Legislature(2003 - 2004)

05/01/2003 03:14 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       May 01, 2003                                                                                             
                          3:14 PM                                                                                               
                                                                                                                                
TAPE HFC 03  73, Side A                                                                                                         
TAPE HFC 03 - 73, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Williams   called  the  House   Finance  Committee                                                                    
meeting to order at 3:14 PM.                                                                                                    
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative   Norman    Rokeberg;   Representative   John                                                                    
Coghill;  Ian   Fisk,  Staff,  Representative   Ogg;  George                                                                    
McClune, United Fisherman of  Alaska; Benjamin Brown, Alaska                                                                    
State  Chamber of  Commerce; Chip  Wagoner, Alaska  Catholic                                                                    
Conference;  Don Etheridge,  AFL-CIO;  Karen Rugina,  Alaska                                                                    
Hospitality  Alliance; Eddy  Jeans, Manager,  School Finance                                                                    
and Facilities  Section, Department  of Education  and Early                                                                    
Development;   Debby   Chalmers,  Alyeska   Central   School                                                                    
Education  Association; Cecilia  Miller, ACSEA;  John Paden,                                                                    
Counselor,  Alyeska   School;  Kevin   Sweeney,  Legislative                                                                    
Liaison, Department of Education and Early Development.                                                                         
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jay  Sutherland,  Anchorage;  John Brown,  President,  Labor                                                                    
Council,  Fairbanks;   Jack  Lewis,  Sour   Mining  Company,                                                                    
Anchorage; Ayiare  Voorhees, student; Nancy  Rochar, parent;                                                                    
Victoria  Martin, parent,  Anchorage;  Greg Miller,  Charter                                                                    
Schools,  Anchorage; Kym  Wolcott, Anchorage;  Ryan Wolcott,                                                                    
student,  Anchorage;  Victoria  Martin,  parent,  Anchorage;                                                                    
Sean  Ruddell,  student,  Anchorage; Dan  Gavora,  Executive                                                                    
Vice   President,  Utility   Services  of   Alaska;  Michael                                                                    
Jeffrey, parent,  Barrow; Dan Easton, Director,  Division of                                                                    
Facility   Construction   and   Operation,   Department   of                                                                    
Environmental Conservation;                                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 119    "An  Act permitting  grants  to certain  regulated                                                                    
          public  utilities  for water  quality  enhancement                                                                    
          projects   and   water   supply   and   wastewater                                                                    
          systems."                                                                                                             
                                                                                                                                
          HB  119  was  heard  and  HELD  in  Committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 174    "An   Act  relating   to  the   state  centralized                                                                    
          correspondence  study  program,   to  funding  for                                                                    
          educational programs that  occur primarily outside                                                                    
          school  facilities, and  to the  duties of  school                                                                    
          boards of  borough and  city school  districts and                                                                    
          regional   educational   attendance   areas;   and                                                                    
          providing for an effective date."                                                                                     
                                                                                                                                
          HB  174  was  heard  and  HELD  in  Committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 199    "An  Act removing  the  annual  adjustment to  the                                                                    
          minimum wage  based on the rate  of inflation; and                                                                    
          providing for an effective date."                                                                                     
                                                                                                                                
          HB  199  was  heard  and  HELD  in  Committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
SB 139    "An  Act repealing  the  termination  date of  the                                                                    
          Alaska salmon price  report program; and providing                                                                    
          for an effective date."                                                                                               
                                                                                                                                
          SB 139  was REPORTED out  of Committee with  a "do                                                                    
          pass"  recommendation and  one  new fiscal  impact                                                                    
          note from the Department of Revenue.                                                                                  
SENATE BILL NO. 139                                                                                                           
                                                                                                                                
     "An Act repealing the termination date of the Alaska                                                                       
     salmon price report program; and providing for an                                                                          
     effective date."                                                                                                           
                                                                                                                                
