Legislature(2019 - 2020)ADAMS ROOM 519
03/08/2019 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB39 || HB40 | |
| HB53 | |
| HB54 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 39 | TELECONFERENCED | |
| += | HB 40 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | HB 53 | TELECONFERENCED | |
| *+ | HB 54 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 8, 2019
1:34 p.m.
1:34:13 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
Representative Tammie Wilson, Co-Chair
Representative Kelly Merrick
ALSO PRESENT
Heidi Teshner, Administrative Services Director, Department
of Education and Early Development, Office of Management
and Budget; Lacey Sanders, Budget Director, Office of
Management and Budget; Michael Johnson, Commissioner,
Department of Education and Early Development; Bryan
Fisher, State Coordinating Officer, Homeland Security,
Department of Military and Veterans Affairs.
SUMMARY
HB 39 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 39 was HEARD and HELD in committee for further
consideration.
HB 40 APPROP: MENTAL HEALTH BUDGET
HB 40 was HEARD and HELD in committee for further
consideration.
HB 53 APPROP: SUPP; CAP; DISASTER RELIEF
HB 53 was HEARD and HELD in committee for further
consideration.
HB 54 APPROP:SUPP; REAPPROP; CAP; AMEND; REPEAL
HB was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the meeting agenda.
HOUSE BILL NO. 39
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska, from
the constitutional budget reserve fund; and providing
for an effective date."
HOUSE BILL NO. 40
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program, including
supplemental appropriations; and providing for an
effective date."
1:35:13 PM
HEIDI TESHNER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF EDUCATION AND EARLY DEVELOPMENT, OFFICE OF MANAGEMENT
AND BUDGET, provided a PowerPoint presentation titled
"FY2020 Governor's Amended Budget" dated March 8, 2019
(copy on file). She began with two bar charts on slide 3
showing funding and budgeted position comparisons between
the FY 19 management plan and the FY 20 governor's amended
budget for the Department of Education and Early
Development (DEED). The left chart showed the funding
comparison with the DEED FY 19 management plan budget on
the left. The total was just over $1.6 billion, made up of
$1.483 billion general funds: $1.321 unrestricted general
funds (UGF) and $26.5 million designated general funds
(DGF), which accounted for 81 percent of the total.
Additional funds included $64.8 million in other funds and
$251 million in federal funds (15 percent of the overall
budget). The department's FY 20 governor's amended budget
was slightly over $1.3 billion. Total general funds
accounted for just over $1.031 billion: $1.013 billion UGF
and $18.8 million DGF, which accounted for about 76.8
percent of the overall budget. Other funds were $61.6
million (4.6 percent of the total) and federal funds were
$250.2 million (18.6 percent of the total). The governor's
FY 20 amended budget was $320 million less than the FY 19
management plan (a reduction of about 19.3 percent).
Ms. Teshner addressed the chart on the right that showed
DEED's budgeted position comparison between the FY 19
management plan and the FY 20 governor's amended budget. In
FY 19 there had been 289 total positions and the FY 20
proposal was 282 positions. The reduction included 5 full-
time positions associated with the Alaska State Council on
the Arts (the governor proposed to eliminate the council),
1 permanent position associated with the governor's
proposed elimination of the Online With Libraries program,
and the transfer of the administrative services director
position to the Office of Management and Budget.
1:38:56 PM
Ms. Teshner addressed notable changes impacting the General
Fund (GF) on slide 4. The first bullet showed a reduction
to statewide support in the form of a 50 percent executive
branch travel reduction totaling $146,600 GF (the total
DEED travel budget was $353,000). The second bullet showed
a reduction to the foundation formula program of $269
million. The proposal would repeal the appropriation made
under HB 287 [legislation passed in 2018] that was
scheduled to take effect on July 1, 2019. The proposal
would underfund the formula but would make no change to the
Base Student Allocation (BSA). The funds would be prorated
based on AS 14.17.400(b). She added that the BSA equivalent
of the reduction was $4,880. The current BSA was $5,930.
Ms. Teshner reviewed the last bullet on slide 4 that showed
the governor's proposed elimination of one-time future
funding of $30 million to school districts. The proposal
would repeal the appropriation made under HB 287 with a
scheduled effective date of July 1, 2019.
1:40:33 PM
Ms. Teshner advanced to slide 5 and addressed the proposed
withdraw of funding from the Washington, Wyoming, Alaska,
Montana, and Idaho (WWAMI) program totaling $3 million. She
read from the slide:
• Total appropriation funds 80 WWAMI students (20
students per year for a total of four years)
• Program is delivered at the University of Alaska
Anchorage via the University of Washington, School of
Medicine
• From calendar year 2014 through calendar year 2018,
the percent of graduates practicing in Alaska has
decreased from 84% to 61%
Vice-Chair Ortiz asked if the data cited in the last bullet
point was an apples-to-apples comparison. He had heard the
84 percent figure included individuals from out of state
who had come to Alaska to work, whereas the 61 percent
figure only included Alaskans participating in the [WWAMI]
program who returned to Alaska.
