Legislature(2017 - 2018)ADAMS ROOM 519

04/17/2018 09:00 AM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
<Bill Hearing Canceled>
-- Public Testimony --
Moved CSSB 185(EDC) Out of Committee
-- Public Testimony --
Heard & Held
-- Public Testimony --
Moved CSHB 409(FIN) Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
Moved HCS CSSB 92(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 17, 2018                                                                                            
                         9:10 a.m.                                                                                              
9:10:05 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 9:10 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Senator Peter  Micciche; Rachel Hanke, Staff,  Senator Peter                                                                    
Micciche;  Lisa Skiles  Parady,  Executive Director,  Alaska                                                                    
Council    of    School   Administrators;    Mark    Miller,                                                                    
Superintendent, Juneau School  District, Juneau; Matt Moser,                                                                    
National  Education Association-Alaska,  Juneau; Kathy  Lea,                                                                    
Deputy  Director  and  Chief Pension  Officer,  Division  of                                                                    
Retirement  and  Benefits,   Department  of  Administration;                                                                    
Senator  David Wilson,  Sponsor; Gary  Zepp, Staff,  Senator                                                                    
David Wilson; Elizabeth  Diamant, Staff, Representative Paul                                                                    
Seaton; Rachel  Hanke, Staff,  Senator Peter  Micciche; Gene                                                                    
Therriault,   Deputy  Director,   Statewide  Energy   Policy                                                                    
Development,   Alaska   Energy  Authority,   Department   of                                                                    
Commerce,   Community   and  Economic   Development;   Cathy                                                                    
Schlingheyde,   Staff,   Representative   Jonathan   Kreiss-                                                                    
Tomkins; Representative Jonathan Kreiss-Tomkins, Sponsor.                                                                       
PRESENT VIA TELECONFERENCE                                                                                                    
Jennifer Haldane,  Director, Contract  Administration, Labor                                                                    
Relations   And   Benefits,   Anchorage   School   District,                                                                    
Anchorage;  Scott  McManus, Superintendent,  Alaska  Gateway                                                                    
School  District, Tok;  Margaret Brodie,  Director, Division                                                                    
of  Health Care  Services, Department  of Health  and Social                                                                    
Services;  Marla  Thompson,   Director,  Division  of  Motor                                                                    
Vehicles,  Department of  Administration; John  Springsteen,                                                                    
Alaska   Industrial   Development  and   Export   Authority,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Marla  Thompson,  Director,   Division  of  Motor  Vehicles,                                                                    
Department of Administration;  Elizabeth Ripley, CEO, Mat-Su                                                                    
Health  Foundation,  Wasilla;  Rick Calcote,  Mental  Health                                                                    
Clinician,  Division  of  Behavioral Health,  Department  of                                                                    
Health and Social Services.                                                                                                     
HB 119    AIDEA:DIVIDEND TO STATE;INCOME;VALUATION                                                                              
          HB  119  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
HB 409    DMV ID CARDS & REGISTRATION FEES                                                                                      
          CSHB 409(FIN)  was REPORTED out of  committee with                                                                    
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously  published  fiscal   impact  note:  FN1                                                                    
CSSB 92(FIN)am                                                                                                                  
          VESSELS: REGISTRATION/TITLES; DERELICTS                                                                               
          HCS  CSSB 92(FIN)  was REPORTED  out of  committee                                                                    
          with  a  "no  recommendation"  recommendation  and                                                                    
          with  one   new  fiscal   impact  note   from  the                                                                    
          Department  of  Administration;   one  new  fiscal                                                                    
          impact  note   from  the  Department   of  Natural                                                                    
          Resources   for  Fund   Capitalization;  and   two                                                                    
          previously  published zero  notes:  FN3 (DEC)  and                                                                    
          FN4 (DNR).                                                                                                            
CSSB 105(FIN)                                                                                                                   
          MARITAL/FAMILY THERAPY LIC & MED SERVICES                                                                             
          CSSB 105(FIN) was HEARD and HELD in committee for                                                                     
          further consideration.                                                                                                
CSSB 185(EDC)                                                                                                                   
          REEMPLOYMENT OF RETIRED TEACHERS & ADMIN                                                                              
          CSSB 185(EDC)  was REPORTED out of  committee with                                                                    
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously  published  indeterminate fiscal  note:                                                                    
          FN2 (ADM).                                                                                                            
Co-Chair Foster reviewed the meeting agenda.                                                                                    
CS FOR SENATE BILL NO. 185(EDC)                                                                                               
     "An Act relating to reemployment of persons who retire                                                                     
     under the teachers' retirement system."                                                                                    
9:11:04 AM                                                                                                                    
Co-Chair Foster noted that the  bill was companion to HB 224                                                                    
by Representative Jennifer Johnston.                                                                                            
SENATOR PETER  MICCICHE, thanked  the committee  for hearing                                                                    
the teacher  retire/rehire bill. He spoke  to the nationwide                                                                    
shortage of teachers and  educators. Historically Alaska had                                                                    
relied on  the recruitment  of teachers  from the  Lower 48,                                                                    
but  the  pool in  the  Lower  48  had shrunken,  which  had                                                                    
exacerbated the  teacher shortage in Alaska.  He reported in                                                                    
2015 there  were 3.3 million  teachers in the  U.S.; 344,000                                                                    
new  teachers had  graduated in  2017  and 531,000  teachers                                                                    
left the  profession. He  shared that  the turnover  rate in                                                                    
poverty  schools  was  much  higher;  it  was  a  nationwide                                                                    
problem. He  detailed that teacher  job fairs in  Alaska had                                                                    
seen  a  steady decline  in  prospective  teachers. In  2017                                                                    
there had been  only 211 registrants, 172  from in-state and                                                                    
39  from  out  of  state. He  detailed  that  typically  the                                                                    
numbers were more balanced. He  elaborated that 36 districts                                                                    
had been represented. In 2018  the number of registrants had                                                                    
dropped to 179  and only 31 were from out  of state. In some                                                                    
schools  there   were  high  school   graduates  supervising                                                                    
certain classrooms.                                                                                                             
Senator  Micciche explained  that the  bill returned  to the                                                                    
retire/rehire  provisions in  place  from 2001  to 2010.  He                                                                    
explained that  to be eligible [for  re-employment] a person                                                                    
62 years of age  or older had to be retired  for 60 days and                                                                    
a person younger  than 62 had to be retired  for six months.                                                                    
There  were no  salary deductions,  retirement and  benefits                                                                    
could still be received, there  was no credited service, and                                                                    
there was  no hit to  the Teachers' Retirement  System (TRS)                                                                    
system. He commented that the  department would speak to the                                                                    
fiscal  note  later  in the  meeting.  The  districts  would                                                                    
continue to pay the  12.56 percent TRS requirement. Benefits                                                                    
and pay would  depend on the bargaining unit,  some would be                                                                    
union  represented  and  some  would  not.  Sick  leave  was                                                                    
required by current state law  and there would be a 12-month                                                                    
contract just like any other  teacher. He detailed that from                                                                    
2001 to 2010  there had been only 325  teachers rehired. The                                                                    
average  reemployment  time had  been  18.7  months and  the                                                                    
shortest had been 3 months.  He specified the number equated                                                                    
to 32 teachers  on average per year. He  believed the number                                                                    
would be higher if the bill passed.                                                                                             
9:15:11 AM                                                                                                                    
Senator Micciche  expounded that  the bill would  put Alaska                                                                    
retired  teachers on  equal  footing  with retired  teachers                                                                    
from  other  states.  Currently  any  retired  teacher  from                                                                    
another state  could be rehired  in Alaska;  however, Alaska                                                                    
could not  rehire its own  retired teachers. He  believed an                                                                    
experienced  teacher was  better  for the  students until  a                                                                    
school could fill  a position with a  new full-time teacher.                                                                    
Additionally,    he   believed    there   were    mentorship                                                                    
opportunities  for   younger  teachers.  The   bill  enabled                                                                    
districts to take  advantage of a lifetime  of experience at                                                                    
the same or  lower cost of a new teacher  until the position                                                                    
could  be filled  with a  recent graduate.  He pointed  to a                                                                    
handout specifying that rural  remote schools had the lowest                                                                    
retention among  principals and teachers (copy  on file). He                                                                    
detailed that urban schools  included Juneau, Anchorage, and                                                                    
Fairbanks;  the urban/rural  fringe included  Palmer, Sitka,                                                                    
Seward, Kenai;  the rural hub category  included places like                                                                    
Bethel, Healy,  and Unalaska; and the  rural remote category                                                                    
included places like Adak, Arctic  Village, and Yakutat. The                                                                    
rural  remote  schools only  retained  61  percent of  their                                                                    
principals  and 64  percent  of their  teachers  in 2017  to                                                                    
2018,  whereas  urban schools  had  retained  88 percent  of                                                                    
their  principals  and  80 percent  of  their  teachers.  He                                                                    
reiterated there was  a problem facing the  state, which the                                                                    
bill  would  help  to   manage  temporarily  with  qualified                                                                    
9:17:17 AM                                                                                                                    
RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, reviewed the                                                                       
sectional analysis (copy on file):                                                                                              
     Section 1                                                                                                                  
     Adds new section to AS 14.20:                                                                                              
     AS  14.20.136(a)  allows  school  districts  to  rehire                                                                    
     educators that  have retired under the  defined benefit                                                                    
     plan or the defined contribution plan when;                                                                                
     AS  14.20.136(b)(1) the  retired member  certifies that                                                                    
     there was no prearrangement  of reemployment made prior                                                                    
     to retirement;                                                                                                             
     AS  14.20.136(b)(2)  the  member has  been  retired  at                                                                    
     least 60 days  if they are 62 years of  age or older or                                                                    
     six months  if the member  is younger than 62  years of                                                                    
     AS  14.20.136(c)  the  school district  has  adopted  a                                                                    
     rehire   policy   by   resolution  and   has   publicly                                                                    
     advertised  the position  for 10  business days  and is                                                                    
     actively recruiting to fill the  position with a person                                                                    
     other than a retired member.                                                                                               
     AS 14.20.136(d)  reemployment contracts may  not exceed                                                                    
     12 consecutive months.                                                                                                     
     AS  14.20.136(e)  the  school  district  that  hires  a                                                                    
     retiree must  provide the administrator with  a copy of                                                                    
     the resolution and policy required  by (e) as well as a                                                                    
     report  stating  the  retiree's  name,  description  of                                                                    
     circumstances,  and actions  taken to  comply with  the                                                                    
     policy. The  school district is  also required  to make                                                                    
     contributions to AS 14.25.070.                                                                                             
     AS  14.20.136(f) certain  requirements  of the  section                                                                    
     don't  apply to  a  rehire member  that's eligible  for                                                                    
     restoration of tenure rights.                                                                                              
     Section 2                                                                                                                  
     Allows  retirees  who  are  rehired,  as  permitted  by                                                                    
     section 1,  to continue to receive  retirement benefits                                                                    
     during the  period of  reemployment unless  they become                                                                    
     an active member.                                                                                                          
     Section 3                                                                                                                  
     Makes  retirees who  are  reemployed,  as permitted  by                                                                    
     section 1, ineligible  to receive additional retirement                                                                    
     benefits based  on their service and  salary during the                                                                    
     period of reemployment.                                                                                                    
     Section 4                                                                                                                  
     Clarifies  that a  member who  is  reemployed does  not                                                                    
     become an  active member, the  member will  continue to                                                                    
     receive retirement benefits,  deductions under TRS will                                                                    
     not be  made to  their salary and  reemployed educators                                                                    
     will  not  receive  credited time  for  service  during                                                                    
     reemployment. This section also  ensures that a retired                                                                    
     and  rehired teacher  will be  eligible to  receive the                                                                    
     group health  plan coverage that is  provided to active                                                                    
     members  employed by  the school  district  if they  so                                                                    
     Section 5                                                                                                                  
     Inserts reference  to section 1 which  will require the                                                                    
     employer  to  make   TRS  contribution  for  reemployed                                                                    
     retirees at a rate of 12.56%.                                                                                              
     Section 6                                                                                                                  
     Applies the  bill's provisions to contracts  made on or                                                                    
     after the effective date.                                                                                                  
9:19:31 AM                                                                                                                    
Co-Chair Foster listed individuals available for questions.                                                                     
Representative Grenn asked why  the tool had previously been                                                                    
removed in 2010.                                                                                                                
Senator  Micciche  replied  that  he could  not  answer  the                                                                    
question. He  explained that  as he had  worked on  the bill                                                                    
someone had suggested  using a short sunset  window in order                                                                    
to  drive educators  to  find a  long-term  solution to  the                                                                    
shortage.  He remarked  that if  educators elsewhere  in the                                                                    
U.S. could  not solve  the problem, he  did not  believe the                                                                    
idea was realistic. He thought  the situation was a frequent                                                                    
challenge  in  the  past.  He spoke  to  the  difficulty  of                                                                    
getting a piece  of legislation passed. He did  not know why                                                                    
it  sunset  in  the  past.  He  thought  they  had  probably                                                                    
believed a solution should be  achieved, but he did not know                                                                    
that  it  was  realistic.  He  believed  the  challenge  was                                                                    
frequent in  Alaska depending on  the status of  the economy                                                                    
and other issues.                                                                                                               
LISA SKILES  PARADY, EXECUTIVE  DIRECTOR, ALASKA  COUNCIL OF                                                                    
SCHOOL ADMINISTRATORS, responded that  the school system had                                                                    
missed that the law had sunset; they now needed it back.                                                                        
Representative   Wilson  pointed   to  Section   2  of   the                                                                    
legislation  that read  "...continue  to receive  retirement                                                                    
and benefits  during the period of  reemployment unless they                                                                    
become an  active member." She  noted the  language appeared                                                                    
in two  places in the bill.  She wondered if a  person could                                                                    
be retired  and receiving  retirement and benefits  and also                                                                    
become an active member.                                                                                                        
Senator  Micciche  replied that  a  person  could always  be                                                                    
rehired and  become an active  member. He elaborated  that a                                                                    
retired person could decide they  would no longer be retired                                                                    
and go back to the profession  of teaching. He stated that a                                                                    
person could not be both. The  bill would enable a person to                                                                    
be a  temporary teacher after retirement.  He continued that                                                                    
if  a person  decided to  return to  being an  active member                                                                    
they  would  come out  of  retirement  and would  no  longer                                                                    
receive their retirement benefits.                                                                                              
Representative Wilson  observed that many teachers  were not                                                                    
coming out  of retirement, otherwise  the bill would  not be                                                                    
needed. She surmised that a  retired teacher could decide to                                                                    
come  back  [temporarily]  under contract,  while  retaining                                                                    
their  benefits.  She  believed  the benefit  to  the  [TRS]                                                                    
retirement  plan was  that  12.5 percent  was  put into  the                                                                    
system  and no  additional  money would  go  to the  retiree                                                                    
because they were already in a plan.                                                                                            
Senator  Micciche replied  in the  affirmative. He  believed                                                                    
people  had not  chosen to  become active  employees because                                                                    
when people were ready to  retire they were ready to retire.                                                                    
He  remarked  that  the  bill  would  very  likely  bring  a                                                                    
significant  savings  for  the state.  He  underscored  that                                                                    
people  did  not  retire  to   go  back  to  work.  However,                                                                    
sometimes a teacher retired and  was amenable to coming back                                                                    
for a  temporary period.  He believed  there were  many more                                                                    
teachers  in  the  queue in  that  scenario  versus  retired                                                                    
teachers wanting to come back to work full-time.                                                                                
9:24:44 AM                                                                                                                    
Representative Kawasaki referenced  a one-page document from                                                                    
the Division of Retirement and  Benefits (copy on file) that                                                                    
listed the  Lower Kuskokwim School District  as the employer                                                                    
employing  the  largest  number  of  individuals  under  the                                                                    
retire/rehire  program ["Retiree  Rehire Program  Experience                                                                    
Summary 2001-2010 School Years (copy  on file)]. He asked if                                                                    
there   were  statistics   available   on  other   employers                                                                    
particularly related to rural and remote Alaska.                                                                                
Ms.  Parady believed  Representative Kawasaki  was referring                                                                    
to a  summary of  statistics in  members' bill  packets. The                                                                    
document specified  that the employer employing  the largest                                                                    
number of  individuals under  the retire/rehire  program was                                                                    
the  Lower Kuskokwim  School District.  The information  was                                                                    
broken down  by position.  For example,  there had  been 149                                                                    
teachers,    45     special    education     teachers,    18                                                                    
superintendents.  She explained  it was  possible to  obtain                                                                    
who used  what by district  if necessary. She  remarked that                                                                    
the program had been used  more historically in rural areas,                                                                    
the  urban   areas  desperately   needed  it   for  specific                                                                    
positions  like   special  education.  She   believed  every                                                                    
district  would use  the  tool provided  under  the bill  if                                                                    
Representative  Kawasaki  noted that  the  law  had been  in                                                                    
effect  from   2001  to  2010.   The  committee   had  heard                                                                    
repeatedly in testimony that the  reason so many individuals                                                                    
were retained in school districts,  trooper ranks, and other                                                                    
places  was  primarily  related  to  the  retirement  system                                                                    
currently in place. He asked Ms. Parady for comment.                                                                            
Ms.  Parady  answered  that Alaska  was  reflective  of  the                                                                    
national shortage,  but it was having  greater struggles due                                                                    
to   its    remoteness   combined    with   its    loss   of                                                                    
competitiveness.  She  noted  that  teachers  had  testified                                                                    
throughout session that  the state had lost  ground with its                                                                    
retirement  system  and wages  for  the  cost of  living  in                                                                    