IAN FISK, STAFF, REPRSENTATIVE OGG,  spoke in support of the                                                                    
bill.  He  explained that the current bill  would repeal the                                                                    
sunset date  of a Department  of Revenue program  called the                                                                    
Alaska  Salmon   Price  Report  (ASPR),   which  is   in  AS                                                                    
43.80.050. Processors  that sell over one  million pounds in                                                                    
salmon products a year are  required to report the wholesale                                                                    
price  received  for  the  product   to  the  Department  of                                                                    
Revenue.  The Department  publishes the  data three  times a                                                                    
year:  January  31,  May  31, and  September  30.  The  ASPR                                                                    
details monthly  and annual  average wholesale  price sorted                                                                    
by salmon species, product form  and the eight regions where                                                                    
the salmon is produced. The  report provides data helpful to                                                                    
negotiations between  harvesters and  processors.   The ASPR                                                                    
statute  would   sunset  on  July   1,  2003,   without  the                                                                    
legislation.  The  sponsor believes  the  ASPR  should be  a                                                                    
permanent function of the Department of Revenue.                                                                                
                                                                                                                                
Co-Chair Harris  observed that Representative  Austerman had                                                                    
previously introduced the legislation.   Mr. Fisk noted that                                                                    
the  bill was  successful and  received broad  support.   In                                                                    
response  to a  question  by Co-Chair  Harris, he  confirmed                                                                    
that the proposed  bill merely eliminated the  sunset of the                                                                    
program.   He noted that  the report  was used to  help with                                                                    
the purchase program and had no opposition.                                                                                     
                                                                                                                                
Representative  Whitaker referred  to the  zero fiscal  note                                                                    
and expressed support for the legislation.                                                                                      
                                                                                                                                
Representative  Croft noted  that  Chair  had expressed  the                                                                    
desire to know  the real cost of boards or  commissions.  He                                                                    
observed  that the  program cost  roughly  $50 thousand  and                                                                    
suggested that  it should be  reflected in the  fiscal note.                                                                    
Mr.  Fisk confirmed  that this  cost estimate  was accurate.                                                                    
They pointed  out that  funding would  come from  the salmon                                                                    
fund.                                                                                                                           
                                                                                                                                
Representative Croft  MOVED that the fiscal  note be changed                                                                    
to reflect  the $50 thousand  in salmon treaty  funds. There                                                                    
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
Co-Chair  Harris MOVED  to report  SB 139  out of  Committee                                                                    
with the accompanying revised fiscal note.                                                                                      
                                                                                                                                
Representative Stoltze OBJECTED and  stated that he hoped to                                                                    
someday pass  a bill  to benefit sports  fishing as  well as                                                                    
commercial fishing.  He WITHDREW  his OBJECTION. There being                                                                    
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
SB  139 was  REPORTED  out  of Committee  with  a "do  pass"                                                                    
recommendation  and  one new  fiscal  impact  note from  the                                                                    
Department of Revenue.                                                                                                          
HOUSE BILL NO. 199                                                                                                            
                                                                                                                                
     "An Act removing the annual adjustment to the minimum                                                                      
     wage based on the rate of inflation; and providing for                                                                     
     an effective date."                                                                                                        
                                                                                                                                
REPRESENTATIVE    NORMAN    ROKEBERG,   SPONSOR,    provided                                                                    
information  regarding the  legislation.   He discussed  the                                                                    
history  and methodology  behind  the bill,  which tied  the                                                                    
minimum wage  to the consumer  price index (CPI)  and/or one                                                                    
dollar above federal standard.   He suggested that an annual                                                                    
increase  in the  minimum wage  would  have an  inflationary                                                                    
impact  on the  State's  economy.   He  speculated that  the                                                                    
increases affected  potential employers and  would increased                                                                    
unemployment.     He  noted  competing   theories  regarding                                                                    
minimum wage legislation.   He noted that one  point of view                                                                    
indicated that legislative  action created negative impacts,                                                                    
but that the  other side stated that increase  in income had                                                                    
a positive impact  on lower income workers.   He stated that                                                                    
he adhered to  the belief that the impact  of increases were                                                                    
negative,  and  quoted  research  by  the  Ohio  University,                                                                    
analyzing law in Washington  State.  Representative Rokeberg                                                                    
stressed that  the bill would  not cut the minimum  wage and                                                                    
emphasized  that Alaska's  $7.15 per  hour minimum  wage was                                                                    
the  highest   in  the  country.     He  questioned  whether                                                                    
businesses could  afford an increase and  suggested that the                                                                    
largest provider of jobs in  this sector was the hospitality                                                                    
industry.  He  stated that the industry had been  hit with a                                                                    
27  percent increase.    He maintained  that  this sent  the                                                                    
message the Alaska was not "open for business".                                                                                 
                                                                                                                                