Ms. Teshner replied that she had not heard the statement
Vice-Chair Ortiz had referenced.
Vice-Chair Ortiz read from an Anchorage Daily News (ADN)
newspaper article:
The 84 percent figure was large because the
calculation included Alaskan students and students
from other WWAMI states who ended up in Alaska, while
the 61 percent figure included Alaskan students only.
Vice-Chair Ortiz noted the information in the article was
according to the WWAMI program.
1:43:08 PM
Ms. Teshner replied that she would follow up.
Representative Sullivan-Leonard highlighted the incredible
need for positions in Alaska. She believed the WWAMI
program had been successful and had resulted in Alaskans
coming back to work as physicians in-state (including Mat-
Su). She had been a strong supporter of the WWAMI program.
She asked what would take WWAMI's place if the program went
away.
Ms. Teshner replied that the students participating in the
program would have to compete against a larger number of
applicants. She believed the 20 individuals applying for
the program would have to compete against approximately
7,000 other applicants if the program was eliminated.
Vice-Chair Ortiz asked if the term "compete against" meant
competing for admittance into the University of Washington
medical program or competing for scholarships. He noted
that part of the program allowed students to have 50
percent of their costs covered as long as they returned to
work in Alaska.
Ms. Teshner replied that she was referring to competing for
admittance into a medical school. She used a hypothetical
example where 7,000 individuals applied for a medical
school program that only had 100 spaces available. She
clarified she was not referring to competition for
scholarship money.
Vice-Chair Ortiz asked for verification that the
elimination of the program would mean Alaskan students
would no longer have 50 percent of their tuition costs
waived by returning to work in Alaska.
Ms. Teshner replied affirmatively.
LACEY SANDERS, BUDGET DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, added the proposal had been put forward as each of
the agencies identified their core services. The
elimination of funding was not about the program's value.
She explained the department's focus was on K-12 services;
the WWAMI program fell outside DEED's core services.
1:46:42 PM
Vice-Chair Johnston asked if the program was potentially a
core service for the Department of Health and Social
Services (DHSS).
Ms. Sanders replied that it was a fair question. She did
not know that DHSS would be the best location. She reported
that the program was delivered through the University of
Alaska and she suggested there could be conversations about
whether it was valuable to place the program there.
Vice-Chair Johnston asked if Alaska would be the only state
that had no medical program for its residents if the WWAMI
funding was eliminated.
Ms. Sanders answered she would have to follow up.
Vice-Chair Johnston requested a spreadsheet showing
programs offered in other states.
Ms. Sanders agreed to follow up on the request.
1:48:20 PM
Ms. Teshner continued to address slide 5. She reported that
60 percent of WWAMI students return to practice [medicine]
in Alaska. She noted that Alaska had a shortage of
physicians and the declining return of students was a
primary reason for the governor's proposed funding
reduction. She elaborated that Alaska needed 60-plus
physicians each year to meet demand, while the WWAMI
program only contributed 14-plus physicians annually. She
addressed the last bullet on slide 5 and reported that the
Alaska Performance Scholarship (APS) was continued in the
budget with a change in fund source from the Higher
Education Investment Fund to UGF.
Vice-Chair Ortiz shared that he had received a question
from a student constituent about the proposed funding
source change. He appreciated the fund would continue. He
asked if the change in fund source would change how the
program operated.
Ms. Teshner replied there would be no change to the
program; it would continue as established in statute. The
only change was the fund source.
Representative Sullivan-Leonard asked for the current
balance of the APS account.
Ms. Sanders replied that the balance was approximately $450
million.
Vice-Chair Johnston pointed out that the focus of the
budget was on core missions. She wondered why funding the
APS fell outside the mission of the current funding source
[Higher Education Investment Fund]. She believed the fund
had synergy with the APS because it applied to many of the
same students.
Ms. Sanders asked if Vice-Chair Johnston was speaking to
the APS.
Vice-Chair Johnston answered in the affirmative. She spoke
to the proposal to change the fund source.
Ms. Sanders replied that the proposed fund source change
from the Higher Education Investment Fund to UGF was due to
the administration's proposal to eliminate quasi-dedicated
funds. She elaborated that the administration would
introduce legislation to eliminate quasi-dedicated funds,
which included the Higher Education Investment Fund. The
proposed budget changed the funding source to enable the
continuation of the APS program after the Higher Education
Investment Fund was eliminated.
Vice-Chair Ortiz questioned whether there was opportunity
cost to making the change. He asked for verification that
the funds currently came from the Higher Education
Investment Fund.
Ms. Sanders replied in the affirmative.
Vice-Chair Ortiz asked if the Higher Education Investment
Fund balance was currently $400 million.
Ms. Sanders replied the fund balance was approximately $450
million.
Vice-Chair Ortiz asked if the APS assistance had been paid
for with return on investments, allowing the fund principal
to remain intact.
