Legislature(2011 - 2012)HOUSE FINANCE 519
02/06/2012 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB142 | |
| HB 118 | |
| HB198 | |
| HB180 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 142 | TELECONFERENCED | |
| + | HB 180 | TELECONFERENCED | |
| + | HB 198 | TELECONFERENCED | |
| += | HB 118 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
February 6, 2012
1:35 p.m.
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:35 p.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Reggie Joule
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Rena Delbridge, Staff, Representative Mike Hawker; Curtis
Thayer, Deputy Commissioner, Department of Commerce,
Community and Economic Development; Alan Johnston, Wedbush
Securities, Anchorage; Dan White, Associate Vice
Chancellor, Research, University of Alaska, Fairbanks;
Representative Alan Dick, Chair, Special Committee on
Education; Millie Ryan, Executive Director, Governor's
Council on Disabilities and Special Education; P.J, Ford
Slack, PH.D, Board President, Special Education Service
Agency; Patrick Pillai, Executive Director, Special
Education Service Agency (SESA); Marcy Herman, Special
Assistant, Department of Education and Early Development;
Representative Dan Saddler, Sponsor; Joe Michel, Staff,
Representative Bill Stoltze.
PRESENT VIA TELECONFERENCE
Bruce Tangeman, Deputy Commissioner, Tax Division,
Department of Revenue; Laraine Adans, Director of Social
Services, Lower Yukon School District, Mountain Village;
Dr. Cassie Wells, Director, Student Services, North Slope
Borough School District, Barrow; Ron Siebels, Military
Order of the Purple Heart, Anchorage; Chris Nelson,
Muldoon; Ric Davidge, President, Vietnam Veterans of
America; Susan Gorski, Eagle River Chamber of Commerce,
Chugiak; Verdie Bowen, Director Veterans Affairs,
Anchorage; Stacy Oates, Administrative Manager, Division of
Motor Vehicles, Department of Administration.
SUMMARY
HB 118 RESEARCH AND DEVELOPMENT TAX CREDIT
HB 118 was HEARD and HELD in Committee for
further consideration.
HB 142 PRESUMPTION AGIA PROJECT IS UNECONOMICAL
HB 142 was HEARD and HELD in Committee for
further consideration.
HB 180 VETERAN DESIGNATION ON DRIVER'S LICENSE
CSHB 180(FIN) was REPORTED out of Committee with
a "do pass" recommendation and with a new fiscal
impact note by the House Finance Committee for
the Department of Administration.
HB 198 SPEC. EDUC. SERVICE AGENCY FUNDING/SUNSET
HB 198 was HEARD and HELD in Committee for
further consideration.
HOUSE BILL NO. 142
"An Act relating to the creation of a rebuttable
presumption that the project licensed under the Alaska
Gasline Inducement Act is uneconomic because of
insufficient firm transportation commitments during
the first open season."
1:35:30 PM
Co-Chair Thomas MOVED to ADOPT proposed committee
substitute for HB 142, Work Draft 27-LS0451\E. Co-Chair
Stoltze OBJECTED for purpose of discussion.
RENA DELBRIDGE, STAFF, REPRESENTATIVE MIKE HAWKER, spoke on
behalf of the sponsor, Speaker Mike Chenault. She discussed
changes contained in the committee substitute. Dates were
changed to update the legislation to 2012:
· Page 11, Line 9: July 15, 2011, is changed to May
15,2012
· Page 1, Line 12: Aug. 1,2011 is changed to May 30,
2012
· Page 1, line 13: July 15, 2011 is changed to May
15,2012
· Page 2, line 3: Aug. 15,2011, is changed to June
15,2011
· Page 2, line 7: 2013 is changed to 2014
Ms. Delbridge explained that the dates corresponded to
deadlines contained in the legislation.
Co-Chair Stoltze asked if there were any substantive
issues. Ms. Delbridge observed that a year had passed since
the legislation was introduced and that the sponsor felt
that it was appropriate to encourage a more timely process.
Deadlines were shortened by a couple of months. The first
benchmark of July 15, 2012 was changed to May 15, 2012. She
pointed out that the open season would have been in effect
for two years.
Ms. Delbridge noted that throughout the bill, "firm
transportation commitments" were changed to "commitments to
acquire firm transportation capacity". Firm transportation
commitments were not the expected outcome of an open
season. Instead the expected outcome was precedent
agreements or commitments to iron out conditions that
become firm transportation capacity. The changes were made
in the title; page 1, line 10; page 1, line 12 - 13; page
1, line 14; and page 2, line 10.
Ms. Delbridge observed that the last change was to the
standard for commitments to acquire firm transportation
commitments, which had been changed to require sufficient
commitments to support development of the project licensed
by the Alaska Gasline Inducement Act (AGIA). The new
standard replaced "construction" with "development" of the
project. The change was reflected on page 1, line 10. The
committee substitute struck prior language requiring those
commitments to be "sufficient to support the construction
of the project." The change was also reflected on page 2,
line 9. The word "credit" was deleted; the project had to
have sufficient "support" and finance "development".