BENJAMIN BROWN,  ALASKA STATE CHAMBER OF  COMMERCE testified                                                                    
in  support  of  the  bill.    He  acknowledged  the  debate                                                                    
engendered  by the  legislation.   He suggested  de-indexing                                                                    
the  Alaska  minimum  wage  from the  national  index.    He                                                                    
discussed economic  theories, such  as the  "invisible hand"                                                                    
theory.  He  maintained  that the  "invisible  hand"  became                                                                    
visible when the minimum wage  increase was implemented with                                                                    
a tie  to the  CPI index. He  explained that  employers were                                                                    
forced to pay the amount specified  by the state.  He stated                                                                    
that the  bill did  not reduce minimum  wage, but  created a                                                                    
system of  automatically deciding  the proper  minimum wage,                                                                    
rather  than allowing  future debate  based  on the  economy                                                                    
needs.   He  also noted  that  some believe  that using  the                                                                    
consumer price index created an  artificial inflation in the                                                                    
economy.   He  added that  there was  a suggestion  that the                                                                    
legislature  was  aggregating  an earlier  decision  by  de-                                                                    
indexing the minimum  wage, and suggested that  there was no                                                                    
legal implication against the State in this regard.                                                                             
                                                                                                                                
CHIP  WAGONER,  ALASKA   CATHOLIC  CONFERENCE  testified  in                                                                    
opposition to  the bill and  expressed the  Church's support                                                                    
of the minimum  wage. He discussed the concept  of a "living                                                                    
wage" to support  individuals with dignity.   He pointed out                                                                    
that  the  current  minimum wage  still  placed  individuals                                                                    
below  the  poverty level.    He  discussed the  two  public                                                                    
policy  issues when  evaluating the  minimum wage.  He first                                                                    
emphasized  that the  legislature should  determine a  floor                                                                    
below  which the  legislature believed  was an  unjust wage.                                                                    
Once a  just minimum wage  is determined by  the legislature                                                                    
then it should remain constant  with the economy in terms of                                                                    
inflation  because  below  that   minimum  wage  it  becomes                                                                    
unjust. The  second public issue is  economics. He suggested                                                                    
that  the main  arguments  against indexing  dealt with  the                                                                    
cost of jobs.   He urged the Committee  to carefully examine                                                                    
the  source of  information in  this  area.   He noted  that                                                                    
professionals  in  this  area could  create  information  to                                                                    
support their  viewpoints. He suggested that  the Employment                                                                    
Policies  Institute  was  historically against  the  minimum                                                                    
wage, and  the Economic  Institute was historically  for the                                                                    
minimum wage.   He discussed  information from the  state of                                                                    
Alaska. He noted  that according to Department  of Labor and                                                                    
Workforce  Development  there  are  only  14,000  people  in                                                                    
Alaska  earning  the minimum  wage.  He  argued that  14,000                                                                    
people   earning   minimum   wage  would   not   create   an                                                                    
inflationary spiral  that would  affect the entire  state of                                                                    
Alaska.  Of these  14,000, about  a third  were in  the food                                                                    
service/drinking industry.   He noted that  these industries                                                                    
were those  against the  minimum wage  increase.   He argued                                                                    
that if there were going to be  a loss of jobs that it would                                                                    
have  occurred  between  December and  January  [2003]  when                                                                    
there  was a  $1.5 overnight  increase in  minimum wage.  He                                                                    
acknowledged  that   there  was   a  six  percent   drop  in                                                                    
employment,  but   pointed  out  that  the   drop  could  be                                                                    
attributed to the seasonal drop,  which occurred at the same                                                                    
time  in  the previous  year.    He  stated that  a  similar                                                                    
situation  occurred  in Washington  State.    He quoted  the                                                                    
state of  Washington concluded that: "There  does not appear                                                                    
to be  a direct correlation  between the index  minimum wage                                                                    
and the number  of jobs in the  food service/drinking places                                                                    
industry." He  concluded that  a the  raise in  minimum wage                                                                    
was only one factor among many  in terms of job loss and the                                                                    
numbers don't  prove that there has  been a job loss  in the                                                                    
food service/drinking places industry.                                                                                          
                                                                                                                                