Ms. Sanders replied that the fund had initially been
established to pay for the APS. However, past legislation
had utilized the funds for other items outside the
statutory purpose. She could not speak to the eroding of
the balance of the fund's principal. She reported that the
amount of funds being utilized had been increasing over the
years to be utilized for other programs. She highlighted
the purpose of quasi-dedicated funds. She explained that
although the fund was set up for a specific purpose, the
legislature had the power of appropriation and could
utilize the funds for other purposes. The change would
transfer all the funding from the Higher Education
Investment Fund into the GF and allowed the program to
compete with other programs for funding. She stated it was
a priority of the administration and the program would
continue.
1:54:47 PM
Vice-Chair Ortiz believed the benefit of investment returns
would be lost if the Higher Education Investment Fund was
eliminated because the General Fund was not invested for
earning returns.
Ms. Sanders answered that she was not an investor, but she
agreed with the logic that the returns may not be as good
as those earned in the Higher Education Investment Fund.
The administration believed quasi-dedicated funds should be
eliminated and that programs should compete for general
funds on an even playing field.
Representative Josephson was confused about the statement
that programs should compete. He cited Ms. Sanders'
testimony that there had been some use of quasi-dedicated
funds for purposes outside of their original intent. He
asked for verification that historically there had been a
legislative understanding there was some vulnerability and
nothing was dedicated.
Ms. Sanders replied that the administration's point was
that none of the funds should be dedicated. She believed
there was often an understanding that statutory designated
funds could only be used for a specific purpose. She
highlighted that there were no constitutional dedicated
funds. She thought the proposal to eliminate the quasi-
dedicated funds would provide clarity that there was only
one fund source.
Representative Josephson understood the intent, but he
believed each of the [quasi-dedicated] funds, including the
Power Cost Equalization Fund (PCE) had been designed for a
legislative purpose that succeeding legislatures had
recognized and largely honored by not dissolving them. His
concern was that conceptually the public would view "these
things" differently. He was concerned about the competition
the programs would face for funding [if the fund source was
changed to GF]. He wondered if the move was a forerunner to
the programs' eventual dissolution. He asked why he should
not be worried that the programs would be dissolved.
Ms. Sanders responded that she could not convince anyone or
make statements about what could happen in the future. The
budget proposal was to continue the programs. She detailed
that the proposal was merely an opportunity for the
legislature to have clarity in its budget. She stated that
the public may not understand that the funds were not
dedicated for that purpose. She could not speak to the
future and claim that things would not be eliminated or
changed. She continued that the legislature had the power
of appropriation. She elaborated that all projects should
compete for equal funding and it was the legislature's role
to determine what was a priority.
1:59:24 PM
Ms. Teshner moved to slide 6 that included reductions to
early learning programs:
• Pre-Kindergarten Programs & Other Early Learning Grant
Programs (-$16,847.7 GF)
o ($6,853.0) GF Head Start Grants
square4 Head Start grantees are required to have a
20 percent match on their federal grants
• Match must come from non-federal
sources; can be in kind donations or a
cash match received from their parties
or contributed by the grantee
• There is no requirement for State
funding
square4 This appropriation has served as that match
on their federal Head Start grants
Ms. Teshner noted that Head Start entities received
approximately $46 million in federal funds. She expounded
that DEED did not have oversight over those funds or the
associated matching funds. Alaska was one of a handful of
states that provided matching funds to Head Start grantees.
She highlighted that Head Start programs were still
operating in states that did not provide matching funds.
Co-Chair Foster asked if the state's $6.8 million leveraged
the $46 million in federal funds.
Ms. Teshner replied that the state funding did not leverage
the full amount. She detailed that 5 of 16 Head Start
agencies [in Alaska] received waivers from the federal
government that exempted them from meeting the 20 percent
federal match. The department distributed the funds that
were primarily, but not always, used towards the federal
match.
Vice-Chair Johnston asked if other states had other
government entities (e.g. counties or boroughs) that
provided matching funds.
Ms. Teshner responded that she did not know and would
follow up on the question.
Vice-Chair Ortiz asked how much of the $46 million [in
federal funds] was leveraged by the $6.85 million [in state
funds]. He asked if $25 million sounded accurate.
2:03:16 PM
Ms. Teshner replied that she had not done the math and did
not have a clear answer.
Vice-Chair Ortiz asked to hear from the DEED commissioner
on the issue that he referred to as a policy call. He noted
that Commissioner Johnson had served as commissioner during
the previous administration as well. He recalled that the
commissioner had worked on a program to improve schools but
could not recall the name.
MICHAEL JOHNSON, COMMISSIONER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, answered that Vice-Chair Ortiz was
referring to the Alaska Education Challenge.
Vice-Chair Ortiz recalled the challenge included focusing
on literacy by the third grade.
Commissioner Johnson replied that one of the five goals was
for every student to read proficiently by the end of third
grade.
Vice-Chair Ortiz asked how a reduction to the accessibility
to Pre-K programs throughout the state helped achieve the
goal of the overall challenge.
