Legislature(2017 - 2018)SENATE FINANCE 532

04/23/2018 01:30 PM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved CSHB 267(RES) Out of Committee
CS FOR HOUSE BILL NO. 219(JUD)                                                                                                
     "An   Act   relating    to   background   investigation                                                                    
     requirements  for  state  employees  whose  job  duties                                                                    
     require  access  to  certain federal  tax  information;                                                                    
     relating  to current  or  prospective contractors  with                                                                    
     the   state  with   access  to   certain  federal   tax                                                                    
     information;  establishing  state personnel  procedures                                                                    
     required  for employee  access to  certain federal  tax                                                                    
    information; and providing for an effective date."                                                                          
2:16:37 PM                                                                                                                    
BRANDON   S.   SPANOS,   DEPUTY  DIRECTOR,   TAX   DIVISION,                                                                    
DEPARTMENT  OF REVENUE,  presented  the  bill. He  explained                                                                    
that  HB   219  authorized  agencies  to   mandate  national                                                                    
criminal    history    record     checks    that    included                                                                    
fingerprinting,   for   state  employees   and   contractors                                                                    
accessing  certain  federal  tax information.  The  Internal                                                                    
Revenue  Service's (IRS)  "Publication  1075" (published  by                                                                    
the  Department of  the Treasury,  Internal Revenue  Service                                                                    
and updated  September 30, 2016) specified  the requirements                                                                    
that state and local agencies  must follow to obtain certain                                                                    
federal  tax  information directly  from  the  IRS. The  IRS                                                                    
enacted  the  measures  to  safeguard  the  information.  He                                                                    
related   that  the   bill   applied   primarily  to   three                                                                    
departments:  The  Department   of  Revenue,  Child  Support                                                                    
Services Division  and the Tax  Division; the  Department of                                                                    
Labor and  Workforce Development (DLWD), and  the Department                                                                    
of  Health and  Social Services  (DHSS). He  reiterated that                                                                    
the 2016  update for Publication 1075  required the criminal                                                                    
history  record  checks  that included  fingerprinting.  The                                                                    
state implemented  the background checks but  needed further                                                                    
authority  to  require  fingerprinting. He  summarized  that                                                                    
essentially,   the   bill  authorized   the   fingerprinting                                                                    
requirement.   The  fingerprints   were  submitted   to  the                                                                    
Department  of Public  Safety  (DPS) who  sent  them to  the                                                                    
Federal  Bureau  of  Investigation (FBI)  for  the  national                                                                    
criminal history check.                                                                                                         
2:18:53 PM                                                                                                                    
Mr. Spanos discussed the Sectional Analysis (copy on file):                                                                     
     Section 1                                                                                                                  
     Amends AS 12.62.400 by adding a new subsection.                                                                            
     This will require an agency  to submit the fingerprints                                                                    
     of  current  or  prospective employees  or  contractors                                                                    
     whose  job   duties  require  access  to   federal  tax                                                                    
     information   (defined   in  AS   39.55.015(e)(3)   and                                                                    
     36.30.960(d)(3))  to the  Department  of Public  Safety                                                                    
     for submission  to the Federal Bureau  of Investigation                                                                    
     to obtain a criminal  history record. Defines "agency",                                                                    
     "employee" and "contractor".                                                                                               
     Section 2                                                                                                                  
     Amends AS 36.30 by adding a new section.                                                                                   
     This  section  establishes state  personnel  procedures                                                                    
     for obtaining  and submitting fingerprints  for current                                                                    
     or  prospective  contractors  if a  contract  with  the                                                                    
     state  requires  access  to  federal  tax  information.                                                                    
     Defines   "agency",  "contractor"   and  "federal   tax                                                                    
     Section 3                                                                                                                  
     Amends AS 39 by adding a new chapter.                                                                                      
     This new  chapter addresses state  personnel procedures                                                                    
     related to federal tax information.                                                                                        
     Adds AS 39.55.010                                                                                                          
     This section  explains the purpose of  the chapter-- to                                                                    
     establish   procedures   to   safeguard   federal   tax                                                                    
     information   which  will   apply  to   a  current   or                                                                    
     prospective  state employee  whose  job duties  require                                                                    
     access to federal tax information.                                                                                         
     Adds AS 39.55.015                                                                                                          