DON  ETHERIDGE, AFL-CIO  testified on  behalf of  his 60,000                                                                    
members  in opposition  to  the  bill.   He  noted that  his                                                                    
organization petitioned  to achieve  an increase  in minimum                                                                    
wage.  He  pointed out that the  subsequent increase finally                                                                    
raised  Alaska's rank  from  being the  lowest  on the  west                                                                    
coast.  He  suggested that the first CPI  increase should be                                                                    
observed  before repealing  it.   He  noted  that the  first                                                                    
increase would be a 14-cent  increase that should not impact                                                                    
businesses.                                                                                                                     
                                                                                                                                
KAREN  RUGINA,  ALASKA  HOSPITALITY  ALLIANCE  testified  in                                                                    
support of  the bill.   She  provided information  of losses                                                                    
experienced by  restaurants and hotels  due to  increases in                                                                    
wages, and  explained that  hotels and  restaurants operated                                                                    
on a  narrow margin.   She suggested  that the  increase, in                                                                    
combination with  an increase in  insurance and  decrease in                                                                    
customers.   She  suggested that  benefits  were being  cut.                                                                    
She  gave examples  of businesses  that had  decided not  to                                                                    
come to  Alaska due to  the increase  in minimum wage.   She                                                                    
noted a natural  CPI indexing occurred in  the business with                                                                    
an increase in  menu prices.  She concluded  that this added                                                                    
more uncertainty to an already uncertain climate.                                                                               
                                                                                                                                
JAY SUTHERLAND,  ANCHORAGE, testified via  teleconference in                                                                    
support of  the bill.   He  stated that  he is  a restaurant                                                                    
operator and noted that his  business had been forced to lay                                                                    
off  employees  and  suggested that  there  would  be  fewer                                                                    
future jobs for youth.  He  noted that the CPI was suggested                                                                    
in  Washington State,  and referred  to its  effects on  the                                                                    
industry.   He maintained that businesses  invested in other                                                                    
states to avoid this restriction.                                                                                               
                                                                                                                                
JOHN BROWN,  PRESIDENT, LABOR COUNCIL,  FAIRBANKS, testified                                                                    
via  teleconference in  opposition to  the bill.   He  noted                                                                    
that  50 thousand  people signed  a petition  supporting CPI                                                                    
indexing, and maintained that legislators  had also voted to                                                                    
support it.   He suggested  that workers needed a  fair wage                                                                    
and that  if wages were  not guaranteed it  would negatively                                                                    
affect  the  economy.   He  maintained  that all  businesses                                                                    
competed on an equal basis.                                                                                                     
                                                                                                                                
JACK LEWIS,  SOUR MINING  COMPANY, ANCHORAGE,  testified via                                                                    
teleconference in  support of  the bill.   He  stressed that                                                                    
the last increase  was sizable and that, for  the first time                                                                    
ever, he  was not able to  pass along the increases  in menu                                                                    
prices.   He referenced  the liquor tax  in addition  to the                                                                    
minimum  wage  increase.   He  noted  the need  to  decrease                                                                    
benefit  programs in  order to  accommodate  increases.   He                                                                    
stated that he did not  support an automatic increase or the                                                                    
legislature  suggesting appropriate  levels.   He  expressed                                                                    
concern  over  the  increase since  customers  were  already                                                                    
eating out less.                                                                                                                
                                                                                                                                
Co-Chair Harris  requested that the Department  of Labor and                                                                    
Workforce  Development should  produce an  additional fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
HB  199  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
HOUSE BILL NO. 174                                                                                                            
                                                                                                                                