1:41:02 PM
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, committee substitute for HB 142, Work
Draft 27-LS0451\E was adopted.
HB 142 was HEARD and HELD in Committee for further
consideration.
HOUSE BILL NO. 118
"An Act relating to a tax credit for corporate income
taxes paid for qualified research and development
expenditures; and providing for an effective date."
1:42:58 PM
Co-Chair Thomas MOVED to ADOPT a proposed committee
substitute for HB 118, work draft 27-GH1951\B. Co-Chair
Stoltze OBJECTED for purpose of discussion.
JOE MICHEL, STAFF, REPRESENTATIVE BILL STOLTZE, explained
changes to the proposed committee substitute. He observed
that there were two changes on page 2, line 11:
"apportioned to this state" and "AS 43.20.021" were
deleted; and "this title was inserted.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, proposed committee substitute for HB
118, work draft 27-GH1951\B was adopted.
CURTIS THAYER, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, testified in support of
HB 118. He observed that innovation can be an expensive,
intricate and time-intensive enterprise. But it also could
also spark a chain of investments in capital equipment,
workers, and spillover activities in every economic sector.
Nearly 40 other states had already recognized this by
establishing a tax credit for research and development in
addition to illustrated economic benefits the credit brings
to those states. The tax credit also brought a competitive
benefit advantage over Alaska.
Mr. Thayer observed that House Bill 118 would address the
issue by establishing a 20 percent tax credit for qualified
research and development (R&D) conducted by corporate
taxpayer in Alaska. In effect, the research and development
tax credit would stimulate private-sector investment,
entrepreneurial activity and business expansion in the
state that would bring opportunity and sustainable long-
term benefits to the state's economy.
Mr. Thayer noted the HB 118 tax credit was modeled after
the federal R&D established in 1981 and reauthorized
fourteen times. The credit was reauthorized through 2011.
Legislation was introduced to make the R&D tax credit
permanent in order to help companies create good jobs while
growing future productivity.
Mr. Thayer explained that the legislation would allow
Alaskan corporations to receive a 20% tax credit, not to
exceed $10 million per taxpayer, per tax year. The research
and development activities, or the payroll of the
employees, must take place in Alaska. To qualify, research
and development activities must meet the following:
· The purpose is discovering information technological
in nature;
· The application of which is intended to be useful in
the development of a new or improved component of the
taxpayer;
· Substantially all of the activities constitute a
process of experimentation; and
· The experimentation is for a qualifying activity or
purpose.
Mr. Thayer reviewed what would qualify:
•Developing new or improved products, processes, or
formulas;
•Developing prototypes or models;
•Building or improving manufacturing facilities;
•Developing or improving software technologies;
•Certification testing; and
•Developing or applying for patents.
Mr. Thayer reviewed what would not qualify:
•Exploration activity to ascertain the existence,
location, extent, or quality of any ore or mineral
deposit;
•Duplicating an existing business component;
•Surveys and studies such as market research,
advertising, and routine data collection;
•Research in the social sciences, arts, or humanities;
and
•Anything for style, taste, cosmetic, or seasonal
reasons.
1:48:13 PM
Mr. Thayer gave examples of the type of credits that could
occur. He referred to seafood processing waste disposal in
fisheries. The EPA had restricted processing effluent.
Research was needed to reduce sediment piles through
process innovation, increased protein and by-product
utilization. Tax credits meant research conducted in
Alaska, jobs, vendor payments, increased experience, and
capacity building in process and product innovation. He
observed that some of the research was being down out-side
of the state of Alaska for fish processing plants in the
state of Alaska.
Mr. Thayer reviewed potential tax credits for minerals,
rare earth deposit processing. There was a need to
customize the process for milling and recovery to use
deposits to the fullest potential. More than 240 processes
might be required to reach all components in a deposit. He
observed the work was being done in Canada and maintained
it should be done in Alaska.
Mr. Thayer spoke to timber for use in architectural and
building industries. To be specified for many building and
architectural uses, species must have technical standards
set for each product form.
Mr. Thayer observed that there were 38 states with a form
of R&D tax credit or incentive available. He clarified that
credits were not stackable against other industries such as
oil and gas within the title of the legislation.
1:50:08 PM
ALAN JOHNSTON, WEDBUSH SECURITIES, ANCHORAGE, testified in
support of the legislation. He noted he had been in the
investment business for 35 years and stressed the
importance of the legislation. He emphasized the importance
of raising aspirations that R&D could occur in Alaska.
1:51:44 PM
DAN WHITE, ASSOCIATE VICE CHANCELLOR, RESEARCH, UNIVERSITY
OF ALASKA, FAIRBANKS, spoke in support of the legislation
and stressed the importance of moving research and
development from the university into the private sector.
moving R&D to the private sector was seen as a critical
element of economic development in Alaska, especially in
engineering. Businesses would gain competitive advantage in
national and global markets from applied research conducted
and licensed by the University of Alaska, Fairbanks. He
concluded that HB 118 would provide a significant incentive
to business to take advantage of emerging opportunities and
contribute to the university's mission. The legislation
would build a bridge between the university and the private
sector that would lead to job growth and diversification
for the state.
