Legislature(1999 - 2000)

01/19/2000 01:39 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
GENERAL SUBJECT(S):  Review of Departments Accomplishments                                                                      
Department of Education and Early Development                                                                                   
 Alaska Aerospace Development Corporation                                                                                       
    Alaska Railroad Corporation                                                                                                 
                                                                                                                                
The following overview was taken in log note format.  Tapes and                                                                 
handouts will be on file with the House Finance Committee through the                                                           
21st Legislative Session, contact 465-2156. After the 21st Legislative                                                          
Session they will be available through the Legislative Library at 465-                                                          
3808.                                                                                                                           
                                                                                                                                
Time Meeting Convened: 1:39 p.m.                                                                                                
                                                                                                                                
Tape(s):   HFC 00 - 11, Side 1                                                                                                  
  HFC 00 - 11, Side 2                                                                                                           
 HFC 00 - 12, Side 1                                                                                                            
  HFC 00 - 12, Side 2                                                                                                           
                                                                                                                                
                                                                                                                                
PRESENT:                                                                                                                        
X                                                                                                                               
Representative G. Davis                                                                                                         
absent                                                                                                                          
Co-Chair Therriault                                                                                                             
X                                                                                                                               
Representative Foster                                                                                                           
X                                                                                                                               
Co-Chair Mulder                                                                                                                 
X                                                                                                                               
Representative Grussendorf                                                                                                      
X                                                                                                                               
Vice Chair Bunde                                                                                                                
X                                                                                                                               
Representative Moses                                                                                                            
X                                                                                                                               
Representative Austerman                                                                                                        
X                                                                                                                               
Representative Phillips                                                                                                         
absent                                                                                                                          
Representative J. Davies                                                                                                        
X                                                                                                                               
Representative Williams                                                                                                         
                                                                                                                                
ALSO PRESENT: Pat Ladner, Executive Director, Alaska Aerospace                                                                  
Development Corporation (AADC), Department of Community and Economic                                                            
Development; Laura Gould, Alaska Aerospace Development Corporation                                                              
(AADC), Department of Community and Economic Development; Richard                                                               
Cross, Commissioner, Department of Education and Early Development;                                                             
Karen Rehfeld, Director, Division of Education Support Services,                                                                
Department of Education and Early Development; Governor Bill                                                                    
Sheffield, President, Alaska Railroad Corporation; Yvonne Chase,                                                                
Director, Division of Early Development, Department of Education and                                                            
Early Development; Bruce Johnson, Deputy Director, Department of                                                                
Education and Early Development; Representative John Coghill Jr.;                                                               
Jerome (Jerry) Anderson, Alaska Railroad Corporation, Community and                                                             
Economic Development.                                                                                                           
                                                                                                                                
                                                                                                                                
LOG                                                                                                                             
SPEAKER                                                                                                                         
DISCUSSION                                                                                                                      
                                                                                                                                
TAPE HFC 00 - 11                                                                                                                
SIDE 1                                                                                                                          
                                                                                                                                