     "An   Act    relating   to   the    state   centralized                                                                    
     correspondence   study   program,    to   funding   for                                                                    
     educational  programs  that   occur  primarily  outside                                                                    
     school facilities,  and to the duties  of school boards                                                                    
     of  borough  and  city school  districts  and  regional                                                                    
     educational  attendance  areas;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
EDDY JEANS, MANAGER, SCHOOL  FINANCE AND FACILITIES SECTION,                                                                    
DEPARTMENT  OF  EDUCATION  AND  EARLY  DEVELOPMENT  provided                                                                    
information about  the legislation.   He compared  the House                                                                    
State Affairs  Committee version and the  Governor's Bill as                                                                    
introduced.    He  noted  that  the  Governor's  bill  would                                                                    
eliminate  the program  beginning July  1, 2003  whereas the                                                                    
House  State Affairs'  Committee Substitute  would eliminate                                                                    
the  current summer  program with  a one-year  delay in  the                                                                    
effective  date  eliminating  the  statewide  correspondence                                                                    
program.   Both bills  contain a provision  under 14.70.430,                                                                    
which  deals  with  state funding  of  correspondence  study                                                                    
programs  in  the  foundation  program.  These  and  similar                                                                    
programs  are funded  at 80  percent. Some  charter schools,                                                                    
which   are  home-based   programs,   have  challenged   the                                                                    
Department   because  they   do   not   see  themselves   as                                                                    
correspondence  programs.  The   Department  has  taken  the                                                                    
position  that, for  foundation  formula purposes,  programs                                                                    
outside  of a  brick  and mortar  school are  correspondence                                                                    
programs. The  legislation would bring clarity  by expanding                                                                    
the definition to include home-based programs.                                                                                  
                                                                                                                                
Mr.  Jeans  discussed  two  central  issues:    first,  cost                                                                    
savings.    He  noted  the  argument  that  eliminating  the                                                                    
program  would  not save  the  state  of Alaska  money,  but                                                                    
rather cost  money as students  seek accredited  programs in                                                                    
brick and mortar schools.   He suggested that the Department                                                                    
believes that many of the  students will find correspondence                                                                    
services elsewhere  in the state.  He added that there  is a                                                                    
potential savings through space  lease reductions, but noted                                                                    
that the Department might have  other uses for the space. He                                                                    
discussed  the  second  issue:  policy.   He  gave  a  brief                                                                    
history  of the  Alyeska  Central School  (ACS or  Alyeska),                                                                    
which  was  initiated  in 1939  and  has  provided  valuable                                                                    
services.  He pointed out that  at that time there were only                                                                    
two options,  municipal school districts and  state operated                                                                    
schools.    He  stated  that  in  1977,  Regional  Education                                                                    
Attendance Areas  (REAA) were initiated, so  that every area                                                                    
of  Alaska was  covered by  a school  district. Each  school                                                                    
district  has  the   responsibility  of  educating  students                                                                    
within their boundaries. Approximately  seven years ago, the                                                                    
State  began   allowing  students   to  take   advantage  of                                                                    
correspondence  programs.    He   referenced  SB  36,  which                                                                    
supports  correspondence  programs.    Today  there  are  12                                                                    
[correspondence] programs  including ACS. He  suggested that                                                                    
[ACS] students  would attend another program.   He addressed                                                                    
statewide enrollments, and observed  that the bill addressed                                                                    
open  enrollments.    He  noted  that  Alyeska  would  allow                                                                    
certain exceptions  to enrollment,  such as  disability, but                                                                    
that these  were case by case.   He suggested that  they had                                                                    
other rules for closing enrollment.                                                                                             
                                                                                                                                
Mr.  Jeans addressed  accreditation  and  noted that  Craig,                                                                    
Delta, Galena,  and Yukon schools districts  had applied for                                                                    
accreditation  and been  awarded conditional  accreditation.                                                                    
He   explained  that   conditional  accreditation   provides                                                                    
transferable credit for students.                                                                                               
                                                                                                                                
TAPE HFC 03 - 73, Side B                                                                                                      
                                                                                                                                
AYIARE  VOORHEES, STUDENT,  testified via  teleconference in                                                                    
support  of the  amended bill.   She  stated that,  although                                                                    
they would  prefer for  the school  to remain  mandated, she                                                                    
appreciated the response  of the State to  requests to allow                                                                    
the school to remain open for the year.                                                                                         
                                                                                                                                
NANCY ROCHAR,  PARENT, testified  in support of  the Alyeska                                                                    
Central School.   She suggested that it was  the only school                                                                    
that upheld the no  child left behind regulations currently.                                                                    
She  pointed out  that all  teachers were  certified in  the                                                                    
subjects that they teach.   She maintained that services are                                                                    
not duplicated, and  suggested that it was  the only program                                                                    
with  direct teacher  involvement.    She acknowledged  that                                                                    
other programs,  which offer cash inducements  might be more                                                                    
popular, but  maintained that other programs  were deficient                                                                    
in  teacher  involvement.    She  suggested  that  this  cut                                                                    
produced  no cost  savings  to  the state  of  Alaska.   She                                                                    
pointed out that not every  student had Internet access, and                                                                    
that  Alyeska  also  utilized regular  mail  correspondence.                                                                    
She commended the success and quality of the program.                                                                           
                                                                                                                                
