identify three things: 1) the problem they are dealing with, with this budget cutting process and with these departments; 2) the solution; 3) what the desired result would be if they implement that solution. Representative Kohring stated the problem is that, he said in their minds, government needs to be restructured. He said that as they continue to reduce government spending, recognizing across-the-board cuts are not necessarily the answer, they think restructuring, as they are presenting here with HB 400, is certainly a good way to go. Representative Kohring added he thinks greater efficiency in program delivery is needed, indicating he feels that is not currently being accomplished. He stated the solution with HB 400 would be to cut the bureaucracy instead of important programs, by unifying these two departments. He stated the desired result would be enhanced economic development throughout Alaska, preserving important economic development programs, noting that this also fits in with their majority's plan to achieve greater efficiency in government. He referred to the majority's "commitment to Alaska plan," noting the plan indicated that they were trying to achieve greater efficiency. Representative Kohring stated that concluded his presentation and he was prepared for questions, unless the Chairman wished to proceed with further testimony. Number 1034 CHAIRMAN ROKEBERG stated the committee would take questions at this time, then take testimony. He noted the committee could call Representative Kohring back up after the testimony. Number 1043 REPRESENTATIVE COWDERY asked for examples of duplication in the two departments. Number 1050 REPRESENTATIVE KOHRING responded that they are working on specifics regarding overlapping functions and are examining the different missions of the two departments. He noted, however, they have a list of quite a few things operated under both DCED and DCRA. For example: rural economic development, rural small business development, fishery-related programs, rural tourism, energy development, electrical utility assistance. Representative Kohring stated that both entities are currently performing similar functions in the examples just cited. He said they're taking a harder look at precisely where that overlap is and what kind of savings could be achieved if some of the overlapping functions were eliminated. REPRESENTATIVE COWDERY indicated Representative Kohring had discussed the administration of the new department. He asked, "If you created a new department, what would that title be, and that type of thing, and who would be in charge?" Number 1110 REPRESENTATIVE KOHRING responded that it would be called the Department of Commerce and Rural Development. He noted that they were trying to retain the names of the previous departments as much as possible. Representative Kohring said "commerce" was retained because they want people to know it is an economic development- related entity; "rural" was retained because they also want people to know that they're trying to develop the economy of rural Alaska. Representative Kohring noted Representative Cowdery's question about upper management structure. He stated HB 400 does call for the elimination of the DCRA upper management structure and that commissioner's office. However, he said, the make-up of the new management entity would be left at the discretion of the (indisc.) administration once the bill became law. Number 1157 REPRESENTATIVE HUDSON commended Representative Kohring on combining many elements from two departments, indicating he thought, from Representative Kohring's testimony, that it probably would ultimately involve several other departments as well. Representative Ryan stated, because it was a very comprehensive look at governmental services and how those services are performed, he was interested in knowing if existing statutory services were being eliminated. He clarified he meant services the legislature has imposed upon these various departments in the past, and he asked Representative Kohring if he had identified services that should be eliminated "within this rewrite here." Number 1204 REPRESENTATIVE KOHRING noted Mr. Krieber's presence for technical assistance and stated it was his understanding HB 400 did not eliminate any services. He said the bill, as it currently stood, focused just on the bureaucracy of one of the two management entities; services would stay the same under the new management auspices per the divisions he had earlier outlined, and one of the two commissioners' offices would be eliminated. Number 1232 CHAIRMAN ROKEBERG referred to page 40, line 13, "(27) REPEALED", the safety of air carriers in the state, and line 21, "(32) REPEALED", the neighborhood revitalization program. He stated, "That looks like as if there's a programmatic repeal of authority of the department ...." Number 1299 MIKE KRIEBER, Legislative Administrative Assistant to Representative Vic Kohring, came forward to testify. He responded, "A lot of what is listed there as repeal had been previous repealed in prior legislation. There're not any programs eliminated by that ... section." CHAIRMAN ROKEBERG commented it should be checked out. Number 1322 REPRESENTATIVE HUDSON, from his experience over quite a number of years, commented on the complexity of redesigning how an administration performs the work the legislature has imposed upon it through the statutes over the years. He noted Representative Kohring indicated he and his staff