                                                                                                                                
000                                                                                                                             
Co-Chair Mulder                                                                                                                 
Convened the House Finance Committee                                                                                            
meeting at 1:39 p.m.                                                                                                            
110                                                                                                                             
RICHARD CROSS,                                                                                                                  
COMMISSIONER,                                                                                                                   
DEPARTMENT OF                                                                                                                   
EDUCATION AND EARLY                                                                                                             
DEVELOPMENT                                                                                                                     
Noted that the State Board of Education                                                                                         
plays a role in guiding the Department of                                                                                       
Education and Early Development.                                                                                                
Emphasized that there needs to be                                                                                               
coordination of missions with the Board                                                                                         
of Education to assure that they are                                                                                            
consistent.                                                                                                                     
387                                                                                                                             
Commissioner Cross                                                                                                              
Noted that the first graduation                                                                                                 
qualification exams would be given in 47                                                                                        
days.                                                                                                                           
432                                                                                                                             
Vice Chair Bunde                                                                                                                
Questioned how long the standards exam                                                                                          
has been under construction.                                                                                                    
469                                                                                                                             
Commissioner Cross                                                                                                              
Acknowledged that work on standards has                                                                                         
been under way for 10-12 years.                                                                                                 
Emphasized that there is agreement on the                                                                                       
items that children need to know.                                                                                               
Students will be expected to demonstrate                                                                                        
that they have the skills they need to be                                                                                       
successful.                                                                                                                     
610                                                                                                                             
Vice Chair Bunde                                                                                                                
Pointed out that some people think that                                                                                         
the exams are being sprung on the                                                                                               
students.                                                                                                                       
641                                                                                                                             
Representative                                                                                                                  
Phillips                                                                                                                        
Recounted a letter she received from a                                                                                          
high school student requesting funding                                                                                          
for education. It that was so poorly                                                                                            
written that it was embarrassing.                                                                                               
711                                                                                                                             
Representative                                                                                                                  
Austerman                                                                                                                       
Noted that he received two high school                                                                                          
annuals from a school in his district. He                                                                                       
indicated that the quality of the writing                                                                                       
was poor.                                                                                                                       
796                                                                                                                             
Commissioner Cross                                                                                                              
Stressed that standards are designed to                                                                                         
assure that students can express                                                                                                
themselves appropriately. Noted that we                                                                                         
will need to work together to use the                                                                                           
results of the exams to assure that the                                                                                         
standards are accomplished. Educators                                                                                           
need to shift focus off the tests and on                                                                                        
to the real benefits that they are                                                                                              
intended to achieve. The tests are the                                                                                          
best opportunity to focus on the common                                                                                         
agenda to achieve performance.                                                                                                  
1001                                                                                                                            
Commissioner Cross                                                                                                              
Important to accept responsibility but                                                                                          
give up ownership. Emphasized the need to                                                                                       
build support for the benefit of the                                                                                            
students and recognize that there will be                                                                                       
problems.                                                                                                                       
1076                                                                                                                            
Commissioner Cross                                                                                                              
The department is actively involved in                                                                                          
trying to build support. People are aware                                                                                       
of what is going on. Anchorage has put                                                                                          
practice tests for the high school                                                                                              
graduation-qualifying test on the                                                                                               
internet.                                                                                                                       
1194                                                                                                                            
Commissioner Cross                                                                                                              
The test contains items that everyone                                                                                           
thinks are important, like balancing a                                                                                          
checkbook.                                                                                                                      
1218                                                                                                                            
Commissioner Cross                                                                                                              
Noted that there is support for the goal                                                                                        
of achieving standards. Stressed that                                                                                           
they are at an important point in the                                                                                           
process. The test is not the final step.                                                                                        
1275                                                                                                                            
BRUCE JOHNSON,                                                                                                                  
DEPUTY COMMISSIONER,                                                                                                            
DEPARTMENT OF                                                                                                                   
EDUCATION AND EARLY                                                                                                             
DEVELOPMENT                                                                                                                     
Summarized accomplishments relating to                                                                                          
the Quality Schools Initiative. Alaskans                                                                                        
have done everything. Performance                                                                                               
standards have been refined for math,                                                                                           
reading and writing. Developmental                                                                                              
profiles were administered to                                                                                                   
kindergartens throughout the state.                                                                                             
Alaskans developed the assessment high                                                                                          
school qualifying exam and benchmark                                                                                            
exams. Standards were adjusted to be fair                                                                                       
to all Alaskans. They were field-tested                                                                                         
in Alaska. The questions that were                                                                                              
considered fair across the state were                                                                                           
used. There are enough questions for 3                                                                                          
tests. Books will be sent to school                                                                                             
districts soon.                                                                                                                 
1392                                                                                                                            
Mr. Johnson                                                                                                                     
The department conducted training                                                                                               
workshops last December.                                                                                                        
1456                                                                                                                            
Mr. Johnson                                                                                                                     
The department is making an effort to                                                                                           
assure that people have a chance to talk                                                                                        
about assessments. Assessments will be                                                                                          
administered in March. They are on time                                                                                         
examinations. Students cannot mix during                                                                                        
or between testing.                                                                                                             