1:53:38 PM
Representative Guttenberg noted that seasonal items would
not apply and pointed out that "seasonal" could apply to
agriculture, fishing, or timber; and questioned the
definition. Mr. Thayer offered to provide a definition
under the tax code. Co-Chair Stoltze asked for further
clarification regarding agricultural seasonal definitions.
Mr. Thayer observed that agricultural items would qualify.
He pointed out that the peony market was a product of the
university's research.
1:57:03 PM
Representative Gara recalled concerns that state money
would not displace federal funds. He asked the federal tax
rate. Mr. Thayer explained businesses could not claim both
a state and federal tax credit on the same percentage.
Mr. Thayer explained that the 20 percent tax credit for
qualified research and development that exceeded the
average qualified research and development expenditures as
defined in 26 U.S.C 41(d) (Internal Revenue Code) for the
three years immediately preceding the year in which the
credit was claimed. Unused credits might be carried forward
for up to seven years after the expenditure for which the
credit was claimed. In order to prevent a corporate
taxpayer from claiming more than one benefit for a single
expenditure, the bill would also provide that a credit
could not be claimed for expenditures the corporation
deducted in calculating its tax liability, or for any other
credit, including any federal credits, that had been
apportioned to the state and claimed under the current
Alaska Net Income Tax Act.
Representative Gara asked what would occur in a case where
there was a 22 percent state credit and an 18 percent
federal credit and questioned if the state would pay the
extra 2 percent or the entire credit. He reiterated his
request for the federal tax rate.
1:59:19 PM
Representative Guttenberg reiterated his question: What
agricultural products qualify that would not be seasonal.
BRUCE TANGEMAN, DEPUTY COMMISSIONER, TAX DIVISION,
DEPARTMENT OF REVENUE (via teleconference), could not
respond but promised to provide the information.
Representative Gara asked the federal tax rate and if it
would be replaced with state credits. Mr. Tangeman stated
he would provide the information.
Co-Chair Stoltze noted the bill would be held in order to
allow the Department of Revenue time to research answers to
the member's questions.
2:01:17 PM
Representative Gara concluded that businesses could take
the state or federal tax credit and restated his previous
scenario. He thought the state would pay the entire tax if
its tax credit was higher than the federal rate.
Representative Gara noted a comprehensive system of
deductions and credits under 43.55 oil and gas tax
established under Alaska's Clear and Equitable Share
(ACES). He did not see the prohibition for adding these
credits to the proposed R&D tax credit. He wanted further
assurance that the tax could not be taken in addition to
the ACES credit.
2:03:00 PM
Representative Neuman asked equipment and facilities would
be allowed if they supported a new product or technology.
Mr. Thayer affirmed that they would be covered as long as
the business was a taxpayer to the state of Alaska and it
supported new technology to bring something to market; it
would qualify if it had not been done before. He clarified
the credit would apply for developing and proving the
technologies or building or improving manufacturing
facilities to add or enhance a product.
2:05:08 PM
Vice-chair Fairclough observed that page 2 lines 5 and 6
provided for a seven-year credit carry forward and asked
why a past tax liability would be allowed for seven years.
Mr. Thayer explained that the provision was modeled after
federal tax legislation.
Vice-chair Fairclough referred to page 2, line 9. She
shared concerns that the state deduction would be taken in
lieu of another deduction [federal] and questioned if there
should be a requirement to go forward on the other
deduction.
Vice-chair Fairclough observed the national and global
recession and questioned what other states were doing in
terms of R&D tax credits.
2:07:09 PM
Representative Gara referred to subsections (c) and (d) on
page 2:
(c) If the tax credit under this section exceeds the
taxpayer's tax liability after other tax credits are
taken under this chapter for the year in which the
expenditure is incurred, the excess of the tax credit
over the liability may be carried forward for up to
seven years. If an unused credit is carried forward to
a tax year from an earlier year, the credit arising in
the earliest year is applied first against the tax
liability for the year.
(d) A person may not claim a credit under this section
for qualified research and development expenditures
that were deducted in the calculation of tax liability
under AS 43.20.011(e) or for which any other credit,
including any federal credit, has been apportioned to
this state and claimed under AS 43.20.021.
Representative Gara thought that the above sections
conflicted. He thought that they implied that credits were
stackable to 100 percent. Mr. Thayer responded that the
committee substitute would effectively prohibit stacking.
He maintained that the legislation prohibited a company
from claiming R&D tax credits against corporate income tax
if the expense used in calculating the R&D was used to
claim a credit against taxes due on other types under Title
43. Testimony in previous committees during the 2011
session expressed concern that a company subject to both
corporate income tax and oil and gas production tax could
receive a credit against both taxes for the same expense.