were conversing with various elements of the Administration, Representative Hudson said he was assuming that would be the Governor's office as well. He asked if HB 400 embodied some of the views, concerns and hopefully some (indisc.) with the Administration. Representative Hudson asked Representative Kohring if that was his view, and how he would characterize the Administration's reaction to HB 400. Number 1392 REPRESENTATIVE KOHRING stated the Administration recognizes what they were trying to accomplish and appreciated their efforts to reach out to the Administration and work with it. Representative Kohring referred to a possible newspaper quote which supposedly said, "If something isn't broken, why are we trying to fix it?" He indicated that generally summed up the Administration's perspective, at least from the perspective of the Governor's office. Representative Kohring indicated he and his staff have tried very hard to work with the Administration, to be open, and to hear the Administration's feedback. He noted he hasn't received any specifics from the Administration, but the concern has been expressed, " What are you trying to accomplish here, Vic, if both organizations are working well?" Representative Kohring noted he would answer that by saying they are trying to accomplish greater efficiencies by merging the two departments together, running the whole department under one management entity. He said, from his perspective, "It's broken if we can, in fact, save ourselves some dollars and run the same programs with less dollars. And from - from what we've deduced, from our research and what we put together right off the bat we'll be able to save a million dollars as a result of the implementation of this legislation." Number 1468 REPRESENTATIVE COWDERY asked Representative Hudson, as a member of the administration 15 or 20 years ago, how many departments were there then and how have the departments have grown, and if Representative Hudson had a perspective on that. Representative Cowdery indicated Representative Hudson might possible answer the second question in combination with Representative Kohring. Number 1494 REPRESENTATIVE HUDSON stated he certainly did have a perspective on it, noting he came in 1974 with Governor Jay Hammond and obviously government has grown appreciably since then. Representative Hudson attributed much of this growth to new programs imposed on the administration by the legislature. They have created new programs as they have had more money, and he thinks the administration has had to grow in order to accommodate a lot of that work. Representative Hudson indicated, however, that every administration has a different way of attempting to administer and perform the services and the levels of works the legislature has imposed. Representative Hudson indicated he hopes the legislature is working with the current administration in their approach, noting representatives of the Administration would be speaking about the ideas embodied in HB 400. Number 1552 REPRESENTATIVE BRICE asked why the Head Start Program was being kept in the new department, noting the decision to move the day care and child care programs out of this new department into H&SS. Number 1580 REPRESENTATIVE KOHRING indicated it was his understanding that the Head Start Program was under the auspices of the child care assistance programs and was transferred out of the new department in this legislation. He asked Representative Brice what page of the legislation he was referring to. Number 1592 REPRESENTATIVE BRICE indicated page 40, lines 27 and 28, which read: "(24) operate the headstart funding program governed by 42 U.S.C. 9835." Representative Brice noted that was under the duties of the Department of Commerce and Rural Development. Number 1603 CHAIRMAN ROKEBERG added that he had many question of that nature. Number 1611 REPRESENTATIVE BRICE asked one other question, "I keep hearing how this is going to create an efficiency of -- in terms of provision of service to the people of the state of Alaska. I've heard it, I've heard it - I don't see it in the bill. Could you maybe direct us a little bit towards - towards that?" Number 1641 REPRESENTATIVE KOHRING stated he would point most toward what would be called the Financial Services Division. He noted Mr. Krieber had pointed that out as well, and perhaps could elaborate on some of the details when they had a chance. Representative Kohring stated they feel putting all these services like ASTF, PCE, AIDEA, the revenue sharing and municipal assistance programs, which are scattered throughout government right now, under the management, control and operation of one division would enable them to "more optimize" the funding of these programs to run them better. Representative Kohring noted it was somewhat like a "one-stop shopping program." If municipal entities, organizations out there, needed assistance they could go to just one division, as opposed to working with separate divisions within state government. Representative Kohring indicated they think this Financial Services Division would minimize delays in grant monies, noting it would be easier for municipal entities to go through the processing of grant and loan applications. Representative Kohring said he thinks that would be the primary thing he would point to (indisc.) enable them to achieve greater efficiencies, and asked Mr. Krieber if he had anything to add. Number 1715 REPRESENTATIVE BRICE used the analogy