1522                                                                                                                            
Mr. Johnson                                                                                                                     
Discussed the next milestone, 63 Alaskans                                                                                       
will be brought together to determine the                                                                                       
cut-line or passing score. Benchmark                                                                                            
decisions will also be made by a group of                                                                                       
Alaskans and will come out in the fall.                                                                                         
1565                                                                                                                            
Co-Chair Mulder                                                                                                                 
Clarified that the cut-line will not be                                                                                         
known prior to the exam.                                                                                                        
1580                                                                                                                            
Mr. Johnson                                                                                                                     
Explained "bookmaking", which will be                                                                                           
used to determine the cut-line or pass                                                                                          
score. The test questions will be ordered                                                                                       
from the easiest to the hardest based on                                                                                        
test scores. The last question will be                                                                                          
the one that students found to be the                                                                                           
most difficult (the fewest correct                                                                                              
answers). The bookmarking group will not                                                                                        
know the percentage of students that                                                                                            
answered a question correctly. They will                                                                                        
go through the answers and decide where                                                                                         
the cut-line should be drawn.                                                                                                   
1666                                                                                                                            
Representative                                                                                                                  
Phillips                                                                                                                        
Expressed concern with the bookmarking                                                                                          
approach. She felt that a standard should                                                                                       
be set.                                                                                                                         
1699                                                                                                                            
Co-Chair Mulder                                                                                                                 
Questioned if the objective is to have 70                                                                                       
percent of the children pass. He felt the                                                                                       
lack of a marker could screw the                                                                                                
objective.                                                                                                                      
1724                                                                                                                            
Mr. Johnson                                                                                                                     
Reiterated that the group will evaluate                                                                                         
the questions to decide at what level the                                                                                       
standard should be set based on what they                                                                                       
think a high school graduate should know.                                                                                       
1764                                                                                                                            
Representative                                                                                                                  
Williams                                                                                                                        
Expressed concern with the bookmarking                                                                                          
system.                                                                                                                         
1813                                                                                                                            
Representative                                                                                                                  
Austerman                                                                                                                       
Expressed confusion regarding the                                                                                               
bookmarking approach.                                                                                                           
1821                                                                                                                            
Commissioner Cross                                                                                                              
In response to a question by                                                                                                    
Representative Williams, Commissioner                                                                                           
Cross discussed the recent national grade                                                                                       
assessment of the state of Alaska. He                                                                                           
maintained that the state received a poor                                                                                       
grade due to a misunderstanding of the                                                                                          
state's system. He explained that one of                                                                                        
the things that is being worked on is the                                                                                       
appropriate way to state a measure. The                                                                                         
national group felt that the state's                                                                                            
standards (mission) were too vague. What                                                                                        
they did not understand is that there is                                                                                        
another level of standards (performance                                                                                         
measures).                                                                                                                      
1934                                                                                                                            
Commissioner Cross                                                                                                              
Discussed bookmarking. He noted the                                                                                             
difference between percentages and                                                                                              
bookmarking. Percentages are tailored so                                                                                        
that there is an appropriate scale for                                                                                          
the level of the students being taught.                                                                                         
Bookmarkers will not determine how many                                                                                         
students pass or fail. What they will                                                                                           
determine is what is an acceptable level                                                                                        
on a passing scale, without knowing how                                                                                         
many will pass or fail.                                                                                                         
2105                                                                                                                            
Mr. Johnson                                                                                                                     
In response to a question by Vice Chair                                                                                         
Bunde, Mr. Johnson explained that a                                                                                             
bookmark would establish a bar rather                                                                                           
than a curve.                                                                                                                   
2114                                                                                                                            
Vice Chair Bunde                                                                                                                
Stated that he is not concern that                                                                                              
teachers will test to the test.                                                                                                 
2160                                                                                                                            
Commissioner Cross                                                                                                              
Acknowledged that there is nothing wrong                                                                                        
with teaching to the test if the test is                                                                                        
made up of the items that students should                                                                                       
understand.                                                                                                                     
2193                                                                                                                            
REPRESENTATIVE JOHN                                                                                                             
COGHILL                                                                                                                         
Asked if there is a comparison with                                                                                             
national or international exams.                                                                                                
2290                                                                                                                            
Mr. Johnson                                                                                                                     
Responded that there is no national or                                                                                          
international comparison. The tests are                                                                                         
uniquely Alaskan, but he assured the                                                                                            
Committee that the tests are as higher or                                                                                       
higher than other standard tests.                                                                                               
2229                                                                                                                            
Representative                                                                                                                  
Foster                                                                                                                          
Questioned what will be done for students                                                                                       
that do not pass the exams.                                                                                                     
2286                                                                                                                            
Commissioner Cross                                                                                                              
Emphasized that education is delivered                                                                                          
through the districts and that the                                                                                              
department is unable to impose results.                                                                                         
2313                                                                                                                            
Commissioner Cross                                                                                                              
Accountability lies first with the                                                                                              
student. Quality initiatives rate schools                                                                                       
and how well they are improving the                                                                                             
performance of their students. The                                                                                              
department plans to bring districts                                                                                             
together at the end of September to share                                                                                       
results and discuss strategies.                                                                                                 
                                                                                                                                