JANET  WALKER,  PARENT,   testified  via  teleconference  in                                                                    
support of the  Alyeska Central School.  She  noted that her                                                                    
family  lived  in  the   wilderness  of  Alaska.  Therefore,                                                                    
Alyeska was  essential since it  offered programs  that were                                                                    
not  on the  Internet.   She acknowledged  that while  there                                                                    
were other correspondence schools,  Alyeska was the only one                                                                    
that  was   fully  accredited  and  provided   online  adult                                                                    
education.   She suggested  that to  close the  school would                                                                    
cost the  state of Alaska  up to  $300 thousand.   She urged                                                                    
members to keep Alyeska open.                                                                                                   
                                                                                                                                
GREG  MILLER,  CHARTER   SCHOOLS,  ANCHORAGE  testified  via                                                                    
teleconference.  He stated his  experience as an attorney in                                                                    
representing  charter schools.   He  addressed Section  5 to                                                                    
the Committee  Substitute, which pertained to  AS 14.70.430,                                                                    
which set the  level of 80 percent for charter  schools.  He                                                                    
noted   that   the   change  expands   the   definition   of                                                                    
correspondence schools, and suggested  that it raised a much                                                                    
larger issue. He  stated that it would in  essence treat any                                                                    
school  not  in  a  regular  facility  as  a  correspondence                                                                    
school.   He  suggested  that this  was  not an  appropriate                                                                    
definition  and  should  rather relate  to  the  mailing  of                                                                    
materials between the  school and students.   He noted three                                                                    
potential  impacts  of the  language  change:   first,  that                                                                    
charter schools that were outside  of a "school facility" as                                                                    
a correspondence school; second,  home school study programs                                                                    
would now  be considered correspondence schools;  and third,                                                                    
alternative school district programs  would now be affected.                                                                    
He concluded that this sentence raised a larger issue.                                                                          
                                                                                                                                
KYM  WOLCOTT, ANCHORAGE,  parent of  Alyeska Central  School                                                                    
students testified via teleconference  in support of Alyeska                                                                    
Central School.   She suggested that ACS had  no parallel in                                                                    
service in the  state.  She discussed  the services provided                                                                    
by ACS,  and questioned  how students  may be  absorbed into                                                                    
districts  that are  already  overcrowded and  under-funded.                                                                    
She  challenged   the  Administration  to   support  quality                                                                    
education and not close ACS.                                                                                                    
                                                                                                                                
RYAN    WOLCOTT,   student,    Anchorage,   testified    via                                                                    
teleconference in  support of  the Alyeska  Central Schools.                                                                    
He said that  the teachers at Alyeska provided  him with the                                                                    
support he  needed to  achieve an  education.   He suggested                                                                    
that there  was not  a cost savings  and requested  that the                                                                    
members consider saving the school.                                                                                             
                                                                                                                                
VICTORIA   MARTIN,    PARENT,   ANCHORAGE    testified   via                                                                    
teleconference  in support  of the  Alyeska Central  School.                                                                    
She pointed  out that Alyeska  was currently  accredited and                                                                    
had been  a part  of the  state since  1938.   She suggested                                                                    
that every child  could be supported by  the Alyeska Central                                                                    
School and  expressed the negative  impact on her  family of                                                                    
closing the  school.   She noted that  she had  testified on                                                                    
numerous occasions.                                                                                                             
                                                                                                                                
SEAN    RUDDELL,    STUDENT,   ANCHORAGE    testified    via                                                                    
teleconference in  opposition to the  bill.  He  stated that                                                                    
the amendment was not acceptable.                                                                                               
                                                                                                                                
DEBBY   CHALMERS,    ALYESKA   CENTRAL    SCHOOL   EDUCATION                                                                    
ASSOCIATION (ACSEA)  testified in  support of  the Committee                                                                    
Substitute.  The teachers  and  parents  support a  one-year                                                                    
transition period. She  observed that the school  has a very                                                                    
complex   program  and   infrastructure,   which  has   been                                                                    
developed over many years.                                                                                                      
                                                                                                                                