of comparing apples and oranges with regards to AIDEA and ASTF in that scenario, noting he felt the programs were not meant to do the same thing, and were meant specifically to be different, otherwise there would not be the need for two separate programs. Representative Brice indicated there had not been complaints about AIDEA or ASTF. He stated, "And it gets back to the question, I guess, if - if efficiency's what we're looking for, the greatest - the most efficient type of government is also that form of government which leads or -- that does not allow public input or any other type of involvement that we - that we think is important. Not that that's what we're doing here, but I just don't see how we're getting to the efficient provision of large bonding and capitalization of industrial development in this state by ... moving AIDEA from point A to point B." Number 1821 REPRESENTATIVE KOHRING indicated he simply thinks having it all together makes it easier to provide services to (indisc.) entities, municipalities. He indicated that these municipalities can then go to just one division and the one individual operating that division; he used the analogy of "singing from one sheet of music." Representative Kohring stated it would also help them focus more on infrastructure and energy development. He noted energy development is one of the big things they are trying to accomplish, particularly for the benefit of rural Alaska. He said they are trying to look at these different programs from that perspective. Representative Kohring stated, "How can we work all these together in tandem to help further develop, not just the infrastructure, but energy-related resources in the state of Alaska to help our ..." Number 1870 REPRESENTATIVE BRICE commented, "So the purpose then is to develop a viable energy program for the state." REPRESENTATIVE KOHRING replied that was much of what they were trying to accomplish. REPRESENTATIVE BRICE continued, "As opposed to using AIDEA or ASTF to develop small businesses or medium-size industrial businesses to create economy. That's why I think it's important to keep maybe those types of programs separate .... In my mind, they serve very distinct roles, and if what we're talking about is to create a super energy program, you know, then maybe what we -- then probably that's what we're ... looking to do here." Number 1924 CHAIRMAN ROKEBERG noted he agreed with a good deal of what Representative Brice was saying. Chairman Rokeberg stated he wished to take some further testimony and then they could start looking into some of the details. Number 1939 REPRESENTATIVE KOHRING stated HB 400 does not change the missions of any of the specific programs, but they would like to recognize that rural energy development is extremely important for Alaska, particularly with the PCE program, one of the new department's funding sources. He said they are cognizant of that serious approaching problem, and moving to recognize the importance of infrastructure development, the importance of energy development. He noted they thought if they could put all these funding entities under one management roof, it could help to enhance those two aspects, and he stated Mr. Krieber wished to offer a comment or two. Number 1992 MR. KRIEBER stated the problem is both DCRA and DCED are funding infrastructure projects; both departments are funding rural small development initiatives, grants, and loans. Mr. Krieber indicated both departments use a "shotgun approach," and combining the departments would result in efficiencies. He noted he had recently attended a Southeast Alaska Community Economic Revitalization Team (SE-CERT) meeting here over a few days which brought together the various federal and state funding entities. Mr. Krieber noted the subject of the meeting was "scoping," in order to get the entities all to focus on the same type of result and try to decide who would take the lead; he said it was very apparent in that meeting that there was quite an overlap, so, he said, there is some coordination out there which is not achieving the desired results. He indicated the formation of the Financial Services Division in the one new department would give them the results currently being desired by these various departments. Number 2073 REPRESENTATIVE KOHRING noted Chairman Rokeberg had asked about lines 13 and 21 on page 40, dealing with repealing of statutes. Representative Kohring indicated their intent was not to repeal any current services, other than transferring some services into different departments, and he indicated they would check the statutes. CHAIRMAN ROKEBERG said that was some of the minutiae they could get into later. REPRESENTATIVE KOHRING continued, indicating the inclusion of the Head Start Program in the new department was an error by Legislative Legal and Research Services. He said the intent was to transfer the program to H&SS, noting that they would have to come back with a proposed committee substitute in order to incorporate the appropriate language. Number 2122 CHAIRMAN ROKEBERG stated that he wanted the committee members and the sponsor to know starting at 3:30 a.m. that morning he read the entire bill, all 68 pages. He stated, "There's a number of little things in there ...." Chairman Rokeberg stated he would like to go on unless there was some (indisc.). Number 2140 REPRESENTATIVE HUDSON requested a sectional analysis. Number 2146 CHAIRMAN ROKEBERG noted the presence of a brief, simple sectional