TAPE CHANGE, HFC 00                                                                                                             
- 11, SIDE 2                                                                                                                    
                                                                                                                                
                                                                                                                                
92                                                                                                                              
Representative                                                                                                                  
Grussendorf                                                                                                                     
Suggested that there are more people that                                                                                       
can land a plane than can pass the test.                                                                                        
Asked if there should be a horizontal                                                                                           
line before a vertical line. Expressed                                                                                          
concern that standards are going to be                                                                                          
set before they are sure of their                                                                                               
instruments.                                                                                                                    
213                                                                                                                             
Commissioner Cross                                                                                                              
Pointed out that if there is a high level                                                                                       
of certificates of attendance instead of                                                                                        
diplomas the department will have failed.                                                                                       
Maintained that the standards exist.                                                                                            
322                                                                                                                             
Mr. Johnson                                                                                                                     
Stressed that the standards have been                                                                                           
established. Emphasized The point is                                                                                            
within the standard how high do we want                                                                                         
the student to achieve before graduation.                                                                                       
There are degrees of difficulty (within                                                                                         
multiplication problems how high should                                                                                         
the student perform). Should students be                                                                                        
able to multiply 2 place, 3 place or more                                                                                       
numbers.                                                                                                                        
422                                                                                                                             
Representative                                                                                                                  
Foster                                                                                                                          
Pointed out difficulties that rural                                                                                             
students have. Many do not have access to                                                                                       
equipment or laboratories needed for                                                                                            
chemistry or other subjects. Expressed                                                                                          
concern that they will not have the                                                                                             
teaching facilities or teachers to meet                                                                                         
their needs. Emphasized that rural                                                                                              
students cannot compete with Anchorage                                                                                          
and Fairbanks students.                                                                                                         
586                                                                                                                             
Commissioner Cross                                                                                                              
Acknowledged that there are tough issues.                                                                                       
Stressed that the skills that are being                                                                                         
tested are skills that the students need                                                                                        
to have regardless of where they live. If                                                                                       
the students aren't receiving the skills                                                                                        
then the department is going to have to                                                                                         
figure a way to get them to the students.                                                                                       
Emphasized the need for benchmarks.                                                                                             
747                                                                                                                             
Vice Chair Bunde                                                                                                                
Observed that many legislators have                                                                                             
GED's.                                                                                                                          
787                                                                                                                             
Representative                                                                                                                  
Williams                                                                                                                        
Questioned what is being fixed by the                                                                                           
standards.                                                                                                                      
917                                                                                                                             
Representative                                                                                                                  
Coghill                                                                                                                         
Pointed out that there are a lot of                                                                                             
students of military families in the                                                                                            
state's system.                                                                                                                 
950                                                                                                                             
Representative                                                                                                                  
Austerman                                                                                                                       
Agreed that the standards should be the                                                                                         
same for all students.                                                                                                          
1020                                                                                                                            
Commissioner Cross                                                                                                              
In response to a question by                                                                                                    
Representative Austerman, Commissioner                                                                                          
Cross noted that 32 percent of the                                                                                              
state's students are where 25 percent of                                                                                        
the nation's students are.                                                                                                      
                                                                                                                                