Alaska. The  state no  longer drew  [new teachers]  from the                                                                    
Lower  48  as it  had  in  the  past.  She noted  that  many                                                                    
recalled when there  had been lines out the door  to work in                                                                    
Alaska, whereas, currently  the state was down  to less than                                                                    
200 and the  majority were rotating between  districts - not                                                                    
from the Lower 48.                                                                                                              
9:27:46 AM                                                                                                                    
Senator  Micciche  elaborated   that  there  were  currently                                                                    
shortages in some areas that  had some of the most lucrative                                                                    
defined benefit  plans in  the nation.  He remarked  that it                                                                    
was largely  a social  issue -  the primary  reason teachers                                                                    
were  leaving was  dissatisfaction. The  social norms  where                                                                    
teachers  had  been  revered by  parents  and  students  had                                                                    
changed. He stressed the need  to turn the situation around.                                                                    
He  believed it  was a  national problem  and that  teachers                                                                    
were tired  of being abused  and not being valued.  The non-                                                                    
monetary problems  seemed to be more  pervasive than whether                                                                    
there was a lucrative defined benefit plan in a district.                                                                       
Representative Kawasaki remarked that  one of the criticisms                                                                    
he had  heard about a  retire/rehire program (e.g.  for city                                                                    
police and teachers) was rather  than hiring new teachers it                                                                    
was a  way to keep  individuals who had  retired previously.                                                                    
He  had  heard  the  issue  was a  negative  aspect  of  the                                                                    
Ms. Parady countered that the  districts were unable to fill                                                                    
vacant  positions. She  underscored it  was not  a situation                                                                    
where  jobs   were  taken  away   from  new   teachers.  The                                                                    
legislation  was designed  to  require  school districts  to                                                                    
advertise and  try to recruit  a permanent teacher  into the                                                                    
position. If  the position was  not filled,  districts could                                                                    
hire  a  retired  individual  to   fill  the  position.  She                                                                    
understood  that it  may  be  a concern  in  times when  the                                                                    
districts  were able  to attract  teachers, but  it was  not                                                                    
applicable in  the current  situation. Currently  there were                                                                    
many districts patch-working  substitutes or para-educators.                                                                    
She believed  the students  would be  much better  served if                                                                    
districts  had the  ability to  rehire retired  teachers who                                                                    
were  familiar with  the  Alaska content  and  was a  proven                                                                    
resource  for  students.  She  concluded  that  patchworking                                                                    
substitutes  and  others  to  teach  the  class  or  to  put                                                                    
additional  load on  teachers by  double-hatting or  merging                                                                    
classes was not good for students.                                                                                              
9:30:41 AM                                                                                                                    
Vice-Chair Gara stated the bill  was easy for him to support                                                                    
for the  reasons mentioned  by Ms.  Parady. He  believed the                                                                    
bill had  passed the other  body unanimously  because people                                                                    
with  different  views on  education  funding  saw a  common                                                                    
ground  with the  legislation.  He  recalled testimony  that                                                                    
several  years  ago  the  job fairs  had  been  filled  with                                                                    
individuals looking  to move  to Alaska,  whereas, currently                                                                    
the  state   was  having  difficulty   attracting  qualified                                                                    
teachers  to come  to Alaska.  He believed  the bill  helped                                                                    
fill the gap.                                                                                                                   
Ms. Parady  answered that  Alaska was  seeing a  crisis that                                                                    
was unparalleled to anything in  the past. She characterized                                                                    
the situation  as the perfect  storm. There were  not enough                                                                    
new  teachers  being  produced  nationally.  She  referenced                                                                    
research  out of  Penn from  2015 reporting  there were  3.3                                                                    
million teachers in the U.S.;  343,000 new teachers had been                                                                    
prepared  that  year, but  over  500,000  teachers left  the                                                                    
profession. The  deficit in the  country's teacher  pool was                                                                    
exaggerated in Alaska because of  its reliance on recruiting                                                                    
teachers from  the Lower 48.  She emphasized  that education                                                                    
was hard;  teachers were asked to  do much more than  in the                                                                    
past. She  believed there were  many reasons for  the severe                                                                    
shortage.  She asked  members to  think about  the education                                                                    
system as a business.                                                                                                           
Ms.  Parady   explained  that  education  was   the  largest                                                                    
business  in most  of the  state's communities.  She equated                                                                    
superintendents  to business  CEOs  and  stressed there  had                                                                    
been a  60 percent  turnover rate  over a  four-year period.                                                                    
Additionally, districts had a  26 percent principal turnover                                                                    
rate.  She  referenced  the   handout  provided  by  Senator                                                                    
Micciche  about teacher  turnover. She  elaborated that  the                                                                    
picture worsened with  time in schools that  needed the most                                                                    
stability. The bill was not a  silver bullet, but it was one                                                                    
strategy  to  help  fill vacancies.  She  communicated  that                                                                    
educators  understood   that  the  proposal   of  additional                                                                    
strategies was  needed, and  she believed  legislators would                                                                    
be seeing more proposals in the coming years.                                                                                   
9:34:53 AM                                                                                                                    
Senator Micciche  spoke about retirement and  believed money                                                                    
had much  to do with  the issue nationwide. He  thought that                                                                    
the legislature was considering  early funding for education                                                                    
because he and  Co-Chair Seaton had attended  a meeting with                                                                    
educators and administrators in  Seward earlier in the year.                                                                    
He  hoped  the  effort  was  successful.  He  believed  flat                                                                    
funding had a dramatic impact  on teaching. He agreed it was                                                                    
a  discussion that  needed to  continue. There  was struggle                                                                    
for many reasons  and the bill offered a  simple solution to                                                                    
part of the problem.                                                                                                            
Vice-Chair Gara stated that more  experienced teachers had a                                                                    
stabilizing effect.  He believed mentors worked  in numerous                                                                    
ways and that experienced  teachers were also beneficial for                                                                    
other  teachers. He  remarked on  a separate  effort to  get                                                                    
more mentors in the child protection system.                                                                                    
Representative Pruitt  referred to financial impacts  of the                                                                    
bill. He asked  if retired teachers would come  back to work                                                                    
at a new teacher salary or other.                                                                                               
Ms.  Parady  answered that  it  would  depend based  on  the                                                                    
school  district.  She  explained  that a  teacher  was  not                                                                    
locked  into  the salary  they  received  at their  previous                                                                    
district. She explained  that if a person had  been a master                                                                    
teacher  at a  higher  level before  retirement, the  rehire                                                                    
negotiation  would be  between the  school district  and the                                                                    
retired individual.  She guessed  that depending how  long a                                                                    
position  had been  vacant, the  more  leverage the  retired                                                                    
individual  would have.  There was  no locked  in amount  or                                                                    
prescribed way  an individual would  come back to  work. The                                                                    
individual could only be hired  after the district had tried                                                                    
to fill the position in the normal process.                                                                                     
9:38:42 AM                                                                                                                    
Representative Pruitt  pointed to Section 1(d)  and observed                                                                    
that contracted  reemployment could not exceed  more than 12                                                                    
months. He asked for verification  that the rehired teachers                                                                    
would  not fall  under  a normal  bargaining contract  where                                                                    
they would move into [payroll]  steps and tiers annually. He                                                                    
surmised  it   would  be   a  year-by-year   discussion  and                                                                    
Ms.  Parady  answered  that   depending  on  the  collective                                                                    
bargaining agreement  of the district and  the definition of                                                                    
teacher, the individual  would or would not  fall under that                                                                    
category. She  confirmed that the contracts  were negotiated                                                                    
year-by-year (as  with every teacher)  and a  retired person                                                                    
would only  be able to  contract for one  year at a  time or                                                                    
less depending on the needs of the district.                                                                                    
Representative Pruitt  noted that rehired teachers  would be                                                                    
eligible for  insurance under the  current plan.  He thought                                                                    
healthcare insurance would be  secondary from the retirement                                                                    
Senator  Micciche  read from  page  2,  paragraph 3  of  the                                                                    
fiscal note [OMB Component Number 64]:                                                                                          
     Current  retired members  covered under  the AlaskaCare                                                                    
     Retiree  Health Plan  who  return  to employment  under                                                                    
     this  bill  will  generate  a  cost  savings  as  their                                                                    
     retiree health insurance will become secondary to the                                                                      
     active insurance received upon reemployment...                                                                             
Representative  Pruitt  wanted   to  understand  the  fiscal                                                                    
impacts  of  the  bill.  He stated  there  was  always  cost                                                                    
concern  about double  dipping when  there were  discussions                                                                    
about  retiree  rehire  in teaching  or  other  systems.  He                                                                    
recognized the need had been  established due to the lack of                                                                    
teachers.  He asked  how to  ensure people  were comfortable                                                                    
that the  legislature was not  providing an  opportunity for                                                                    
an  individual to  potentially benefit  off  the system.  He                                                                    
stated  that  double  dipping   had  cost  some  communities                                                                    
Senator  Micciche answered  that  the  bill would  implement                                                                    
some  things that  had not  been  in place  under the  prior                                                                    
program. He noted there had  also been some Internal Revenue                                                                    
Service (IRS) changes. He elaborated  that the bill required                                                                    
bona  fide separation  with  no  prearrangement allowed.  He                                                                    
detailed   that   prearrangement    had   some   significant                                                                    
consequences,   which   increased    the   likelihood   that                                                                    
retirement systems would not be  impacted. He explained that                                                                    
the fiscal  note provided a  set of facts. He  detailed that                                                                    
if  100 percent  were  rehired from  the retired  population                                                                    
there  would be  a savings.  He  reported there  would be  a                                                                    
fiscal impact  if people  retired to  take advantage  of the                                                                    
program  earlier.  He  stated  that if  50  percent  of  the                                                                    
participants were retired over three  years there would be a                                                                    
savings to  the program, which  he expected to be  the case.                                                                    
He found it highly unlikely  someone would retire to go back                                                                    
to  work for  the  incremental increase  they would  receive                                                                    
with the program.                                                                                                               
Senator  Micciche did  not  view the  bill  as a  retirement                                                                    
incentive. He anticipated the bill  would result in savings.                                                                    
The fiscal note  was indeterminate because it  covered a set                                                                    
of  facts specifying  there would  be a  savings at  certain                                                                    
percentages of  people already being  retired it would  be a                                                                    
savings,  whereas,   there  could  be  a   cost  with  lower                                                                    
percentages  and  "x"  number  of people  retiring  to  take                                                                    
advantage  of the  program. He  thought the  probability was                                                                    
unrealistic [that a cost would result].                                                                                         
9:43:30 AM                                                                                                                    
Representative Pruitt thought it  was appropriate to mention                                                                    
the individuals  would not be  adding into  their retirement                                                                    
when  doing  the  work. Individuals  would  step  away  from                                                                    
retirement  and would  be coming  in under  typical one-year                                                                    
contract.  He  underscored  that individuals  would  not  be                                                                    
adding  to the  retirement system  or increasing  the future                                                                    
retirement liability.                                                                                                           
Senator Micciche  replied he believed it  was a disincentive                                                                    
to  add to  the program.  He  stated that  if the  situation                                                                    
became desperate  enough he could see  districts hiring back                                                                    
retired teachers  to reenter as  regular employees  and then                                                                    
adding to  their retirement  benefits. The  bill discouraged                                                                    
that  situation and  would allow  districts to  hire retired                                                                    
teachers  temporarily  while   remaining  on  their  regular                                                                    
retirement and  not adding to  their benefits.  He concluded                                                                    
that   hopefully  a   savings  would   result  because   the                                                                    
individuals were  retired and  there would  be a  savings in                                                                    
healthcare  to  the system.  He  stated  that  if a  Tier  I                                                                    
teacher was  brought back they  would begin adding  to their                                                                    
benefits again.  He saw the bill  as discouraging additional                                                                    
cost in the retirement system.                                                                                                  
Co-Chair Seaton  clarified that the bill  was different than                                                                    
the  prior retirement  incentive  program  that covered  all                                                                    
state employees who would retire  and be rehired at the same                                                                    
rate. It  meant there had  not been an upward  mobility path                                                                    
for  lower level  employees. He  appreciated  that the  bill                                                                    
required a  teacher to  be separated from  the system  for a                                                                    
minimum of  60 days or  6 months [depending on  the person's                                                                    
age]. He also appreciated  that Section 5 required districts                                                                    
to  continue to  put the  12.5  percent of  salary into  the                                                                    
retirement system. He believed  it would keep the retirement                                                                    
system whole and  would solve the problem of  not being able                                                                    
to fill  positions. He thought  one of the reasons  the past                                                                    
program had  gone away was  it had been combined  with other                                                                    
state employees.                                                                                                                
9:47:02 AM                                                                                                                    
Representative Guttenberg  asked about  attracting teachers.                                                                    
He remarked on the nationwide  teacher shortage. He asked if                                                                    
Ms. Parady had thought about  other ways to attract teachers                                                                    
to Alaska.                                                                                                                      
Ms.  Parady replied  that educators  were actively  thinking                                                                    
about ways  to shift the  terrain because the  situation was                                                                    
not healthy  for students or  anyone. She remarked  that the                                                                    
situation had  been dwindling downward and  it was necessary                                                                    
to figure  out how to stop  the cycle and move  forward. She                                                                    
referenced the  organization's joint position  statement she                                                                    
had previously  provided to members;  all its  members focus                                                                    
and  vote  on  the  positions.  One  of  the  organization's                                                                    
highest priorities was  preparing, attracting, and retaining                                                                    
qualified   educators.  She   continued  it   would  include                                                                    
innovative,  alternative pathways  to attract  teaching. She                                                                    
spoke to  the need to  create education career  pathways for                                                                    
current  students. The  organization  was  working with  the                                                                    
University  -   she  referenced  University   President  Jim                                                                    
Johnson's   goal  of   90  percent   by   2025,  which   the                                                                    
organization  was supportive  of. Many  different strategies                                                                    
were  being  considered.  She   believed  they  would  bring                                                                    
additional ideas  about ways to  attract teachers  to Alaska                                                                    
in  coming sessions.  She listed  the  need for  reciprocity                                                                    
with  other states  allowing certification  in one  state to                                                                    
transfer  to  another   state.  She  referenced  alternative                                                                    
certification.  For  example,  making  it  possible  for  an                                                                    
engineer  to teach  math if  they were  willing. She  shared                                                                    
there  were  many  strategies  used  in  other  states  that                                                                    
deserved consideration and possible implementation.                                                                             
Representative Guttenberg  shared that  he had a  friend who                                                                    
had started a dog mushing  magazine and a local hospital had                                                                    
said it was the biggest recruiting  tool it had ever had for                                                                    
doctors. He recalled  a doctor in Juneau telling  him he had                                                                    
been recruited to Alaska and  his son had discovered hockey,                                                                    
which kept  them in Alaska.  There were many  things outside                                                                    
the norm  that anchored  people to  Alaska. He  believed the                                                                    
state had a significant amount to offer.                                                                                        
Representative Kawasaki noted that  the last sentence of the                                                                    
fiscal  note  specified  a complete  analysis  by  the  plan                                                                    
actuary,   Conduent  Human   Resources  Services   would  be                                                                    
submitted  with  the  fiscal  note.  He  remarked  that  the                                                                    
analysis was not included in members' bill packets.                                                                             
9:51:03 AM                                                                                                                    
Senator Micciche replied that he  would have copies made and                                                                    
distributed to members.                                                                                                         
Co-Chair Foster OPENED public testimony.                                                                                        
MARK   MILLER,  SUPERINTENDENT,   JUNEAU  SCHOOL   DISTRICT,                                                                    
JUNEAU, testified in support of  the bill. He shared that he                                                                    
had previously been  a physics and chemistry  teacher for 12                                                                    
years.  He  provided details  about  his  past career  as  a                                                                    
teacher.  He  had a  passion  for  teaching. He  provided  a                                                                    
scenario  where   he  decided   to  give   up  his   job  as                                                                    
superintendent. He provided an  option where he could choose                                                                    
to work  for ACE Hardware  [he brought examples of  items he                                                                    
could teach people  to use]; however, he  would be forbidden                                                                    
to return to  teaching in Alaska if he worked  part time. He                                                                    
believed  it was  wrong. He  stressed it  was not  a finance                                                                    
issue, but  a resource  issue. He  stated that  whatever the                                                                    
fiscal note  was, it would  be budget dust in  comparison to                                                                    
the overall  state budget. Whether  the bill passed  or not,                                                                    
no one  looking at the  budget in  the next year  would know                                                                    
whether  the   bill  passed.  He   detailed  he   and  other                                                                    
individuals at  a time in  their lives where they  no longer                                                                    
wanted a  full-time job  were the  resource. He  stated that                                                                    
teaching came  from the  heart and  soul. He  believed great                                                                    
teachers  were born,  not made.  He wondered  why a  retired                                                                    
teacher in  Alaska had to move  out of state if  they wanted                                                                    
to  teach, yet  a retired  teacher from  out of  state could                                                                    
teach in Alaska.                                                                                                                
Mr. Miller stressed  that some of the  state's most valuable                                                                    
resources   (veteran  teachers)   were   being  wasted.   He                                                                    