analysis in the bill packet. Chairman Rokeberg informed the committee it was his intention to have further hearings on HB 400 on February 25 and February 27. He indicated the scheduled bills would be heard first and HB 400 would be taken up at approximately 4:00 p.m. on both days. Chairman Rokeberg stated he wanted to minimize any inconvenience for the personnel from the various departments, but noted the committee would like to have people available for technical questions, and he said the committee looked forward to the presence of the bill sponsor. Chairman Rokeberg invited Commissioner Irwin, DCRA, to come forward to testify, and he invited Representative Kohring to sit at the committee table. Number 2240 MIKE IRWIN, Commissioner, Department of Community and Regional Affairs, came forward to testify. He noted the presence of other DCRA personnel who would be able to answer technical questions, as the Chairman had indicated, and also the presence of Jeff Bush, Deputy Commissioner, DCED, and personnel from other affected agencies. Commissioner Irwin stated, "This is a bill, obviously, that would have a profound effect on the department that I work for and to the people across the state who rely on the services that we provide, and in many ways I think that we provide a very good product. I'm not going to go into a lot of financial or programmatic detail as to the pros and cons of this particular piece of legislation. There are many people much more expert and knowledgeable than I about the technicalities who will make themselves available to you as you consider this. I want to confine my remarks to a couple of specific areas and also, if I might to -- I was taking notes as Representative Kohring was speaking, and I might have a few things to ... say on those as well. First, I would like to speak to the notion that efficiencies in government is one of the prime considerations of the legislation before you. In fact, this was one of the chief reasons given two years ago when the legislature was considering dismantling DCRA through HB 409. At that time I had only been in this job for a little over a year, so I have to honestly admit that, that time, I didn't quite know if what we did and what we were all about was - was inherently inefficient or efficient. And so I've had to ... roll up my shirtsleeves to try and find that out since there seem to be a lot of people in this body who tend to think that we are quite inefficient." Number 2386 COMMISSIONER IRWIN continued, "I would like to submit that DCRA is one of most efficient organizations of its type that I have ever been around, and I speak from a lot of experience. I've worked in the private sector for multi-million-dollar corporations. I've worked in the non-profit world, again for organizations that administer literally tens and hundreds of millions of dollars in state and federal dollars annually. I've worked for the federal government, and this is my second time in an appointed policy position in state government, and adding to that from the world of academia, I also bring a master's degree in public administration to kind of help balance out my hands-on management over the last two decades. So I haven't come to the conclusions when I talk about efficiencies of this department in any kind of haphazard way. Nor have I come to these conclusions out of a subjective analysis that says I could very well lose my job as a result of HB 400. In that regard, I know that I am just a temporary hire, I always have been, and it's just a matter now of how temporary that ... is. COMMISSIONER IRWIN CONTINUED, "My assessment, rather, that DCRA is an efficient department is based on factual analyses ..." ["We don't have a lot of layers of bureaucracy that simple issues need to work their way through before a decision can be made."] [TESTIMONY INTERRUPTED DUE TO TAPE CHANGE, INSERTED PHRASE FROM WRITTEN STATEMENT] TAPE 98-17, SIDE A Number 0001 COMMISSIONER IRWIN continued, "... (indisc.) and on the way up. I mean certainly on - on internal issues such as personnel and other matters where you should have a - a more rigorous system, we do, but when it comes to actual policy decisions, folks needing things to get done, they can a pretty quick decision out of the ... head offices. When a pulp mill closes in Ketchikan, or a fire destroys the generation system up in Chalkyitsik, or, as happened this summer out in Bristol Bay and Kuskokwim, we have some 52 communities and the attendant families put in financial crisis, we can and do respond with an efficiency and effectiveness that is difficult to match - and here I would like to go to Mr. Krieber's statement about the community economic revitalization team process that we're enacting, and in fact, it's my department that's the head of that and who invited him to come the that particular meeting. And as he stated, there were lots of federal and state agencies there. The problems with trying to find an effective response has very little to do with DCRA or Commerce and Economic Development. The people who are actually at that table, and who really need to - to work more effectively and efficiently together, in this particular circumstance because we have federal timber issues in the mix, we - we have all kinds of layers of - of issues affecting the Tongass community. It's actually a lot of the resource agencies, both federal and state, who - who really need to be at the table and working effectively together for the benefit of