Legislature(2017 - 2018)HOUSE FINANCE 519
01/23/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Department of Transportation and Public Facilities: Department Overview | |
| Department of Revenue Fy 18 Budget Overview | |
| Judiciary: Alaska Court System Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 23, 2017
1:30 p.m.
1:30:39 PM
CALL TO ORDER
Co-Chair Seaton called the House Finance Committee meeting
to order at 1:30 p.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
Mark Luiken, Commissioner, Department of Transportation and
Public Facilities; Amanda Holland, Administrative Services
Director, Department of Transportation and Public
Facilities; Randall Hoffbeck, Commissioner, Department of
Revenue; Dan DeBartolo, Director, Division of
Administrative Services, Department of Revenue; Doug
Wooliver, Deputy Administrative Director, Alaska Court
System; Jerry Burnett, Deputy Commissioner, Department of
Revenue;
PRESENT VIA TELECONFERENCE
SUMMARY
Department of Transportation and Public Facilities:
Department Overview
Department of Revenue FY 18 Budget Overview
Judiciary: Alaska Court System Overview
Co-Chair Seaton relayed the agenda for the day.
^Department of Transportation and Public Facilities:
Department Overview
1:32:35 PM
MARK LUIKEN, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES, introduced the PowerPoint presentation:
"Department of Transportation and Public Facilities:
Department Overview" (copy on file).
Commissioner Luiken turned to slide 2: "Transportation &
Public Facilities: Keep Alaska Moving through service and
infrastructure." He indicated that per Alaska Statute 44.42
the department was responsible for planning, research,
design, construction, operation, maintenance, and
protection of all state transportation systems and public
facilities. The department achieved this through the
department's core services in its strategic approach known
as results-based alignment. He read from the slide:
The Department of Transportation & Public Facilities is
responsible for providing these core services:
· Preserve Alaska's Transportation Infrastructure
· Operate Alaska's Transportation Infrastructure
· Modernize Alaska's Transportation Infrastructure
· Provide Transportation Services
Commissioner Luiken reported that results-based alignment
was a service delivery framework from which the department
measured the contribution of the services the department
delivered in support of its mission. He noted links to
source documents included on the slide.
1:34:58 PM
AMANDA HOLLAND, ADMINISTRATIVE SERVICES DIRECTOR,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
reviewed slide 3: "Department of Transportation & Public
Facilities Share of Total Agency Operations." She reported
that the slide provided a 10-year look back of the
department's unrestricted general fund (UGF) and designated
general fund (DGF) funding. For the FY 18 governor's
proposed budget, the UGF total equaled $145.7 million. The
designated general fund total equaled $126.9 million. The
numbers were close to the department's FY 09 levels.
Ms. Holland reviewed slide 4: "Department of Transportation
& Public Facilities Line Items." She reported that the
slide showed all funds by line item. The department's
commodities, services, travel, and personal services were
trending below FY 12 levels. She noted that travel was
below the FY 08 level.
Co-Chair Seaton announced that Representative Pruitt had
joined the meeting.
Representative Guttenberg referred to the personal services
line on slide 4. He referred to the numbers for the FY 17
management plan and for the FY 18 governor's plan. He
wondered about whether design and engineering were
contained in the numbers. Ms. Holland indicated that the
chart reflected a 10-year look back.
Representative Guttenberg remarked that FY 18 governor's
plan was included. Ms. Holland reported that the chart
reflected the department's total personal services cost for
FY 18 including any reductions of positions that were in
the budget including design and construction positions.
Representative Guttenberg was under the impression that the
numbers did not include estimated savings or changes in the
budget. He looked forward to further discussion on the
proposal to move design and engineering into a private
function within DOT's budget.
1:38:39 PM
Co-Chair Seaton explained to students in the room about
decorum in a discussion, which served the useful purpose of
managing the meeting.
Ms. Holland explained slide 5: "Appropriations within the
Department of Transportation & Public Facilities: GF Only."
She pointed out that the graph looked at general funds
only, which included UGF and DGF sources. There were 2
result delivery units including the Highways, Aviation, and
Facilities unit and the Alaska Marine Highway System
(AMHS). These delivery units made up 94 percent of the
department's general fund operating budget. It meant that
94 percent of the department's general fund operating
budget was dedicated to direct service for Alaskans. She
highlighted that the FY 18 budget for AMHS was near the FY
08 level. The budget for the Highways, Aviation, and
Facilities unit was below the FY 08 level.
Ms. Holland turned to slide 6: "Appropriations within the
Department of Transportation & Public Facilities: All
Funds." She relayed that when looking at all funds for the
FY 18 governor's proposed budget, the Highways, Aviation,
and Facilities unit had the largest share of the operating
budget, while the budget for AMHS was a close second. Most
of the operating budget was dedicated to 3 core services
including preserving Alaska's infrastructure, operating
Alaska's infrastructure, and providing transportation
services.
Ms. Holland advanced to slide 7: "Department of
Transportation & Public Facilities Total Funding Comparison
by Fund Group: All Funds." She informed the committee that
the chart showed total funding by fund group. Capital
improvement program (CIP) receipts comprised over 50
percent of the other state funds category. They funded the
design, engineering, and oversight of the capital program.
Ms. Holland continued to slide 8: "Administration and
Support RDU." The slide broke down the department by the
results delivery unit. It included the funding breakdown by
fund category in the second column and the number of
positions in the third column. The 3 furthest right columns
showed constitutional, federal, and statutory requirements.
The rating of importance column, in the middle of the
slide, reflected the department's rating of each program as
either critical, important, beneficial, or status quo. She
pointed to the administration and support results delivery
unit, which included several types of services such as
measurement standards, commercial vehicle enforcement,
statewide aviation, program development, and statewide
planning.
Co-Chair Seaton asked which line she was referring to. Ms.
Holland drew attention to the farthest left column labeled,
"Component." Each of the lines provided statewide functions
performed by the department.
Co-Chair Seaton asked for further clarification.
Commissioner Luiken pointed to the statewide administrative
services line. Ms. Holland further clarified that she was
showing the different components that made up the entire
results delivery unit; Administration and Support.
Representative Kawasaki pointed to the rating of importance
to the mission on slide 9. He focused on three components
that were listed critical to the mission: Statewide Design
and Engineering Services, Regional Design and Engineering
Services Components, and Regional Construction and CIP
Support Services. He noted that the three components were
taking the hardest hit in the budget. He asked her to
comment. Ms. Holland asked Representative Kawasaki if he
was asking about the Administration and Support Results
Delivery Unit or the Design, Engineering and Construction
Results Delivery Unit.
Representative Kawasaki referred to slide 9 which addressed
Statewide Design and Engineering Services, Regional Design
and Engineering Services Components, and Regional
Construction and CIP Support Services. He thought the three
components were being targeted for the largest reductions.
Ms. Holland would address his question on the following
slide.
Vice-Chair Gara commented that the legislature needed to
prioritize what it was spending money on in the budget.
There were several new roads the department was
considering. He mentioned the Ambler Road. He asked where
on the chart could he find the money spent on assessing,
designing, planning, going through the environmental impact
statement process. Commissioner Luiken responded that the
Ambler Road was not a DOT project. The department listed
personal services for planning and programing could be
found under the Statewide Transportation Improvement
Program. Any funding that would be put towards design,
engineering, or construction would be placed in that
component [Program Development and Statewide Planning].