Commissioner Johnson restated the question. He hoped that
whatever happened with the state's budget that access was
not necessarily reduced. He relayed that DEED had recently
received a grant for over $2 million to expand access. He
elaborated that whatever happened to the state budget, the
department would continue to work to provide as many
resources and opportunities as possible. Secondly,
districts had a number of options for providing the
services (some used state resources, some had tuition based
programs, and some worked in cooperation with their
municipalities). He added that he would not characterize
the cuts as being helpful, as he would not expect someone
to characterize using the PFDs from families as being
helpful, or taxing families that were already eating
paycheck to paycheck as being helpful. He stated that a
sustainable budget would be helpful, which he believed was
true of Pre-K and the goal of reaching third grade reading.
Whatever the change was to the budget would not change the
department's goal of students reading by third grade.
Vice-Chair Johnston remarked that if the state only
provided 20 percent matching funds, it would mean a large
portion of federal funds would be left on the table. She
requested to see the federal grants that would be impacted.
She referenced Ms. Teshner's testimony that some of the
funds would go to programs that did not pay the 20 percent
match. She was interested how much federal funding would be
forsaken.
2:08:07 PM
Ms. Teshner clarified that the $46 million in federal funds
went directly to Head Start grantees; the funds did not
pass through DEED. The department had not heard that the
reduction would put the federal funding at risk. The
grantees would receive the funds but would have to make up
the match through in-kind contributions or within their own
budgets.
Vice-Chair Johnston noted that in an earlier response Ms.
Teshner had stated that some grantees were not using the
funding for their 20 percent match [for federal funds]. She
asked where the money was or was not being used for the 20
percent match. She wanted more clarity on the consequences.
Ms. Teshner clarified that 5 of the 16 Head Start grantees
had a waiver and were not required to meet the 20 percent
match. The grantees with waivers still received some of the
$6.8 million (which had typically been used as a match) but
did not use the funds towards their match.
Vice-Chair Johnston requested the monetary breakdown.
Co-Chair Foster asked for a list of all 16 [Head Start]
programs and detail on which of the 5 had waivers. He
assumed all 16 grantees received a piece of the $6.8
million. He requested specifics on how much the grantees
could potentially lose in federal funds.
2:10:43 PM
Representative Josephson asked for verification that for
every $1 the state contributed, $7.50 was received through
the federal Head Start program.
Ms. Sanders clarified that the $6.8 million was put forward
by the state for the Head Start programs. She explained
that some of the programs had their own in-kind
contributions. She detailed it was necessary to look at the
whole picture; the state funding was only a piece of the
match requirement.
Representative Josephson had heard the administration say
it did not know how local communities would respond to the
budget and what monies communities would raise to maintain
the services currently provided. He asked if anyone had
checked to see how the 16 programs would respond to needing
to come up with almost $7 million.
Ms. Teshner believed DEED staff had recently had
conversations with the Head Start agencies. She would get
the information from those individuals and would follow up
with detail on how the reduction would impact the agencies.
Representative Josephson termed how he thought former U.S.
Senator Ted Stevens would handle a situation as the
"Stevens doctrine." He believed Senator Stevens would "let
Washington be Washington" and would bring home the revenue
Alaska was entitled to under current rules and laws. He was
gravely concerned the state would be leaving countless
dollars on the table in program after program. He wanted to
know the match was a real thing that was achievable.
Co-Chair Foster had spoken with his local Head Start
agency, that was under the umbrella of the regional Native
organization. The agency was currently using other funds to
fund the program and help with its match. It sounded to him
like the agency was already accessing any other funding it
could. He did not know where else the agency could get the
matching funds unless the city helped cover funds. He knew
the issue was a concern for the agency.
2:13:40 PM
Representative Carpenter remarked that the committee was
looking at K-12 education but was discussing a Pre-K
program. He asked if a Pre-K program was a core requirement
for K-12 education.
Commissioner Johnson replied that the department was the
Department of Education and Early Development. He reported
that in the Moore case [Moore vs. State of Alaska], Judge
[Sharon] Gleason noted the importance of Pre-K but stated
in that case it was not a constitutional mandate.
Ms. Teshner reviewed the remainder of slide 6:
($1,200.0) GF Early Learning Grants
• Funds currently serving 419 students in 9 school
districts
• Added in FY2018 as one time increment for Pre-
Kindergarten programs affected by the Moore
Settlement and added to base budget in FY2019
• Funding is not sufficient to serve the Pre-
Kindergarten population on a statewide basis
Ms. Teshner added that the funds along with a $2 million
reduction to Pre-K grants (included on slide 7) were not
sufficient to serve Pre-K statewide.
2:15:43 PM
Vice-Chair Johnston asked when the state's responsibility
for the Moore settlement was over.
Ms. Teshner replied the settlement had been finalized in FY
17.
Vice-Chair Ortiz asked for further detail about the last
bullet point on slide 6: Funding is not sufficient to serve
the Pre-Kindergarten population on a statewide basis.