characterized the  program under the  bill as a  win-win for                                                                    
teachers  and school  districts.  The  bill meant  districts                                                                    
could  stop rotating  substitutes with  no teacher  training                                                                    
through classrooms and would allow  retired teachers to work                                                                    
part-time.   He  believed   committee  members   had  become                                                                    
legislators  because they  wanted to  contribute. He  shared                                                                    
his  favorite quote  from  Horace Mann  "be  ashamed to  die                                                                    
until you have  won some victory for  humanity." He believed                                                                    
the  bill would  mean a  win for  humanity and  the kids  of                                                                    
Alaska. He  did not believe  the fiscal note would  hurt the                                                                    
state  and the  bill  would provide  a  powerful option  for                                                                    
education in Alaska.                                                                                                            
9:57:00 AM                                                                                                                    
MATT MOSER,  NATIONAL EDUCATION  ASSOCIATION-ALASKA, JUNEAU,                                                                    
testified in  support of the  bill. He read from  a prepared                                                                    
     NEA-Alaska  supports  having  a qualified  educator  in                                                                    
     front of every  Alaska student at the  beginning of the                                                                    
     school year.  We believe this  legislation is  one tool                                                                    
     to help make that a reality.                                                                                               
     NEA-Alaska  is  supportive  of efforts  to  return  our                                                                    
     veteran educators to the classroom.                                                                                        
     NEA-Alaska's  understanding  is  that Senate  Bill  185                                                                    
     will  not affect  existing collective  bargaining units                                                                    
     of certificated educators.                                                                                                 
     Collective  Bargaining  Agreements  in  districts  that                                                                    
     cover  all "certificated  educators" would  continue to                                                                    
     cover all "certificated  educators", including retired-                                                                    
     rehired educators and that the  terms and conditions of                                                                    
     employment would  continue to be subject  to collective                                                                    
     bargaining agreements  with the exception  of continued                                                                    
     NEA-Alaska  believes this  is a  band aid  for ensuring                                                                    
     that  students  have  a  certified  educator  in  every                                                                    
     classroom.     We  strongly  believe  that   the  state                                                                    
     legislature and governor will need  to take a hard look                                                                    
     at  how   to  actually   attract  and   retain  quality                                                                    
     educators.   We believe  that will happen  by returning                                                                    
     to a  defined benefit,  looking at salaries  keeping up                                                                    
     with inflation, and  strong mentorship and professional                                                                    
     development programs.                                                                                                      
9:59:06 AM                                                                                                                    
JENNIFER HALDANE,  DIRECTOR, CONTRACT  ADMINISTRATION, LABOR                                                                    
RELATIONS   and   BENEFITS,   ANCHORAGE   SCHOOL   DISTRICT,                                                                    
ANCHORAGE (via  teleconference), spoke in favor  of the bill                                                                    
with a prepared statement  on behalf of superintendent Deena                                                                    
     The  district  appreciates  the  opportunity  to  speak                                                                    
     today  in  support  of  SB 185.  As  has  already  been                                                                    
     discussed,  teacher  recruitment   in  Alaska  is  very                                                                    
     challenging.  The   Anchorage  School   District  hires                                                                    
     approximately  250  teachers  a  year.  We  are  always                                                                    
     recruiting    for   qualified    applicants   and    we                                                                    
     consistently  have  vacancies,  especially in  hard  to                                                                    
     fill areas such as special  education, CTE, and some of                                                                    
     our  language emersion  programs.  SB  185 provides  an                                                                    
     opportunity to utilize  experienced retired teachers to                                                                    
     fill gaps in these areas  and our students benefit from                                                                    
     that  added flexibility.  We  believe this  legislation                                                                    
     would  have  a  positive  impact  on  school  districts                                                                    
     across the state. Thanks for your time today.                                                                              
10:00:22 AM                                                                                                                   
SCOTT MCMANUS, SUPERINTENDENT, ALASKA GATEWAY SCHOOL                                                                            
DISTRICT, TOK (via teleconference), testified in support of                                                                     
the bill. He read from a statement:                                                                                             
     You've  heard today  over and  over how  recruitment of                                                                    
     teachers in  today's environment  is becoming  more and                                                                    
     more difficult. When  I was a kid in  the village being                                                                    
     a teacher meant something  and it meant doing something                                                                    
     that  was respected.  Both my  mother  and father  were                                                                    
     teachers  in  Ambler  where  I   grew  up  and  it  was                                                                    
     something that  I aspired  to be. When  I was  going to                                                                    
     college I went  to an apprenticeship as  a cement mason                                                                    
     at a  local 867  there and  that was  35 years  ago; 35                                                                    
     years ago, a  journeyman mason made $30  an hour, which                                                                    
     is more than a starting teacher makes today.                                                                               
     When  I  went  to  the   job  fair  this  year  as  the                                                                    
     superintendent, I went down there  looking to hire five                                                                    
     teachers. There were  180 teachers at the  job fair and                                                                    
     we were  fortunate to  be able to  hire three  of them.                                                                    
     For those  of you  who know my  district, we're  on the                                                                    
     road system,  which gives  us a little  bit of  an edge                                                                    
     over some  school districts that aren't.  I was pleased                                                                    
     with  that outcome.  I went  down to  the Portland  job                                                                    
     fair and  there were  22 school  districts in  the room                                                                    
     and  less than  30  teachers looking  for positions.  I                                                                    
     only  interviewed one  person and  didn't hire  them. I                                                                    
     guess the  point is  that it's  becoming more  and more                                                                    
     difficult, as you've been hearing.                                                                                         
     Teachers  were leaving  their  jobs  because they  find                                                                    
     themselves  in an  unappreciated profession  where they                                                                    
     don't think  they're making a difference.  They're beat                                                                    
     up by parents, they're  beat up by politicians, they're                                                                    
     beat up  by the press.  They leave because it's  one of                                                                    
     the lowest  paying professions  that require  a college                                                                    
     degree, they  leave because they  don't feel  they have                                                                    
     the  support of  the administration  or the  community,                                                                    
     they leave  because they don't  feel they are  making a                                                                    
     difference. That is  really the key. People  want to do                                                                    
     something with their lives that  has meaning, they want                                                                    
     to make  a difference, they want  to be a part  of that                                                                    
     I did  a project a  few years  ago for a  post graduate                                                                    
     study and  I surveyed 360  rural teachers in  Alaska. I                                                                    
     was interested  in a study  about why  teachers stayed.                                                                    
     It  was  really  a profound  learning  experience.  The                                                                    
     reason  they stay  and the  reason they  leave are  the                                                                    
     same. Teachers stay where they  feel like they're being                                                                    
     appreciated  and  where  they're making  a  difference.                                                                    
     Teachers  don't become  teachers because  they want  to                                                                    
     get rich, they  just want to make a  good living, which                                                                    
     I  think it's  incumbent upon  us socially  that we  do                                                                    
     that.  They've  got  to  feel  like  their  lives  have                                                                    
     meaning and if they're  constantly getting beat up they                                                                    
     want to  leave. The  long-term solution to  the teacher                                                                    
     shortage was  like most things,  it was  really simple,                                                                    
     but it was very difficult to  do. What we need to do is                                                                    
     effect social change that  attracts quality teachers in                                                                    
     order to  improve the public perception  of schools and                                                                    
     in order to improve the  quality of teachers we have to                                                                    
     change   that  perception.   It   was  an   egg/chicken                                                                    
     Personally, my  feeling is that the  long-term solution                                                                    
     -  and I  think  this bill  is  a short-term,  stop-gap                                                                    
     solution  -  but  the long-term  solution  is  counter-                                                                    
     intuitive. I  think it needs  to become  more difficult                                                                    
     to become a  teacher, not less. That's how  you make it                                                                    
     mean something.  There's a long waiting  list of people                                                                    
     trying  to  get  into military  academies,  there's  no                                                                    
     shortage of people trying to  get into ranger school or                                                                    
     getting  into these  special military  schools, there's                                                                    
     no shortage  of people  trying to  get into  upper end,                                                                    
     elite ivy  league schools because that  means something                                                                    
     and they're willing  to work really hard to  do it. The                                                                    
     Finnish  model  of  education  really  did  that,  they                                                                    
     closed a  number of teacher preparation  programs, made                                                                    
     it  far  more difficult  to  get  in, as  difficult  to                                                                    
     become  a teacher  in  Finland  as it  is  to become  a                                                                    
     doctor. I  think we  know what the  end result  of that                                                                    
     was.  It  wasn't  because  they  pay  them  more,  it's                                                                    
     because  of  their  social  status  -  they  have  some                                                                    
     meaning in  their lives  and because  they're respected                                                                    
     by their community.                                                                                                        
Mr. McManus concluded that the bill was a stop-gap                                                                              
solution, but it would help. There were teachers in his                                                                         
community he would hire if the bill passed.                                                                                     
Co-Chair Foster CLOSED public testimony.                                                                                        
10:05:46 AM                                                                                                                   
Vice-Chair Gara reviewed the  indeterminate fiscal note from                                                                    
the Department of Administration.  He detailed that teachers                                                                    
retiring after the bill's effective  date may add some costs                                                                    
and  teachers retiring  prior to  the  effective date  would                                                                    
save  some costs.  There  was no  way to  know  what mix  of                                                                    
teachers would utilize the system.                                                                                              
Representative Wilson asked about page  2 of the fiscal note                                                                    
pertaining to  the different percentages listed  of teachers                                                                    
rehired from  the current  retired population  (100 percent,                                                                    
67 percent,  50 percent,  etcetera). She did  not understand                                                                    
why  the  information was  shown  for  200 and  400  rehired                                                                    
KATHY  LEA,  DEPUTY  DIRECTOR  AND  CHIEF  PENSION  OFFICER,                                                                    
DIVISION   OF  RETIREMENT   AND   BENEFITS,  DEPARTMENT   OF                                                                    
ADMINISTRATION,  answered the  goal had  been to  look at  a                                                                    
band of  numbers to demonstrate  the potential  impacts. She                                                                    
detailed  there had  been 325  participants in  the previous                                                                    
program, but  the department  did not  know whether  more or                                                                    
fewer  individuals would  participate  in  the new  program.                                                                    
Therefore, the  department chose  to show what  would happen                                                                    
if  there were  200 participants  and what  would happen  if                                                                    
there were 400.                                                                                                                 
Representative  Wilson  asked  about  the  100  percent,  67                                                                    
percent, 50 percent,  and 33 percent [listed on  the left of                                                                    
page 2  of the  fiscal note]. She  asked if  the information                                                                    
indicated how  a teacher retired with  benefits or something                                                                    
Ms. Lea replied that  the percentages represented the number                                                                    
of  retirees rehired  under the  program. She  detailed that                                                                    
there  would be  a savings  to the  retirement plans  if 100                                                                    
percent of the rehired teachers  had been retired because of                                                                    
the  shift of  cost  from  the retiree  health  plan to  the                                                                    
active health plan.                                                                                                             
Representative Wilson asked for  verification it had nothing                                                                    
to do  with how an  individual retired, only  the percentage                                                                    
of  retired  individuals who  would  take  advantage of  the                                                                    
bill. Ms. Lea answered in the affirmative.                                                                                      
Representative   Kawasaki  stated   that   when  the   first                                                                    
retire/rehire program was done  in 2001 the participants had                                                                    
been  in either  Tier  I or  II. He  wondered  if Tier  III,                                                                    
implemented after 2004, had been taken into account.                                                                            
Ms. Lea  replied that  the numbers in  the fiscal  note were                                                                    
limited to the Defined  Benefit (DB) population because once                                                                    
a  Defined Contribution  (DC)  employee  could either  leave                                                                    
their contributions in  the fund or take them  out once they                                                                    
retired. She  explained the individuals were  not accruing a                                                                    
DB-type  benefit;  therefore,  they  could  come  back  into                                                                    
reemployment with no penalty.                                                                                                   
10:10:02 AM                                                                                                                   
Representative  Pruitt  asked  about  a  scenario  where  50                                                                    
percent  of the  people  came  back to  the  system. He  was                                                                    
trying to  understand why there  was a cost increase  to the                                                                    
retirement system for fewer people coming back in.                                                                              
Ms.  Lea answered  that the  information  indicated that  50                                                                    
percent  were coming  from the  retired  population and  the                                                                    
other  50 percent  came from  the active  teacher population                                                                    
who would retire and come into the program.                                                                                     
Representative   Pruitt    asked   for    verification   the                                                                    
information  was split  between retirement  timeframes prior                                                                    
to the  bill and after the  bill. He asked for  the accuracy                                                                    
of his explanation.                                                                                                             
Ms. Lea answered  in the affirmative. She  detailed that the                                                                    
chart  looked  at the  utilization  of  the program  between                                                                    
individuals who  were currently retired and  individuals who                                                                    
may  come back  in  after retiring.  She explained  teachers                                                                    
retiring  after  the  program's effective  date  may  retire                                                                    
earlier than anticipated, which represented a cost.                                                                             
Representative Pruitt surmised there  was an expectation the                                                                    
bill  may encourage  people to  retire early,  meaning there                                                                    
would potentially be a cost  to the system. He detailed that                                                                    
a  memo  [Conduent memorandum  addressed  to  Ms. Lea  dated                                                                    
March 19,  2018 (copy on  file)] indicated that there  was a                                                                    
potential for  people to retire sooner,  meaning there would                                                                    
be a  cost to the system.  He asked if he  was understanding                                                                    
the actuarial analysis correctly.                                                                                               
Ms. Lea  answered that because  the TRS DB plan  was closed,                                                                    
its  value was  based  on its  precise  experience when  the                                                                    
valuations were  done on what the  future costs may be  - in                                                                    
order  to not  overstate the  unfunded liability.  Under the                                                                    
current  TRS system,  most individuals  retired within  four                                                                    
years past their normal retirement  date - their benefit was                                                                    
not 100  percent funded until  that time. There was  a table                                                                    
used  showing the  likelihood a  person  would retire  every                                                                    
year after  that person's  normal retirement  date. Anything                                                                    
that may incentivize a person  to retire on their retirement                                                                    
date meant their benefit was  not 100 percent funded at that                                                                    
time, which was the reason for the cost.                                                                                        
10:13:32 AM                                                                                                                   
Representative  Guttenberg  surmised   that  if  a  person's                                                                    
benefits were not 100 percent  funded at a given point, they                                                                    
would only  receive the benefits  they were eligible  for at                                                                    
that point.  He provided a  scenario where a  person retired                                                                    
at  18  years  instead  of  20 years  and  wondered  if  the                                                                    
person's retirement  benefit was diminished.   He referenced                                                                    
a retirement  plan he  had been  a part  of, where  a person                                                                    
received  90   percent  or  less   if  they   retired  early                                                                    
(depending  on  how  early they  retired),  similar  to  the                                                                    
social security process.                                                                                                        
Ms.   Lea  replied   that   Representative  Guttenberg   had                                                                    
mentioned  two different  terms.  She  explained that  early                                                                    
retirement (before a person's  normal retirement date) was a                                                                    
reduced benefit.  In the case  of the bill,  the information                                                                    
looked at a person's age  or service requirement (20 years).                                                                    
History had  shown that teachers generally  may retire after                                                                    
24  years or  at age  64 instead  of age  60. Anything  that                                                                    
incentivized  teachers  to  retire   earlier  than  the  two                                                                    
assumptions the  actuary made in order  to determine funding                                                                    
for the  plan, meant all  of the  funding was not  there for                                                                    
them.  She clarified  that it  did not  impact the  member's                                                                    
benefit. The  member received the full  benefit because they                                                                    
reached normal  retirement age. She explained  that it meant                                                                    
in  the following  valuation the  state "on  behalf" may  be                                                                    
affected.  She  elaborated  that the  employer  contribution                                                                    
could not  be raised; therefore,  the only place to  get any                                                                    
shortfall would be from state  assistance. The memo provided                                                                    
by the actuary and the  department's fiscal note showed what                                                                    
the affects on state assistance may be.                                                                                         
Representative  Guttenberg surmised  that for  every year  a                                                                    
person did  not retire they  continued to pay  benefits into                                                                    
the  retirement   program,  but   their  benefits   did  not                                                                    
Ms. Lea  clarified that an individual  would earn additional                                                                    
benefits as they continued to work.                                                                                             
Co-Chair  Seaton  MOVED  to  REPORT  CSSB  185(EDC)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSSB  185(EDC) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
indeterminate fiscal note: FN2 (ADM).                                                                                           
10:17:30 AM                                                                                                                   
AT EASE                                                                                                                         
10:18:22 AM                                                                                                                   
CS FOR SENATE BILL NO. 105(FIN)                                                                                               
     "An  Act  relating  to the  licensure  of  marital  and                                                                    
     family therapists;  relating to medical  assistance for                                                                    
     marital and family therapy  services; and providing for                                                                    
     an effective date."                                                                                                        
10:18:40 AM                                                                                                                   
SENATOR DAVID WILSON, SPONSOR, introduced himself.                                                                              
GARY  ZEPP, STAFF,  SENATOR DAVID  WILSON, provided  a brief                                                                    
bill summary.  The bill provided expanded  behavioral health                                                                    
access to Alaskans. He shared  there had been testimony from                                                                    