1:45:38 PM
Vice-Chair Gara reported that the spending in that section
[Program Development and Statewide Planning] was $7.8
million of other funding and $268 thousand in UGF. He asked
about the other funding. He did not believe it was all
federal funding. Ms. Holland replied that the other state
funds included several funding sources, over 50 percent of
which was capital improvement program receipts. She
elaborated that it was authority to spend capital
improvement monies in the operating budget. The capital
improvement program monies came through the federal
government in the capital budget.
Vice-Chair Gara asked the commissioner for a list of new
roads that are in the planning stages and the amounts being
spent on each. Commissioner Luiken was happy to provide the
information. He relayed that he had given the planning and
programing folks in his department 4 priorities for the
department's capital program: to preserve the state's
system, to preserve the state's bridges, to base any new
roads or passing lanes on safety data, to follow a time cap
(if the department had started work on a federal project
and was running up against a time limit it would decide
whether to go forward with or cancel the project).
Representative Guttenberg referred to slide 8 under the
columns labeled "Constitutional Requirement" and "Federally
Required." He highlighted that on slide 9 and slide 10 the
only component that was constitutionally required was the
Commissioner's Office. Whereas, the Equal Employment and
Civil Rights Component was federally required. He wondered
if there were state constitutional requirements that dealt
with the issue of equal opportunity rights. He mentioned
the Elizabeth Peratrovich Gallery in the building. He
thought it should be looked at again. Ms. Holland indicated
the department could look at it.
Representative Tilton asked about the methodology used in
terms of importance ratings. Ms. Holland explained that for
the rating of importance the department's primary guidance
was provided in the memorandum from Co-Chair Seaton and Co-
Chair Foster. The department went by the definition
provided for what constituted critical, important,
beneficial, and status quo. Regarding the rating of
effectiveness, individuals within the department assisted
with both ratings. The department executive team and some
subject matter experts in specific areas.
1:49:46 PM
Representative Pruitt referred to slide 7, which
highlighted the switch from UGF to DGF. He asked about the
amount associated with and the reasoning behind the change.
Ms. Holland wanted to clarify that he was asking about why
there was a significant change in UGF and DGF.
Representative Pruitt thought it was obvious that UGF had
been supplemented for DGF. More importantly he wanted to
understand the thought process behind the change. Ms.
Holland responded that it tied back to the department's
results-based alignment and the way the department was
working. It showed that the services being provided by the
department were directly connected to statutory
requirements and to its mission. She clarified that with
the swap to a DGF amount (the proposed Alaska
Transportation Maintenance Fund), the department would be
allowed to take monies that drivers and motorists paid, for
example, in motor fuel tax and apply it directly to the
preservation and operation of the roads they were using to
drive their vehicles on. The department believed that by
having it as a DGF, the department could show Alaska
exactly what service the department was providing and how
it benefited the tax payer. It would better show what
services were being provided, such as a pothole getting
patched.
1:51:55 PM
Representative Pruitt appreciated her answer. He believed a
fee for service was needed. He agreed that if there was a
situation where the public was receiving a benefit in some
capacity or in a particular industry, such as timber, the
fee should cover the cost of providing the service. He
thought the challenge was how the legislature would deal
with the thought process of the public. Moving the funds
looked like there was a reduction of UGF, appearing that a
change was made different than what was actually made. He
wanted to make sure that legislators clearly articulated
what had been done with the budget. The public paid
attention to unrestricted general funds (UGF). He just
wanted to ensure transparency to the public.
Co-Chair Seaton added that was the reason he had asked for
the charts to reflect all funds identified rather than only
UGF. It would have been hiding the ball rather than showing
the location of the ball.
Representative Pruitt did not believe anyone was trying to
hide anything. He asked about the 76 positions that were
being cut and moving towards privatization. Commissioner
Luiken indicated it would be better to wait until the
department saw the settlement between the state and the
General Government Unit (GGU).
Representative Pruitt inquired about privatization. He
relayed that currently the agency contracted 55 percent of
the work. He asked if there had been PCNs in the past
representing the 55 percent that was currently privatized.
He suggested that if 55 percent was accurate, then the
associated PCN's could be removed from the budget.
Commissioner Luiken responded that in keeping with the
department's core value of excellence it was driven to
continually improve. The department was seeking to optimize
the delivery of its capital program. A key to the
optimization was to review the department's workforce size
and capabilities. The department was unsure that 55 percent
was the optimal number. He thought the feasibility study
that department would be conducting would help it to make a
determination.
Co-Chair Seaton indicated that the committee would be
returning to that question.
Representative Thompson referred to the DGF on slide 7
showed a huge increase. He asked if the number included the
governor's proposed increase in gas tax. Ms. Holland
responded affirmatively.
Representative Thompson questioned whether the committee
would have to readjust the formula if the bill did not
pass. Ms. Holland replied that the department would have to
readjust its ask for the FY 18 budget.
Representative Thompson asked about privatizing engineering
and design. He thought most of the engineers were 90
percent funded with federal money. Commissioner Luiken
thought the discussion needed to focus on what the
department was doing. The department was looking to
optimize the delivery of DOT's program. He added that
privatization was not the best term to use. However, the
department's real focus and effort was to optimize the
delivery of its program.
Representative Thompson asked about the possibility of the
engineering being privatized to firms that were working for
companies in Alaska but were designing and engineering
roads in other places such as Seattle or Portland. He
wondered if the 90 percent contribution from the federal
government would go to Seattle or Portland rather than
remaining in-state. Commissioner Luiken reiterated that the
department could not make a determination presently because
it did not have the necessary data. He thought the
feasibility study the department would be conducting would
help in making the determinations.
Representative Thompson was looking forward to further
discussion.
1:59:43 PM
Co-Chair Foster asked if 90 percent was the correct
percentage of federal dollars the state received to pay for
the positions. Commissioner Luiken responded that he
thought the number was close.
Representative Guttenberg noted that the commissioner
continued to use the word optimization. He asked when the
study would be completed in reference to the budget
schedule. He had been under the impression that design work
had already been contracted out. Commissioner Luiken
indicated the department was crafting a request for
proposal (RFP) for the study to be done. He expected to
have the RFP out by the end of the month. The department
would issue an award by about the end of February with a
start date in March. The study could take up to 6 months.
He noted that there had not been any outsourcing or
privatization with the current budget. The feasibility
study, currently, did not need to be completed before the
end of the budget cycle.
Representative Guttenberg was looking at earlier budgets
and had asked the question between FY 17 management plan
and FY 18 governor's plan about the proposal. He did not
know if discussions would ensue about what the study would
mean and what criteria the study would contain.
Co-Chair Foster mentioned that he had had a meeting with
the commissioner earlier in the day. He conveyed that of
the 76 positions, not all of them were filled and some of
them might be part time. He had asked the commissioner for
information on the breakdown, which he would provide to the
committee.