Ms. Teshner replied that the bullet point went in line with
the $2 million reduction to the Pre-K grant [on slide 7].
She detailed that Pre-K grants started out as a pilot
program intended to grow from $2 million to $10 million
over time. She elaborated that the funding had never
expanded beyond $2 million. The addition of the $1.2
million [one-time Pre-K increment added to the FY 19 base
budget] allowed DEED to expand the program slightly, but
the program continued to only serve a small percentage of
Pre-K students statewide.
Vice-Chair Ortiz asked if the explanation was a
justification for removing the funds.
Ms. Teshner replied that it was one justification.
Additionally, the programs were not in statute.
2:17:42 PM
Representative Josephson remarked that only looking at
constitutionally mandated programs could quickly collapse
the government. He asked if the Moore settlement actually
detailed that the obligation to contribute something as
part of the Pre-K program was time limited. He thought it
seemed like an odd thing for a judge to write. He asked if
the judge had actually specified the state needed to care
more about Pre-K for a given period of time only.
Commissioner Johnson suggested the Department of Law may be
better equipped to answer questions about a settlement. He
reported that the [Moore] settlement did have timeframes,
but he did not characterize the judge or agreement as
specifying that Pre-K was important only for a certain
amount of time.
Co-Chair Foster asked Commissioner Johnson for a brief
description of the Moore settlement and how it sought to
establish equity in the quality of education.
Commissioner Johnson agreed and encouraged the committee to
get further detail on the settlement from the Department of
Law. He shared a quote [by the judge] from the case, "The
primary question in this case is whether the public
education system in Alaska is constitutionally adequate."
He elaborated that throughout the case the judge noted
funding was only one element and she had not found the
funding was inadequate. The judge had found that DEED was
not providing adequate oversight to districts where
students were not proficient.
2:21:00 PM
Ms. Teshner turned to slide 7 and continued to address the
governor's proposed reductions to Pre-K and other early
learning grant programs:
• ($320.0) GF Best Beginnings Grant
o 27 Imagination Libraries serving 107 communities
• ($474.4) GF Parents As Teachers Grant
o Four grantees serving approximately 159 children
in 134 families in 6 communities
Representative Sullivan-Leonard asked if there had been
conversations with nonprofits that would be willing to
support the Best Beginnings and Imagination Library
programs. She reported that a Rotary chapter in Mat-Su
contributed a substantial amount to the Imagination Library
program.
Ms. Teshner responded that she had not had any
conversations about the issue and would check with
department staff to see if there had been any discussions.
She thought there were nonprofits that would be more than
willing to help support the continuation of the program.
Vice-Chair Johnston disclosed that her daughter-in-law was
on the Best Beginnings board. She elucidated that Best
Beginnings is a nonprofit and was constantly out working to
raise funds and get further support from other groups.
Ms. Teshner reviewed the final items on slide 7:
• ($2,000.0) GF Pre-Kindergarten Grants
o Funds currently serving 504 students in 11 school
districts
o Started out as a pilot Pre K program in FY2010
o Funding is not sufficient to serve the pre-
Kindergarten population on a statewide basis
• ($6,000.0) GF remove one time multi-year (FY2019 and
FY2020) increment for Pre-Kindergarten Grants
o FY2019 serving 231 students in 6 school districts
o FY2020 expected to serve 761 students in 9 school
districts
Ms. Teshner elaborated on the proposal to remove one-time
multi-year funding. She detailed the increment had been
removed from the FY 20 base budget because the full
increment had been received in FY 19 for the two years. She
clarified that the same six districts participating in FY
19 would participate in FY 20 with the addition of three
more districts.
2:24:27 PM
Vice-Chair Ortiz discussed how the state was
constitutionally mandated try to provide a quality
education for K-12 students. He asked if there was any
evidence to suggest that investments made at the Pre-K
level reduced education costs for K-12.
Commissioner Johnson responded there was strong evidence
that reading proficiency by the end of third grade was more
efficient for the system and more productive for the
student. He spoke about Pre-K and noted that the
legislature could find a host of advocates for Pre-K and
another host of individuals who would say the impact of
Pre-K diminished over time. There was research on both
sides of the issue. Additionally, there was research
associated with universal and targeted education and
whether it helped some students more than others.
Vice-Chair Ortiz pointed to Commissioner Johnson's position
as the commissioner of DEED and his past experience as a
superintendent and teacher. He asked from that perspective
whether Commissioner Johnson believed Pre-K helped provide
better outcomes for students in grades K-12.
Commissioner Johnson answered that Pre-K was one factor in
a student's success by the third grade. He reported that
the factor may make a difference for some students and not
others. He detailed that targeted Pre-K had shown to be
very helpful in places throughout the U.S. He reiterated
that Pre-K was one element of preparing kids for school.
2:27:52 PM
Vice-Chair Ortiz agreed. He asked about other critical
components.
Commissioner Johnson asked for clarification.
Vice-Chair Ortiz was interested in detail on components
that were critical for a student's success.