therapists,  emergency room  (ER)  doctors, school  district                                                                    
administrators,  and federally  qualified health  centers in                                                                    
Alaska. The  bill would improve and  streamline the training                                                                    
for associates  to become fully licensed  marital and family                                                                    
therapists  to help  provide expanded  access to  behavioral                                                                    
health services.  The bill was  not being touted as  a cost-                                                                    
savings measure,  but as a  way to help Medicaid  clients in                                                                    
need  of  behavioral  health  services  that  were  severely                                                                    
lacking.  However,  there  was  great  potential  for  cost-                                                                    
savings  if individuals  could  be  diverted from  emergency                                                                    
rooms.  He  detailed  that  in   2016  the  Mat-Su  Memorial                                                                    
Hospital  had  spent  $43.8  million   on  ER  services.  He                                                                    
detailed the costs had covered  about 1,300 patients with an                                                                    
average  cost  of  $12,721 per  person  for  one  behavioral                                                                    
health  assessment. In  a clinical  setting the  cost ranged                                                                    
from $150 to $250.                                                                                                              
Mr. Zepp referenced a 2017  document titled "Alaska Medicaid                                                                    
Facts  and Figures"  published by  the Department  of Health                                                                    
and Social  Services (DHSS) (copy  on file). He  shared that                                                                    
in  2016 Medicaid  patients cost  Alaska ER  facilities $233                                                                    
million and $245  million in 2017. He  stressed the patients                                                                    
were Medicaid clients  the state was already  paying for. He                                                                    
explained if the  individuals could be diverted  from the ER                                                                    
by  expanding  access  and  getting  them  into  a  clinical                                                                    
setting there was  a great potential for  savings. He shared                                                                    
there  had  been  great  support for  the  bill  by  various                                                                    
healthcare  providers  and  it  had passed  the  other  body                                                                    
unanimously.  He  spoke to  support  by  ER doctors,  family                                                                    
therapists,  the state  Board of  Therapy, and  the national                                                                    
Board of  Marital and Family  Therapists. He noted  DHSS had                                                                    
provided a letter addressed to  the committee providing more                                                                    
detail on the  bill [letter from the  Division of Behavioral                                                                    
Health Director Randall Burns dated  April 13, 2018 (copy on                                                                    
10:22:51 AM                                                                                                                   
Representative   Wilson  stated   that  the   committee  had                                                                    
received  a  letter  [from  the   Division  of  Health  Care                                                                    
Services  Director  Margaret  Brodie dated  April  19,  2018                                                                    
(copy  on   file)]  stating  that  the   bill  would  expand                                                                    
[Medicaid services]  and that it  would be necessary  to ask                                                                    
permission from  the federal government to  add the service.                                                                    
She  asked  what  the process  entailed.  Additionally,  she                                                                    
wondered  about the  process of  going back  to the  federal                                                                    
government  to  remove  the  service if  the  bill  added  a                                                                    
substantial cost and no savings.                                                                                                
MARGARET   BRODIE,  DIRECTOR,   DIVISION   OF  HEALTH   CARE                                                                    
SERVICES,  DEPARTMENT OF  HEALTH  AND  SOCIAL SERVICES  (via                                                                    
teleconference),  answered that  the  bill  would require  a                                                                    
state plan amendment;  it would be an update  to the current                                                                    
state  plan.   If  anticipated  savings  did   not  come  to                                                                    
fruition,  a  new state  plan  amendment  would be  made  to                                                                    
remove the providers' ability to provide the services.                                                                          
Representative  Wilson stated  that savings  had been  shown                                                                    
for HB 25. She wondered why  it was so difficult to estimate                                                                    
potential savings under HB 105.                                                                                                 
Mr. Brodie replied that it  was difficult to project savings                                                                    
for SB  105 because  it was not  possible to  anticipate who                                                                    
would  be utilizing  the services.  She explained  that with                                                                    
other bills the department was  able to look at individuals'                                                                    
diagnoses and  what procedures were  being done in  order to                                                                    
identify who would be able to utilize the services.                                                                             
Representative  Wilson was  concerned about  the $1  million                                                                    
fiscal note.  She was hoping  to get a  better understanding                                                                    
of potential  savings because  now the  committee understood                                                                    
the  service  would  be  added  [to  the  list  of  Medicaid                                                                    
services]. She  stated the  process was  long and  the state                                                                    
did not know  how easy it would be to  remove the service if                                                                    
the savings  did not come  to fruition. Given  that Medicaid                                                                    
was  currently  one  of  the  biggest  [cost]  drivers,  she                                                                    
believed  the committee  should  be  concerned about  adding                                                                    
more services.                                                                                                                  
Co-Chair Foster  noted the committee  would break  for floor                                                                    
CSSB 105 (FIN)  was HEARD and HELD in  committee for further                                                                    
consideration. [Note: the bill  was heard again beginning at                                                                    
2:20 p.m.]                                                                                                                      
10:26:37 AM                                                                                                                   
12:52:29 PM                                                                                                                   
Co-Chair Foster  relayed that the  committee has  posed some                                                                    
questions earlier on SB 105,  which were being worked on. He                                                                    
relayed the bill would be heard last on the agenda.                                                                             
CS FOR SENATE BILL NO. 92(FIN) am                                                                                             
     "An  Act relating  to abandoned  and derelict  vessels;                                                                    
     relating to  the registration  of vessels;  relating to                                                                    
     certificates  of title  for  vessels;  relating to  the                                                                    
     duties  of the  Department of  Administration; relating                                                                    
     to the  duties of the Department  of Natural Resources;                                                                    
     establishing  the derelict  vessel prevention  program;                                                                    
     establishing  the  derelict vessel  prevention  program                                                                    
     fund; relating  to the authority of  certain persons to                                                                    
     enforce   laws  relating   to  derelict   vessels;  and                                                                    
     providing for an effective date."                                                                                          
12:53:00 PM                                                                                                                   
Co-Chair Foster asked Co-Chair Seaton's staff to review the                                                                     
changes in the committee substitute (CS).                                                                                       
12:53:30 PM                                                                                                                   
ELIZABETH  DIAMENT,   STAFF,  REPRESENTATIVE   PAUL  SEATON,                                                                    
highlighted the changes in the  CS ["Explanation of Changes:                                                                    
CSSB  92 (FIN)Version  I.A to  House Finance  CS for  CSSB92                                                                    
(FIN) Version M (copy on file)]:                                                                                                
     Section 7 (page 4, line 23)                                                                                                
     Definition of Barge                                                                                                        
     In SB  92 Version  I.A "barge" is  defined as  a "flat-                                                                    
     bottomed boat used for carrying  freight that is either                                                                    
     nonmotorized and towed by another boat or motorized."                                                                      
     In the  CS for  CSSB92 (FIN)  Version M  the definition                                                                    
     has been changed  to "barge" means a boat  that is: (A)                                                                    
     motorized or  nonmotorized, (B)  designed to  be towed,                                                                    
     and (C) used for carrying freight.                                                                                         
     Note: The  main difference reflected is  the removal of                                                                    
     the  flat-bottomed  boat  portion  of  the  definition.                                                                    
     There  was some  concern that  definition from  CSSB 92                                                                    
     Version I.A  could misinterpret a flat  bottom skiff as                                                                    
     a barge.                                                                                                                   
     Section 24 (page 14, line 30)                                                                                              
     Instead of  repealing Chapter  30. Article  03. Vessels                                                                    
     Abandoned on  Business Premises  of Persons  Engaged in                                                                    
     Repair  Business, the  CS for  CSSB92  (FIN) version  M                                                                    
     keeps  the article  in  statute and  amends  it to  add                                                                    
     storage businesses,  as well  as extending  the waiting                                                                    
     period for auctioning abandoned vessels from 5 days to                                                                     
     30 days.                                                                                                                   
     Note: The  change from 5  to 30  days was in  the house                                                                    
     companion  bill which  did not  repeal but  amended the                                                                    
     section to  be in line  with the timeframe laid  out in                                                                    
     other sections of the bill.                                                                                                
12:55:07 PM                                                                                                                   
Co-Chair   Seaton   MOVED   to  ADOPT   proposed   committee                                                                    
substitute  for  CSSB   92(FIN)am,  Work  Draft  30-LS0481\M                                                                    
(Bruce,  4/17/18).  There  being  NO OBJECTION,  it  was  so                                                                    
Representative Ortiz asked where  he could find the language                                                                    
pertaining to an exemption for boats up to 24 feet long.                                                                        
Co-Chair Seaton directed attention to page 3, line 30.                                                                          
Ms. Diament confirmed  the language was on page  3, line 30,                                                                    
subsection  (f):   "This  section  does  not   apply  to  an                                                                    
undocumented boat that is 24  feet or less in length, unless                                                                    
the owner of the boat chooses to apply..."                                                                                      
Representative  Ortiz wondered  if  vehicles were  currently                                                                    
exempt from  registering or titling  in rural  areas without                                                                    
access to Division  of Motor Vehicles (DMV)  offices. If so,                                                                    
he asked  if the  exemption was  maintained for  boats under                                                                    
the legislation.                                                                                                                
Ms. Diament deferred to the bill sponsor's staff.                                                                               
RACHEL HANKE,  STAFF, SENATOR  PETER MICCICHE,  replied that                                                                    
she  could follow  up with  the  information after  speaking                                                                    
with DMV.                                                                                                                       
Co-Chair Seaton  believed 24 foot  boats were exempt  in any                                                                    
location. He stated that vessels  operating on inland waters                                                                    
were required to be registered.                                                                                                 
12:58:29 PM                                                                                                                   
Representative  Ortiz  believed  that  current  titling  and                                                                    
registration  requirements for  vehicles  in outlying  areas                                                                    
were  exempt. If  there  was an  exemption  for vehicles  in                                                                    
rural areas without access to  DMV, he wondered if there was                                                                    
an exemption for all boat owners.                                                                                               
Co-Chair Seaton  believed if there  was an exemption  it was                                                                    
not due  to lack  of access  to DMV,  but due  to a  lack of                                                                    
access to  roads with state  maintenance. He  believed there                                                                    
was  a registration  exemption on  vehicles not  operated on                                                                    
any public road.                                                                                                                
Representative  Ortiz asked  for verification  that Co-Chair                                                                    
Seaton believed that the issue  was not about lack of access                                                                    
to  DMV  offices, but  was  related  to  being on  the  road                                                                    
Co-Chair Seaton  added that registration  with DMV  could be                                                                    
accessed  via  mail.  He  noted  some  areas  may  not  have                                                                    
internet, but there was phone and mail access.                                                                                  
Ms. Diament added that DMV would provide a written answer.                                                                      
Representative  Kawasaki stated  that Section  4 dealt  with                                                                    
inadequate  evidence of  ownership. He  stated a  person was                                                                    
supposed  to   obtain  documentation   to  present   to  the                                                                    
Department of Administration (DOA)  as proof of ownership of                                                                    
a boat. He asked if it  was the same way people licensed and                                                                    
registered their cars.                                                                                                          
Ms.  Hanke  responded  that   DMV  considered  current  boat                                                                    
registration  as  proof  of ownership,  which  was  slightly                                                                    
different than vehicles.                                                                                                        
1:01:17 PM                                                                                                                    
Representative Kawasaki was concerned  they could be getting                                                                    
to a point  where statute designated a  person had ownership                                                                    
of  a boat,  even though  they  may not  have ownership.  He                                                                    
referenced  Section  4(c)(2),  which  specified  if  it  was                                                                    
uncontested for  three years following  the issuance  of the                                                                    
"no title  issued" registration that  a person  could become                                                                    
the owner of  record even though they may not  have been the                                                                    
owner  of  record.  He  asked  if  the  issue  had  come  up                                                                    
Ms. Ranke  responded that someone  could currently go  in to                                                                    
DMV  with  a  bar  napkin  as  a  bill  of  sale  to  get  a                                                                    
registration.  After starting  to  issue the  titles with  a                                                                    
sale and initial titling would  use current registrations as                                                                    
proof  of  ownership. She  supposed  it  could be  happening                                                                    
1:02:37 PM                                                                                                                    
Representative   Kawasaki  referenced   the  exemption   for                                                                    
undocumented boats  that were 24  feet or less.  He wondered                                                                    
how 24 feet had been chosen.                                                                                                    
Ms. Hanke  replied that she  would have  to get back  to the                                                                    
Representative Wilson thought  a boat had to  be larger than                                                                    
24 feet and commercial.                                                                                                         
Ms.  Diament  responded  that  the  language  Representative                                                                    
Wilson was  referencing was in  the house companion  bill HB
386, whereas,  SB 92 only contained  a length determination.                                                                    
She explained boats  that were 24 feet or  less were exempt;                                                                    
boats over 24 feet would require a title.                                                                                       
Representative Wilson  asked how  many 25-foot  personal use                                                                    
boats there  were that would  have to register.  She thought                                                                    
the  problem pertained  to  commercial  boats, not  personal                                                                    
boats. She wondered why the change had been made.                                                                               
1:04:09 PM                                                                                                                    
Co-Chair Seaton  responded that the 20-foot  length was used                                                                    
because it was  considered fairly easy to  dispose of. Boats                                                                    
over 24  feet had built in  fuel tanks and other  things. He                                                                    
stated  there was  generally a  length and  width ratio.  He                                                                    
continued  it became  a larger  problem. The  exemption used                                                                    
[by the House  version] had been for  non-commercial so that                                                                    
commercial  vessels  under 20  feet  would  still require  a                                                                    
title,  but  that  had  not  been in  the  Senate  bill.  He                                                                    
continued  that   the  provisions  considered  what   was  a                                                                    
reasonable amount.  He asked his  staff for number  of boats                                                                    
excluded pertaining to difference between 20 and 24 feet.                                                                       
Ms.  Diament  relayed  that there  were  about  9,100  boats                                                                    
between 20 and 25 feet that were exempt.                                                                                        
Co-Chair Seaton explained the  consideration was a balancing                                                                    
act  around  what  qualified  as  something  that  could  be                                                                    
abandoned,  but  would  need  to  be  taken  care  of  by  a                                                                    
different mechanism; it was the  reason for the length of 24                                                                    
feet  suggested by  the  Senate. He  stated  that the  House                                                                    
version of  the bill  had used  20 feet,  but it  had agreed                                                                    
with the Senate.                                                                                                                
Representative Wilson pointed out  the 9,000 boats mentioned                                                                    
by Ms.  Diament pertained to  boats between 20 and  25 feet,                                                                    
not  20 and  24 feet.  She  asked if  her understanding  was                                                                    
Ms. Diament replied  that the current language  was 24 feet.                                                                    
She stated the  bill related to boats that were  20 feet and                                                                    
under or 24 feet and under.  She explained it would be under                                                                    
25 feet.                                                                                                                        
Representative Wilson  restated her question.  She explained                                                                    
that Ms.  Diament had previously provided  information about                                                                    
the number of boats between 20 and 25 feet.                                                                                     
Ms. Diament  corrected her previous testimony  and clarified                                                                    
that the [9,100] boats were between 20 and 24 feet.                                                                             
1:06:23 PM                                                                                                                    
Vice-Chair Gara  reviewed the four fiscal  notes. There were                                                                    
two  zero  fiscal  notes  from  the  Department  of  Natural                                                                    
Resources and  the Department of  Environmental Conservation                                                                    
(OMB Component  Numbers 3002  and 3094  respectively). There                                                                    
was one Department of  Natural Resources fund capitalization                                                                    
fiscal  note  for  funds  from   fees  generated  under  the                                                                    
legislation - fees would  generate roughly $58,600 beginning                                                                    
in  2020   and  would   decline  after   registrations  were                                                                    
completed  to $30,000  in 2022  and  to $2,500  in 2023  and                                                                    
2024.   The   last  note   was   from   the  Department   of                                                                    
Administration  (OMB Component  Number 2348)  DMV reflecting                                                                    
fee  generation of  $65,000, declining  to $50,000  in 2020.                                                                    
The note reflected additional  designated general fund (DGF)                                                                    
revenues from fees beginning at  $64,100 in 2019, increasing                                                                    
to $108,600  in 2020 and  2021, $80,500 in 2022,  $52,500 in                                                                    
2023  and 2024.  Undesignated  general  fund (UGF)  revenues                                                                    
were projected at $19,600 starting in 2020.                                                                                     
1:09:16 PM                                                                                                                    
Representative Wilson  referred to page 2  of the Department                                                                    
of Administration  fiscal note  (OMB Component  Number 2348)                                                                    
related to title  and barge fees. The  fiscal note specified                                                                    
there  were over  68,000 motorized  boats registered  in the                                                                    
State of  Alaska, of which  8,418 are  25 feet and  over. It                                                                    
also specified  that a title fee  of $20 for boats  above 24                                                                    
feet would  generate approximately  $168,360. She  asked why                                                                    
the language  used 25 feet  in one  sentence and 24  feet in                                                                    
MARLA  THOMPSON,  DIRECTOR,   DIVISION  OF  MOTOR  VEHICLES,                                                                    
DEPARTMENT OF ADMINISTRATION,  (via teleconference), replied                                                                    
the language was  merely an error. The  language should read                                                                    
"25 feet and above."                                                                                                            
Representative  Wilson  asked   for  verification  that  the                                                                    
reference to 24 feet should be changed to 25.                                                                                   
Co-Chair Foster replied in the affirmative.                                                                                     
Representative  Ortiz  asked  about   the  fiscal  note  OMB                                                                    
Component Number  2348. He wondered  if the fiscal  note had                                                                    
been changed  since the boat  exemption had changed  from 20                                                                    
feet to  24 feet.  He believed there  would be  less revenue                                                                    
with the inclusion of the exemption.                                                                                            
Ms.  Thomson responded  that the  fiscal note  reflected the                                                                    
Co-Chair  Seaton  noted  there  had been  a  question  about                                                                    
numbering of documented vessels. He  read from a response he                                                                    