Commissioner Luiken continued with slide 8. He reported
that the department had left the number of Alaskans served
column blank because it was difficult to measure
quantitatively. The state's transportation infrastructure
directly and indirectly impacted every and indirectly
impacted every Alaskan every day. The system was working
all the time providing connectivity and access to drivers,
pilots, and passengers and delivering goods such as food
and medicine or services such as emergency response. The
department indicated "effective" on its rating of
effectiveness as it was currently meeting its mission.
Results-based alignment was implemented in the prior year.
While the department was beginning to see some trends in
performance data, it was still maturing.
2:04:34 PM
Ms. Holland advanced to slide 9: "Design, Engineering and
Construction RDU State Equipment Fleet RDU." The unit was
responsible for the design, engineering, and oversight of
the capital program, which included roads, bridges, and
runways (generally referred to as horizontal construction)
and facilities (vertical construction). The Design,
Engineering, and Construction Results Delivery Unit was
tied to the state's infrastructure, which was developed to
address the unique needs of Alaskans on the move. She
reported that only 2 percent of Alaska's land area was
accessible by road. She added that 82 percent of Alaska
communities were not connected to the road system. She
indicated that the regional components were combined into
one line for design and one line for construction.
Ms. Holland continued to report on slide 9. She relayed
that the State Equipment Fleet Results Delivery Unit
procured, maintained, and disposed of vehicles, equipment,
and attachments that were owned and operated by the
executive branch agencies, Legislative Affairs, and the
Alaska Court System. It was a shared service responsible
for 7,129 pieces of state equipment and vehicles.
Commissioner Luiken advanced to slide 10: "Highways,
Aviation & Facilities RDU, International Airports RDU,
Marine Highway System RDU." He relayed that an example of
the department's effectiveness using results-based
alignment and its core services was snow and ice removal by
the regional highways and aviation components. He
elaborated that for 2017, departmentwide, it experienced
231 winter weather events, which meant a snow, ice, or wind
event and met its time response goal 96.6 percent of the
time. Another example of effectiveness was provided by the
Alaska Marine Highway System. The on-time departure rate
for 2016 was 92 percent, a slight increase from 91 percent
for 2015.
Commissioner Luiken continued that DOT was an economic
driver for Alaska. According to a 2016 economic impact
study, every dollar invested in AMHS returned $2.30 of
economic benefit to the state. According to reports from
2011, the Ted Stevens Anchorage International Airport's
economic impact was 1 in 10 jobs in Anchorage. The economic
impact of the Fairbanks International impact was 1 in 20
jobs in Fairbanks. He was happy to provide additional
information on how DOT was using results-based alignment to
align its budgets to core services and to increase its
accountability through performance data.
2:07:18 PM
Co-Chair Seaton returned to slide 9. He drew attention to
the first [Statewide Public Facilities] and third [Harbor
Program Development] components that received a rating of
importance to the mission of beneficial. He asked how the
department would characterize the Harbor Program
Development component. He wondered about the nature of the
component. Ms. Holland responded that the program that
looked at harbors and ports that were scattered throughout
the state. It helped with maintaining or developing ports
and harbors. It was a federal pass through program.
Co-Chair Seaton asked about the Statewide Public Facilities
component. He had noticed it was graded as beneficial. Ms.
Holland answered that the component was comprised of a
group of design and construction engineers who oversaw the
construction of facilities for various agencies. They did
not always work on transportation and public facilities.
They often assisted with things such as a fish hatchery or
the scientific crime lab in Anchorage.
Co-Chair Seaton wondered if the rating had to do with
directly affecting the department's core mission. It could
be an RSA through another agency. He asked if he was
accurate. Ms. Holland responded in the affirmative.
Representative Kawasaki asked about the Harbor Development
Program being a federal pass through. The amount was about
$300 thousand UGF and was not required federally. He asked
if there was someone else that could do the job. Ms.
Holland would have to get back to the representative, as
she was not intimately familiar with the program.
Co-Chair Seaton added that the subcommittees would be
taking up issues in greater detail. Recommendations would
be presented to the full House Finance Committee. The
subcommittees would be looking at fees, discounts, or
anything else being done in the subcommittee process. He
noted indirect expenditures and noted that there 2 reports.
It was important to make sure the state was collecting all
that was possible for services it was providing.
Representative Kawasaki returned to the topic of
privatization and asked why the feasibility study was not
done prior to adding it to the FY 18 budget. Ms. Holland
responded that in collective bargaining agreements
feasibility studies were required if the department
anticipated layoffs of permanent or probationary employees.
The department did not anticipate any layoffs for the
proposed budget of FY 18. Therefore, a feasibility study
was not required by collective bargaining ahead of time.
Representative Kawasaki relayed the importance of
legislators needing to have the information. He wanted to
make sure it actually saved money. He asked, out of the 55
percent of the design work, if it included when the
department contracted with the municipality to take over
the design work like it was done in the city of Fairbanks.
Commissioner Luiken would respond later.
2:12:00 PM
Representative Tilton mentioned the programs under DOT that
were paused. She asked if they were accounted for and where
she could find the information. Commissioner Luiken was
unclear what Representative Tilton was asking. He was aware
of which projects she was talking about. Representative
Tilton suggested the commissioner talk to her later.
Representative Grenn asked about the cost or fee percentage
which he noted ranged from zero to 100 percent. He wondered
if they swung wildly from year to year and whether it was
trackable over the previous 5 to 10 fiscal years. Ms.
Holland would get back to him.
Co-Chair Seaton encouraged members to attend the
subcommittee meetings.
2:13:37 PM
AT EASE
2:17:09 PM
RECONVENED
^Department of Revenue FY 18 Budget Overview
2:17:09 PM
Co-Chair Seaton welcomed the commissioner from Department
of Revenue (DOR).
RANDALL HOFFBECK, COMMISSIONER, DEPARTMENT OF REVENUE,
introduced the Power Point presentation: "Department of
Revenue FY 18 Budget Overview" (copy on file). He would be
making a few remarks and would be turning to Mr. DeBartolo
to walk through the presentation.
Commissioner Hoffbeck turned to slide 2: "Alaska Department
of Revenue: The Department of Revenue Mission and Core
Programs":
Mission: to collect, distribute, and invest funds for
public purposes.
Core Programs
· Treasury Division - Invest
· Tax Division - Collect
· Permanent Fund Dividend Division - Distribute
· Child Support Services Division - Collect and
Distribute
Commissioner Hoffbeck relayed that the slide showed the
department's mission statement and the various functions of
the department. He emphasized that the department was laser
focused on its specific mission in all the functions within
the department. The core programs included the Treasury
Division, the state's investment arm. Investment management
and cash management reside within the division. Another
core program was the Tax Division, the state's collection
component for taxes. The Permanent Fund Division handled
the distribution of the Alaska Permanent Fund. The child
Support Services Division was another core program that was
in charge of collection and distribution of funds for the
purposes of the federal mandate on child support
enforcement.