those communities, and, in fact, it's our agencies who, through our models, help those - those folks along in that regard. And when the restructuring of our workloads is mandated by reductions in our budgets as has happened the last several years, I think, again, this is a time when DCRA, through our small organization and through our ability to react, we have been able to - to do the reconfigurations of talent and the reorganization of the structure to accommodate those and still put the product and the service out there on the street." Number 0180 COMMISSIONER IRWIN stated, "On the other hand, I realize that when statements are made regarding the perceived inefficiencies of government, it's not only about particular agencies, but also about how efficiently government works in the whole, and I understand and appreciate that. With respect to HB 400, again I fail to see how a better service or product will be provided to Alaskans by rearranging certain functions of government, and then taking what's left of DCRA and having it subsumed into a much larger organization. If larger is better, then I guess this makes some sense. In my opinion, however, larger is not necessarily more efficient; and I think that there are a lot of people who would agree with that; in fact, that - that perhaps it's fundamentally less efficient the larger you get. If efficiency, as it is used here to rationalize HB 400, is simply to save a relatively minor amount of wages ... by reducing a few positions at or near the top of the two departments slated for consolidation, then the rationale works. One commissioner would go, as would up to two or three top managers between the two departments. These savings would, we feel, however, be offset many times over by just the sheer costs of carrying out the dismantling and consolidation anticipated in this legislation. Now we don't have the fiscal note yet prepared, we're working with Representative Kohring's office on that, and I think that there are some who would say, 'Well, you know you really won't be changing people around. You won't be changing their sites and all of that.' I - I don't know that I agree that that would be the best approach to take in something like this, I think that there would a lot of arguments for co-location and actually the need for moving people around, and all of the costs that - that go with that, and ... every time you move a person the standard rate used by the Department of Administration is - is something like $5,000 per person. Those are just the financial costs, not to mention the personal costs that will be born by workers and their programs as they see and experience the tumult and uncertainty of their work environments. These uncertainties, and the emotional burdens that are inherent to them, will saddle and demoralize these workers and professionals throughout the many long years, and it will take years to truly effect the changes contemplated in HB 400. And I can't even begin to put into financial terms the cost of lost productivity that will certainly follow." Number 0359 COMMISSIONER IRWIN stated, "The other point that I really wanted to - to bring up today, and it's a difficult one for me to talk about in many ways, has to do with the friction that we're currently seeing as a state, regarding relations between urban and rural Alaska. I think it's safe to say that those frictions are greater today than at any time since statehood. Just this morning I participated in a press conference announcing the Governor's formation of a commission on rural governance and empowerment. And the driver behind all of this, and as we've seen, some of your colleagues ... in the House in Community [and] Regional Affairs this week will also starting to look at those - those same issues, that there's something out there, ... there is something happening in Alaska. These issues, that like bubble gum, the more you chew on 'em, the harder they get, and they seem to all be coming to a head and - and there seems to be kind of a critical mass. Again, when you look at subsistence, when you look at tribal sovereignty, native sovereignty that's manifesting itself at this particular time in the Venetie court case that could be decided by the Supreme Court at any time. We hear discussions about the fairness between funding, funding for rural schools versus urban schools. These are just some real -- they're the hot issues of the day, they all affect and have ... their roots in the rural-urban relationship. I bring this up in the discussion of HB 400 because I see a true connection here. Rightly or wrongly, there are those throughout the state, citizens and policy-makers alike, who see a clear connection between DCRA and rural Alaska. For some, this connection has a positive connotation. For others, this connection is anything but positive. In reality, DCRA has a relationship with, and responsibilities to, every Alaskan community from the largest to the smallest. When it comes to financial relationships - from safe communities funding which used to be municipal assistance and revenue sharing, to day care assistance and jobs training ... -- those three programs comprise a majority of - of the funds that run through our department. Our relationship with Alaska's large urban governments constitutes by far and away the greatest amount of our workloads and fiduciary responsibilities, and we're proud of this fact. But, yes, when it comes to on-the- ground, hands-on service delivery, our