had   received  to   the  question:   "states  may   require                                                                    
documented  vessels  to be  registered  and  to display  the                                                                    
state  decal  showing that  they  have  complied with  state                                                                    
requirements."  However,   there  was  some   dispute  about                                                                    
whether vessels could be renumbered.  The bill specified the                                                                    
same  numbers  would be  used  in  titling  as used  in  the                                                                    
documentation.  He noted  that the  Coast Guard  was present                                                                    
for  questions.   Apparently  other  states  had   the  same                                                                    
1:12:17 PM                                                                                                                    
Co-Chair  Seaton MOVED  to report  HCS CSSB  92(FIN) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
HCS CSSB  92(FIN) was REPORTED  out of committee with  a "no                                                                    
recommendation"  recommendation  and  with  one  new  fiscal                                                                    
impact note  from the Department of  Administration; one new                                                                    
fiscal impact note from the  Department of Natural Resources                                                                    
for Fund  Capitalization; and two previously  published zero                                                                    
notes: FN3 (DEC) and FN4 (DNR).                                                                                                 
1:12:57 PM                                                                                                                    
AT EASE                                                                                                                         
1:13:15 PM                                                                                                                    
HOUSE BILL NO. 119                                                                                                            
     "An  Act  relating to  the  dividends  from the  Alaska                                                                    
     Industrial Development  and Export  Authority; relating                                                                    
     to  the meaning  of 'mark-to-market  fair value,'  'net                                                                    
     income,'  'project or  development,' and  'unrestricted                                                                    
     net  income'  for  purposes of  the  Alaska  Industrial                                                                    
     Development and Export Authority;  and providing for an                                                                    
     effective date."                                                                                                           
1:13:38 PM                                                                                                                    
GENE  THERRIAULT, DEPUTY  DIRECTOR, STATEWIDE  ENERGY POLICY                                                                    
DEVELOPMENT,   ALASKA   ENERGY  AUTHORITY,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  explained                                                                    
that some  committee members who  had been on  the committee                                                                    
in 2016 may  recognize the legislation, given  it had passed                                                                    
the  House Finance  Committee with  10 "do  pass" signatures                                                                    
and had  passed the House  floor with 36 "yes"  votes (other                                                                    
members  had been  excused or  absent). He  shared that  the                                                                    
bill had  not cleared the  final hurdle in the  Senate Rules                                                                    
Committee.   The  legislation   before  the   committee  was                                                                    
identical  to  the  previously  considered  legislation.  He                                                                    
referred to page 2, lines 2  and 3 of the bill and explained                                                                    
that  when  the  Alaska Industrial  Development  and  Export                                                                    
Authority  (AIDEA)   dividend  had  been   established,  the                                                                    
legislature had specified  it wanted the dividend  to be set                                                                    
on the  net income  in AIDEA's audited  financial statement.                                                                    
The legislature  had also realized  that some  things needed                                                                    
to be  excluded from the  number (line  3 of the  bill). The                                                                    
existing statutory  language made it clear  that although it                                                                    
was necessary  to follow all  the accounting rules  in order                                                                    
for AIDEA  to receive  its audited financial  statement, the                                                                    
legislature got to  specify which number it  wanted AIDEA to                                                                    
use in  the dividend  calculation. Unfortunately,  since the                                                                    
dividend  had been  established, some  new accounting  rules                                                                    
had kicked  in that  were bringing unnecessary  gyrations to                                                                    
the dividend.  He explained  that AIDEA  would like  to back                                                                    
those out and base the dividend on true net income.                                                                             
1:16:09 PM                                                                                                                    
Mr.  Therriault provided  a  PowerPoint presentation  titled                                                                    
"Alaska's Development  Finance Authority: HB 119  - Proposed                                                                    
Language  Changes  to  Modernize AIDEA's  Dividend  Statute"                                                                    
(copy  on file)  beginning with  slide 3.  He explained  the                                                                    
bill aimed  to fix two  problems. The first related  to mark                                                                    
to  market changes.  There  were  numerous accounting  rules                                                                    
that  required following  "real  transactions," issues  that                                                                    
generate revenue  or real expense that  impact that revenue.                                                                    
Another   accounting   rule   related   to   estimates   and                                                                    
allocations.  For example,  an asset  depreciated over  time                                                                    
and  its economic  value eroded.  The third  accounting rule                                                                    
pertained to mark to market  adjustments for assets that had                                                                    
fluctuation  in   their  valuation.   The  mark   to  market                                                                    
valuations brought  the largest amount of  volatility to the                                                                    
AIDEA dividend calculation.                                                                                                     
Mr.  Therriault  turned to  slide  4  and addressed  current                                                                    
statutory language  reading that AIDEA shall  adopt a policy                                                                    
for payment of  a dividend, which was supposed to  be set on                                                                    
net income. Net  income meant the change in  net position in                                                                    
the  agency's  audited  financial statements  on  an  annual                                                                    
Mr. Therriault turned  to slide 5 and addressed  the mark to                                                                    
market valuation  issue that needed correction.  He provided                                                                    
a scenario where an asset's  valuation fluctuated because of                                                                    
market changes. He  asked members to imagine  they owned the                                                                    
asset where  a snapshot of the  asset was taken and  then to                                                                    
pretend  they sold  the  asset at  a gain  or  loss at  that                                                                    
amount.  Yet, in  reality the  asset had  not been  sold. He                                                                    
explained  it   was  the  type  of   fluctuation  AIDEA  was                                                                    
1:18:02 PM                                                                                                                    
Mr. Therriault moved  to slides 7 and 8  showing an Internal                                                                    
Revenue Service  (IRS) 1040 tax  form. He detailed  that for                                                                    
an  individual the  tax form  would show  income, perhaps  a                                                                    
dividend  from  a  stock portfolio,  income  from  a  rental                                                                    
property, and  other. The  example on  slide 8  showed total                                                                    
income of $109,000.  He elaborated that income  tax would be                                                                    
based  on  the real  $109,000  the  individual had  made  as                                                                    
income. However,  slide 10 showed  how the  individual's tax                                                                    
form would  be impacted if  the individual had to  apply the                                                                    
Governmental   Accounting  Standards   Board  (GASB)   rules                                                                    
including GASB  31 that had  been in  place for a  number of                                                                    
years  and other  more recent  rules. Line  11 pertained  to                                                                    
GASB  31 -  the booking  of an  unrealized gain  or loss  on                                                                    
marketable securities.  He expounded  that GASB 31  had been                                                                    
in place for the longest.                                                                                                       
Mr. Therriault  explained that AIDEA held  its cash reserves                                                                    
in marketable securities (e.g. T-bills  and other). When the                                                                    
stock  market  was  booming,  the  market  for  T-bills  was                                                                    
suppressed. There  had been  a booming  stock market  in the                                                                    
past couple years; therefore, AIDEA's  cash reserves held in                                                                    
T-bills were  not worth as  much. He noted that  the T-bills                                                                    
had not  been sold and  AIDEA had  not suffered a  loss. The                                                                    
example showed that  if the market was doing  poorly and the                                                                    
market  for marketable  securities  was  booming, AIDEA  may                                                                    
have a  paper gain from  GASB 31  and even though  the asset                                                                    
had  not been  sold, AIDEA  would have  to pretend  like the                                                                    
cash had  been realized.  He explained  that it  meant taxes                                                                    
would have  to be  paid on  money that  had not  really been                                                                    
Mr. Therriault  pointed to line  16a on slide  10 pertaining                                                                    
to  a  value adjustment  from  a  401k account  invested  in                                                                    
stocks. He  asked members to  consider a situation  where an                                                                    
individual had  to take  a picture of  the valuation  on the                                                                    
last calendar  day of the year  and pay taxes on  gains that                                                                    
had not been realized. He explained  that it was the type of                                                                    
thing GASB  68 was  suggesting AIDEA had  to do.  He relayed                                                                    
that  AIDEA had  to  follow  all the  rules  to receive  its                                                                    
audited  financial  statement.  Additionally, AIDEA  had  to                                                                    
follow GASB  72 and 75 that  had kicked in or  would kick in                                                                    
soon. He returned to the  personal tax example and explained                                                                    
that  previously the  individual had  $109,000 in  income to                                                                    
pay taxes  on, but if they  had to follow all  the same GASB                                                                    
rules and  the economy  was booming,  it would  increase the                                                                    
individual's  income up  artificially to  $169,000 and  they                                                                    
would have to pay taxes on money they did not receive.                                                                          
1:21:32 PM                                                                                                                    
Mr. Therriault continued  to slide 11 and  explained that HB
119  would mean  AIDEA would  follow all  the GASB  rules in                                                                    
order to get its audited  financial statements, but it would                                                                    
enable the agency to back  out the paper adjustments and use                                                                    
its  true  cash earnings  in  the  dividend calculation.  It                                                                    
would mean  the agency would be  basing 25 to 50  percent of                                                                    
its  true cash  with the  state treasury  on a  yearly basis                                                                    
instead of an artificially adjusted number.                                                                                     
Mr.  Therriault advanced  to  a table  on  slide 12  showing                                                                    
AIDEA's adjusted  true net  income since  it began  paying a                                                                    
dividend [in  1991]. He pointed  out that cash  available to                                                                    
pay  a  dividend  fluctuated  depending   on  the  level  of                                                                    
activity AIDEA had. He pointed to  a gold line on a table on                                                                    
slide  13  showing  that  GASB  31  artificially  spiked  or                                                                    
suppressed   net   income    year-to-year,   which   brought                                                                    
volatility to  the AIDEA dividend calculation.  He discussed                                                                    
that three  more GASB  rules either had  kicked in  or would                                                                    
kick in soon.  The agency feared that if the  rules were all                                                                    
driven  by the  same  dynamics in  the  economy, they  would                                                                    
start  stacking up,  meaning the  swings  would become  more                                                                    
pronounced. He  continued it may  be that from time  to time                                                                    
they offset  each other -  one may be  artificially positive                                                                    
and one may be artificially  negative, but depending on what                                                                    
was  driving   things  (e.g.  evaluation  of   real  estate,                                                                    
appreciation of  stocks, and marketable securities)  if they                                                                    
were  all  in  the  same direction  they  could  bring  some                                                                    
substantial swings to the AIDEA dividend calculation.                                                                           
1:23:53 PM                                                                                                                    
Mr. Therriault  addressed the second problem  the bill would                                                                    
address  related to  the  dividend  penalty, which  happened                                                                    
infrequently  (slide 15).  He  referenced existing  language                                                                    
specifying  that  AIDEA  was  supposed  to  exclude  certain                                                                    
things. He explained  that when the dividend  had first been                                                                    
created, AIDEA  informed members of the  legislature that if                                                                    
it was  supposed to pay 25  to 50 percent of  its yearly net                                                                    
income back  to the state  as a  dividend on a  yearly basis                                                                    
and if  the legislature gave  an appropriation to work  on a                                                                    
specific  project,  the money  was  brought  onto the  AIDEA                                                                    
books by  showing an  increase in  the income.  He continued                                                                    
that if the  language had not been adjusted at  the time and                                                                    
the legislature  gave AIDEA $1,000  for a  specific project,                                                                    
at  the end  of  the  year AIDEA  would  have  to write  the                                                                    
legislature  a  check  back  for  half  of  the  money.  The                                                                    
legislature at the time had  determined the situation should                                                                    
be avoided. The legislature  had specified if AIDEA received                                                                    
money for a specific project  from the state General Fund by                                                                    
appropriation or  a federal source, the  agency was directed                                                                    
to disregard the  money as positive debt to  net income when                                                                    
making its dividend calculation.                                                                                                
Mr. Therriault explained a scenario  the legislature had not                                                                    
anticipated. He  provided a hypothetical scenario  where the                                                                    
legislature  gave  AIDEA $1  million  to  explore a  project                                                                    
including geotechnical  and economic work, and  a permitting                                                                    
process.  He  elaborated  that  AIDEA  turned  some  of  the                                                                    
dollars into work product. He  continued that if the project                                                                    
did not move forward, AIDEA  would have to write the project                                                                    
off  its books.  In order  to write  the project  off, AIDEA                                                                    
took  the  expenditures  as  a   deduction  to  net  income.                                                                    
Previously,   the  legislature   specified  that   if  AIDEA                                                                    
received money  from an  outside source,  the agency  was to                                                                    
disregard it  on the upside. Under  the proposed legislation                                                                    
if AIDEA ever  had to write money off because  a project was                                                                    
not  going  forward,  they  did  not  want  to  artificially                                                                    
suppress the dividend  in the year the  write-off was taken.                                                                    
He  stated that  the write-offs  happened infrequently,  but                                                                    
when they did, they artificially pulled the dividend down.                                                                      
Mr. Therriault  elaborated that the  previous year  when the                                                                    
legislation  had  been  proposed,   AIDEA  had  advised  the                                                                    
legislature  that  because of  a  booming  stock market,  it                                                                    
appeared  there   would  be  a  paper   loss  in  marketable                                                                    
securities. He  explained that the  AIDEA dividend  had been                                                                    
suppressed by about  $6.5 million in 2017  because AIDEA did                                                                    
not have  the ability  to make  mark to  market adjustments.                                                                    
The  agency believed  it should  be sharing  with the  state                                                                    
treasury out  of its true cash  on hand; AIDEA wanted  to be                                                                    
able to back  out the paper adjustments and  it would follow                                                                    
all  the rules  to get  its appropriately  audited financial                                                                    
statement,  but   it  wanted   to  remove   the  unnecessary                                                                    
volatility out of the dividend calculation.                                                                                     
1:27:25 PM                                                                                                                    
Co-Chair  Foster   referred  to   the  example   showing  an                                                                    
individual's  1040 individual  income tax.  He wondered  why                                                                    
GASB treated companies like AIDEA differently.                                                                                  
Mr.  Therriault responded  that  GASB rules  applied to  all                                                                    
corporations.  After going  through  the financial  meltdown                                                                    
Congress and  the governing board for  accountants wanted to                                                                    
make  sure  that  if  someone  was  going  to  invest  in  a                                                                    
corporation, they  did not want  the corporation to  be able                                                                    
to  hide  liabilities or  assets.  He  expounded that  AIDEA                                                                    
would continue to  disclose all the information  if the bill                                                                    
passed. He  explained the bill  recognized that some  of the                                                                    
items were merely paper adjustments  - an asset had not been                                                                    
sold and AIDEA  had not suffered a loss  or gain; therefore,                                                                    
AIDEA should not  pay the dividend on money it  did not earn                                                                    
or suffer  a loss  on a  loss that did  not take  place. For                                                                    
corporations,   particularly  corporations   where  citizens                                                                    
could  invest,  the  accounting   boards  wanted  to  ensure                                                                    
substantial   transparency   in    the   audited   financial                                                                    
1:29:09 PM                                                                                                                    
JOHN SPRINGSTEEN,  ALASKA INDUSTRIAL DEVELOPMENT  AND EXPORT                                                                    
AUTHORITY,  Department of  Commerce, Community  and Economic                                                                    
Development   (via  teleconference),   clarified  that   for                                                                    
publicly  traded corporations  regulated  by the  Securities                                                                    
Exchange Commission and other  related entities there was an                                                                    
equivalent  set of  accounting rules  set  by the  Financial                                                                    
Accounting Standards Board.                                                                                                     
Co-Chair  Foster surmised  the primary  reason for  the GASB                                                                    
rules was  to increase transparency. He  explained typically                                                                    
a  person used  the 1040  IRS form  to pay  their taxes.  He                                                                    
noted  that  the  example included  an  unrealized  gain  of                                                                    
$25,000,  but it  did not  mean  the individual  had to  pay                                                                    
taxes  on the  amount. He  believed the  information on  the                                                                    
form  was  not  for  tax purposes,  but  merely  helping  to                                                                    
illustrate the  situation AIDEA was facing.  He surmised the                                                                    
$25,000 was shown  on the slide because AIDEA  was trying to                                                                    
increase  transparency   and  let  investors  know   it  had                                                                    
unrealized gains and losses.                                                                                                    
Mr.  Therriault  responded  affirmatively. The  example  was                                                                    
meant  to illustrate  that if  a person  had to  include the                                                                    
gain in  their tax  calculation they  would pay  the federal                                                                    
government a larger check. Comparatively,  when AIDEA had to                                                                    
book the gain it went  into the dividend calculation; it did                                                                    
not increase  AIDEA's taxes, but  it increased  the dividend                                                                    
AIDEA paid on money it did not actually make.                                                                                   
Co-Chair  Foster  stated  his understanding  that  the  GASB                                                                    
requirement  was for  auditing and  financial purposes,  not                                                                    
tax payment purposes.  He believed the goal of  the bill was                                                                    
to fix the  system to ensure an accurate  dividend was paid,                                                                    
which was not based on artificial paper.                                                                                        
Mr. Therriault agreed  and explained the goal  was for AIDEA                                                                    
to pay the dividend on its true net income.                                                                                     
Co-Chair Foster OPENED and CLOSED public testimony.                                                                             
1:32:36 PM                                                                                                                    
AT EASE                                                                                                                         
1:32:56 PM                                                                                                                    
Co-Chair Foster  indicated there  may be some  amendments to                                                                    
the  bill.   He  asked  that  amendments   be  submitted  by                                                                    
Wednesday, April 18, 2018 at 5:00 p.m.                                                                                          
HB  119  was  HEARD  and   HELD  in  committee  for  further                                                                    
1:33:55 PM                                                                                                                    
AT EASE                                                                                                                         
1:36:42 PM                                                                                                                    
HOUSE BILL NO. 409                                                                                                            
     "An Act  relating to identification cards;  relating to                                                                    
     vehicle registration fee rates;  relating to changes of                                                                    
     address;  relating   to  driver's  license   fees;  and                                                                    
     relating   to   financial  responsibility   for   motor                                                                    
1:36:57 PM                                                                                                                    
CATHY  SCHLINGHEYDE,  STAFF, REPRESENTATIVE  KREISS-TOMKINS,                                                                    