Commissioner Hoffbeck advanced to slide 3: "Alaska
Department of Revenue: Authorities, Corporations, and
Boards":
Authorities, Corporations, and Boards
· Alaska Housing Finance Corporation (AHFC) - Invest
and Distribute
· Alaska Permanent Fund Corporation (APFC) - Invest
· Alaska Retirement Management Board (ARMB) - Invest
· Alaska Mental Health Trust Authority (AMHTA) -
Distribute
· Alaska Municipal Bond Bank Authority (AMBBA) -
Distribute
Commissioner Hoffbeck explained that the authorities,
corporations, and boards resided within the purview of DOR,
but generally functioned autonomous from the departments.
2:19:53 PM
DAN DEBARTOLO, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE, scrolled to slide 4:
"Department of Revenue Share of Total Agency Operations: GF
Only." He pointed to the note by the Legislative Finance
Division regarding a change over time, which seemed to be
an important function to discuss. The general fund budget
grew by $5.1 million between FY 08 and the FY 18 governor's
request with an average annual growth of 2 percent, which
equated to $83 per resident worker. He commented that the
$83 was a portion of the state's actual total GF budget,
not the actual increase of $5.1 million. He indicated that
when looking at the graph and talking about trends, it was
important to know why the budget increased at the beginning
of the time span. He provided some context. First, in FY 09
one of the notable increases was the implementation of HB
2001 [Legislation that passed in 2015] which allowed for
approximately $1.26 million to be added to the budget for
audit masters including an additional support staff and
money to implement changes. Also, during that time, the
bargaining unit compensation including health insurance,
saw a significant increase in that year.
Mr. DeBartolo continued that during the time period of FY
10 and FY 11 there was a significant jump on the chart. He
pointed out that the department added two positions during
that time including petroleum commercial analyst positions
for gasline and production tax. He mentioned that many of
the other changes were fund source changes. He reported
that within the Division of Child Support Services,
American Recovery and Reinvestment Act (ARRA) funds were
going away. The department had to replace approximately
$826 million while the stimulus was lapsing. He also
mentioned that for quite some time Child Support Services
was receiving designated general funds (UGF). At the time
the funds were switched to a GF match in the amount of $5.9
million. The department also had to change the
Constitutional Budget Reserve (CBR) management fees to GF
in the same year in the amount of another $2.1 million.
While it looked like there was a significant increase in
the agency GF budget in that time frame from FY 10 to FY
11, most of it was a fund source change rather than a pure
growth in operations
Representative Guttenberg was looking for more than a
number. He asked if there was an example of or a value that
the additional audit masters brought into the state. He was
aware they had 6 years to complete an audit. He did not
know if the state had not completed one on time. He
suggested the results of the audit brought the state closer
to being up to date in order to reduce the lag. He asked
about the financial benefits resulting from the additional
audit masters.
2:23:43 PM
Commissioner Hoffbeck answered that it was very difficult
to find a quantitative number involved with the audit
masters. The state had switched from a gross tax with the
Petroleum Production Tax (PPT) to the Alaska's Clear and
Equitable Share (ACES) and then to SB 21 [Oil tax
legislation referred to as the More Alaska Production Act
(MAPA) passed in 2015] resulting in more complexity for
auditing purposes. The department felt it needed to bring
in people with higher level auditing experience and, to the
extent possible, people with oil company experience. The
audit masters, rather than being auditors on the ground,
functioned in a training, review, and support position to
make sure the department was capturing all the value due to
the state. He thought it would be difficult to assign an
actual dollar value.
Co-Chair Seaton asked if the commissioner felt that the
audit masters had paid for themselves with their expertise.
He asked if they had recoveries for the state that
superseded their personnel expense. Commissioner Hoffbeck
responded affirmatively.
2:25:11 PM
Vice-Chair Gara commented that the department was behind on
audits and there was a statute of limitations. He asked if
the department was keeping up with the statutory timeline
requirements for auditing oil company tax returns. He also
inquired whether the the state had incurred any losses due
to not having enough staff to perform thorough audits.
Commissioner Hoffbeck responded that the department was
comfortably on schedule with oil and gas tax audits and
staffed sufficiently to complete them. The department was
currently in a 2-year audit cycle where it was auditing 2
years at a time. In other words, the department was
catching up 1 year every year. He hoped the department
would be at a 3-year lag in audits within 2 years. He
reported that a 3-year lag was the minimum the department
could achieve because of the time it took to compile
necessary data and to get all essential questions answered
for completing an audit. He suggested that it would take 2
more years to get caught up.
Commissioner Hoffbeck thought the stress of completing
audits could be seen more in other tax types rather than in
oil and gas tax audits. The department wanted to audit
other tax types more fully but did not have the needed
auditors.
Vice-Chair Gara asked if the commissioner thought the state
was missing out on revenue that exceeded what it would cost
to properly perform the audits. Commissioner Hoffbeck
replied that the department believed there was additional
revenue to be gained. He did not want to comment about
which departments were not being audited fully. He
preferred everyone to believe the department was watching
them. He was happy to answer the representative's question
offline.
Representative Pruitt asked if the state was completed with
the more complex audits related to the Alaska's Clear and
Equitable Share (ACES) structure. He wondered if the stress
on auditors would decline. Commissioner Hoffbeck reported
that the department was currently fully into the ACES
audits which had allowed the department to combine audits.
The department had been through the first net tax audit
cycle. The auditors were more cognizant of the issues and
the tax payers were more aware of the questions they would
ask. The department was currently auditing tax returns
where regulations were in place before the taxes were due,
which has helped everyone to be in compliance. As the
department moved through the audits, it would see greater
compliance and less adjustments and be able to audit more
quickly.
Representative Ortiz asked if the audits had an impact on
overall revenue. Commissioner Hoffbeck indicated that
revenues had varied from year-to-year. The department
anticipated about $200 million per year in audit
adjustments. He noted litigating certain audits and
reducing them over time. He thought that the adjustments
would likely go to about $100 million per year once people
became more aware of the state's expectations.
2:30:21 PM
Representative Thompson asked how the state compensated
investment officers. Commissioner Hoffbeck responded that
the investment officers were exempt state employees
receiving a fair salary, although less than the private
sector.
Representative Thompson asked whether the state would see
better results if the state could offer wages that were
more competitive. Commissioner Hoffbeck responded that the
department's investment officers did well in achieving
returns. The department used 2 different models. The
treasury with the Alaska Retirement Management Board (ARMB)
investors typically brought in young people with
significant capacity, trained them, and got them certified
to do investment work for the state. By doing so, the staff
was more stable. The Alaska Permanent Fund Corporation's
(APFC) model was to recruit investment officers with
experience but resulted in a higher turnover.
Representative Thompson asked about the loss of .043
percent on the ARMB's investment fund. Commissioner
Hoffbeck stated that most funds took a loss in the previous
year with the exception of the Permanent Fund (PF). The
Permanent Fund's return was driven by the sale of shares
within Juneau Therapeutics, a venture capital investment
that did well. They went public and made a substantial
return. Otherwise, the APFC would have had similar
investment losses as the ARMB investments. Typically, the
ARMB and APFC investment returns paralleled. He noted that
in 33 years the ARMB had outperformed APFC 22 of the 33
years by small margins. They essentially had the same
return history.