                                                                                                                                
ALASKA RAILROAD CORPORATION                                                                                                     
                                                                                                                                
1328                                                                                                                            
GOVERNOR BILL                                                                                                                   
SHEFFIELD,                                                                                                                      
PRESIDENT, ALASKA                                                                                                               
RAILROAD CORPORATION                                                                                                            
Stated that the Alaska Railroad                                                                                                 
corporation (ARRC) is a professionally                                                                                          
run, self-sustaining, full service                                                                                              
railroad serving ports and communities                                                                                          
from the Gulf and Alaska to Fairbanks.                                                                                          
It has been owned by the State of Alaska                                                                                        
since 1985, the railroad is overseen by a                                                                                       
seven member Board of Directors appointed                                                                                       
by the Governor. Referred to derailments                                                                                        
that resulted in oil spills. He spoke to                                                                                        
the preventative actions that the                                                                                               
railroad has undertaken.  There has been                                                                                        
a letter sent that detailed all the                                                                                             
changes that the railroad has undertaken.                                                                                       
Next Tuesday, there will be a full report                                                                                       
available regarding the operations of the                                                                                       
railroad.                                                                                                                       
1531                                                                                                                            
Governor Sheffield                                                                                                              
Noted that the cabooses are back on the                                                                                         
railroad for positive train control.                                                                                            
1587                                                                                                                            
Co-Chair Mulder                                                                                                                 
Asked for a statement of the Alaska                                                                                             
Railroad Corporation's mission.                                                                                                 
1596                                                                                                                            
Governor Sheffield                                                                                                              
The mission is defined as providing safe,                                                                                       
high quality transportation services for                                                                                        
the State of Alaska.                                                                                                            
1623                                                                                                                            
Governor Sheffield                                                                                                              
Added that the mission is to provide safe                                                                                       
transportation to visitors and residents                                                                                        
of the state and develop and foster long                                                                                        
term growth in the state.  He stressed                                                                                          
that, for the investment, the state                                                                                             
receives increased jobs and improved                                                                                            
infrastructure.                                                                                                                 
1680                                                                                                                            
Governor Sheffield                                                                                                              
Outlined the state's investment. The                                                                                            
railroad is a tax-exempt entity. It is                                                                                          
the only full service rail in the nation                                                                                        
operating passenger and freight service.                                                                                        
1755                                                                                                                            
Governor Sheffield                                                                                                              
Stressed the importance of the railroad                                                                                         
to provide safe transportation and foster                                                                                       
economic growth. The railroad has not                                                                                           
required state funds since it was                                                                                               
purchased. Railroad employees are not on                                                                                        
the state's payroll or retirement system.                                                                                       
1832                                                                                                                            
Governor Sheffield                                                                                                              
The railroad generates approximately $9                                                                                         
million dollars in annual income.                                                                                               
1883                                                                                                                            
Governor Sheffield                                                                                                              
An ongoing capital investment is needed                                                                                         
to take advantage of improved technology.                                                                                       
1910                                                                                                                            
Governor Sheffield                                                                                                              
In 1989, an audit recommended the                                                                                               
revamping of the Alaska Railroad                                                                                                
Corporation's safety program. The                                                                                               
railroad was able to reduce their rate of                                                                                       
injuries in the last half of 1999.                                                                                              
1977                                                                                                                            
Governor Sheffield                                                                                                              
Reviewed financial indicators. Profits go                                                                                       
back into the railroad to increase its                                                                                          
operation. The railroad increased in                                                                                            
value from $22.3 million in 1984 to                                                                                             
$101.2 million dollars in 1999. Ridership                                                                                       
has grown. Since 1995, the railroad has                                                                                         
shipped 2.76 million metric tons of coal                                                                                        
in the last year.                                                                                                               
2055                                                                                                                            
Governor Sheffield                                                                                                              
The railroad has approximately 650                                                                                              
employees in 2000. The railroad pays                                                                                            
$36.2 million dollars in wages.                                                                                                 
2085                                                                                                                            
Governor Sheffield                                                                                                              
Noted capital improvements. Fixed assets                                                                                        
have increased to over $180 million                                                                                             
dollars. The railroad receives $10                                                                                              
million dollars a year from Congress for                                                                                        
ties and other expenses.                                                                                                        
2113                                                                                                                            
Governor Sheffield                                                                                                              
When the state purchased the Alaska                                                                                             
Railroad Corporation it assured that                                                                                            
passenger service would be continued. A                                                                                         
private owner would only operate                                                                                                
profitable lines.                                                                                                               
2152                                                                                                                            
Governor Sheffield                                                                                                              
Reiterated that the railroad is tax                                                                                             
exempt entity. He emphasized the                                                                                                
importance of the service where people                                                                                          
have no other transportation.                                                                                                   
2210                                                                                                                            
Co-Chair Mulder                                                                                                                 
Pointed out that it costs approximately                                                                                         
$2,200 per person for rail service in one                                                                                       
area of Alaska during the winter.                                                                                               
Stressed the need to evaluate the cost.                                                                                         
2263                                                                                                                            
Governor Sheffield                                                                                                              
Noted that there is no way to charge                                                                                            
enough to make it economical in some                                                                                            
areas.                                                                                                                          
2282                                                                                                                            
Co-Chair Mulder                                                                                                                 
Observed that the House Finance Committee                                                                                       
has to make policy decisions and set                                                                                            
direction.                                                                                                                      
2302                                                                                                                            
Vice Chair Bunde                                                                                                                
Noted that some of the individuals that                                                                                         
live in remote areas (where the railroad                                                                                        
operates a deficit) are among those that                                                                                        
cry the loudest that they are not                                                                                               
receiving state services and should not                                                                                         
pay taxes.                                                                                                                      
                                                                                                                                