Commissioner Johnson replied there were as many components
as there were differences in students. He provided examples
including family, health, community, economics, the quality
of the curriculum and instruction. He stated there were
endless factors in kids' lives that contributed to success.
He added that funding was only one factor.
Vice-Chair Ortiz clarified his understanding that
Commissioner Johnson had stated that Pre-K (not just
funding) was one factor. He shared that from his experience
as a former educator, teachers did not have a lot of input
on family and economics, but they did have input on Pre-K.
He acknowledged the importance of the other components. He
asked for the accuracy of his statements.
Commissioner Johnson asked Vice-Chair Ortiz if the question
was whether DEED had influence over whether a student
received Pre-K.
Vice-Chair Ortiz nodded.
Commissioner Johnson replied that he believed the
legislature had influence over whether students had Pre-K
because it controlled the budget. He stated that the
department merely implemented the budget provided by the
legislature. He stated that the department would do
everything possible to support Pre-K opportunities
throughout the state with whatever resources the
legislature decided to appropriate.
2:30:13 PM
Representative LeBon recalled that when he had served on a
school board, the board had received annual requests to
enroll four-year-olds. The board had always denied the
requests because once an age exception was granted, it
would need to be granted for everyone. He asked for
verification that the Pre-K program had been designed for
the four-year-old group.
Ms. Teshner replied the program had been designed for three
and four-year-olds.
Representative LeBon asked if the program had been launched
in the previous year. He cited the information on slide 7
stating that in FY 19, 6 school districts and 231 students
had been served.
Ms. Teshner asked if Representative LeBon was referring to
the $6 million [the governor's proposal to remove a $6
million one-time, multi-year increment for Pre-K grants
(slide 7)].
Representative LeBon responded affirmatively.
Ms. Teshner clarified that the $6 million had been a one-
time additional grant to help expand the Pre-K program. The
grant was intended to expand the $2 million grant and the
$1.2 million on slide 6. She explained that slides 6 and 7
broke out the pots of money and the number of students the
program was serving. She referenced the $6 million
increment and detailed that in FY 19, 231 students would be
served in 6 school districts.
Representative LeBon stated from the perspective of a past
school board member he was concerned about the idea of
rolling out a program that would not be sustained in the
future. He asked what the department had been hoping to
learn and whether it had been supportive of the program. He
asked if there were any early results about the success of
three and four-year-olds in the 6 school districts that
served as a model for the program. He asked if it was too
early to have the results.
Ms. Teshner responded that it was too early to have
results. She explained the intent behind the grants was for
districts to provide innovative ways to provide Pre-K. She
detailed that if districts applied for the grants, they had
to show the ability to provide something they could sustain
in the long-term (when state funds were no longer
available).
Representative LeBon asked about the time duration for the
program.
Ms. Teshner replied it was a two-year grant.
Representative LeBon wondered if it was enough time to
measure success. He asked how success was defined.
Commissioner Johnson replied it would be a reasonable
amount of time to determine success for the students
enrolled in the programs. He was uncertain it would be a
reasonable amount of time to make broad conclusions about
Pre-K programs.
Representative LeBon remarked that if a program was rolled
out, the state should be ready for every school district to
want to enroll four-year-olds. He would have been cautious
about accepting the grant without a good feeling about
sustainability and whether there was a desire to continue a
program in the future.
2:34:21 PM
Representative Josephson stated it appeared that if the
state abandoned its Pre-K programs it would be one of six
states without Pre-K. He understood eliminating Pre-K was
not necessarily the governor's proposal and that there
could be other in-kind contributions or nonprofits;
however, it moved in the direction of not having Pre-K. He
did not want to debate the efficacy of Pre-K. He detailed
that Head Start had begun around 1965 under Lyndon
Johnson's Great Society. The programs had existed since
that time and were established in 45 states. He asked for
verification that "we're not really saying that it doesn't
have value, right?" He believed the value of the program
was undeniable. He reasoned it was a policy call to say
that the state could not afford it.
Commissioner Johnson would let OMB speak to policy calls
about what was or was not included in the budget. Whatever
the final budget looked like - school districts would have
to go through a similar process. He stated it was not
always a "this is important or unimportant, but what's most
important." He would not argue that Pre-K was unimportant.
Co-Chair Foster noted that school districts did not all
have the Pre-K program. He asked how each school district
had been chosen to receive the funds. He wondered if there
had been a desire to achieve regional diversification and
balance. Alternatively, he wondered if districts had been
selected based on a need for improvement or if districts
had merely applied for a chance to receive the grant.
Commissioner Johnson answered that Pre-K included several
programs in the state. One part was from the Moore
settlement that targeted funds to claimant districts
associated with the case. Head Start was another Pre-K
program that DEED did not necessarily regulate or control,
though that money had supported some of those programs in
the past. There were other district-initiated and sponsored
programs that had been developed throughout the state. The
Pre-K picture in the state was bigger than what was
represented in the presentation.
2:38:09 PM
Co-Chair Foster referenced the administration's earlier
testimony that a number of Alaska State Council on the Arts
positions would be eliminated. He informed the committee
there was a representative from the agency in the room who
was available for any questions.