     This  section requires  current  and prospective  state                                                                    
     employees whose  job duties  require access  to federal                                                                    
     tax  information to  provide information  to an  agency                                                                    
     for  a  state  and  national  criminal  history  record                                                                    
     check.  Defines  "agency",   "employee",  "federal  tax                                                                    
     information", "return", and "return information".                                                                          
     Section 4                                                                                                                  
     Provides the effective date of July 1, 2018.                                                                               
Senator Stevens asked what areas  of the state the employees                                                                    
that required  fingerprinting were located. Mr.  Spanos only                                                                    
knew the location  of the DOR employees  that were primarily                                                                    
located  in  Anchorage  and  Juneau.   He  offered  that  an                                                                    
employee  could  go  to  any   law  enforcement  agency  for                                                                    
Co-Chair MacKinnon  asked whether  the Office  of Children's                                                                    
Services was affected  by the bill. Mr. Spanos  did not know                                                                    
the answer.                                                                                                                     
Vice-Chair  Bishop  wondered  what  the  procedure  was  for                                                                    
sending fingerprints to the FBI.                                                                                                
2:22:43 PM                                                                                                                    
KATHRYN    MONFREDA,    CHIEF,    CRIMINAL    RECORDS    AND                                                                    
IDENTIFICATION  BUREAU,  DIVISION   OF  STATEWIDE  SERVICES,                                                                    
DEPARTMENT    OF     PUBLIC    SAFETY,     ANCHORAGE    (via                                                                    
teleconference), explained that  fingerprints for employment                                                                    
or licensing  purposes were  received as  a "rolled"  set of                                                                    
fingerprints  on  a  "hard   card  format."  The  department                                                                    
digitized the fingerprints and compared  them in the state's                                                                    
system  that was  a consortium  of 8  states systems  in one                                                                    
shared    database.    Subsequently,    they    were    sent                                                                    
electronically to the FBI for  the background check. The FBI                                                                    
destroyed the  fingerprints after  the background  check was                                                                    
Co-Chair MacKinnon OPENED public testimony.                                                                                     
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
2:24:35 PM                                                                                                                    
Vice-Chair Bishop  addressed the fiscal notes.  He noted the                                                                    
four zero fiscal notes accompanying  the bill. The first was                                                                    
for DOC,  allocated to  Administrative Services,  FN6 (COR),                                                                    
the  second  was  for   DHSS,  allocated  to  Administrative                                                                    
Support  Services, FN7  (DHS), and  the third  was for  DPS,                                                                    
allocated to  Criminal Justice Information  Systems Program,                                                                    
FN9 (DPS). Lastly, he pointed  to the DLWD zero fiscal note,                                                                    
FN6 (LWF)  allocated to  Unemployment Insurance  and relayed                                                                    
that  the  anticipated  cost would  be  covered  within  the                                                                    
current budget through federal funds.  He continued with the                                                                    
fiscal impact  note for  DOR, FN10  (REV), allocated  to the                                                                    
Tax Division  in the amount of  $4.8 thousand for FY  19 and                                                                    
$500 in the outyears. He read  from the analysis on the page                                                                    
2 of the fiscal note:                                                                                                           
     This  bill  authorizes   state  agencies  that  receive                                                                    
     Federal  Tax  Information   (FTI)  to  undergo  federal                                                                    
     background checks  as now  required in  IRS Publication                                                                    
     1075.  Background  checks  would be  conducted  on  all                                                                    
     current and  new employees  at a cost  of $47  for each                                                                    
     completed investigation.                                                                                                   
     The Tax  Division estimates that 102  employees will be                                                                    
     fingerprinted in  the first year, and  approximately 10                                                                    
     employees in subsequent years.                                                                                             
Co-Chair  MacKinnon  asked  whether  DOR had  to  adopt  new                                                                    
regulations  with passage  of  the  legislation. Mr.  Spanos                                                                    
answered in  the negative. Co-Chair MacKinnon  asked why the                                                                    
department  did not  calculate the  cost of  fingerprints as                                                                    
revenue  on the  fiscal note.  Mr. Spanos  replied that  the                                                                    
cost  of  fingerprinting  did not  change  the  department's                                                                    
revenue. He  added that  losing the  ability to  receive the                                                                    
federal   information   would      negatively   impact   the                                                                    
department.  Co-Chair  MacKinnon  inquired whether  DOR  was                                                                    
charging  anyone  to   perform  fingerprinting.  Mr.  Spanos                                                                    
responded  that DOR  planned to  pay for  the fingerprinting                                                                    
and not charge the employees.                                                                                                   