TAPE CHANGE, HFC 00                                                                                                             
- 12, SIDE 1                                                                                                                    
                                                                                                                                
51                                                                                                                              
Co-Chair Mulder                                                                                                                 
Observed that the federal government is                                                                                         
providing a large amount for railroad                                                                                           
maintenance.                                                                                                                    
120                                                                                                                             
Governor Sheffield                                                                                                              
Responded that 120,000 railroad ties can                                                                                        
be bought with the federal funding the                                                                                          
railroad receives. In two to three years                                                                                        
the Alaska Railroad Corporation will only                                                                                       
require 35,000 replacement ties a year.                                                                                         
196                                                                                                                             
Governor Sheffield                                                                                                              
With the savings the railroad can do                                                                                            
other maintenance and buy more                                                                                                  
locomotives. New locomotives are more                                                                                           
powerful and will save money by allowing                                                                                        
trains to operate with fewer locomotives.                                                                                       
He discussed other efficiencies that can                                                                                        
occur through further investments. All                                                                                          
the money made in a year goes into the                                                                                          
next summer's capital budget to make the                                                                                        
railroad safer and more efficient.                                                                                              
435                                                                                                                             
Representative                                                                                                                  
Austerman                                                                                                                       
Asked about the Anchorage railroad                                                                                              
station expansions.                                                                                                             
448                                                                                                                             
Governor Sheffield                                                                                                              
Noted that the Anchorage railroad                                                                                               
expansion was built to increase the                                                                                             
number of passengers using the service.                                                                                         
549                                                                                                                             
Governor Sheffield                                                                                                              
Discussed the plan to increase tourism's                                                                                        
use of the rail. He estimated that $2                                                                                           
million dollars could be gained through                                                                                         
the Anchorage expansion.                                                                                                        
608                                                                                                                             
Governor Sheffield                                                                                                              
Noted that there is a chance that coal                                                                                          
contracts could be lost. The cash                                                                                               
generated from coal contracts have                                                                                              
decreased. Passenger increases will help                                                                                        
to make up for the loss of revenue from                                                                                         
coal.                                                                                                                           
709                                                                                                                             
Representative                                                                                                                  
Austerman                                                                                                                       
Asked the cost to operate the Anchorage                                                                                         
station.                                                                                                                        
731                                                                                                                             
Governor Sheffield                                                                                                              
Stated that the cost would be about $300                                                                                        
thousand dollars a year.                                                                                                        
815                                                                                                                             
Governor Sheffield                                                                                                              
In response to a question by                                                                                                    
Representative Grussendorf, Governor                                                                                            
Sheffield noted that severe weather and                                                                                         
bad track conditions caused a derailment                                                                                        
near Hurricane.                                                                                                                 
962                                                                                                                             
Governor Sheffield                                                                                                              
Discussed cabooses. He noted that                                                                                               
cabooses help when the train has to back                                                                                        
out of sight and assist in switches                                                                                             
1083                                                                                                                            
Governor Sheffield                                                                                                              
In response to a question by                                                                                                    
Representative Phillips, Governor                                                                                               
Sheffield noted that the railroad uses a                                                                                        
line of credit of up to $10 million                                                                                             
dollars to address problems.                                                                                                    
1116                                                                                                                            
Representative                                                                                                                  
Phillips                                                                                                                        
Observed that there is an obligation to                                                                                         
keep the deep-water ports open in Seward.                                                                                       
1170                                                                                                                            
Representative                                                                                                                  
Phillips                                                                                                                        
Discussed other obligations to the                                                                                              
federal government. Noted that Whittier                                                                                         
also needs to stay open.                                                                                                        
1184                                                                                                                            
Co-Chair Mulder                                                                                                                 
Asked Representative Phillips to work on                                                                                        
a mission statement.                                                                                                            
1201                                                                                                                            
Governor Sheffield                                                                                                              
In response to a question by                                                                                                    
Representative Foster, Governor Sheffield                                                                                       
noted that the derailment has cost $3                                                                                           
million dollars so far and may cost up to                                                                                       
$5.5 million dollars.                                                                                                           
1231                                                                                                                            
Representative                                                                                                                  
Foster                                                                                                                          
Noted that the Alaska Railroad                                                                                                  
Corporation is seeking legislative                                                                                              
changes.                                                                                                                        
1281                                                                                                                            
Governor Sheffield                                                                                                              
Discussed legislation relating to an                                                                                            
agreement with the city of Whittier. He                                                                                         
added that the railroad has been busy                                                                                           
with land trades. There is no money                                                                                             
involved.                                                                                                                       
1354                                                                                                                            
Co-Chair Mulder                                                                                                                 
Asked if legislation has been drafted.                                                                                          
1366                                                                                                                            
Governor Sheffield                                                                                                              
Stated that the legislation has not been                                                                                        
drafted.                                                                                                                        
1445                                                                                                                            
Vice Chair Bunde                                                                                                                
Asked what measures are being taken for                                                                                         
spill response prevention.                                                                                                      
1459                                                                                                                            
Governor Sheffield                                                                                                              
Noted trains contain spill response                                                                                             
equipment. They are working to increase                                                                                         
spill response.                                                                                                                 
1508                                                                                                                            
Vice Chair Bunde                                                                                                                
Referred to the railroad dock in Seward.                                                                                        
Asked how rates will compare to those                                                                                           
charged by the city of Seward.                                                                                                  
1523                                                                                                                            
Governor Sheffield                                                                                                              
Did not know the city's rate. Noted that                                                                                        
tariffs have not been increased in many                                                                                         
years. Railroad tariffs will be increased                                                                                       
this year. Acknowledged competition with                                                                                        
the city of Seward.                                                                                                             
1641                                                                                                                            
Governor Sheffield                                                                                                              
Spoke to hauling freight. Discussed                                                                                             
railroad transportation into Canada and                                                                                         
mining in the Yukon Territory.                                                                                                  
1750                                                                                                                            
Co-Chair Mulder                                                                                                                 
Questioned if the state could do a bond                                                                                         
issue for continuation of the railroad to                                                                                       
the Arctic.                                                                                                                     
1763                                                                                                                            
Governor Sheffield                                                                                                              
No, not through revenue bonds.                                                                                                  
1772                                                                                                                            
Co-Chair Mulder                                                                                                                 
Asked if there would be people to buy                                                                                           
those bonds.                                                                                                                    
1781                                                                                                                            
Governor Sheffield                                                                                                              
Stated that work has not been done at                                                                                           
this point.                                                                                                                     
1794                                                                                                                            
JEROME (JERRY)                                                                                                                  
ANDERSON, ALASKA                                                                                                                
RAILROAD                                                                                                                        
CORPORATION,                                                                                                                    
COMMUNITY AND                                                                                                                   
ECONOMIC DEVELOPMENT                                                                                                            
Stated that the state could bond if there                                                                                       
was a revenue stream.  It would not tie                                                                                         
into the Alaska Railroad, as we know it                                                                                         
today.                                                                                                                          
1841                                                                                                                            
Governor Sheffield                                                                                                              
Stressed the value of coal resources and                                                                                        
the need for access to that resource.                                                                                           
1856                                                                                                                            
Representative                                                                                                                  
Foster                                                                                                                          
Noted that the coal north of Kotzebue                                                                                           
could supply the world for 400 years. He                                                                                        
spoke to the idea of private ownership of                                                                                       
the railroad.  He asked if the                                                                                                  
privatization committee had any                                                                                                 
suggestions on privatizing the railroad.                                                                                        
1912                                                                                                                            
Governor Sheffield                                                                                                              
Stated that he was waiting for that data                                                                                        
to be released.                                                                                                                 
1924                                                                                                                            
Co-Chair Mulder                                                                                                                 
Asked that the safety issues on                                                                                                 
realignment in Fairbanks and limits of                                                                                          
visibility be addressed for Rep. Coghill.                                                                                       
1945                                                                                                                            
Governor Sheffield                                                                                                              
Stated that there was a plan to address                                                                                         
those concerns.  He spoke to the route                                                                                          
outside of Ft. Wainwright, which is a $22                                                                                       
million dollar project, supported by                                                                                            
Senator Stevens.  He commented on a new                                                                                         
tracking system for hauling missiles.                                                                                           
Funding for these projects are being                                                                                            
considered and would solve the problem of                                                                                       
the refinery.                                                                                                                   
2056                                                                                                                            
Governor Sheffield                                                                                                              
Stated that the best thing that the                                                                                             
legislature could do would be to approve                                                                                        
the land trade negotiations.                                                                                                    
2100                                                                                                                            
Co-Chair Mulder                                                                                                                 
Stressed that he does not want to                                                                                               
jeopardize the future of Ft. Richardson                                                                                         
or hold up that base. Expressed concern                                                                                         
that the work continues.  Observed that                                                                                         
there can be no development along Cluney                                                                                        
Lake.                                                                                                                           
2137                                                                                                                            
Governor Sheffield                                                                                                              
Agreed that should not be a decision that                                                                                       
the legislature should have to make.  The                                                                                       
railroad got caught in the middle of that                                                                                       
concern.                                                                                                                        
2165                                                                                                                            
Representative                                                                                                                  
Foster                                                                                                                          
Spoke to the long-term vision of the                                                                                            
railroad.                                                                                                                       
2189                                                                                                                            
Co-Chair Mulder                                                                                                                 
Asked when the state could anticipate a                                                                                         
dividend from the railroad. Stated that                                                                                         
he would like to see a dividend of                                                                                              
approximately $5 million dollars a year                                                                                         
from the railroad.                                                                                                              
2212                                                                                                                            
Governor Sheffield                                                                                                              
Replied that the railroad would feel good                                                                                       
if they were in a position to pay a                                                                                             
dividend.  The goal is to establish a                                                                                           
time within the next year of when payback                                                                                       
can be expected.  He added that the                                                                                             
railroad does a lot to help                                                                                                     
municipalities.                                                                                                                 
                                                                                                                                