CECILIA MILLER,  ACSEA, testified in support  of keeping the                                                                    
Alyeska Central School  open for all the  children that need                                                                    
to be served.   She asked that there be at  least a year for                                                                    
transition.  It would benefit the  State for the best.  This                                                                    
will impact kids that are off to college.                                                                                       
                                                                                                                                
JOHN  PADEN, COUNSELOR,  ALYESKA  CENTRAL  SCHOOL, spoke  in                                                                    
opposition to the proposed legislation.   He noted that when                                                                    
the bill  was first heard, the  idea of saving of  money was                                                                    
the major  consideration.  He observed  that the elimination                                                                    
of  the program  might not  reduce  the lease  costs of  the                                                                    
Department.   He noted that  the two main issues  were money                                                                    
and  duplication of  services.   Parents  and students  with                                                                    
Alyeska recognize  that it is unique.   The real issue  is a                                                                    
policy  one.   He  maintained  that  the legislation  is  an                                                                    
affront to  those children and families.   Extending Alyeska                                                                    
                                               th                                                                               
would  be better  than closing  it on  June  30.    Allowing                                                                    
Alyeska to continue would be the best solution.                                                                                 
                                                                                                                                
KEVIN SWEENEY, LEGISLATIVE  LIAISON, DEPARTMENT OF EDUCATION                                                                    
AND  EARLY  DEVELOPMENT,   summed  up  the  Administration's                                                                    
arguments in  support of  the bill.   He realized  that this                                                                    
was an  emotional issue, but  observed that  the educational                                                                    
system has changed  since the implementation of  ACS. At its                                                                    
peak ACS  served more than  2,000 students. It  now educates                                                                    
just over  one-quarter of that  amount. He pointed  out that                                                                    
other districts  now offer the  same type of  service, which                                                                    
could  accommodate the  program.   There are  currently over                                                                    
8,000  students   registered  in   statewide  correspondence                                                                    
programs.   The State has encouraged  these school districts                                                                    
to expand their correspondence program.                                                                                         
                                                                                                                                
Mr. Sweeney  stated that the  intent is to see  the programs                                                                    
continue to  grow and  attract students.   He  observed that                                                                    
the primary argument against the  closure of ACS is that the                                                                    
program  is  unique and  is  the  only program  that  offers                                                                    
accreditation.    He  disagreed  with  those  arguments.  He                                                                    
stressed  that programs,  which are  run outside  of Juneau,                                                                    
have shown  great promise. These  programs have  assured the                                                                    
Department  that  they  will  adapt  to  the  needs  of  the                                                                    
students  and they  want to  attract  students. He  asserted                                                                    
that  school   districts  are   ready  to   provide  teacher                                                                    
interaction and "snail mail" service.                                                                                           
                                                                                                                                
Mr. Sweeney pointed out that  the temporary accreditation is                                                                    
not an issue that is  unique to correspondence programs. All                                                                    
the   credits   that    students   earn   [under   temporary                                                                    
accreditation]  are  counted  as  accounted  credits.    The                                                                    
Governor's  approach is  to  avoid  duplication and  support                                                                    
competition among school districts.                                                                                             
                                                                                                                                
Discussion on HB 174 was HELD until later in the meeting.                                                                       
HOUSE BILL NO. 119                                                                                                            
                                                                                                                                
     "An Act permitting grants to certain regulated public                                                                      
     utilities for water quality enhancement projects and                                                                       
     water supply and wastewater systems."                                                                                      
                                                                                                                                