Representative LeBon asked about the WWAMI program. He
highlighted that the program listed 205 active borrowers
who received benefits from the program. He asked how many
of the active borrowers were practicing in Alaska.
Ms. Teshner replied that she did not know and would follow
up.
Co-Chair Foster respected that everyone had a different
opinion about how programs were funded. He understood that
one perspective was that if something could not be provided
for everyone that it should not be provided to anyone. His
philosophy was that the state should embrace and build on
the small numbers that existed. He understood it was policy
call for the legislature to make.
HB 39 was HEARD and HELD in committee for further
consideration.
HB 40 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 53
"An Act making supplemental appropriations for fire
suppression activities and restoration projects
relating to earthquake disaster relief; capitalizing
funds; and providing for an effective date."
2:40:19 PM
LACEY SANDERS, BUDGET DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, highlighted that the administration had introduced
two supplemental bills on January 28 (the statutory
deadline). She indicated she would first speak about HB 53.
She introduced a PowerPoint presentation titled "HB 53 -
Disaster Relief Supplemental Overview" dated March 8, 2019
(copy on file). The items in the bill were related to the
2018 Cook Inlet earthquake and included capitalization of
the Disaster Relief Fund, Federal Highway Administration
(FHWA) funding within the Department of Transportation and
Public Facilities (DOT), and state facilities costs not
covered by insurance. Additionally, the bill included
funding for FY 19 fire suppression activity under the
Department of Natural Resources (DNR). The total bill was
$139 million, comprised of $102 million in requested
federal receipt authority and $37.3 million in general
funds (matching funds and direct unrestricted general
funds).
Ms. Sanders advanced to a bar chart on slide 4 showing a
historical summary of disaster supplemental appropriations
from FY 14 to FY 19. She reported that disasters were
unpredictable, and the funding needed from year-to-year
varied depending on events and the Disaster Relief Fund
balance. The administration was concerned about the current
level of the disaster fund. As of March 5, the balance was
currently an unobligated $362,900, which was projected to
be fully expended by April 1, 2019 (slide 5). The
Department of Military and Veterans Affairs (DMVA),
Division of Homeland Security and Emergency Management
managed the fund and was diligently analyzing the
outstanding disasters to make funding available for the
Cook Inlet earthquake response. The urgency of the
legislation was due to the low fund balance.
2:43:44 PM
Ms. Sanders looked at a high level overview of items in the
bill (slide 6). The first item of $7.9 million was for DNR
fire suppression. The amount that had historically been in
the operating was low and not sufficient; it was
anticipated that approximately $7.9 million would be needed
heading into the fire season. The second item was an
appropriation to DOT totaling $65 million in FHWA federal
receipts with a match requirement of $6.5 million. The
funding would be used to work on roads damaged by the
earthquake; it was a multi-year appropriation - the
supplemental request would allow the work to occur sooner
and would enable the state to continue to collect federal
receipts for the work into FY 20.
Ms. Sanders reviewed a $1 million UGF appropriation to DOT
for costs not covered by insurance for state facilities
(item 3, slide 6). She elaborated that DOT and the
Department of Administration (DOA) were working with DOA's
Division of Risk Management to address all the facility
damages. There were some things deemed not coverable by
insurance. For example, part of the funding would go to
repair damage to a correctional facility parking lot.
Additionally, administrative costs associated with
buildings and broken items in buildings were other examples
of items covered by the appropriation.
Ms. Sanders addressed the last item was a fund
capitalization of the Disaster Relief Fund for $21,901,700.
She detailed the fund balance was anticipated to reach zero
in the near future. The department was asking for federal
authority related to what was allowed by the disaster
declaration. The administration recognized the redundancy;
the operating bill allowed any receipts received on behalf
of a disaster to be deposited into the Disaster Relief
Fund, but HB 53 was an opportunity to clarify the necessary
amount. She noted that the numbers were estimates. The
$21.9 million was based on an estimate that had been
revised after the signing of the disaster declaration. The
amount specific to the Cook Inlet earthquake had been
reduced to $12 million. The administration was requesting
to continue the $21 million appropriation in anticipation
of any potential spring disasters. The goal was to ensure
there was money available in the fund to allow quick
response time to any disasters in the near future.
2:48:03 PM
Co-Chair Foster asked what the fund balance had been the
previous April.
Ms. Sanders did not have the balance from the previous
year, but offered to provide the information. She detailed
there had been several appropriations to the Disaster
Relief Fund to try to increase the balance because the
amount appropriated over several years was very low. She
believed $10 million had been deposited in 2018 and $2
million had been deposited in 2019. She noted the funds had
all been utilized.
Vice-Chair Johnston requested a 10-year lookback of the
fund balance.
Ms. Sanders replied that DMVA had the information and OMB
would provide it.
Representative Josephson asked whether school districts
were eligible for any of the funds.
Ms. Sanders deferred the question to DMVA.