2:27:07 PM                                                                                                                    
AT EASE                                                                                                                         
2:29:07 PM                                                                                                                    
Vice-Chair Bishop  pointed to the following  from the fiscal                                                                    
note,  "An updated  background check  will also  be required                                                                    
every   ten   years."   He    assumed   that   did   include                                                                    
fingerprinting.  Mr.  Spanos  replied  in  the  affirmative.                                                                    
Vice-Chair Bishop  asked what changed on  fingerprints after                                                                    
10  years. Mr.  Spanos responded  that he  thought the  same                                                                    
thing   and  considered   maintaining   a   record  of   the                                                                    
fingerprints  for  resubmission  if possible.  However,  the                                                                    
background checks were required every 10 years.                                                                                 
Co-Chair  MacKinnon  noted that  some  of  the fiscal  notes                                                                    
reported  that  fingerprinting cost  $47  per  set, and  the                                                                    
Legislative  Finance Division  (LFD) believed  that a  small                                                                    
amount of  revenue would  be generated  from fingerprinting.                                                                    
However,  she understood  that Mr.  Spanos stated  DOR would                                                                    
not  charge  employees  for fingerprinting.  She  wanted  to                                                                    
discuss the issue of  storing someone's personal information                                                                    
and any liability  issue that might result for  the state as                                                                    
a result.  She requested  further review  of the  DPS fiscal                                                                    
2:31:16 PM                                                                                                                    
Vice-Chair  Bishop pointed  to  one last  DOR fiscal  impact                                                                    
note  allocated to  the Child  Support Services  Division in                                                                    
the amount  of $10 thousand for  FY 19 and $1.5  thousand in                                                                    
the  outyears.  He  mentioned  that  $6.6  thousand  was  in                                                                    
Federal  Receipts   and  the  remaining  $3.4   thousand  in                                                                    
Undesignated General  Funds (UGF).  He read  from page  2 of                                                                    
the analysis:                                                                                                                   
     The Child  Support Services Division has  196 employees                                                                    
     who  will  be  fingerprinted  in the  first  year,  and                                                                    
     approximately 32 employees  each subsequent year. Every                                                                    
     10   years,   background   checks  must   be   renewed.                                                                    
     Background  checks would  be conducted  on all  current                                                                    
     and new employees  at a cost of $47  for each completed                                                                    
Vice-Chair  Bishop relayed  that he  had concerns  regarding                                                                    
what happened to the background  check information after ten                                                                    
Co-Chair  MacKinnon  questioned   whether  regulations  were                                                                    
necessary for  the Division of  Child Support  Services with                                                                    
passage of the bill. She  purported that the fiscal note did                                                                    
not speak to the question.                                                                                                      
2:33:04 PM                                                                                                                    
Co-Chair  MacKinnon  returned to  the  DPS  fiscal note  and                                                                    
asked  Ms.   Monfreda  to   comment  regarding   storage  of                                                                    
employee's background information for  ten years and the FBI                                                                    
destruction  of fingerprints.  She  referred  to an  earlier                                                                    
version of  the DPS fiscal  note that reported  revenue from                                                                    
the  collection  of  fingerprints. Ms.  Monfreda  reiterated                                                                    
that the department's  fiscal note was zero  because the fee                                                                    
collected for  processing the fingerprints was  equal to the                                                                    
cost  charged by  the  FBI, which  billed  DPS monthly.  She                                                                    
continued that the  reason for the 10 year  renewal was that                                                                    
fingerprints changed through the  aging process or were worn                                                                    
down.   She   reiterated   that  the   FBI   destroyed   the                                                                    
fingerprints and  DPS stored the  fingerprints. Fingerprints                                                                    
over  one-year old  were unacceptable  to the  FBI. Co-Chair                                                                    
MacKinnon confirmed  that DPS was storing  the fingerprints.                                                                    
Ms. Monfreda replied in the affirmative.                                                                                        
CSHB 219(JUD)  was HEARD and  HELD in committee  for further                                                                    
2:35:20 PM                                                                                                                    
AT EASE                                                                                                                         
2:35:51 PM                                                                                                                    

Document Name Date/Time Subjects
HB106 Additional Document-HFIN Questions Memo 2.22.18.pdf SFIN 4/23/2018 1:30:00 PM
HB 106
HB106 Sectional Analysis ver D 2.22.18.pdf SFIN 4/23/2018 1:30:00 PM
HB 106
HB106 Additional Document-SJUD Questions Memo 2.22.18.pdf SFIN 4/23/2018 1:30:00 PM
HB 106
HB106 Sponsor Statement 2.22.18.pdf SFIN 4/23/2018 1:30:00 PM
HB 106
HB106 Supporting Document-Letters of Support 2.22.18.pdf SFIN 4/23/2018 1:30:00 PM
HB 106
HB106 Updated Sectional Analysis ver D 4.23.18.pdf SFIN 4/23/2018 1:30:00 PM
HB 106
HB106 Updated Sponsor Statement 4.23.18.pdf SFIN 4/23/2018 1:30:00 PM
HB 106