specialty is assisting communities of small to medium size." Number 0541 COMMISSIONER IRWIN stated, "Many, and if not an outright majority, of these communities are made up largely of Alaska Natives. To that extent, I can understand those who characterize these unending attempts to do away with DCRA as nothing more than veiled ... attacks on rural Alaska in general and the Alaska Native community in particular. Such a notion, I am sure, makes each and every one of us in this room uncomfortable and I'm equally sure that such is not the motivation of anyone in this legislature, least of all the prime sponsor of HB 400. But public policy is not a science as we all know, it is an art. And it is thus subject to individual interpretations of the how's and the why's of the fact that HB 400 is before us today. To the extent that many in rural and Native Alaska see this as yet another attempt to pull the rug out from under them, care and caution in how we proceed is of paramount importance. Together we will have to answer the question as to whether or not this is simply an attempt to take away what may see as, quote, a rural seat at the governor's cabinet. Together, we will have to convince many tens of thousands of Alaskans that this isn't an attempt to take the talent and the energy that has been built up over the past 25 years, ... talent and energy that addresses the governance and community development needs of rural Alaska, and let it dissipate into organizations that have missions quite unsimilar to that of the current Department of Community and Regional Affairs. And with that, I'd like to thank you once again for allowing me to speak and I'd be happy to go into other areas of inquiry ... to answer questions you might have." Number 0644 CHAIRMAN ROKEBERG stated he wanted to comment about Commissioner Irwin's reference to the friction between rural and urban Alaska. Chairman Rokeberg noted he has been saying much the same thing for about the last five or six years because he thought this was very foreseeable, indicating it was particularly foreseable from the narrower view of declining state revenues, decreasing oil production and "price squeezes." He indicated, with less money available to fund interests that may historically been funded statewide, it was quite foreseeable and predictable that this schism between the urban and rural areas would grow, noting he thinks that is only a portion of it. Chairman Rokeberg stated, as he said the Commissioner rightly pointed out, there are other issues, not necessarily economic in origin, but just as important, particularly with some of the people in rural areas of the state. Chairman Rokeberg indicated he felt this type of friction, or schism, was really unfortunate. He stated he knew for certain that the bill sponsor and those interested in HB 400 did not harbor "any of those particular types of biases or prejudices that ... we certainly don't accept in this state and haven't for decades and decades, and - and rightfully so." Chairman Rokeberg added that he did think the Commissioner pointed out a few things that might not actually be correct, referring to the idea of a rural seat on the governor's cabinet, and noting that attitude, if it existed, should be examined by those holding it. COMMISSIONER IRWIN noted he meant it the other way around. Number 0778 CHAIRMAN ROKEBERG responded that it meant the same thing however it was characterized, noting he did not want to create any more friction but that was part of the exercise they were going through. Chairman Rokeberg stated, "I think you've identified -- and I think this committee, the whole legislature, and the people in the state, more importantly, ought ... to be aware of what you bring forward on that issue because it's extremely important and a very sensitive-type thing we need to be able to work with and work around." Number 0808 REPRESENTATIVE COWDERY commented on the discussion of the division between urban and rural Alaska. He noted five generations of his family have lived in Alaska, and said, "My perspective, that as long as politicians, and the press and everything, keep driving that wedge of Native Alaskans rather than Alaskans, and urban, you know, and - and Black Americans instead of Americans and this and that. I think ... it's sad that we keep doing that or that that happens, and I think it makes the time when we'll all become one further down the road." Representative Cowdery noted Commissioner Irwin had spoken about the emotional stress of the uncertainty, indicating all the committee members appreciated that stress at every November general election. He asked Commissioner Irwin if he would be willing to work in the new department if asked, bringing his expertise in to help develop this, if HB 400 became law. Number 0911 COMMISSIONER IRWIN replied he had honestly not given it much thought. He noted there would obviously be only one commissionership, and said he has jokingly spoken with Commissioner-designee Sedwick of the DCED about "arm-wrestling" for the position. Commissioner Irwin stated he chose to accept his current appointment from Governor Knowles because DCRA is a department he feels in tune with and akin to. He noted his roots are in rural Alaska, his and his wife's families both live there; he said he is a product of rural Alaska. Commenting that he was not bringing up the issue of "rural versus urban," Commissioner Irwin noted he thinks there are very unique issues specific to rural Alaska