The committee substitute assured that the company could
only take a credit against one tax type for those expenses.
Representative Gara reiterated his concerns. Mr. Thayer
noted that an oil company or subsidiary that does R&D on
heavy or viscous retrieval would qualify as long as there
was no other tax credit received; the credit would not
apply once production was begun.
2:09:23 PM
Representative Gara provided a scenario based on a company
invested in heavy oil technology that received a deduction
of their tax rate, which could be 40 percent. He suggested
that the legislation would not prevent the company from
getting a tax credit on top of the deduction.
Mr. Thayer reiterated that the legislation refers back to
the bill title, which indicated that credits would only pay
for qualified research and development expenditures. He
maintained that they could not take both.
Representative Gara argued that the legislation spoke to
tax credits not deducts, which were separate under the oil
and gas [tax] code.
Mr. Tangeman clarified that it could not be used as a tax
credit if it were used as a deduction and pointed to
Section (d), page 2, line 8:
A person may not claim a credit under this section for
qualified research and development expenditures that
were deducted in the calculation of tax liability
under AS 43.20.011(e).
2:11:24 PM
Representative Gara agreed with the intent but noted that
AS 43.20.011(e) referred to the nine percent state
corporate tax, not the oil and gas tax. Mr. Tangeman felt
that Section (d) was clear and maintained that the intent
was not to allow stacking. Representative Gara suggested an
amendment was needed for clarification that the credit
could not be stacked on credits and deductions taken under
AS 43.55, oil and gas tax.
2:13:22 PM
Representative Neuman asked what discussions had occurred
regarding transferable and non-transferable credits. He
observed that transfers had been enacted to assist smaller
companies with working capital. He recognized that the
state was still "on the hook" for 100 percent, but
suggested they be transferrable.
Mr. Thayer noted that only the film incentive program had
transferrable tax credits. He observed issues surrounding
how credits would be transferred and evaluated. Film
industry tax credits sell between 80 to 90 cents on a
dollar. Smaller companies would not have a tax liability to
the state. The credit would be aimed at large companies
that had the ability to do a lot of R&D in the state.
Mr. Tangeman agreed that the intent was not to be
transferable and the seven year provision would allow
smaller corporations to have time to realize the tax
liability.
Co-Chair Stoltze closed public testimony.
HB 118 was HEARD and HELD in Committee for further
consideration.
2:17:41 PM
AT EASE
2:25:42 PM
RECONVENED
2:26:09 PM
HOUSE BILL NO. 198
"An Act relating to the special education service
agency."
REPRESENTATIVE ALAN DICK, CHAIR, SPECIAL COMMITTEE ON
EDUCATION, testified in support of HB 198. He observed that
House Bill 198 would remove a sunset requirement and
increase state funding for the Special Education Service
Agency (SESA), which was a not-for-profit organization
established in statute in 1986. The Special Education
Service Agency was governed by the Governor's Council on
Disabilities and Special Education and its own independent
board of directors.
Representative Dick noted that sometimes districts could
not fully serve students that had low-incidence
disabilities with existing personnel and resources. House
Bill 198 would incorporate the recommendations of the most
recent legislative audit, completed in 2007. The Special
Education Service Agency assisted local school districts to
provide needed special education services. House Bill 198
would repeal the sunset requirement and increase SESA
funding.
Representative Dick noted that the Special Education
Service Agency received state support based on a funding
formula adopted in 1998. Each year the Department of
Education and Early Development allocated to SESA not less
than $15.75, times the number of students statewide.
Although local school districts had received increases in
state funding since 1998, SESA had not. Under HB 198, the
multiplier would increase as the base student allocation
increases. Currently the computation (.4 percent of
$5,680) equaled $22.72 which would approximate the impact
of inflation from 1998 to 2011. He observed that the
Committee did not change the provision.
The Special Education Service Agency was set to expire on
June 30, 2013. During previous performance audits, both
the Department of Education and the Legislative Auditor
recommended removing SESA from the sunset process. House
Bill 198 would repeal the sunset requirement and thus allow
SESA to plan long-term and have adequate funding to meet
special needs of special children.
2:29:51 PM
MILLIE RYAN, EXECUTIVE DIRECTOR, GOVERNOR'S COUNCIL ON
DISABILITIES AND SPECIAL EDUCATION, testified in support of
HB 198. She observed that the council's mission was to
improve the lives of people with disabilities and the
quality of education provided to students with
disabilities. The council consisted of 27 members appointed
by the governor. Sixty percent of the members were
individuals with disabilities or parents or family members
of people with disabilities. There were state agency
representatives from the Department of Education and Early
Development, Division of Vocational Rehabilitation,
Department of Health and Social Services; and other
representatives designated in federal law.
Ms. Ryan noted that the council had five responsibilities
in statute. Five Council members serve on the SESA board.
There were representatives from: school administrators,
special education administrators, and the National
Educational Association. The special education director
from the Department of Education and Early Development and
Ms. Ryan were ex-official members.