explained that the bill was  a House State Affairs Committee                                                                    
bill derived from a combination  of recommendations from the                                                                    
Department    of   Administration    finance   subcommittee,                                                                    
Legislative   Finance    Division's   indirect   expenditure                                                                    
reports, and some statutory clean  up ideas submitted by the                                                                    
Division  of   Motor  Vehicles   (DMV).  She   reviewed  the                                                                    
sectional analysis (copy on file):                                                                                              
     Section 1: This section standardizes the age for                                                                           
     senior citizen fee waivers by changing the age for a                                                                       
     senior citizen identification card from 60 to 65.                                                                          
Ms.  Schlingheyde   detailed  that  currently   the  vehicle                                                                    
registration  waiver went  into effect  when someone  turned                                                                    
65.  However,  the qualifying  age  for  the senior  citizen                                                                    
identification  card  fee  waiver  was 60.  The  bill  would                                                                    
standardize the qualifying age to 65 for both.                                                                                  
     Section 2:  This section allows  a person  to authorize                                                                    
     the Division  of Motor Vehicles  (DMV) to  update their                                                                    
     address  based  on  the United  States  Postal  Service                                                                    
     (USPS) database.                                                                                                           
Ms.  Schlingheyde  elaborated  that currently  if  a  person                                                                    
updated their  address at the post  office without notifying                                                                    
DMV, the agency had to send  mail to the wrong address, wait                                                                    
for the mail  to bounce back, and then seek  out the correct                                                                    
address.  She  explained  the process  cost  money  and  was                                                                    
     Section   3:   This   section   removes   the   vehicle                                                                    
     registration   fee   exemption    for   amateur   radio                                                                    
     Section   4:   This    section   raises   the   vehicle                                                                    
     registration  fee for  municipalities  to the  standard                                                                    
     $100,  and  raises  the vehicle  registration  fee  for                                                                    
     charitable organizations to $50.                                                                                           
     Section 5: This section sets  the fee for DMV Knowledge                                                                    
     Tests at $5 and raises the  fee for DMV Road Tests from                                                                    
     $15 to $25.                                                                                                                
Ms. Schlingheyde  elaborated that  Section 5  would generate                                                                    
revenue and reduce the no-show rate.                                                                                            
     Section  6:  This  section  raises  the  threshold  for                                                                    
     requiring  deposit  of security  to  DMV  from $501  to                                                                    
     $2,000 to  align with the  standard for  the Department                                                                    
     of Transportation (DOT).                                                                                                   
     Section  7:  This  section  raises  the  threshold  for                                                                    
     requiring   a   peace   officer  to   provide   written                                                                    
     notification  about  the   requirements  in  the  Motor                                                                    
     Vehicle Safety Responsibility Act from $501 to $2,000.                                                                     
     Section  8:  This  section  raises  the  threshold  for                                                                    
     accepting release  from liability executed by  a parent                                                                    
     or legal  guardian on  behalf of a  minor from  $501 to                                                                    
     Section  9:  This  section  raises  the  threshold  for                                                                    
     requiring  proof of  financial  responsibility after  a                                                                    
     traffic offense from $501 to $2,000.                                                                                       
     Section  10:  This  section raises  the  threshold  for                                                                    
     requiring  proof of  financial responsibility  after an                                                                    
     accident from $501 to $2,000.                                                                                              
Ms.  Schlingheyde  expounded  that  Sections  6  through  10                                                                    
increased  the reporting  thresholds  for various  accidents                                                                    
and crashes. Currently  the thresholds were $501  at the DMV                                                                    
and $2,000  at the  Department of Transportation  and Public                                                                    
Facilities (DOT).  The bill would standardize  the threshold                                                                    
at  the DOT  rate of  $2,000; the  DMV number  had not  been                                                                    
updated for inflation for 33 years.                                                                                             
     Section 11:  This section  requires proof  of financial                                                                    
     responsibility  after   a  license  is   suspended  for                                                                    
     failure  to pay  a  judgement be  maintained for  three                                                                    
     years,  rather than  the  existing lifetime  provision.                                                                    
     The section also changes the  requirement to hold proof                                                                    
     of    financial    responsibility    after    judgement                                                                    
     satisfaction  only if  the failure  to pay  was due  to                                                                    
     driving while uninsured.                                                                                                   
Ms.   Schlingheyde  addressed   SR-22   insurance,  a   type                                                                    
insurance   required   after  certain   vehicle   accidents.                                                                    
Insurance companies  were required to submit  SR-22 forms to                                                                    
notify  DMV  if a  person's  insurance  lapsed. The  section                                                                    
required SR-22 insurance  for a lifetime if  a person failed                                                                    
to pay a judgement within 30  days. The bill changed the SR-                                                                    
22 requirement for failure to pay  within 30 days to 3 years                                                                    
and it  would only kick in  if the person was  driving while                                                                    
     Section 12:  This section allows  for a  second payment                                                                    
     plan   in  installments   for  people   facing  license                                                                    
     suspension based on outstanding financial judgements.                                                                      
     Section  13:  This  section raises  the  threshold  for                                                                    
     showing  proof  of  motor vehicle  liability  insurance                                                                    
     from $501 to $2,000.                                                                                                       
     Section  14: This  section removes  the requirement  to                                                                    
     update  DMV  with address  changes  if  the person  has                                                                    
     given permission  for DMV to update  addresses from the                                                                    
     USPS database.                                                                                                             
Ms. Schlingheyde  elaborated that  Section 14  was statutory                                                                    
cleanup for the post office  update. She explained that if a                                                                    
person allowed  DMV to  update their  address based  off the                                                                    
post office, they did not have to notify DMV.                                                                                   
1:40:27 PM                                                                                                                    
Representative Kawasaki  referred to  Sections 6  through 10                                                                    
and 13  dealing with  the inflationary adjustment.  He asked                                                                    
what happened in  cases where a vehicle was  worth less than                                                                    
Ms. Schlingheyde  responded that  the judgement  would still                                                                    
have to  be paid. The  threshold had  to be reported  to DMV                                                                    
and DOT for  certain accidents, but it would  not negate the                                                                    
requirement  for an  insurance company  or an  individual to                                                                    
compensate for damages.                                                                                                         
Representative  Kawasaki   referred  to  Section   3,  which                                                                    
removed an exemption for amateur  radio operators. He shared                                                                    
that he  had an amateur  radio operator in his  district. He                                                                    
wondered why the  bill would remove the  exemption. He asked                                                                    
if the reasoning was because  the exemption was infrequently                                                                    
Ms. Schlingheyde indicated there were  only 44 people in the                                                                    
state who currently had the exemption.                                                                                          
Representative  Kawasaki asked  Ms.  Schlingheyde to  review                                                                    
Sections 11  and 12. He  believed he liked the  sections and                                                                    
wondered how they had been  brought into the bill that dealt                                                                    
mostly with adjustments and indirect expenditures.                                                                              
Ms.  Schlingheyde  responded  that both  sections  had  been                                                                    
recommended by DMV. She elaborated  that DMV had worked with                                                                    
many individuals  who had issues  with the SR-22.  She added                                                                    
that  DMV   was  available  for  questions.   Currently  the                                                                    
insurance was required  for five years in the case  of a DUI                                                                    
and for  a lifetime  after four  DUIs. The  section required                                                                    
SR-22 insurance for  a lifetime if a person failed  to pay a                                                                    
judgement within 30 days, which  was disproportionate to the                                                                    
rest of  the statute. The bill  would bring it in  line with                                                                    
the penalty  for driving while  uninsured or on  a suspended                                                                    
1:42:31 PM                                                                                                                    
Representative  Kawasaki referenced  Section 4  dealing with                                                                    
vehicle registration fees  for municipalities and charitable                                                                    
organizations.  He  asked  for verification  that  like  the                                                                    
state,   currently    municipalities   were    exempt   from                                                                    
registration fees.                                                                                                              
Ms.  Schlingheyde  responded that  municipalities  currently                                                                    
paid  a  $10  registration  fee,  which  was  a  90  percent                                                                    
Representative Kawasaki asked  what charitable organizations                                                                    
currently   paid.  Ms.   Schlingheyde  responded   that  the                                                                    
registration fee for charitable organizations was also $10.                                                                     
Representative   Tilton  asked   whether  the   post  office                                                                    
database   provision  in   Section   1   was  optional   for                                                                    
Ms. Schlingheyde  confirmed is was optional  for individuals                                                                    
and  was   only  based  on  permanent   address  changes.  A                                                                    
temporary  forwarding of  mail would  not affect  a person's                                                                    
registration at DMV.                                                                                                            
Representative  Pruitt  asked  for  verification  Section  1                                                                    
would apply  to any  mail correspondence with  DMV including                                                                    
license  and registration  renewal.  He shared  that at  one                                                                    
point  DMV had  sent  his registration  renewal  to his  old                                                                    
Ms. Schlingheyde responded in the affirmative.                                                                                  
1:44:22 PM                                                                                                                    
Representative Pruitt referred to  Sections 6 through 10 and                                                                    
13 that would increase  the threshold [for requiring deposit                                                                    
of security  to DMV] from $501  to $2,000. He noted  that it                                                                    
was difficult to determine the  distinction between $500 and                                                                    
$2,000 damage on a vehicle.  He recalled a situation where a                                                                    
police officer  had specified that  damage to a car  did not                                                                    
appear to  be over $500;  however, the damage had  been over                                                                    
$5,000. He  had been fortunate that  insurance companies had                                                                    
managed the situation. He asked  how to determine whether to                                                                    
contact  a  police  officer to  have  them  participate.  He                                                                    
continued  that having  a police  officer  document that  an                                                                    
accident took place and what  occurred could be a huge asset                                                                    
to an individual dealing with  damage to a vehicle. He asked                                                                    
how individuals  should deal with  accidents when  trying to                                                                    
figure out how to manage going forward.                                                                                         
Ms.  Schlingheyde responded  that the  sections in  the bill                                                                    
did  not  address  the  issue of  calling  the  police,  but                                                                    
whether they  had to file  certain forms with DMV  after the                                                                    
accident.  Individuals would  have time  to assess  what the                                                                    
damage level  was. She  deferred to  DMV for  any additional                                                                    
1:46:18 PM                                                                                                                    
Co-Chair Foster  indicated the committee had  been joined by                                                                    
the bill sponsor.                                                                                                               
REPRESENTATIVE  JONATHAN  KREISS-THOMKINS, SPONSOR,  thanked                                                                    
the committee for hearing the bill.                                                                                             
Representative  Pruitt  referenced   Section  7  that  would                                                                    
increase  the threshold  for requiring  a  peace officer  to                                                                    
provide written  notification about the requirements  in the                                                                    
Motor  Vehicle  Safety  Responsibility   Act  from  $501  to                                                                    
$2,000. He stated while it  was related to the suspension of                                                                    
an operator's  license or driving privileges,  it involved a                                                                    
police  officer assessing  what  the damage  was. He  stated                                                                    
that currently  officers could look  at the side  of caution                                                                    
because $500 was  a small amount, but $2,000  was four times                                                                    
that amount.  He was concerned  about putting  an individual                                                                    
in a position where they did  not have an officer present to                                                                    
provide credible  assistance and determine the  damage value                                                                    
that may be needed in a judicial proceeding later.                                                                              
Co-Chair Foster indicated that DMV was available online.                                                                        
Ms. Schlingheyde noted that they  did assess $2,000 worth of                                                                    
damage  currently   for  reports   to  DOT.   Currently  two                                                                    
thresholds  were reported  on -  $500 to  DMV and  $2,000 to                                                                    
DOT. The bill would change  the reporting requirement to one                                                                    
threshold amount.                                                                                                               
1:49:28 PM                                                                                                                    
Representative Pruitt  spoke to the requirement  of a police                                                                    
officer  to assist  a person  who had  been in  an accident.                                                                    
With the higher threshold  he believed police officers would                                                                    
be less likely to assist and  more likely to give a card out                                                                    
because it  was difficult to  tell how much damage  had been                                                                    
done. He believed officers could  err on the side of caution                                                                    
when it did not appear  significant damage had been done. He                                                                    
stated that with  the higher threshold more  damage could be                                                                    
done, and it  would be easier for an officer  to merely hand                                                                    
a  card out  as opposed  to writing  a report.  He stated  a                                                                    
report by  a police officer  could assist an  individual and                                                                    
operate as  a credible  witness later on.  He asked  how the                                                                    
threshold would be administered,  how a police officer would                                                                    
deal with  the reporting,  and how  the change  would impact                                                                    
people involved in an accident.                                                                                                 
MARLA  THOMPSON,  DIRECTOR,   DIVISION  OF  MOTOR  VEHICLES,                                                                    
DEPARTMENT  OF  ADMINISTRATION (via  teleconference),  spoke                                                                    
about  the   goal  of   updating  the   discrepancy  between                                                                    
reporting a person's insurance to  DMV for everything at and                                                                    
above $501  and reporting an  accident and insurance  on the                                                                    
DOT form. The goal was to only have one threshold.                                                                              
Representative Pruitt  wondered if the small  tweaks did not                                                                    
necessitate  an individual  to have  something put  on their                                                                    
record if the damage was less than $2,000.                                                                                      
Ms.  Thompson agreed.  Previously,  if a  person  was in  an                                                                    
accident  and damage  was over  $500 they  were supposed  to                                                                    
report the accident  to DMV and provide  proof of insurance.                                                                    
The bill would  clean up the thresholds; if a  person was in                                                                    
an  accident  they would  fill  out  the DOT  report,  which                                                                    
included  their  insurance  information  -  the  bill  would                                                                    
eliminate confusion  by cutting out extra  requirements that                                                                    
people did not know they were supposed to do.                                                                                   
1:52:54 PM                                                                                                                    
Co-Chair Foster  stated his understanding that  currently if                                                                    
an accident  involved damages exceeding $500,  an individual                                                                    
was required  to submit a form  to DMV online. He  asked for                                                                    
detail about the DOT report requirement.                                                                                        
Ms.  Thompson responded  that  the DOT  report  was a  crash                                                                    
report  that  individuals were  required  to  fill out  (the                                                                    
report was often filled out  by police officers at the crash                                                                    
site). The  report also included the  individual's insurance                                                                    
Co-Chair Foster  summarized that under the  legislation if a                                                                    
person had a  crash they did not have to  submit a report to                                                                    
DMV if they believed damages  were under $2,000. However, if                                                                    
the  person  believed  the   damages  exceeded  $2,000  they                                                                    
contacted a police officer. He asked for clarification.                                                                         
Ms. Thompson responded that $2,000  was a substantial number                                                                    
and most of  the time the police would fill  out the report;                                                                    
if the  officer did not fill  out the report, they  tell the                                                                    
individual what to fill out.  The report included a person's                                                                    
insurance  information, meaning  they only  had to  fill out                                                                    
one report, which was shared with DOT.                                                                                          
Vice-Chair Gara  stated that in  2017 there had been  a bill                                                                    
on Real ID; in the later  stages of the bill the license fee                                                                    
had been  increased substantially  in his view.  He recalled                                                                    
the  fee   was  significantly   higher  than  the   cost  of                                                                    
administering  the license.  He  asked Ms.  Thompson if  she                                                                    
remembered the  proposed license  fee and  the fee  that had                                                                    
ultimately been adopted. He wondered  what fee level (in the                                                                    
current legislation) would be cost neutral.                                                                                     
Ms. Thompson reported  that the fee was $20,  which had been                                                                    
changed in the end. She  believed DMV's original request had                                                                    
been  $10  and   then  $5.  The  cost   neutral  amount  was                                                                    
approximately $5.                                                                                                               
1:55:48 PM                                                                                                                    
Vice-Chair Gara asked  for verification that the  $20 was in                                                                    
addition  to  the  regular driver's  license.  Ms.  Thompson                                                                    
replied in the affirmative.                                                                                                     
Vice-Chair Gara  asked for the  total Real ID  license cost.                                                                    
Ms. Thompson  answered that a  regular driver's  license was                                                                    
$20, and a Real ID was $15.                                                                                                     
Vice-Chair  Gara asked  for verification  that  the Real  ID                                                                    
license cost $40.  Ms. Thompson responded that  the cost was                                                                    
$40,  but the  extension had  increased  from 5  years to  8                                                                    
Representative Wilson stated that  several years back a bill                                                                    
contained a  provision allowing people to  pay an additional                                                                    
$25 for vehicles  older than eight years,  meaning the owner                                                                    
did not have  to buy another registration until  the car was                                                                    
sold.  She asked  if the  sponsor would  be amenable  to the                                                                    
deletion of AS 28.10.155, which would remove the exemption.                                                                     
Representative   Kreiss-Tompkins  responded   that  he   had                                                                    
reviewed the indirect expenditure  report. He stated that it                                                                    
was a substantial  indirect expenditure and he  had been let                                                                    
down to  find that the  anticipated cost of  the expenditure                                                                    
had  not  yet been  calculated  by  the Legislative  Finance                                                                    
Division.  He recalled  when the  exemption had  been passed                                                                    
and he  would be amenable  to the change, which  he believed                                                                    
created further reduction of indirect expenditures.                                                                             
1:57:53 PM                                                                                                                    
Representative Wilson explained that  the exemption had been                                                                    
automatic for  individuals in  an unorganized  area, whereas                                                                    