including economic development. He indicated he feels a structure like DCRA, with its particular talents and expertise developed over the last 25 years in rural governance, is necessary to help find the answers to some very difficult issues which have plagued this state for a long time. Commissioner Irwin indicated he thought governance played a major role, even in the inability to get good economic opportunities in rural Alaska, even where those economic opportunities presented themselves. He noted he has a particular passion for that, and that was one of the reasons why he accepted his present position. Commissioner Irwin indicated he did not accept his appointment because of financial need, and was not overly concerned about that aspect if his job was eliminated. In response to Representative Cowdery's question, Commissioner Irwin said he did not know, stating, "It doesn't look to me to be the kind of structure that ... would be the type that I would necessarily find any real personal things to help me get up in the morning and want to go to work." Number 1018 REPRESENTATIVE COWDERY said, "Even if it was commissioner, you wouldn't?" Number 1025 COMMISSIONER IRWIN stated he didn't know. Number 1025 REPRESENTATIVE COWDERY asked him if he would be willing, if this became law, to take a position below the level of commissioner in the new department, if he was asked. Number 0132 COMMISSIONER IRWIN answered, "Not at all." Number 1034 REPRESENTATIVE COWDERY noted revenues were down and money was going to be cut this year. He asked Commissioner Irwin where he would cut $5 million in his department. Number 1047 COMMISSIONER IRWIN replied he could not do it, mainly because he did not have any pieces large enough, indicating he would have to totally dismantle myriad programs. He indicated the biggest chunk of DCRA's general fund dollars went into the Safe Communities Program; he noted the Administration's position on that is very clear so $5 million would not come from there. He noted he has other "big chunks," giving the example of child care, which is also one of the Administration's priorities. Commissioner Irwin stated, "I can't trim and cut $5 million dollar worth out of the ..." Number 1091 REPRESENTATIVE COWDERY asked Commissioner Irwin if he could cut less. Number 1095 COMMISSIONER IRWIN answered he did not think so at this point without coming to the hard decisions; coming back and asking them, "What is it you would like us not to do anymore?" He noted they have trimmed down, found efficiencies, had layoffs, restructured, and he said he thinks they are "still putting the product out there on the street that we've always been able to." He attributed this to the many incredible people who work for DCRA, noting he can't speak for other departments who might have personnel just as good. He stated, however, that he knew that whatever he asked of DCRA staff, they had delivered, whether it meant taking on a couple of different jobs, making up the rest of it on the weekends and in the evenings. Number 1140 REPRESENTATIVE BRICE asked Commissioner Irwin, on a time line, how long he thought it would take to implement the changes within HB 400. Number 1153 COMMISSIONER IRWIN noted up-front things like new stationery for everyone, and he said it would take a little while to get the administrative aspects in place, stating he did not intend to sound "flip." He commented that, as far as the restructuring and moving of people, it could take years to get everybody where they need to be logistically, noting DCRA, DCED and the other affected departments have state leases all over the place. Commissioner Irwin mentioned that through some of the work DCRA's been doing on the coordinated response in southern Southeast Alaska, he has gotten to know some people in Washington State who work in a hybrid department not unlike what this one would be. He noted Washington State had done a similar move three years ago, indicating that he did not think they should be looking to Washington as an example because of the lack of correlations between the states. He said he did know, however, that Washington still hasn't effected the entire changes anticipated by the legislature, noting a lot of it had to do with "corporate culture." He said the people in-house, not the leaders, don't like the change and are intent to make sure it doesn't succeed in a lot of ways. Number 1234 REPRESENTATIVE BRICE asked how much discussion Commissioner Irwin had had with "these folks who did this." Representative Brice asked if there was discussion about the impact on programs during this time. COMMISSIONER IRWIN replied, "We didn't get into the - the technical details; Vic and I have had conversations, but it was basically finding out what it was that he was proposing." Number 1257 CHAIRMAN ROKEBERG noted that it was almost 5:20 p.m. He conferred briefly with Jim Nordlund, Director, Division of Public Assistance, H&SS; and Jeff Bush, Deputy Commissioner, DCED. It was determined that Mr. Nordlund would delay his testimony until February 27; Mr. Bush was not available February 27, and would testify on February 25. Chairman Rokeberg stated the committee would probably like to hear from Commissioner Irwin again if he was able to attend another hearing, and the Chairman requested the presence of DCRA staff if the Commissioner would not be available. Chairman Rokeberg stated the committee would next take the testimony of Ms. Healy, who was visiting from Wasilla, and