2:32:33 PM
Ms. Ryan noted that the job of board was to assure SESA
provided assistance to school districts and early
intervention programs serving students with low incidence
disabilities, particularly those who lived in rural and
remote areas of the state. The board also assured that SESA
supported education that was student, family and community-
centered and met the individual needs of students; assisted
SESA in addressing other state education needs of
individuals with low incidence disabilities, as external
funding was obtained; and monitored SESA policies and
procedures.
Ms. Ryan observed that SESA was established in 1986, as a
not-for-profit corporation that operated under a sunset
provision. She noted that SESA received Low Incidence
Disabilities (LID) funding from the Department of Education
and Early Development based on prior year's statewide total
enrollment and federal and state grants and contracts.
2:33:45 PM
Representative Wilson referred to LID funding. She asked if
funding was based on all students that were designated as
special education students. Ms. Ryan explained that funding
was based on the entire student count not just the count of
special education students.
Ms. Ryan pointed out that required services were itinerant
outreach services to students who were deaf; deaf-blind;
cognitively impaired; hearing impaired; blind and visually,
orthopedically disabled, multiple disabilities, or autism.
She noted that these disabilities tended to be uncommon.
Special education instruction support and training of local
school district personnel were provided to both special and
regular education staff. Other services appropriate to
special education needs were also provided.
2:35:13 PM
Ms. Ryan spoke to the funding formula set in 1998, which
was $15.75 times the number of students in the state in
average daily membership in the preceding fiscal year.
Ms. Ryan observed that the recommended change in funding
formula for SESA was 0.40% of the current year base student
allocation (BSA) X total average daily membership (ADM)
from previous year. She explained that the increase would
catch SESA up in terms of inflation. The formula would tie
SESA funding to the BSA. The sunset provision would also be
removed.
Ms. Ryan explained that the funding formula for SESA was
based on a fixed student allocation that was set in 1998
and did not keep up with inflation. She emphasized that
SESA specialists traveled frequently to rural Alaska and
travel expenses were rising. In FY 2013, SESA would receive
less money than it did 10 years ago; SESA's BSA did not
change when school district's BSA changed. If SESA's BSA
had changed at the same time, its rate would be $22.71
instead of $15.75.
2:36:51 PM
Ms. Ryan observed that the 2007 audit recommended that the
statutory funding formula be reevaluated based on the
effects of inflation and increased employee costs. The
interim commissioner of Department of Education and Early
Development concurred with the audit's recommendations at
the time of the audit.
Co-Chair Stoltze asked the position of the new
commissioner. Ms. Ryan stated that the new commissioner was
non-committal.
2:38:04 PM
Ms. Ryan observed that in response to the last audit, SESA
successfully secured additional grants and contracts that
fit with its mission. "Soft" money dedicated for specific
purposes in 2011 comprised 45% of SESA's budget; there was
a $236,000 contribution to overhead. As a result, SESA was
able to fund 3 positions for the LID program. She pointed
out that specialists that consult with districts would have
to be reduced if the "soft" money did not continue. She
concluded that SESA had increased grant funding over
previous years.
2:38:46 PM
Ms. Ryan reiterated that SESA had already had difficulty
meeting its statutorily mandated duties. If there was a
reduction in grants and contracts the situation would
worsen and negatively impact students and school districts.
Ms. Ryan emphasized that SESA brought the ability to
provide evidence-based strategies to school districts,
which would be decreased without funding. A lack of funding
would result in fewer and shorter on-site visits.
Ms. Ryan stressed the importance of SESA for new special
education teachers and to classroom teachers working with
students who have unique, low-incidence disabilities.
2:40:14 PM
Representative Wilson spoke to mentoring and observed that
the Department of Education and Early Development already
mentors first and second year teachers and suggested there
was a duplication of service.
P.J, FORD SLACK, PH.D, BOARD PRESIDENT, SPECIAL EDUCATION
SERVICE AGENCY, observed that she was also the principal at
Sitka High School and the former superintendent of the
Delta Greely School District. She responded that the
mentorship program did not mentor special education
teachers or specialists while she was at Delta Greely. Only
core academic areas were mentored.
Representative Wilson argued that special education
teachers were included in the Department of Education and
Early Development's mentoring programs and asked for more
data.
PATRICK PILLAI, EXECUTIVE DIRECTOR, SPECIAL EDUCATION
SERVICE AGENCY (SESA), added that a lot of the new teaching
mentoring was done to bring teachers into the teaching
environment for strategies, while SESA provided
professional development in special education that might be
specific to a particular syndrome. He observed that new
teachers might have only taken one generic class. The
professional development provided by SESA was for classroom
strategies and on-going professional development for the
general school body.
2:42:27 PM
Representative Wilson suggested there needed to be
discussion with the university and Department of Education
and Early Development if there were special education
teachers without a special education degree.
Ms. Ryan explained that a special education teacher could
have a general background, but SESA provided specialized
services.