organized areas had to vote  on the exemption. Anchorage did                                                                    
not take the  exemption because it utilized  a different tax                                                                    
on vehicles.  She noted that  Fairbanks took  the exemption;                                                                    
she  did not  have detail  on other  locations. Part  of the                                                                    
reason the exemption  had been passed was  because the state                                                                    
had money and DMV was making  more money than it needed. She                                                                    
did  not believe  the state  was  in the  same position  any                                                                    
longer. She  thought it  was time  to remove  the exemption.                                                                    
She reasoned her  10-year-old car probably wore  on the road                                                                    
as much as 3-year-old vehicles.                                                                                                 
Representative   Kawasaki  asked   Ms.   Thompson  for   the                                                                    
approximate vehicle registration costs.                                                                                         
Ms.  Thompson answered  that she  would follow  up with  the                                                                    
information.  She  detailed  that  the rates  had  not  been                                                                    
increased recently.  There were things  like $15 for  a road                                                                    
test that DMV was trying to increase to $25 to cover costs.                                                                     
Representative Kawasaki  noted Section  4 of the  bill would                                                                    
raise  registration rates  from  $10 to  $50  for a  vehicle                                                                    
owned by a charitable organization  and from $10 to $100 for                                                                    
vehicles owned  by municipalities. He wondered  if the state                                                                    
would suddenly  be making money  rather than  breaking even.                                                                    
He understood  it was difficult  to suss out the  total cost                                                                    
because  of the  various work  done  by the  agency. He  was                                                                    
trying to come up with a reasonable amount.                                                                                     
Ms.  Thompson replied  that in  the fiscal  note showed  the                                                                    
registration changes  with the difference  in municipalities                                                                    
and charities separately.                                                                                                       
2:00:38 PM                                                                                                                    
Representative Guttenberg  asked if  the division had  a way                                                                    
to  parse  out how  long  it  took  when individuals  got  a                                                                    
vehicle registration  or a  license, had  difficulty getting                                                                    
registration,  or did  not have  sufficient information.  He                                                                    
was  interested  in   how  long  each  of   the  items  took                                                                    
separately and  where the cost drivers  resided. He provided                                                                    
various  examples of  different things  individuals came  to                                                                    
DMV for.                                                                                                                        
Ms.  Thompson  answered  that  she   tracked  the  wait  and                                                                    
transaction times across the  state. The average transaction                                                                    
time was about seven minutes.                                                                                                   
Representative Guttenberg  stated that  when he went  to DMV                                                                    
he  observed  that  some   people  were  having  significant                                                                    
difficulty.  He  stated  that he  typically  had  basic  and                                                                    
simple business to conduct; however,  he did not think seven                                                                    
minutes was  the average  time it  took when  he went  in to                                                                    
renew  something. He  wondered about  the time  it took  for                                                                    
someone  with  an  out-of-state license  to  get  an  Alaska                                                                    
license in comparison to other items.                                                                                           
Ms. Thompson  replied that she  could probably come  up with                                                                    
some  averages on  registration and  driver's licenses.  She                                                                    
did  not know  whether she  could  parse down  to the  level                                                                    
Representative Guttenberg  was looking for, but  she offered                                                                    
to come up with some figures.                                                                                                   
Representative  Guttenberg clarified  that he  did not  need                                                                    
the figures,  but was  trying to determine  how easy  it was                                                                    
for DMV to come up with the data.                                                                                               
2:04:04 PM                                                                                                                    
Representative  Kreiss-Tompkins followed  up  on an  earlier                                                                    
question  by Representative  Wilson. He  explained when  the                                                                    
initial authorizing  legislation that created  the permanent                                                                    
vehicle  registration   passed  it   had  not   contained  a                                                                    
provision  from   an  earlier  version  that   gave  blanket                                                                    
statewide applicability  in the  fiscal note where  the cost                                                                    
had been  estimated at $20  million per year.  The exemption                                                                    
had been tightened up since that  time. He noted it could be                                                                    
a  little complicated  to  eliminate  the exemption  because                                                                    
permanent  vehicle registration  was at  a higher  rate than                                                                    
normal vehicle  registration. He  thought there may  need to                                                                    
be  an  accommodation  or  transition  incorporated  if  the                                                                    
permanent vehicle registration was eliminated.                                                                                  
Representative Wilson  explained that the  permanent vehicle                                                                    
registration  cost   the  typical   two-year  fee   plus  an                                                                    
additional  $25. She  explained  that  individuals with  the                                                                    
exemption would  have to be grandfathered  in. She explained                                                                    
[the removal of  the exemption] would stop  the bleeding and                                                                    
bring  in a  portion of  the $20  million. She  reported she                                                                    
would work  with the sponsor  on an amendment but  would not                                                                    
hold the bill up in committee.                                                                                                  
Co-Chair Foster OPENED and CLOSED public testimony.                                                                             
2:06:52 PM                                                                                                                    
Representative Kawasaki MOVED  to ADOPT conceptual Amendment                                                                    
1  on page  2, line  22.  The amendment  would maintain  the                                                                    
current   $10  vehicle   registration  fee   for  charitable                                                                    
organizations instead of the proposed $50 fee.                                                                                  
Representative Wilson  OBJECTED. She asked about  the impact                                                                    
and queried the number of charitable organization licenses.                                                                     
Co-Chair Seaton pointed to the  third paragraph on page 2 of                                                                    
the  fiscal note  that specified  there were  2,657 vehicles                                                                    
registered  to charitable  organizations.  The  new $50  fee                                                                    
would generate  an additional $106,280. Due  to the two-year                                                                    
registration cycle  the additional yearly revenue  for FY 19                                                                    
and FY 20 would be $53,140.                                                                                                     
Representative Wilson did not believe  $25 per year [$50 for                                                                    
two years] was  drastic. She remarked that the  bill did not                                                                    
increase the fee as high as it could have (to $100).                                                                            
2:08:52 PM                                                                                                                    
Representative Kawasaki noted there  had been discussion the                                                                    
previous  day  about  the  public,  private,  and  nonprofit                                                                    
sectors. He stated the nonprofit  sector worked closely with                                                                    
Alaska's  public sector.  He elaborated  that the  nonprofit                                                                    
sector thrived  and fell  based on  the state's  economy. He                                                                    
reasoned nonprofits provided more  services. At a time where                                                                    
the public  sector was trying  to find money,  the nonprofit                                                                    
sector was also trying to  scrape by. He reported the senior                                                                    
center in his district that  ran the Meals on Wheels program                                                                    
probably took advantage of the  $10 registration. He did not                                                                    
believe $40 would break the  bank for the nonprofits, but it                                                                    
did not  seem right  to add to  their burdens.  He supported                                                                    
deferring their burdens longer.                                                                                                 
Representative   Grenn   provided   some  context   as   the                                                                    
Department  of  Administration finance  subcommittee  chair.                                                                    
The  Legislative   Finance  Division   indirect  expenditure                                                                    
report noted  that the  discount had  started in  1978. When                                                                    
the discount was  first offered only a  few hundred vehicles                                                                    
were eligible,  compared to the  current number of  close to                                                                    
Representative Wilson MAINTAINED her OBJECTION.                                                                                 
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Guttenberg, Kawasaki, Foster                                                                                          
OPPOSED:  Thompson,  Tilton,  Wilson,  Gara,  Grenn,  Ortiz,                                                                    
Pruitt, Seaton                                                                                                                  
The MOTION to adopt conceptual Amendment 1 FAILED (3/8).                                                                        
2:11:28 PM                                                                                                                    
AT EASE                                                                                                                         
2:13:10 PM                                                                                                                    
Representative  Wilson MOVED  to ADOPT  conceptual Amendment                                                                    
     Delete 8-year-old car exemption in Sec. 28.10.155.                                                                         
     Permanent motor vehicle registration.                                                                                      
     Except  for   anyone  who   already  has   a  permanent                                                                    
     registration  and  the permanent  registration  expires                                                                    
     when the  owner transfers or assigns  the owner's title                                                                    
     or interest in the vehicle.                                                                                                
Co-Chair Seaton OBJECTED for discussion.                                                                                        
Representative  Wilson explained  that  the amendment  would                                                                    
remove the  8-year-old car permanent  registration exemption                                                                    
under  AS 28.10.155.  She explained  that currently  someone                                                                    
could  pay a  fee  plus $25,  which  exempted their  vehicle                                                                    
[from  another   registration  fee]  until  they   sold  the                                                                    
vehicle. She elaborated  that when the vehicle  was sold the                                                                    
new owner had to reregister and pay the fee.                                                                                    
Co-Chair  Seaton  asked for  verification  that  when a  new                                                                    
owner purchased  a car  that had  previously been  under the                                                                    
exemption, they would pay the regular registration fee.                                                                         
Representative  Wilson  replied  in the  affirmative.  There                                                                    
would  no longer  be  an  exemption; therefore,  individuals                                                                    
would pay a two-year registration fee like everyone else.                                                                       
Co-Chair Seaton WITHDREW his OBJECTION.                                                                                         
Representative Thompson  OBJECTED. He  stated that  a person                                                                    
over  the   age  of  65   could  get  a   permanent  vehicle                                                                    
registration.  He  asked   for  verification  the  exemption                                                                    
addressed by the amendment was separate.                                                                                        
Representative Wilson answered  that Representative Thompson                                                                    
was  referencing a  different  statute.  She clarified  that                                                                    
individuals  over the  age of  65 were  allowed a  permanent                                                                    
vehicle registration for one vehicle.                                                                                           
Representative Thompson WITHDREW his OBJECTION.                                                                                 
There  being NO  further OBJECTION,  Conceptual Amendment  2                                                                    
was ADOPTED.                                                                                                                    
2:15:49 PM                                                                                                                    
Representative Kawasaki stated that  he had planned to offer                                                                    
a    separate    conceptual     amendment    dealing    with                                                                    
municipalities. He detailed that  the fee for municipalities                                                                    
would  increase  from $10  to  $100.  He remarked  that  the                                                                    
legislature had done  numerous things in the  past couple of                                                                    
years to  harm municipal governments, including  school bond                                                                    
debt   reimbursement,  reduced   revenue  sharing,   reduced                                                                    
capital  budget,  and  reduced  education.  He  thought  the                                                                    
increased   fee   would   add  an   additional   burden   to                                                                    
municipalities  at  a time  when  they  were having  trouble                                                                    
making ends meet.  He appreciated the bill and  would not be                                                                    
offering the amendment.                                                                                                         
2:16:21 PM                                                                                                                    
Vice-Chair  Gara reviewed  the  previously published  fiscal                                                                    
impact  note from  the  Department  of Administration,  DMV.                                                                    
There was  no cost. The  change in revenue was  $815,300 per                                                                    
year starting in  FY 19. He believed an  updated fiscal note                                                                    
would follow.                                                                                                                   
Co-Chair  Seaton  MOVED  to  report  CSHB  409(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSHB  409(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal impact note: FN1 (ADM).                                                                                                  
2:17:37 PM                                                                                                                    
AT EASE                                                                                                                         
2:20:25 PM                                                                                                                    
CS FOR SENATE BILL NO. 105(FIN)                                                                                               
     "An  Act  relating  to the  licensure  of  marital  and                                                                    
     family therapists;  relating to medical  assistance for                                                                    
     marital and family therapy  services; and providing for                                                                    
     an effective date."                                                                                                        
2:20:33 PM                                                                                                                    
Co-Chair  Foster  noted the  committee  had  heard the  bill                                                                    
earlier in the meeting.                                                                                                         
Co-Chair  Seaton   mentioned  his  earlier   question  about                                                                    
whether the bill would require a plan amendment.                                                                                
Co-Chair Foster remarked that the  bill sponsor had asked to                                                                    
hear   from  Elizabeth   Ripley  with   the  Mat-Su   Health                                                                    
ELIZABETH  RIPLEY, CEO,  MAT-SU  HEALTH FOUNDATION,  WASILLA                                                                    
(via  teleconference), spoke  in  support of  the bill.  She                                                                    
read from prepared remarks:                                                                                                     
     The foundation shares ownership in Mat-Su Regional                                                                         
     Medical Center and invests its profits back into the                                                                       
     community to improve the health  and wellness of Mat-Su                                                                    
     residents. The Mat-Su  Health Foundation fully supports                                                                    
     SB  105  because  it  will  help  our  citizens  access                                                                    
     behavioral health  treatment services  through marriage                                                                    
     and family  therapists to get  care early  before their                                                                    
     problems   escalate  to   a   crisis   stage.  In   the                                                                    
     foundation's   2013  Mat-Su   community  health   needs                                                                    
     assessment,  Mat-Su residents  told us  their top  five                                                                    
     health  issues were  all related  to mental  health and                                                                    
     substance  abuse.  They  asked  us  for  a  coordinated                                                                    
     system  of care  that  makes  treatment for  behavioral                                                                    
     health more  readily accessible.  Instead, the  way our                                                                    
     system currently works,  Mat-Su Regional Medical Center                                                                    
     is  the   number  one  portal  in   Mat-Su  for  people                                                                    
     suffering from a behavioral health problem.                                                                                
     In 2016 alone, 1,196  patients with a behavioral health                                                                    
     diagnosis, 46  percent of which were  on Medicaid, went                                                                    
     to  the  Mat-Su  Regional  emergency  department  (ED).                                                                    
     These patients  had a total  of 3,227 visits  and their                                                                    
     charges   totaled   $14   million,  not   counting   an                                                                    
     additional  cost  of  $1.6 million  estimated  for  law                                                                    
     enforcement,  911 dispatch,  and transportation.  If we                                                                    
     can intervene  early with a system  where all residents                                                                    
     can get  timely access to a  behavioral health provider                                                                    
     we can save pain, suffering,  and money. By example, an                                                                    
     individual  session  for  Medicaid  is  $75,  while  an                                                                    
     average  charge for  a behavioral  health  ED visit  is                                                                    
     $4,370.  Granted  an  individual needs  more  than  one                                                                    
     visit early  on to  prevent a crisis,  but even  if you                                                                    
     paid  for  ten  visits  at $750  you  would  be  saving                                                                    
     $3,600. The  prevalence of mental health  and substance                                                                    
     abuse problems  and crises is increasing  in the Mat-Su                                                                    
     and  statewide.  The  average annual  growth  rate  for                                                                    
     visits in our  ED by patients with  a behavioral health                                                                    
     diagnosis grew 20 percent from  2015 to 2017 due to the                                                                    
     opioid   epidemic  and   lack   of  treatment   access.                                                                    
     Additionally,  from   2014  to   2017  the   number  of                                                                    
     behavioral health assessments  required for patients in                                                                    
     crisis in  our ED grew  from 349  to more than  1,000 -                                                                    
     all  in  a hospital  that  does  not currently  provide                                                                    
     behavioral healthcare.                                                                                                     
     This legislation  could bring the appropriate  level of                                                                    
     care  to people  who  need help  when  a problem  first                                                                    
     starts instead of after it  develops into a crisis. The                                                                    
     Mat-Su Health Foundation is actively  doing its part to                                                                    
     build a  complete behavioral  health continuum  of care                                                                    
     that's  fully  staffed  with caring  professionals.  We                                                                    
     offer  scholarships  to  train  new  behavioral  health                                                                    
     providers  and invest  to help  our nonprofits  provide                                                                    
     badly   needed   services.   We  are   financing   care                                                                    
     coordination projects to keep people  out of the ED and                                                                    
     institutional  care  and  work to  advocate  for  smart                                                                    
     policy like SB  105. We hope you will  move this timely                                                                    
     and important legislation forward. Thank you.                                                                              
2:24:54 PM                                                                                                                    
Co-Chair  Foster  invited  the  sponsor  and  staff  to  the                                                                    
testimony table.                                                                                                                
SENATOR DAVID WILSON, SPONSOR, introduced himself.                                                                              
GARY ZEPP, STAFF, SENATOR DAVID  WILSON, noted that Director                                                                    
Margaret Brodie  with the Division  of Health  Care Services                                                                    
could  provide  an  answer   to  Co-Chair  Seaton's  earlier                                                                    
question  about  whether  the legislation  would  require  a                                                                    
change in the state Medicaid plan.                                                                                              
Co-Chair Foster  intended to take  questions for  Ms. Ripley                                                                    
Co-Chair  Seaton presumed  a  large  portion of  individuals                                                                    
coming into  the Mat-Su hospital  were there for  drug abuse                                                                    
reasons.  He asked  if marital  and  family therapists  were                                                                    
licensed to treat  opioid and other drug abuse.  He asked if                                                                    
it would open a treatment avenue for the health foundation.                                                                     
Ms. Ripley  shared her understanding that  the primary focus                                                                    
of  marital   and  family  therapists  was   mental  health.                                                                    
Frequently,  mental health  and substance  abuse cooccurred.                                                                    
It  was  necessary to  treat  the  underlying cause  leading                                                                    
someone to  self-medicate. She  believed marital  and family                                                                    
therapists  would have  the ability  to  address the  mental                                                                    
health component vital to addressing substance abuse.                                                                           
Co-Chair Seaton asked if marital  and family therapists were                                                                    
licensed to treat mental health.                                                                                                
Ms. Ripley replied, "that's my understanding."                                                                                  
2:27:33 PM                                                                                                                    
Mr.  Zepp  noted  that  Ms.  Brodie  could  answer  Co-Chair                                                                    
Seaton's  question from  earlier  in the  day regarding  the                                                                    