TAPE HFC 00 - 12,                                                                                                               
SIDE 2                                                                                                                          
ALASKA AEROSPACE DEVELOPMENT CORPORATION                                                                                        
000                                                                                                                             
PAT LADNER,                                                                                                                     
EXECUTIVE DIRECTOR,                                                                                                             
ALASKA AEROSPACE                                                                                                                
DEVELOPMENT                                                                                                                     
CORPORATION (AADC),                                                                                                             
DEPARTMENT OF                                                                                                                   
COMMUNITY AND                                                                                                                   
ECONOMIC DEVELOPMENT                                                                                                            
Noted that the mission of the Alaska                                                                                            
Aerospace Development Corporation is to                                                                                         
promote aerospace-related economic growth                                                                                       
and develop corresponding technologies                                                                                          
and support services.                                                                                                           
                                                                                                                                
Discussed programs and contributions to                                                                                         
the mission. The Kodiak Launch Complex                                                                                          
(KLC): a state-owned, AADC managed rocket                                                                                       
launch complex developed to support both                                                                                        
commercial and government launch                                                                                                
activity.                                                                                                                       
                                                                                                                                
Fairbanks satellite ground stations: an                                                                                         
AADC effort to facilitate private                                                                                               
development of satellite ground stations                                                                                        
for polar orbiting satellites.                                                                                                  
                                                                                                                                
Discussed the Challenge Learning Center                                                                                         
in Kenai. He estimated that the Center                                                                                          
would be operational in the next summer.                                                                                        
224                                                                                                                             
Mr. Ladner                                                                                                                      
Noted that their existing customers                                                                                             
include Lockheed Martin Corporation, the                                                                                        
US Air Force and US Army.                                                                                                       
                                                                                                                                
While not direct customers of AADC, the                                                                                         
agency has worked with the following                                                                                            
companies to develop ground stations in                                                                                         
Fairbanks: Los Alamos Laboratories, Space                                                                                       
Imaging Inc., the US Air Force                                                                                                  
224                                                                                                                             
Mr. Ladner                                                                                                                      
Discussed performance measures.                                                                                                 
Measure:  Increase the number of launches                                                                                       
from the Kodiak Launch Complex (KLC) to                                                                                         
at least two in FY01.                                                                                                           
                                                                                                                                
Demonstrate economic impact from KLC                                                                                            
launch activities of at least $2 million                                                                                        
in FY01.                                                                                                                        
                                                                                                                                
Continue to work with industry to locate                                                                                        
more satellite ground stations in the                                                                                           
Fairbanks area.                                                                                                                 
260                                                                                                                             
Mr. Ladner                                                                                                                      
AADC is targeting two to three launches                                                                                         
for FY2001, one for Lockheed Martin in                                                                                          
September 2000 and two government                                                                                               
missions in the first half of 2001.                                                                                             
Contract negotiations are being finalized                                                                                       
with Lockheed and discussions have                                                                                              
commenced for the two government                                                                                                
missions.                                                                                                                       
                                                                                                                                
Mr. Ladner                                                                                                                      
Discussed the Northern Edge exercise. The                                                                                       
inclusion of the space aspect would                                                                                             
result in at least one launch from                                                                                              
Kodiak.                                                                                                                         
341                                                                                                                             
Mr. Ladner                                                                                                                      
Discussed a marketing/ commercialization                                                                                        
grant received from the Alaska Science                                                                                          
and Technology Foundation. The grant                                                                                            
would be expended over a three-year                                                                                             
period.  The purpose of the grant is to                                                                                         
reach out to as many potential customers                                                                                        
as possible and solidify launch contracts                                                                                       
for the KLC. A technical marketing                                                                                              
component of the grant will assist in                                                                                           
contract development and negotiation as                                                                                         
well as explore KLC enhancements that                                                                                           
could broaden the customer base. The                                                                                            
launch control center is complete. It is                                                                                        
occupied and being used.                                                                                                        
544                                                                                                                             
Mr. Ladner                                                                                                                      
The University of Alaska Anchorage,                                                                                             
Institute of Social and Economic Research                                                                                       
(ISER) performed an analysis of the                                                                                             
inaugural launch from the KLC.  Based on                                                                                        
actual expenditures, ISER determined the                                                                                        
total economic effect for the state to be                                                                                       
$1.3 million in sales and $450,000 in                                                                                           
payroll. A benchmark is being developed.                                                                                        
598                                                                                                                             
Mr. Ladner                                                                                                                      
Discussed the Fairbanks satellite ground                                                                                        
stations effort. They did not have to                                                                                           
expend a lot of money for the five ground                                                                                       
stations. They are working with data                                                                                            
processing to assure a full product                                                                                             
within the state.                                                                                                               
693                                                                                                                             
Mr. Ladner                                                                                                                      
Discussed FY99-00 Accomplishments. Noted                                                                                        
that there were two successful launches                                                                                         
from the KLC for the US Air Force prior                                                                                         
to the completion of the facility.                                                                                              
Scheduled first orbital launch from the                                                                                         
KLC for Lockheed Martin Corporation.                                                                                            
Maintained that the construction effort                                                                                         
has been successful. The entire system is                                                                                       
ready.                                                                                                                          
801                                                                                                                             
Mr. Ladner                                                                                                                      
As the construction of the KLC comes to                                                                                         
completion, AADC will transition the                                                                                            
facility to a year-round operational                                                                                            
mode.  An aggressive marketing strategy                                                                                         
aimed at increasing awareness of the                                                                                            
facility, identifying potential customers                                                                                       
and solidifying launch contracts will be                                                                                        
implemented.                                                                                                                    
                                                                                                                                