Representative Gara summarized that urban districts had
their own special education expertise and SESA focused on
smaller districts. Ms. Ryan agreed that the focus was on
rural districts and pointed out that Anchorage and larger
districts had the expertise to work with special needs
students. She added that SESA provided support and
information to all school districts.
Representative Gara stressed the common goal to provide
needed services in the most sufficient manner. He asked how
many students SESA served. Mr. Pillai noted there were 354
LID students. He added that SESA also worked with the
general education staff and peers that interact with those
students through training.
Representative Gara asked the per student dollar cost. Mr.
Pillai agreed to provide the information. He stressed that
services were provided to more than just the students.
2:45:52 PM
Representative Costello observed that the foundation
formula based on student attendance was approximately
$5,682 per student. The LID program was a general
percentage of total student population.
Mr. Pillai clarified that the child count was the count of
special education students. The calculation was $15.75
times the ADM, which was not tied to BSA. School districts
were functioning at 5 percent of the consumer price index
(CPI), while SESA was 30 percent below the CPI.
Representative Costello concluded that the rate was based
on total student population based on a historical number.
Mr. Ryan clarified that the number of children was similar,
but funding was tied to all the children receiving an
education in the state and was a flat rate. She explained
that SESA funding would decrease with the child count;
unlike school districts whose funding was tied to the BSA.
The legislation would tie SESA funding to the BSA.
Districts refer children to SESA.
2:49:33 PM
Representative Costello noted the program was set up to
primarily help rural students. She referred to children
with autism enrolled in Anchorage. Mr. Pillai clarified
that while larger districts tended to have their own
specialists; SESA provides training for larger districts.
Representative Costello questioned how funding for SESA fit
with other state needs and why the request was for a
percentage instead of a dollar amount increase.
Mr. Pillai stressed the difficulty of recruiting and
maintaining staff at the current funding level. Multiple-
disability specialists were reduced from five to three
through attrition. New recruits did not receive the same
level of wage or benefits as those being replaced.
Competition with other school entities affected
recruitment; there was a 40 percent discrepancy between
SESA and the Anchorage School District.
Mr. Pillai spoke to the demand for services. The ADM was
dropping, but the LID numbers and the number of referrals
from rural Alaska had increased. Some districts had up to
eight or nine students with autism. Extra funding would
allow more specialists to be hired and improve salary
scales for retention.
2:53:31 PM
Representative Costello asked the turnover rate. Mr. Pillai
observed that there was a low turnover rate for many years
due to retirement incentives, but six employees had left in
the previous year. He noted difficulties with recruitment
due to salary and the high degree of specialty needed.
2:54:53 PM
Ms. Ryan spoke to the sunset provision. The 2007, audit
found that: SESA performed a valuable, effective and
efficient service to school districts that they could not
provide themselves because of the nature of low incidence
disabilities; students were able to be served in their
local communities; and SESA did not duplicate services
provided by the Department of Education & Early Development
or local school districts. The audit recommended removal of
the sunset. She observed that another audit was underway,
which added to the difficulty of recruiting and retaining
qualified staff.
2:55:53 PM
Vice-chair Fairclough asked if the student count was
breakdown by region. She asked if there was a concentration
in specific school districts. Mr. Pillai observed that 54
school districts were served. Almost every school district
was served, but there were cloisters in different
districts. Some districts had eight to ten students, while
others had one or two. There was a referral process in
place. Vice-chair Fairclough reiterated that she wanted
student service numbers.
Vice-chair Fairclough asked for a copy of the 2007 audit
and expressed concerned about the fiscal note. She
suggested that the fiscal note did not adequately show the
cost of continuing the program. She requested a breakdown
of administrative costs and the cost of Public Employees'
Retirement System (PERS) and Teachers' Retirement System
(TRS) prior to servicing students.
2:58:55 PM
Co-Chair Thomas observed that he had not heard of the
program and spoke against the sunset. He expressed concern
that money had been given several years prior to
disadvantaged children and wondered whether the program
would serve the same children twice.
Vice-chair Fairclough discussed the district cost factor
increment increases, which were currently in their final
year. She thought that additional resources had been
appropriated toward disabilities and wondered how the
programs worked together. She asked for an explanation
about how the program provided unique opportunities that
were not covered by the Department of Education and Early
Development.
3:02:19 PM
Mr. Pillai, in response to a question by Representative
Neuman, explained that intensive funding was provided to
schools for special education; SESA was more in the role of
providing onsite professional development for teachers
based on the referral process. School districts referred
students to SESA for services.
Representative Neuman expressed concern on behalf of
smaller school districts and requested a follow up on
costs.
MARCY HERMAN, SPECIAL ASSISTANT, DEPARTMENT OF EDUCATION
AND EARLY DEVELOPMENT, testified in support of SESA with a
sunset and offered that Michael Hanley, Commissioner,
Department of Education and Early Development would be
happy to attend the next hearing.
Ms. Herman replied to an earlier question from
Representative Wilson and explained that there were 36
special education teachers being mentored through the
mentoring program.