Mr. DeBartolo advanced to slide 5: "Department of Revenue
Line Items: All Funds." He indicated that the slide showed
all funds for DOR line items on a scale with $50 million
increments. The most noticeable change in the graph was the
area in red that increased from FY 10 through FY 17 on a
steady ramp. Red represented the services line item. He
elaborated that the changes dealt with management fees
within ARMB and APFC. During the period of growth from FY
11 to FY 16 the ARMB fees went from approximately $34
million to $62 million for a total increase of $28 million.
At the Alaska Permanent Fund Corporation, the management
fees went from $76 million to $151 million in that same
time period, an increase of $75 million. He continued that
the increase of approximately $100 million seen on the
graph was mostly comprised of management fees. He noted
that in the beginning of the time period there was some
growth in personal services depicted in blue. He detailed
that in FY 08 and FY 09 the department added positions
within the Tax Division. Between FY 08 and FY 10 16
positions were added and contractually obligated salary and
health adjustments were made. Both factors contributed to
the increases within the personal Services line item.
2:35:40 PM
Representative Ortiz wanted to confirm that the management
fee was a set percentage value. If so, as the fund
increased, so would the management fee. He asked if he was
correct. Commissioner Hoffbeck replied in the affirmative.
Representative Pruitt asked if more management could be
brought in-house. He wondered what the legislature could do
to help the department move in that direction. Commissioner
Hoffbeck replied that, as a rule of thumb, it was about
three to five times the cost to have external management
compared to in-house management. The department was working
to bring as much management in-house as possible. He
detailed that the legislature had funded additional
managers for the treasury for the Alaska Retirement
Management Board (ARMB) and APFC investments over the
previous two years. The positions were either filled or
being filled. The department expected to bring more
investment managing in-house. Some investments would never
be managed in-house such as private equity investments
where a certain level of expertise was necessary.
Representative Pruitt asked if there were plans to increase
in-house management in the coming year. Commissioner
Hoffbeck recommended directing his question regarding
whether more personnel funding was in the budget. He was
aware the department was in the process of hiring those
positions that had been approved in the past. Mr. DeBartolo
answered that the department did not put funding for
additional personnel in the budget in the current year.
Representative Pruitt surmised the legislature probably
needed to ensure there was an offsetting. He asked about
correlating value to in-house managers in order to assist
legislators in understanding the amount of savings
resulting from bringing investment management in-house.
Commissioner Hoffbeck replied that he would provide the
information to the committee.
Co-Chair Seaton stated that Representative Wilson had
joined the meeting.
2:39:18 PM
Mr. DeBartolo turned to slide 6: "Appropriations within the
Department of Revenue: GF Only." The Tax Division was the
only core program within DOR that was 100 percent GF
funded. He noted that when they had increases it affected
graphs like the one on the slide. He drew attention to the
blue line. He noted that the call out on the left-hand side
outlined some increases from FY 08 to FY 14 including the
audit masters, 2 commercial analyst positions, and CBR
management fees. On 2 occasions the state incurred
additional management fees. He also reported that in FY 14
one additional audit master was hired for oil and gas. He
continued that in FY 14 the department inherited the film
office, which was later repealed, and the positions became
obsolete.
Mr. DeBartolo continued that while growth was seen through
the middle of the chart, he outlined some things the agency
did to reduce growth. The tax Division saw that the tax
revenue management system was starting to become effective.
The department started seeing automation gains associated
with the system and began to look at what positions could
be reduced. He reported that between FY 15 and FY 16 where
a steeper drop could be seen on the chart, the department
eliminated 11 tax positions including Information
Technology positions that supported the system, a petroleum
policy analyst, a commercial analyst, and some other
positions. The total reduction in positions equated to a
total of $1.2 million. The department also eliminated 3
film office positions equating to $346 thousand. On the
treasury side the department eliminated an additional $600
thousand in CBR management fees.
Mr. DeBartolo continued that on the child support services
line it showed a decline on the graph between FY 15 and FY
18. The reduction was a result of Child Support Services
eliminating 27 positions equal to $1.55 million in GF
matching funds. The division also closed its Juneau and
Wasilla satellite offices.
Representative Ortiz asked if the changes meant the state
would be less effective in enforcing child support laws.
JERRY BURNETT, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
responded that the department had made a strong push
towards not being less effective. He believed the
effectiveness reports would show that the department was
able to do the work with its current number of staff.
Mr. DeBartolo turned to slide 7: "Appropriations within the
Department of Revenue: All Funds." He indicated that the
Legislative Finance Division slide was another
representation of the all funds slide from page 5 but was
broken out by appropriation. He noted that with APFC the
largest increases could be seen in the custody and
management fees compared to everything else on the chart.
It was commensurate with the growth of the assets in-house.
Mr. DeBartolo detailed slide 8: "Department of Revenue
Total Funding Comparison by Fund Group: All funds." He
wanted to get back to talking about what was unusual or out
of the ordinary on the chart. He pointed to the call out
that showed that UGF between FY 08 and FY 18 for DOR
increased by $10.6 million. Much of the increase occurred
between FY 10 to FY 11. He urged members to look at the
purple on the graph. He reported that during that time
period there was a bunch of one-time items that occurred in
the one year. Specifically, the state crated Alaska Gasline
Development Corporation (AGDC) after HB 369 costing $15.64
million. In the following year AGDC moved out of DOR. He
highlighted the sharp increase and then the decease. Other
things that happened in the same year included the sale of
Geo bonds for library education and educational research
facilities totaling $4.7 million. It was a one-time item
that typically did not appear in the department's budget.
These items and other things he mentioned that went to the
department's base earlier in his presentation from FY 1- to
FY 11 comprised the sharp increase in UGF from $17 million
to $51 million and then back down as the department
steadily decreased its UGF expenses.
2:45:05 PM
Vice-Chair Gara pointed to UGF in FY 10. Mr. DeBartolo had
explained that the funds went from about $18 million to $51
million mostly because of AGDC. Once AGDC was moved out of
the department, the budget was $30 million. He asked if the
excess amount was related to the gasline. He noted there
had been an increase to the base consistent through several
years.
Mr. DeBartolo had mentioned the increases to the base on
slide 4. The increases to the base included a DGF to UGF
transfer of $5.9 for child support; the American Recovery
and Reinvestment Act (ARRA) fund of $826 thousand; the
petroleum commercial analyst positions of $400 thousand,
and the CBR of $2.1 million. These items increased the base
as well as the one-time items in that year that he had
mentioned earlier. The department had a lot going on from
FY 10 to FY 11. He suggested that the department went from
$17 million to $31 million, removing the anomalist year.
Much went to the department's base in that year to the tune
of $9 million, then the trend leveled out in the remainder
of the graph.
Vice-Chair Gara asked about the $2 million for the CBR.
Commissioner Hoffbeck answered that the decision was made
to pay the management fees with UGF money for the CBR
instead of creating a debt to the reserve that would then
take an appropriation to pay it back. Vice-Chair Gara
responded, "Thant's fine. Thanks."
Mr. DeBartolo explained the changes on slide 9: "Department
of Revenue [by Program]." He noted a reduction within the
Treasury Division of $374.2 thousand in gf. The reduction
included moving one administrative position to Shared
Services of Alaska, which equaled a $25 thousand GF cut.