then conclude the public hearing on HB 400 for that day. Number 1324 VICKI L. HEALY came forward to testify. Ms. Healy stated she was a parent associated with the Head Start Program ["association" stated on tape]. Ms. Healy stated she was concerned about the Head Start Program being shuffled around under various entities, noting her lack of experience in the political arena and her unfamiliarity with the terms. She indicated she was glad they had figured out keeping the Head Start Program in the new department was a mistake, but moving it to H&SS didn't make her feel any better. Ms. Healy stated that, as a parent, her concern is currently the Head Start Program is an "awesome tool within the communities." She said it is one of the things that, as parents, they can get proper, quick response and reactions for their families and friends. She stated, "It's not a degrading thing, you don't feel bad walking into a Head Start office. ... That is one thing that does work well through the DCRA, and just to say, 'Well, because they're overlapping something with another office, then Head Start should be shoved someplace else, and we think that they'll do better there.' Right now we're working wonderfully where we are." Ms. Healy indicated she is concerned, as a parent, about what would happen if the Head Start Program is moved away from DCRA and put under another entity. She indicated she is not saying H&SS is a bad entity, but she said it is slower running, or "bogged down" as far as response time from a community member up the chain and back to get a response. Ms. Healy indicated, in her opinion, it would slow down their growth as a community. Number 1421 MS. HEALY stated, "How many families -- right now where somebody can go and talk to somebody at DCRA and address a problem and get almost an immediate response, where we have to go down the chain later and work our way through a thicker bureaucracy -- how many families are gonna fall through the cracks during that long delay that we're now gonna have to set by going someplace else, just because they deal with other children issues or self-help issues? Head Start works in all communities, and it's community-oriented, whether it's federally funded or not. It works with the community, it's community people involved, it's not just going into an office where somebody else that you have to deal with who acts like the money is coming out of their pocket, is making all the decisions. This is community-involved, and if you do move it around with careless thought, I don't see a projected future. 'Well, if we move it there, this is why it's going to run more efficient.' I don't see any of that in writing. 'This is ... our five year projection on how Head Start is going to work better there than it does right where it's at now.' And as a parent, that concerns me." Number 1489 CHAIRMAN ROKEBERG asked what type of contact parents had with the actual administration. Number 1495 MS. HEALY responded, "We have meetings all the time. I -- there's committees, all types of involvement. We get to work with the people within Head Start as to what kind of training is gonna happen with the parents on a weekly basis. 'Are we gonna do anger management this month? Are we gonna do, 'How to deal with a new baby in the family?' The people come to the meetings, they get to vote on things with the staff, with the administration, with that community -- and being in a Head Start Program that deals with multiple communities - Wasilla, Big Lake, Chugiak, Eagle River, Palmer - we even get to deal, as parents, separately within our own communities and work with the other ones. Where one thing works well in Wasilla, 'We're gonna do this for a fund-raiser to help this portion of Head Start out,' they may have something else, and, 'Wow, that's a good idea, so maybe we'll do 'em separate and maybe we'll combine 'em.' The community does get involved and they get to make those decision[s] and these are all things that run well through the program. 'Okay, can we do this? Can we do this garage sale in order to fund something to do this?' It has to go up the chain, it has to come back. We need a response for something like that. If it takes us five months to find out whether or not we can do that for a fund-raiser as parents, to try and help our community and our children, that opportunity has been missed because we couldn't even perform the fund-raiser 'cause we couldn't get a response on whether or not that was something legally that could be done. And we get that kind of response as Head Start people through this office." Ms. Healy noted the intended switch of the Head Start Program to H&SS. She stated, "There's a lot of other things that are involved under that hat, and to just shove Head Start in there because you want to merge two other entities, and take something away from them that they're already performing well, I don't see where Head Start is going to benefit, I don't see where the communities, and me, as a parent, is gonna benefit." Number 1609 CHAIRMAN ROKEBERG asked if there were any questions for Ms. Healy. There being none, Chairman Rokeberg announced that the committee, as previously arranged, would first take up the scheduled bills on Wednesday, February 25, and Friday, February 27, and then reopen the public hearing of HB 400 at approximately 4:00 p.m. on both days. He confirmed that Representative Kohring would be able to be in attendance.
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