LARAINE ADANS, DIRECTOR OF SOCIAL SERVICES, LOWER YUKON
SCHOOL DISTRICT, MOUNTAIN VILLAGE (via teleconference),
spoke in support of continued funding through SESA. She
observed that the 11 villages in the district were in
strong support of the legislation.
DR. CASSIE WELLS, DIRECTOR, STUDENT SERVICES, NORTH SLOPE
BOROUGH SCHOOL DISTRICT, BARROW (via teleconference), spoke
in strong support of SESA and the elimination of the sunset
clause. She emphasized that SESA provided on-site
specialized programing and training for those that work
with the students with the most significant disabilities,
particularly in rural and remote areas.
Co-Chair Stoltze noted that HB 198 would remain open for
additional public testimony.
HB 198 was HEARD and HELD in committee for further
consideration.
AT EASE
3:08:29 PM
3:08:52 PM
RECONVENED
3:13:48 PM
HOUSE BILL NO. 180
"An Act authorizing the Department of Administration
to note a person's status as a veteran on the person's
driver's license and to provide certain information to
the Department of Military and Veterans' Affairs."
Co-Chair Thomas MOVED to ADOPT proposed committee
substitute for HB 180, Work Draft 27-LS0589\T, (Luckhaupt,
2/6/12). Co-Chair Stoltze OBJECTED for purpose of
discussion.
REPRESENTATIVE DAN SADDLER, SPONSOR, spoke in support of
House Bill 180. He read the sponsor statement:
House Bill 180 seeks to help Alaska veterans receive
more of the benefits they have earned through their
sacrifice and service in uniform, and to which they
were entitled by law and custom. It would allow the
Division of Motor Vehicles (DMV) to add information to
state drivers' licenses or identification cards
signifying the holder's status as a veteran, and would
allow DMV to share that information with the state's
veterans benefit office.
Alaska is among the most veteran-friendly states in
the Union. Many businesses and organizations
demonstrate their appreciation by offering various
discounts, preferences and other benefits to bona fide
veterans. However, veterans must usually prove they
qualify by presenting certified copies of their
discharge documents - the DD-214, DD-215, or NGB-22
forms, exposing these critical documents to wear,
damage or loss.
By giving veterans a way to carry reliable and
convenient proof of their status on state-issued
cards, this bill would help them more easily enjoy the
full range of personal, business and social benefits
offered to them by a grateful state.
HB 180 could also help relieve the situation in which
tens of thousands of Alaska veterans may be missing
out on significant government benefits, because they
have no contact with the state's Office of Veterans
Affairs. The bill would allow the DMV to provide the
names and addresses of those who were issued veteran-
designated driver's licenses or ID cards to the state
veterans' office. That office could then reach out to
make more veterans aware of programs available to
them, and to help them receive any benefits owed to
them.
Representative Saddler outlined changes from CSHB 180 (STA)
to version X:
· Page 1, line 9:
Adds "at the request of the person" before "The
department shall…" This would allow for the veterans
opt-in provision for information to go to the U.S.
Office of Veterans Affairs for identification cards.
· Page 2, line 1 :
Adds "with the approval of the person" before "The
department shall…" This would allow for the veterans
opt in provision for information to go to the U.S.
Office of Veterans Affairs for the driver's license.
· Page 2 line 8 :
Adds "at the request of the person" before "the
department shall…"
· Page 2, Lines 16-19:
Adds language allowing for a $5 fee for the driver's
license replacement with the veteran designation,
which is a change from a $15 replacement fee. This
would cover the department's expense without
additional revenue.
· Page 2, Lines 13-14:
Adds "with the approval of the applicant" and provides
that the department "shall make available" [provide]
the name and address…" This makes sending information
from the Division of Motor Vehicles to the U.S. Office
of Veterans Affairs for the opt-in provision.
· Page 2, Line 20: changes effective date from 2012 to
"2013".
3:17:51 PM
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, committee substitute for HB 180, Work
Draft 27-LS0589\T, (Luckhaupt, 2/6/12) was adopted.
3:18:50 PM
RON SIEBELS, MILITARY ORDER OF THE PURPLE HEART, ANCHORAGE
(via teleconference), testified in support of the
legislation. He stressed the benefits of the legislation
and the importance the state recognition of veterans.
CHRIS NELSON, MULDOON (via teleconference), testified in
support of HB 180. He noted the high unemployment rate
among recently returned veterans, which was higher than the
national unemployment rate. Several governmental
jurisdictions were instituting veterans' hiring preference
along with unions and private employers that were actively
recruiting veterans. He stressed the importance of easy
identification and noted that the service discharge papers
were cumbersome and included more information than needed
by an employer.
3:21:04 PM
Co-Chair Thomas questioned where the designation would be
on the license and suggested an American flag could be
added to the background.
RIC DAVIDGE, PRESIDENT, VIETNAM VETERANS OF AMERICA (via
teleconference), testified in support of HB 180. He
stressed that the identification of veterans on state ID's
was a national priority. He stressed the need to contact
veterans in regards to medical conditions. He pointed to
congressional directives to seek out veterans for services.