The department also had a reduction of $348.5 thousand in
gf via a fund source change - an allocation of assets
changes under the ARM Board Management. Under the
allocation of unclaimed property, there were no chances,
however, he mentioned that in FY 16 the Unclaimed Property
Division moved $12 million to GF from its trust account.
Since the inception of the program in 1986, $116 million
had been placed into the GF coffers of the state.
Representative Ortiz asked the meaning of unclaimed
property. Mr. Burnett responded that examples of unclaimed
property would be unused gift cards or money left in a bank
account of someone who moved away or died without a will.
That money would be turned over to the State of Alaska. The
person or their heir could claim it later. However, every
year the department calculated the percentage of money not
claimed and moved it into the general fund. If a person
made a claim later, they could still be paid, as there was
sufficient money in the trust.
Mr. DeBartolo continued to the allocation for the Alaska
Retirement Management Board. Under Treasury, the department
reduced $348.5 thousand in GF and increased in ARM Board
funds. Under ARM Board custody and management fees, there
would be a reduction for $12.1 million due to external fees
starting to decline as more investments moved in-house.
Also, some fees were taken directly from the managed funds.
He reported no changes for the Alaska Municipal Bond Bank
Authority for the year.
2:50:37 PM
Mr. DeBartolo advanced to slide 10: "Department of Revenue
[by Program - continued]." He reported that the Permanent
Fund Dividend Division was taking a DGF reduction of $177.9
thousand. The division was eliminating 2 positions; an
information systems coordinator and an imaging technician.
He reported that the $80 thousand of the $177 was for
reducing costs associated with printing applications. The
division was moving towards electronic applications. He
added that one position was being transferred to the
Administrative Services Divisions for the state's shared
services initiative.
Mr. DeBartolo continued that the Child Support Services
Division was eliminating $218 thousand in GF matching
funds. The division also eliminated 2 positions for
efficiency gains associated with the new shared services
initiative. It was also eliminated the remainder of the $25
fee, a subsidy to custodial parents. In the department's
last budget cycle, there was a decrement of $100 thousand
and in the current budget cycle it was taking an additional
$100 thousand. He elaborated that the federal government
mandated that states charge $25 on any payments to
custodial parents above $500. For years, the State of
Alaska subsidized that fee. In the current situation the
department decided to phase that subsidy out. It was
currently being paid by custodial parents. He reported that
the department was transferring 2 positions to the
Administrative Services Division for the shared services
initiative and transferring 3 positions to the Office of
Information Technology.
Mr. DeBartolo offered that under the tax Division there was
a reduction of $307 thousand UGF, which included
eliminating 2 positions; a revenue appeals officer and an
excise tax technician. The division also transferred a
vacant seasonal position to the Treasury Division and was
transferring 1 position to the Administrative Services
Division for the shared services initiative.
Mr. DeBartolo reported that there were no funding changes
in the Commissioner's Office, but the office was
eliminating an Alaska Liquified Natural Gas (AKLNG)
position and transferring in an administrative assistant in
Anchorage from the Criminal Investigations Unit. Under the
Administrative Services Division the department was
increasing interagency authority to $445 thousand because
of the positions being transfer into Administrative
Services. The funding was being left in the agencies. The
department would charge the agencies through the cost of
allocation plan for the services it would provide under
shared services.
Mr. DeBartolo continued to slide 11: "Department of Revenue
Corporations." He reported no funding changes to the Alaska
Housing Finance Corporation (AHFC) Operations or the Alaska
Corporation for Affordable Housing for the year. However,
AHFC had capital project requests in the amount of $42.55
million similar to requests in previous years. The
information was available online. The Alaska Permanent Fund
Corporation had no operational funding changes. However,
like with the ARM Board, the APFC Management Fee section
was taking a $9.4 million reduction under other funds. He
relayed that the corporation was also doing more assets
managed in-house. Market performance had been less than the
projected mid-case return scenario. it would bring the
budget in line with anticipated costs.
Co-Chair Seaton spoke to indirect expenditures within DOR.
He pointed out that one of them was a 100 percent tax
credit allowed for the second $200 thousand of educational
tax credits. The revenue subcommittee would be looking
closely at the issue. It would also allow the redirection
of so much of the state's tax money to other entities. He
thought the issue was important to look at. He encouraged
members to attend the finance subcommittee meetings where
details would be much further investigated.
2:56:22 PM
AT EASE
2:59:45 PM
RECONVENED
^Judiciary: Alaska Court System Overview
2:59:45 PM
DOUG WOOLIVER, DEPUTY ADMINISTRATIVE DIRECTOR, ALASKA COURT
SYSTEM, introduced the PowerPoint Presentation: "Alaska
Court System Overview" (copy on file).
Mr. Wooliver turned to slide 2: "Mission Statement":
Mission Statement
The mission of the Alaska Court System is to provide
an accessible and impartial forum for the just
resolution of all cases that come before it, and to
decide such cases in accordance with the law,
expeditiously and with integrity.
Mr. Wooliver relayed that the mission was really to resolve
court cases. The mission included the system's guiding
principles. In lean budget times, two of the goals were
always at risk. The first was accessibility of the courts
and the second was how quickly cases could be resolved. The
Alaska Court System closed at noon on Fridays, which
somewhat limited the public's access to the court system.
Also, courts were either closing or having greatly reduced
hours in some of the small rural magistrate locations which
also affected accessibility. As Judiciary reduced more and
more of its staffing levels it became more and more
difficult to do things in a timely manner. Judiciary's
challenge was to manage budget cuts in a way that impacted
its goals in the least way possible. However, there would
be impacts.
Mr. Wooliver turned to the 10-year look back on slide 3:
"Judiciary's Share of Total Agency Operations: GF Only." He
pointed out that from FY 08 through FY 15 Judiciary had
general increases in its budget. The overall share of the
general fund budget had not changed much. It was just above
2 percent. The budget had gone up 16 hundredths of 1
percent. In general, it was a flat level for the agency's
total share. He indicated he would talk about the
reductions which showed up in FY 16, 17, and 18 later in
his presentation. There were three primary drivers that had
led to increases in the budget over the years. One was that
Judiciary had asked for legislative approval for additional
judges and staff in court locations where the workloads
warranted the increases. Another main driver had been the
general salary increases that the legislature approved for
non-covered employees including employees in the Judicial
branch. One other area that was reflected in the court
system's increase, but not an actual increase in money, was
the therapeutic courts. He reported that all the funding
associated with those efforts were moved into the court
system in FY 10 and FY 11. Representative Mike Hawker
thought it would be much easier to oversee and manage the
therapeutic courts projects if all the money was in one
location. Throughout the years, with therapeutic courts, a
bill would pass with several fiscal notes from various
departments. Rather than having the funds spread out
throughout the executive branch's budget and a little in
the court system, the legislature took all the funds and
placed them in Judiciary's budget. Judiciary then issued
Reimbursable Service Agreements (RSA) to various agencies.
It was an increase in Judiciary's budget but not an
increase to overall state spending.
Vice-Chair Gara asked how much funding and in what year was
therapeutic courts transferred. He wondered about the
amount proposed for therapeutic court sin FY 18. Mr.
Wooliver replied that the funds from the other agencies
were transferred in FY 11. The total cost for therapeutic
courts for FY 18 was approximately $4.7 million.