The grant process would provide a                                                                                               
technical director under contract to work                                                                                       
closely with industry.                                                                                                          
915                                                                                                                             
Mr. Ladner                                                                                                                      
Discussed FY01 strategies/priorities, to                                                                                        
increase local employment opportunities                                                                                         
and to support aerospace activities.                                                                                            
Lockheed Martin Corporation is currently                                                                                        
working with the Chamber of Commerce. One                                                                                       
of the largest suppliers is working with                                                                                        
the community.                                                                                                                  
937                                                                                                                             
Representative                                                                                                                  
Grussendorf                                                                                                                     
Expressed a desire to see participation                                                                                         
in the Northern Edge exercises. He noted                                                                                        
that Sitka would be used.                                                                                                       
974                                                                                                                             
Mr. Ladner                                                                                                                      
Responded that space assets played a                                                                                            
large role in the Gulf War. The role at                                                                                         
KLC would be to launch a rocket over the                                                                                        
ocean to simulate an enemy missile                                                                                              
launch.                                                                                                                         
1090                                                                                                                            
Vice Chair Bunde                                                                                                                
Noted that there was an unsuccessful                                                                                            
launch and asked if it would have an                                                                                            
impact on the KLC.                                                                                                              
1121                                                                                                                            
Mr. Ladner                                                                                                                      
The recent test failure will have an                                                                                            
impact on the development of the system.                                                                                        
Anticipated a major effort to retest. Did                                                                                       
not think it would have a major impact.                                                                                         
1161                                                                                                                            
Mr. Ladner                                                                                                                      
The launch complex is the first of its                                                                                          
kind. Finding out that this project is                                                                                          
bringing an awareness of Alaska. NASA is                                                                                        
making big plans for an up coming launch                                                                                        
that will bring a different view of                                                                                             
Alaska.                                                                                                                         
1301                                                                                                                            
Representative                                                                                                                  
Phillips                                                                                                                        
Questioned how many tests of ballistic                                                                                          
missiles will occur before action by the                                                                                        
President.                                                                                                                      
1342                                                                                                                            
Mr. Ladner                                                                                                                      
Stated that the federal government was                                                                                          
looking for two successful tests in a                                                                                           
row. The recent failure is a minor set                                                                                          
back.                                                                                                                           
1410                                                                                                                            
Co-Chair Mulder                                                                                                                 
Who is the contractor involved.                                                                                                 
1424                                                                                                                            
Mr. Ladner                                                                                                                      
Boeing is the contractor. There are other                                                                                       
subcontractors.                                                                                                                 
1447                                                                                                                            
Co-Chair Mulder                                                                                                                 
Boeing showed an interest in utilizing                                                                                          
Kodiak due to its position.                                                                                                     
1508                                                                                                                            
Mr. Ladner                                                                                                                      
Noted that Kodiak launches are realistic.                                                                                       
1519                                                                                                                            
Co-Chair Mulder                                                                                                                 
What efforts have been made to attract                                                                                          
Boeing to Kodiak?                                                                                                               
1536                                                                                                                            
Mr. Ladner                                                                                                                      
Met with the head of Boeing two years                                                                                           
ago. Will brief them in the future. The                                                                                         
dialog is occurring.                                                                                                            
1590                                                                                                                            
Co-Chair Mulder                                                                                                                 
Noted that Senator Stevens is                                                                                                   
sympathetic.                                                                                                                    
1607                                                                                                                            
Representative                                                                                                                  
Austerman                                                                                                                       
Asked if there is anything the board can                                                                                        
do to expand other aspects of the                                                                                               
aerospace industry.                                                                                                             
1629                                                                                                                            
Mr. Ladner                                                                                                                      
There is a long-range plan. The first                                                                                           
thing to demonstrate is that there is a                                                                                         
world class launch facility. The                                                                                                
commercial satellite industry had slowed.                                                                                       
They are working with a satellite builder                                                                                       
on a bonding issue.                                                                                                             
1715                                                                                                                            
Vice Chair Bunde                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting adjourned at 4:37 p.m.                                                                                              
                                                                                                                                
HOUSE FINANCE COMMITTEE                                                                                                         
LOG NOTES                                                                                                                       
January 19, 2000                                                                                                                
                                                                                                                                
House Finance Committee    12    1/19/00                                                                                        
                                                                                                                                
                                                                                                                                

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