state Medicaid plan.                                                                                                            
MARGARET   BRODIE,  DIRECTOR,   DIVISION   OF  HEALTH   CARE                                                                    
SERVICES, DEPARTMENT OF HEALTH  AND SOCIAL SERVICES, replied                                                                    
there  was no  cost to  do a  state plan  amendment for  the                                                                    
addition or deletion of a  service. The department had staff                                                                    
to  ensure the  state complied  with the  state plan  at all                                                                    
Co-Chair Seaton asked how difficult  it would be to delete a                                                                    
service if the bill did not accomplish what was intended.                                                                       
Ms.  Brodie   answered  that  the  process   was  easy;  the                                                                    
Department of Health and Social  Services (DHSS) would write                                                                    
a new state  plan and submit it to the  Centers for Medicare                                                                    
and Medicaid Services (CMS).                                                                                                    
Representative Wilson asked when  the state had last deleted                                                                    
a service from its Medicaid  plan. Ms. Brodie responded that                                                                    
she would have to follow up with an answer.                                                                                     
Representative Wilson  stated the legislature had  asked the                                                                    
question frequently and  had always been told  proof of need                                                                    
for the  deletion of a service  and what kind of  a negative                                                                    
impact it would have on  individuals using the service would                                                                    
have to  be provided. She was  amazed to hear that  it would                                                                    
be easy  to remove  something from the  plan because  it had                                                                    
not  been  the  understanding  since she  had  been  on  the                                                                    
committee.  She asked if  marital and family therapists were                                                                    
currently  able  to do  anything  in  the behavioral  health                                                                    
realm  and to  bill Medicaid  if they  were working  under a                                                                    
Ms. Brodie answered in the  affirmative. She elaborated that                                                                    
the services  could be billed  to Medicaid if provided  in a                                                                    
clinic  or the  service could  be provided  anywhere if  the                                                                    
therapist was serving a duly  eligible Medicare and Medicaid                                                                    
Representative  Wilson  asked  for verification  that  if  a                                                                    
therapist was  already able  to bill  Medicare and  a client                                                                    
also    had    Medicaid,    the   therapist    could    bill                                                                    
Medicare/Medicaid  even  though  they  were not  part  of  a                                                                    
Ms. Brodie  agreed. She added  that the state would  pick up                                                                    
the copayment.                                                                                                                  
Representative Wilson  asked for verification that  the bill                                                                    
only pertained  to therapists  with an  independent practice                                                                    
and clients with Medicaid but not Medicare.                                                                                     
2:30:57 PM                                                                                                                    
Ms. Brodie  responded in the  affirmative pertaining  to the                                                                    
recipient. The  provider would also  have to be  enrolled in                                                                    
Representative  Wilson  referenced   the  fiscal  note  that                                                                    
specified  there  were  100   licensed  marital  and  family                                                                    
therapists in Alaska.  She wondered if there  was a database                                                                    
showing the  number of independent  therapists who  may want                                                                    
to take Medicaid patients.                                                                                                      
Ms.  Brodie  deferred to  the  DHSS  Division of  Behavioral                                                                    
Representative Guttenberg  surmised that the reason  for the                                                                    
bill was not to expand  the services provided by marital and                                                                    
family therapists,  but to expand  the group  of individuals                                                                    
receiving  the  benefits the  therapists  had  to offer.  He                                                                    
referenced   the   fiscal   note   that   extrapolated   the                                                                    
anticipated number of individuals  who would use the service                                                                    
and what the  cost would be. He wondered if  there was a way                                                                    
to estimate what  the cost avoidance would be.  He looked at                                                                    
the 633  estimated recipients and  considered what  the cost                                                                    
would be  for the individuals  to go to the  emergency room.                                                                    
He explained that in the future  it would be helpful to look                                                                    
back and know what the savings  had been. He wondered if the                                                                    
avoidance cost could be reflected in the fiscal note.                                                                           
Ms. Brodie replied  that she could do a  calculation, but it                                                                    
would not  be 100  percent accurate. She  could take  all of                                                                    
the emergency  room visits and could  extrapolate the number                                                                    
of  individuals   who  had  received   a  diagnosis   for  a                                                                    
behavioral health disorder. However,  not all providers were                                                                    
comfortable giving  that type  of diagnosis;  therefore, the                                                                    
figure would be off some.                                                                                                       
Representative  Guttenberg  stated  that in  the  future  it                                                                    
would  be helpful  to look  back to  see what  the avoidance                                                                    
cost had  been in the  five years  since the passage  of the                                                                    
Co-Chair  Seaton  asked  if  Representative  Guttenberg  was                                                                    
suggesting  including  a requirement  for  a  report to  the                                                                    
legislature in the bill.                                                                                                        
Representative Guttenberg  thought it  would be a  good idea                                                                    
in  order to  know in  the future  what avoidance  costs had                                                                    
come  from  the legislation.  He  hoped  the department  was                                                                    
looking at  avoidance costs to  understand other  places the                                                                    
state needed to expand or contract services.                                                                                    
2:34:50 PM                                                                                                                    
Mr.  Zepp  believed the  state  was  on  the verge  of  what                                                                    
Representative Guttenberg was asking  for through a separate                                                                    
bill (SB 74) and the  federal 1115 Medicaid waiver the state                                                                    
had  recently  submitted.  The  waiver  was  just  upon  the                                                                    
shortage of  behavioral healthcare and trying  to manipulate                                                                    
the system to demonstrate  a project and redefine behavioral                                                                    
healthcare and  address the shortages throughout  the state.                                                                    
He believed  the components were  addressed in  the 130-page                                                                    
document submitted to the federal government by DHSS.                                                                           
Co-Chair Seaton  was trying to determine  if the legislature                                                                    
would be  getting information back  on the  effectiveness of                                                                    
expanding a  service. He asked if  the reporting requirement                                                                    
needed  to be  more specific  than a  generalized report  on                                                                    
behavioral  health.  He  wondered if  the  department  could                                                                    
provide  the  requested  information  in  a  report  if  the                                                                    
legislation passed.                                                                                                             
Ms.  Brodie  replied  that  the  report  would  need  to  be                                                                    
specialized  because   it  could  get  lost   in  the  other                                                                    
activities the  department was undertaking with  waivers and                                                                    
Medicaid reform. She relayed that  the report was definitely                                                                    
something  DHSS  could provide;  if  the  department knew  a                                                                    
report was due it could compile the data beforehand.                                                                            
Representative  Wilson  pointed   to  research  in  members'                                                                    
packets  from   the  Division  of  Behavioral   Health  that                                                                    
mentioned an existing report. She  believed the report could                                                                    
help the legislature contemplate  what should be included in                                                                    
another  report.  She  stated   the  legislature  should  be                                                                    
concerned that  in 2016 as  a result of  Medicaid expansion,                                                                    
statewide  payments  to   behavioral  health  providers  was                                                                    
$8,641,000, while  in 2017 expansion brought  in $25,173,825                                                                    
to  providers  statewide.  She stated  the  number  was  far                                                                    
beyond $25 million. She thought  it was necessary to be very                                                                    
specific  when determining  what the  report would  include.                                                                    
She wondered if Representative  Guttenberg was talking about                                                                    
only  marital and  family  therapists  or behavioral  grants                                                                    
throughout   the  state.   She  remarked   there  had   been                                                                    
significant discussion  in the committee on  where the money                                                                    
was going  and whether the  state was seeing any  return for                                                                    
its money  in terms  of opioid and  other issues  related to                                                                    
behavioral   health.  She   added  that   the  problem   was                                                                    
increasing as was the cost.                                                                                                     
2:38:02 PM                                                                                                                    
Representative  Wilson  mentioned  a  document  regarding  a                                                                    
Medicaid expansion  legislative research grant (copy  not on                                                                    
file). She  stated the  document specified  the DHSS  was in                                                                    
the  process  of  developing a  reporting  tool  that  would                                                                    
enable  the  legislature  to get  the  type  of  information                                                                    
[Representative  Guttenberg was  requesting].  She asked  if                                                                    
the tool had been finished.                                                                                                     
RICK   CALCOTE,  MENTAL   HEALTH   CLINICIAN,  DIVISION   OF                                                                    
BEHAVIORAL   HEALTH,  DEPARTMENT   OF   HEALTH  AND   SOCIAL                                                                    
SERVICES,  ANCHORAGE (via  teleconference), replied  that he                                                                    
did not have  the information; the tool  was being developed                                                                    
elsewhere in the department.                                                                                                    
Representative Wilson  was uncertain who to  talk to because                                                                    
the report  she was  referencing anticipated the  tool would                                                                    
be operational  by early  2018. She  wanted to  know whether                                                                    
the tool had  been developed and what  information the state                                                                    
had.  She thought  the tool  could help  determine how  much                                                                    
money would be  diverted. She believed the  bill needed more                                                                    
Vice-Chair Gara understood  the need to expand  the group of                                                                    
people providing mental health  services. He asked if adding                                                                    
marital family  services would add  marital counseling  as a                                                                    
covered service.                                                                                                                
Senator Wilson  answered that marital and  family therapists                                                                    
were  licensed  to  provide  myriad  services.  He  provided                                                                    
examples including  psychotherapy, group  psychotherapy, and                                                                    
substance abuse  counseling dealing with family  dynamic. He                                                                    
clarified that  it did not  have to  be limited to  a family                                                                    
unit, but  included whatever the  therapist was  licensed to                                                                    
do.  He continued  that marital  and family  therapists went                                                                    
through similar  schooling to  social workers,  and licensed                                                                    
professional counselors. Marital  and family therapists went                                                                    
through the same licensure  requirements through their board                                                                    
and  could  provide the  scope  of  services throughout.  He                                                                    
stated  it was  more  than family  counseling. He  explained                                                                    
that  like a  car mechanic  that could  treat more  than one                                                                    
limited issue on  a car, marital and  family therapists were                                                                    
licensed  professionals  who  were able  to  provide  myriad                                                                    
services.  He  believed  Director  Randall  Burns  with  the                                                                    
Division  of Behavioral  Health had  addressed the  issue in                                                                    
his letter [to the committee  co-chairs dated April 13, 2018                                                                    
(copy  on file)].  He reiterated  that the  services marital                                                                    
and family therapists could provide were expansive.                                                                             
2:41:54 PM                                                                                                                    
Co-Chair Seaton was  concerned that getting a  big report on                                                                    
behavioral health  services across the state  would lose the                                                                    
essence  of  whether  expanding  services  for  marital  and                                                                    
family  therapists  helped  the  system  and  decreased  the                                                                    
amount of  behavioral health services provided  in emergency                                                                    
rooms.  He  was trying  to  determine  whether requesting  a                                                                    
report  in   the  four-year  timeframe  would   provide  the                                                                    
information  on give  the information  to determine  whether                                                                    
the  system had  improved and  what  the cost  had been.  He                                                                    
thought looking at the overall  system would lose the detail                                                                    
about what was needed pertaining to the topic.                                                                                  
Ms. Brodie  responded that after  the bill's  effective date                                                                    
there should be  one full fiscal year before  the report was                                                                    
required. She  believed going out  four or five  years would                                                                    
be  too long.  She explained  there  were a  high number  of                                                                    
Medicaid   reform  initiatives   underway;  therefore,   she                                                                    
recommended tracking  the information from the  beginning in                                                                    
order to  receive actuals in  the report. The  savings would                                                                    
show  up in  healthcare  services  Medicaid, not  behavioral                                                                    
health  Medicaid. The  savings  would also  show  up in  the                                                                    
Department of  Corrections, law enforcement, and  the Office                                                                    
of  Children's  Services. She  did  not  know whether  those                                                                    
agencies would  have the ability  to track  the information,                                                                    
but Medicaid would.                                                                                                             
Representative  Wilson stated  that the  bill only  included                                                                    
marital  and family  therapists  working independently.  She                                                                    
asked  if there  was a  way  to track  only the  individuals                                                                    
under the bill.                                                                                                                 
Ms.  Brodie answered  there  would  be a  way  to track  the                                                                    
individuals  through  the  bill  because  it  would  require                                                                    
building  specialized  business   rules  into  the  Medicaid                                                                    
Management  Information  System  (MMIS). She  detailed  DHSS                                                                    
could use  the same rules  to track  who was paid  under the                                                                    
2:45:34 PM                                                                                                                    
Representative  Wilson asked  how many  states had  tried to                                                                    
take extras out of their plan and had been denied.                                                                              
Ms. Brodie  did not  know any states  that had  been denied.                                                                    
There were states that had  lengthy discussions with CMS and                                                                    
had  been required  to prove  access. However,  other states                                                                    
were far  ahead of  Alaska in  behavioral health  issues and                                                                    
already had the infrastructure.                                                                                                 
Representative Wilson requested  information on the criteria                                                                    
required to remove any extra services.                                                                                          
Vice-Chair  Gara stated  that  he had  first  been told  the                                                                    
purpose  of the  bill had  was to  allow marital  and family                                                                    
therapists  to  provide  behavioral  health  services.  More                                                                    
recently he had  been asked if the bill  would cover marital                                                                    
counseling through Medicaid.  He asked if the  intent of the                                                                    
bill was  limited to allowing marital  and family therapists                                                                    
to provide  direct behavioral health  services or  to expand                                                                    
the services provided through Medicaid.                                                                                         
Senator  Wilson confirmed  the original  intent of  the bill                                                                    
was  to  allow  therapists  not practicing  in  a  community                                                                    
behavioral  health  clinic  the  ability  to  bill  Medicaid                                                                    
through the  optional service.  The bill  would allow  a new                                                                    
provider type to be added  to the list of licensed providers                                                                    
that  could bill  Medicaid, just  like  a licensed  clinical                                                                    
social worker  could bill for marital  and family counseling                                                                    
through group therapy.  Other non-marriage family therapists                                                                    
could bill for  the same services that  those providers bill                                                                    
for as well.                                                                                                                    
2:48:51 PM                                                                                                                    
Co-Chair  Seaton asked  whether  January 2020  would be  the                                                                    
appropriate  report deadline  if  the bill  passed with  its                                                                    
current effective date.                                                                                                         
Ms. Brodie thought  it would be better to line  the due date                                                                    
up with the  department's other Medicaid reports  due at the                                                                    
end of November.                                                                                                                
Co-Chair  Seaton  asked for  the  year.  Ms. Brodie  replied                                                                    
Co-Chair Seaton  asked for  verification that  the following                                                                    
was  an  adequate parameter  for  DHSS  to design  the  data                                                                    
collection:   a   report   to   the   legislature   on   the                                                                    
effectiveness  and the  cost-effectiveness of  providing the                                                                    
services allowed under the bill  by the authorized providers                                                                    
and the  impact on  diversion of  services provided  in more                                                                    
costly settings.                                                                                                                
Ms. Brodie replied in the affirmative.                                                                                          
Representative  Wilson communicated  she  had a  forthcoming                                                                    
2:51:06 PM                                                                                                                    
AT EASE                                                                                                                         
2:51:39 PM                                                                                                                    
Co-Chair   Foster   stated   there  would   be   forthcoming                                                                    
amendment.  He set  a deadline  of 5:00  p.m. the  following                                                                    
Senator  Wilson  relayed  that the  bill  had  been  brought                                                                    
forward  to  address  behavioral  health  shortages  in  the                                                                    
state.  He  emphasized  there was  an  extensive  line  [for                                                                    
behavioral  health  services]  and he  encouraged  committee                                                                    
members to reach out to  their communities to learn how long                                                                    
it  took for  someone to  get scheduled  for an  integrative                                                                    
behavioral  health assessment.  He  stated  the wait  ranged                                                                    
from several weeks  to one month depending on  what a person                                                                    
needed to be  seen for. He noted  that residential substance                                                                    
abuse  treatment facilities  had  long  waitlists. The  bill                                                                    
would help open a second  door for individuals to access and                                                                    
lessen  the   burden  of  Alaskans  seeking   mental  health                                                                    
services. He thanked the committee for hearing the bill.                                                                        
Vice-Chair Gara thanked Senator Wilson for his patience.                                                                        
CSSB 105(FIN) was HEARD and HELD in committee for further                                                                       
Co-Chair Foster reviewed the schedule for the following                                                                         
day. He recessed the meeting to a call of the chair [note:                                                                      
meeting never reconvened].                                                                                                      
2:54:18 PM                                                                                                                    
The meeting was adjourned at 2:54 p.m.                                                                                          

Document Name Date/Time Subjects
HB119 Sectional Analysis ver A 3.28.18.pdf HFIN 4/17/2018 9:00:00 AM
HB 119
HB 119 Supporting Documents Presentation Slides 3.27.18.pdf HFIN 4/17/2018 9:00:00 AM
HB 119
HB119 Supporting Documents - AIDEA GASB Examples 03.27.18.pdf HFIN 4/17/2018 9:00:00 AM
HB 119
HB119 Supporting Documents - AIDEA Historic Dividend Comparison Existing to Proposed 03.27.18.pdf HFIN 4/17/2018 9:00:00 AM
HB 119
SB185 Sponsor Statement 4.14.2018.pdf HFIN 4/17/2018 9:00:00 AM
SB 185
SB185 Sectional Analysis ver. D.PDF HFIN 4/17/2018 9:00:00 AM
SB 185
SB185 Explanation of Changes Ver. A to Ver. D 4.14.2018.pdf HFIN 4/17/2018 9:00:00 AM
SB 185
SB185 Support Doc - Fiscal Note Explanation Graphic 4.14.2018.pdf HFIN 4/17/2018 9:00:00 AM
SB 185
SB185 Support Doc - 10 Year Utilization Summary 4.14.2018.pdf HFIN 4/17/2018 9:00:00 AM
SB 185
HB 409 Sponsor Statement 4.16.18.pdf HFIN 4/17/2018 9:00:00 AM
HB 409
HB409 Sectional Analysis 4.16.18.pdf HFIN 4/17/2018 9:00:00 AM
HB 409
SB 92 Explanation of changes Ver I.A to Ver M.pdf HFIN 4/17/2018 9:00:00 AM
SB 92
SB 92 HCS WORKDRAFT vM.pdf HFIN 4/17/2018 9:00:00 AM
SB 92
SB 185 Matt Moser Testimony NEA.pdf HFIN 4/17/2018 9:00:00 AM
SB 185
SB 185 Supporting Document Conduent .pdf HFIN 4/17/2018 9:00:00 AM
SB 185
SB 185 Supporting Document Retention.pdf HFIN 4/17/2018 9:00:00 AM
SB 185
CSSB 105(FIN) DHSS' Alaska ER Report_2017.pdf HFIN 4/17/2018 9:00:00 AM
SB 105