Vice-Chair Gara asked about the amount in FY 11 that was
transferred. Mr. Wooliver thought it was about $3.5
million. At the peak the amount for therapeutic courts was
slightly more than $5 million. Now the number was down to
$4.7 million.
Representative Ortiz asked what percentage of Alaska's
population had access to therapeutic courts services. Mr.
Wooliver responded that there were lots of opportunities in
the urban centers, but the state also had therapeutic
courts in Ketchikan, Juneau, and Bethel. There were also
therapeutic courts in Kenai, Palmer, and Anchorage.
3:05:29 PM
Mr. Wooliver pointed to the chart showing a 10-year look-
back broken down by line item on slide 4: "Judiciary Line
Item Comparison: All Funds." He highlighted that the
largest part of Judiciary's budget was personal services
which made up about three-quarters of the branch's entire
budget. He noted that the only other category that changed
much was the second largest category, contractual services.
It reflected the fact that therapeutic courts were moved
into Judiciary's budget.
Mr. Wooliver advanced to slide 5: "Judiciary
Appropriations: GF Only." He reported that the same 10-year
look back could be seen except it separated out therapeutic
courts. They could be seen at the bottom of the chart. The
chart also included the Alaska Judicial Council and the
Commission on Judicial Conduct. Both were part of the
judicial branch of government but were separate from the
court system itself. The chart reflected general funds
only.
Mr. Wooliver touched on slide 6: "Judiciary Appropriations:
All Funds" He reported that the slide looked almost
identical to the previous slide because 97 percent of the
court system's budget was general funds. The slide
reflected all funds but looked like the previous one.
Mr. Wooliver scrolled to slide 7: "Judiciary Total Funding
Comparison by Fund Group: All Funds." He highlighted that
green represented general fund dollars. There were small
amounts of money in other areas including $1.25 million in
federal program receipt authority, an amount Judiciary had
not received but had the authority to receive. There was
$1.8 million in other state funds, mostly inter-agency
transfers for the Family Law Self-Help Center and the
Alaska Mental Health Trust Authority. The court also
received money from the Public Defender agency for
transcripts and appeal cases. He reported that the court
system had $518 thousand in designated general funds (DGF)
from alcohol tax proceeds that went towards therapeutic
court participant treatment. The other $105 million was the
97 percent of general funds.
Mr. Wooliver slide 8: "UGF Budget Cuts FY16 - FY18":
· FY16 - $3,430.4 (3.1%)*
· FY17 - $3,805.0 (3.5%)
· FY18 Proposed - $3,671.8 (3.5%) **
* The FY16 cut was offset by a 2.5% salary increase
resulting in a net reduction of $1,427.6.
** The FY18 proposed cut may be offset by increased
healthcare costs resulting in a net reduction of
$1,821.4.
Mr. Wooliver relayed that currently Judiciary was in budget
cutting mode. He reported that if the legislature approved
the proposed reduction of $3.67 the Court system would have
reduced its costs over the last 3 years by approximately
$11 million.
Mr. Wooliver turned to slide 9: "Examples of Cost-Savings
Measures":
Examples of Cost-Savings Measures
· E-Distribution Project
· Mini-RIP
· Deleted 29 PFT, 14 PPT, and 2 Temporary Positions
for a total of 45 Deleted Positions
· Holding Positions Vacant
· Continuing with Friday Afternoon Closures
· Purchase Computers Using Grant Funds
· Expanded Use of Videoconferencing
Representative Wilson asked if there had been any analysis
been done to look at the affects of closing at noon on
Friday. Mr. Wooliver responded that Judiciary had reviewed
the effects of closing at noon on Fridays. It did not
affect things to the extent that was anticipated for a
couple of reasons. First, the court closed at 4:30 pm.
Employees worked from 4:30 pm to 5:00 pm to help them keep
up with the work load and to avoid falling behind. It was a
half hour at the end of each day when they did not have to
deal with new cases coming in and people at the counter.
There was freed up work time at the end of the day. The
office of Children's Services reported that by having half
a day every week where there were no court appearances
allowed them to do other work. Attorneys had also provided
positive feedback about the closure of the courts at noon
on Friday. The closure did not keep people in jail longer.
They remained on the same schedule because judges were
always available for emergency proceedings, bails, and
those types of things. In other words, certain proceedings
continue even though the general court doors were closed at
noon on Friday.
3:09:44 PM
Representative Wilson mentioned a circumstance where
scheduling in the courts was problematic because of the
availability of judges. She asked if there were enough
judges. She wondered if it had to do with reduced hours on
Fridays. Mr. Wooliver indicated that courts were very busy,
and frequently cases had to be scheduled weeks or months in
advance. The type of case influenced scheduling. Certain
types of cases moved faster than general civil cases
without statutory timelines. He elaborated that every time
the legislature or federal government placed a timeline on
a case type, cases not benefitting from a timeline were
pushed back.
Representative Thompson pointed to the final bullet point
on slide 9 regarding the expanded use of video
conferencing. He asked if the state was behind because of
broadband not expanding enough. He wondered about potential
savings.
Mr. Wooliver replied that the court system had good
broadband. In previous years, the legislature had provided
funding for broadband which helped tremendously. He
reported that Southeast Alaska, in particular, used video
conferencing for court hearings regularly. Broadband was
used throughout the state. For example, a judge could sit
in Ketchikan and preside over a case in Juneau or vice
versa. One of the largest savings associated with video
conferencing was for prisoner transport. Not long ago the
Department of Public Safety would charter an aircraft and
fly from Anvil Mountain Correctional Center in Nome with a
prisoner for a short hearing in Kotzebue. Currently, there
was a video link between Kotzebue Courthouse and Anvil
Mountain Correctional Center because of bandwidth
improvements. In FY 18 the court system would be saving
approximately $900 thousand in bandwidth costs because of
moving to a different system. It would be a system that the
state, rather than GCI managing it. He reiterated that
video conferencing was fabulous. He relayed that video
conferencing was also used for sign language interpreters
and spoken language interpreters. Such services could be
contracted outside the state and provided via video
conferencing for a fraction of the cost.
Representative Guttenberg mentioned availability versus the
cost of broadband. He noted the difficulty of having good
broadband. He mentioned the Quintillion fiber optics
project. He wondered if there was anything the judicial
system had where the costs were subsidized, covered, or
given a priority of use. He asked if there were any funds
or programs set aside that directly affected the court
system and its ability to function. He believed Alaska was
unique. He suggested that no one else had a prisoner
transportation cost. He asked if there were any programs
that would benefit the courts directly. Mr. Wooliver was
not aware of any, but he would look into it.
3:15:51 PM
Representative Ortiz asked Mr. Wooliver to briefly explain
the mini retirement incentive program and how much money it
saved the court system.
Mr. Wooliver responded that in the prior summer the
administrative director came up with the idea of offering a
retirement incentive program to some of Judiciary's
employees. She offered it to employees that had been with
the court for at least 10 years and who had been eligible
to retire for at least 3 years. The incentive to retire was
3 months of severance pay. He reported that there were 28
people eligible for the program, of which 16 participated.