REPRESENTATIVE  JOHN COGHILL,  SPONSOR spoke  in support  of                                                                    
the legislation.  The legislation would permit  grants to be                                                                    
offered to utilities that serve  the public (municipally and                                                                    
privately  owned).   The intent  is  to encourage  municipal                                                                    
development.  Section  3 would allow public  water and sewer                                                                    
utilities to be eligible for  projects that are regulated by                                                                    
Regulatory  Commission   of  Alaska.  The   question  arises                                                                    
regarding  whether  those  doing  contract  work  or  own  a                                                                    
utility would be able to a  make profit from the grants.  He                                                                    
stated that  they would  not.  He  referenced a  letter from                                                                    
the Department of Community  and Economic Development, dated                                                                    
April 8,  2002, in  member's packets.   Grants would  be for                                                                    
project expansion and  would not be put into  the asset base                                                                    
that  would be  later sold.    The purchase  price that  the                                                                    
utility  would be  able to  recover would  be regulated.  He                                                                    
stressed that  the legislation seeks  equity. The  intent is                                                                    
not   to  allow   public  money   to   bolster  up   private                                                                    
corporations,  but to  give ratepayers  relief  and to  grow                                                                    
Alaska through an expansion of utilities.                                                                                       
                                                                                                                                
Representative   Coghill  observed   that  the   contributed                                                                    
capital  for the  utilities would  be regulated.   Regulated                                                                    
utilities  would not  be  permitted  to recover  contributed                                                                    
capital  from  its  costumers.  It  would  account  for  the                                                                    
contributed  capital  in a  manner  that  is identified  and                                                                    
outlined  in  the rate  base  under  the uniform  system  of                                                                    
accounts in the  Regulatory Commission of Alaska.   The bill                                                                    
contains  many   safeguards.    He   claimed  that   he  was                                                                    
comfortable  with  the  issue  and  requested  approval  and                                                                    
passage of the legislation.                                                                                                     
                                                                                                                                
Co-Chair  Harris  asked how  many  private  water and  sewer                                                                    
utilities  were  in the  state  of  Alaska.   Representative                                                                    
Coghill  stated that  there  were four  sewer  and 21  water                                                                    
related utilities.  He noted  that in Fairbanks, one company                                                                    
operates two different utilities.                                                                                               
                                                                                                                                
DAN GAVORA,  EXECUTIVE VICE  PRESIDENT, UTILITY  SERVICES OF                                                                    
ALASKA testified via teleconference  in support of the bill.                                                                    
He  stated that  as a  result of  the privatization  process                                                                    
that  Fairbanks ratepayers  had lost  this eligibility.  The                                                                    
source of  the funds that  pay for the grants  are collected                                                                    
from  the taxes  paid by  both municipal  and private  owned                                                                    
utilities.    He  maintained that  to  discriminate  against                                                                    
utilities, which  shared equally  in the burden,  was unjust                                                                    
and  that the  bill  would put  Fairbanks  ratepayers on  an                                                                    
equal level with  others in the state.  He  noted that there                                                                    
were 45 thousand  residents in the state that  are not given                                                                    
the same treatment as the remainder  of the state.  He noted                                                                    
that under  Regulatory Commission of Alaska  regulations all                                                                    
economic  benefits  of  the  grants are  passed  on  to  the                                                                    
ratepayers.  Shareholders receive  no  benefit.   He  stated                                                                    
that the bill would reduce  the burden to ratepayers, and to                                                                    
expand service.                                                                                                                 
                                                                                                                                
Representative   Stoltze  requested   that  the   Regulatory                                                                    
Commission of Alaska testify at a future meeting.                                                                               
                                                                                                                                
HB  119  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
HOUSE BILL NO. 174                                                                                                            
                                                                                                                                
     "An   Act    relating   to   the    state   centralized                                                                    
     correspondence   study   program,    to   funding   for                                                                    
     educational  programs  that   occur  primarily  outside                                                                    
     school facilities,  and to the duties  of school boards                                                                    
     of  borough  and  city school  districts  and  regional                                                                    
     educational  attendance  areas;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
MICHEAL  JEFFREY, PARENT,  BARROW, testified  in support  of                                                                    
the  Alyeska  Central School.    He  commended the  school's                                                                    
reputation and accreditation.   He maintained that temporary                                                                    
accreditation   did  not   reflect  well   with  prestigious                                                                    
colleges.    He referred  to  the  Committee Substitute  and                                                                    
suggested  that  it would  provide  a  compromise and  allow                                                                    
parents to  attempt to keep  the school going in  some form.                                                                    
He suggested  that Alyeska's certified teachers  presented a                                                                    
cost  savings  to  the  state  of  Alaska.    He  urged  the                                                                    
Committee to pass the Committee Substitute for HB 174.                                                                          
                                                                                                                                
HB  174  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:48 PM                                                                                            
                                                                                                                                
                                                                                                                                

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