The legislation would also allow a uniform ID for veterans
to obtain services for disabilities, discounts, and
employment applications.
3:24:52 PM
SUSAN GORSKI, EAGLE RIVER CHAMBER OF COMMERCE, CHUGIAK (via
teleconference), testified in support of HB 180. She
observed that the legislation would facilitate veterans
with other public services and prevent the need to carry
discharge papers.
Co-Chair Stoltze noted the high density of veterans in his
district, which was double the national average.
3:27:11 PM
VERDIE BOWEN, DIRECTOR VETERANS AFFAIRS, ANCHORAGE (via
teleconference), testified in support of HB 180. He
observed that not all veterans received a medical care card
from U.S. Office of Veterans Affairs (VA); only veterans
that receive care at the VA received a card. Only 30,000
veterans were registered at the VA. He felt the legislation
would facilitate identification of veterans.
3:28:40 PM
Representative Neuman asked if veterans should have to
check to opt in or out with the VA.
Mr. Bowen would prefer to be able to contact all veterans
but stressed that receipt of the benefit on the license was
the first priority.
Representative Neuman noted an amendment might be necessary
to ensure the protection of a veteran's privacy.
3:30:23 PM
Representative Saddler agreed with Representative Neuman's
concern and observed an amendment might be needed to delete
"with the approval of the person" and to insert "unless the
person objects." Co-Chair Stoltze noted that amendments
would be taken up at the next hearing and acknowledged the
need to protect veterans' privacy.
Representative Guttenberg asked if the list of veterans was
available to service agencies for notification of benefits
only. Mr. Bowen affirmed that the provision was included
through the PFD application. Currently, 3,400 had checked
the veteran's box; the majority of addresses were for
military installations.
3:32:07 PM
Representative Saddler felt privacy was protected and had
no objection to the current version.
Representative Gara asked if the Alaska National Guard was
included. Mr. Bowen affirmed.
3:33:17 PM
STACY OATES, ADMINISTRATIVE MANAGER, DIVISION OF MOTOR
VEHICLES, DEPARTMENT OF ADMINISTRATION (via
teleconference), provided information on the legislation.
She observed that the administration was neutral regarding
the legislation but cautioned that the legislation would
open the door to the addition of other designators. She
maintained that the purpose of the license was to provide
proof of the ability to drive and the proof of identity for
law enforcement purposes. There would be additional revenue
from the initial enactment. She observed that wait time at
Division of Motor Vehicle (DMV) offices might be impacted.
She estimated that fifty percent of qualified veterans
would opt for the designator within the first year, which
was reflected in the fiscal note.
3:35:25 PM
Representative Edgmon referred to the fiscal note and
observed that it was unclear whether DMV would collect the
standard fees for driver's licenses.
Co-Chair Stoltze asked if the department had a position on
the organ donor designation. Ms. Oates could not answer.
3:37:14 PM
Representative Wilson spoke to the estimated wait time at
DMV's. Ms. Oates could not determine the real effect on
wait times, but noted that individuals would have to apply
in person. Representative Wilson reiterated concern with
wait times at DMV offices. Ms. Oates acknowledged that wait
time varied.
3:39:03 PM
Vice-chair Fairclough expressed support for the legislation
with a provision to opt-out. She asked that the committee
be provided information relating to the Real ID Act and the
effect on Alaskans.
Representative Saddler noted that the fiscal note was based
on the $15 replacement charge and would need to be updated
to reflect the change to $5. He observed that the right to
privacy was protected in version T on page 2, line 1.
3:41:18 PM
Co-Chair Thomas observed that the fiscal note contained 160
design hours to accommodate the designation. He reiterated
the possibility of placing a flag in the background [as a
designation]. Ms. Oates could not respond.
Co-Chair Thomas reiterated that a flag would be an
appropriate identifier.
Co-Chair Stoltze expressed disappointment with the
administration's neutral position.
3:43:35 PM
Co-Chair Stoltze asked if the 160 contract hours could be
quantified. Ms. Oates noted it would be $143 dollars at 160
hours ($22,880).
Vice-chair Fairclough concurred that a US flag would be a
fitting backdrop.
Vice-chair Fairclough MOVED to ADOPT reduce the contact
costs for design in the fiscal note by $33 thousand. There
being NO OBJECTION, it was so ordered.
3:46:49 PM
Representative Costello MOVED to ADOPT a conceptual
amendment: before "designation" insert "United States flag"
on page 1, line 9 and page 2, line 8. There being NO
OBJECTION, it was so ordered.
3:48:41 PM
Co-Chair Thomas MOVED to report CSHB 180(FIN) out of
Committee with individual recommendations and the
accompanying revised fiscal note. There being NO OBJECTION,
it was so ordered.
CSHB 180(FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a new fiscal impact note by
the House Finance Committee for the Department of
Administration.
ADJOURNMENT
3:49:54 PM
The meeting was adjourned at 3:50 PM