It would save the court system over $600 thousand in the
coming year. The positions that became vacant because of
someone retiring would be held vacant, replaced with a part
time employee, or replace with a full-time employee at a
much lower salary. Many of the people that retired were way
out in the step range and could be replaced with employees
at a step A or step B. Such a program was favored by
Judiciary because not only did the employee feel positive
with the deal, but it saved the court system a significant
amount of money. The program had been very successful
Mr. Wooliver continued reviewing slide 9. He relayed that
because three-quarters of Judiciary's budget was personal
services, most of the savings came from that area as well.
The department realized the savings by holding many
positions vacant, deleting positions, and closing on Friday
afternoons resulting in a pay cut for employees. There were
several other things the court system did to save money at
least in the short term.
Mr. Wooliver reviewed slide 10: "FY18 Operating Budget
Cuts":
FY18 Operating Budget Cuts
· 3.5% Budget Cut from FY17 Adjusted Base Budget
(Adjusted for Healthcare Costs) - $3,671.8
· $1,400.0 Personal Services
· $900.0 Bandwidth Costs
· $800.0 Commodities, Computers, and Postage
· $300.0 Bethel Accommodation
· $150.0 Therapeutic Court Contracts and Services
· $121.8 Leases and Leasehold Costs
Mr. Wooliver explained that there were 2 types of budget
cuts. The first were emergency reductions such as not
replacing computers or not conducting judicial training.
Some were temporary such that if the state received a
windfall it would return to offering additional training
and replacing computers on a regular cycle. There were
other types of savings that were more permanent which were
the type Judiciary tried to find. For example, when e-
filing came on line, the first phase of which would be the
following several months, Judiciary would need fewer staff.
Therefore, many of the staffing positions currently being
held vacant will not have to be refilled. They were long-
term savings that made sense. He also mentioned the reduced
cost in bandwidth as an example. It resulted in a saving he
anticipated going forward forever. The Alaska Court System
now distributed much of its materials through emails rather
than through the mail which saved hundreds of thousands of
dollars in printing costs, postage costs, and paper costs.
3:20:25 PM
Representative Thompson mentioned the recent decision in
the memorandum of understanding with the Anvik Tribe taking
over cases and having tribal courts. He asked if it would
potentially save the state a significant amount of money.
Mr. Wooliver responded that he did not think a significant
amount of money would be saved in the near future. There
were a relatively small number of case. He was aware that
for many years the court has liked the idea of local
communities being able to resolve some of the small issues
that arose in the communities. He mentioned that the court
system entered into its first joint state court, tribal
court, therapeutic court in Kenai with the Kenaitze tribe.
It was a voluntary program and was not just for members of
the tribe. It was a therapeutic court program with both a
tribal court judge and a state court judge sitting on the
bench together. It was the type of effort the court system
was seeing and encouraging.
Mr. Wooliver detailed slide 11: "Judiciary: Appropriations/
Allocation." He explained that the slide showed where
Judiciary's money came from and where it went. The funding
allocations were almost all general funds. The various
sections included appellate courts, trial courts, etc. He
reported that the Alaska Court System brought in about $7
million from the various categories listed on the slide. He
highlighted the designation for constitutional versus
statutory requirements.
Mr. Wooliver explained slide 12: "Alaskans Served in 2016":
Alaskans Served in 2016
· 120,573 new cases filed (trial and appellate)
· 7,000 contacts through the Family Law Self Help
Center
· 23,645 jurors reported for service
· 7,762 law library patrons
· 670,723 citizens passed through security screening
· 4,765,056 visits to the court's website
· 871,172 CourtView searches
· 19,145 online payments made
· 595 therapeutic court participants
· Thousands of on-line court forms accessed or
downloaded
Mr. Wooliver reported that the system served people in
several different ways. He read the numbers. He highlighted
the number of people who accessed the court system for case
files searching for cases and people who accessed the court
for forms and booklets. He suggested that everyone used
CourtView for a host of reasons. In the past, people either
did not look up anything or they went to court to find the
files. CourtView was a huge savings for the court and a
convenience for citizens to look up records. More
importantly, there were thousands of online forms
accessible to the public. In the prior year, about 30
thousand people viewed the landlord tenant booklet and
about 20 thousand viewed the booklet on small claims. About
50 thousand people looked at court forms, which meant that
about 50 thousand booklets did not have to be printed
resulting in significant savings. He also drew attention
that 19 thousand online payments were made, most of which
were related to traffic tickets. It meant that 19 thousand
people did not come into court with a check in hand to give
to a clerk for processing. It saved the court and the
person time and effort.
Representative Wilson mentioned that there were 595
therapeutic court participants. She wondered how many
actually graduated. Mr. Wooliver indicated he would provide
her the number for FY 16.
Representative Wilson noted the cost of $8000 per person.
She also asked about the last time court fees had been
adjusted. Mr. Wooliver responded in the prior year in early
FY 16. Prior to that it had been about 12 years since court
filing fees had been raised.
3:26:12 PM
Mr. Wooliver turned to the final slide 13: "Effectiveness
Ratings and Measures":
Effectiveness Ratings and Measures
· Case Clearance Rates
· Alternative Dispute Resolution Programs
· Customer Surveys
· Jurors and Vendors Paid Timely
· Electronic Efficiencies
Mr. Wooliver noted that every year many cases came into the
court and the state needed to send out or resolve the same
number of cases, although they were not all the same cases.
Cases could be filed in November and resolved a year later.
However, overall the court system had a 100 percent case
clearance rate. It meant that over the years as many cases
were resolved as came into the court to avoid getting
behind. In terms of effectiveness, he pointed to the
alternative dispute resolution program bullet point.
Specifically, he spoke of the program called the Early
Resolution Project. It was a program that mediated
settlements for family law cases including divorces and
child custody cases. The program had been in place for
about 6.5 years. In that time, about 1400 cases had been
resolved affecting a little over 3000 people. Rather than
going through the regular route of several court hearings
spread out over months to resolve a divorce case,
participants came in for one day, met with volunteer
attorneys from the local bar association, had their dispute
mediated, met a judge, and the judge approved the
settlement. About 80 percent of participants walked out the
door with their case settled in one day saving an enormous
amount of time and money. He reemphasized the effectiveness
of the program. The program was run by the family law self-
help center. He was available for questions.
Co-Chair Seaton reminded members that further details would
be provided during finance subcommittee meetings. He
reviewed the agenda for the following day.
ADJOURNMENT
3:29:22 PM
The meeting was adjourned at 3:29 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DOT Final HFC Overview - 23 Jan 2017 01 20 2017.pdf |
HFIN 1/23/2017 1:30:00 PM |
|
| Budget Overview for HFC 1-23-17.pdf |
HFIN 1/23/2017 1:30:00 PM |
DOR HFIN Budget Overview FY 18 |
| FY18 Presentation for House Finance 1 23 17 Final 1 25 PM.pdf |
HFIN 1/23/2017 1:30:00 PM |
JUDiciary FY18 Budget Overview |
| DOT Response HFIN Committee Response Jan 23 Meeting.pdf |
HFIN 1/23/2017 1:30:00 PM |
DOT Budget Overview Responses HFIN |