2:49:42 PM
BRYAN FISHER, STATE COORDINATING OFFICER, HOMELAND
SECURITY, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS,
answered that school districts, local governments, and
certain nonprofits were all eligible for disaster relief
funding.
Representative Carpenter referenced insurance claims
related to the earthquake that had been denied. He wondered
about the state's process for scrutinizing whether a denial
to pay was legitimate. He remarked that insurance companies
liked to not pay when possible.
Ms. Sanders replied that the items addressed by the
proposed funding increment were not eligible for insurance
coverage. She clarified that it was not a situation where
claims had been denied. She reported that the DOA Division
of Risk Management worked on insurance claims and may have
additional information to provide.
Ms. Sanders moved to slide 7 and addressed two supplemental
amendments that had been submitted to the legislature on
March 6. She relayed that OMB was still working with
agencies to work through the needs and on the costs
identified related to the Cook Inlet disaster. She
elaborated that DOT was requesting $1 million for
administrative activities associated with surface
transportation; the costs were not covered by FHWA or the
Federal Emergency Management Agency. For example, funds
would go towards costs associated with administrative staff
working to support any engineers or surveyors that may not
be covered by FHWA. The second item was $1 million in
federal funding for the Department of Labor and Workforce
Development related to the Disaster Unemployment Assistance
Program. She elaborated that individuals who had
interruption to work could apply for individual assistance
or self-employment funding. The department had some
existing authority but needed the additional $1 million to
ensure the funding was provided to eligible individuals.
Co-Chair Foster remarked that the committee would try to
get the bill passed quickly.
HB 53 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 54
"An Act making supplemental appropriations,
reappropriations, and other appropriations; amending
appropriations; capitalizing funds; and providing for
an effective date."
2:53:45 PM
LACEY SANDERS, BUDGET DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, addressed the supplemental request legislation that
fell outside of the disaster need. The bills were separate
in anticipation of needing to move the disaster legislation
more quickly. She provided a PowerPoint presentation titled
"HB 54 - FY2019 Capital and Operating Supplemental
Overview" dated March 8, 2019 (copy on file). She began on
slide 3 and reviewed items covered by the bill including
reductions in spending, formula program adjustments, salary
adjustments related to the classification of trooper
positions, operating adjustments, capital projects, and
several transfers back to the General Fund. The total bill
was $110.4 million, made up of $92 million in federal
funding, $17.7 million in other funds, and $51,800 in
general funds.
Ms. Sanders provided a historical comparison of
supplemental appropriations (excluding disasters) from FY
14 to FY 19. She noted that supplemental requests varied
from year-to-year and explained that costs could be
unpredictable.
2:55:51 PM
Ms. Sanders referenced a spreadsheet outlining FY 19
supplemental requests ["HB 54 - FY2019 Supplemental
Requests" released January 28, 2019 (copy on file)]. She
noted she had briefly reviewed the items during a House
informational meeting in the past. She offered to review
the items or take questions.
Vice-Chair Johnston looked at item 16 related to Medicaid
funding. She remarked that in the past, large supplementals
could be driven by underfunding Medicaid. She asked if the
proposed amount would be sufficient.
Ms. Sanders replied that OMB had worked frequently over the
past several months with the Department of Health and
Social Services (DHSS) to identify what the need was and
should be. She reported that OMB believed the funding was
sufficient to meet Medicaid claims through the remainder of
the fiscal year.
Vice-Chair Ortiz asked how the majority of the $15 million
[in Medicaid funds] was dispersed. He wondered who
benefitted from the funds.
Ms. Sanders answered that she was not a Medicaid expert,
but it was her understanding the funds went towards
payments due to Medicaid providers. She clarified the
funding was to get through the end of the fiscal year to
reimburse providers for costs incurred in the current
fiscal year and not to end payments and shift them into the
next fiscal year.
2:58:00 PM
Representative Josephson looked at item 18 [related to
Village Public Safety Officer (VPSO) program] and asked if
the reduction was due to the inability to hire [VPSOs] and
spend the money.
Ms. Sanders clarified the reduction would align VPSO
program funding. It was the administration's understanding
that grantees receiving the funding were not able to fully
use the funds on an annual basis due in some part to the
inability to fully fill the VPSO positions.
Co-Chair Foster stated that the prior year the legislature
had included language in the operating budget that
specified any excess funds would go towards recruitment and
retention of VPSOs. He asked if any efforts had been made
to increase recruitment and retention of VPSOs.
Ms. Sanders recalled through conversations with the
Department of Public Safety that the department was working
on the issue. She would follow up with the department to
learn what efforts had been made.
Representative Carpenter asked about a $5 million reduction
from the Alaska Gasline Development Corporation (AGDC)
[item 27, page 2].
Ms. Sanders responded that when OMB was working on
supplementals it had asked each agency to review the
funding they had been allocated for the current year and
the funding they had available in funds. She detailed that
AGDC contributed $5 million back to the General Fund; the
funds were in excess of what AGDC needed to get through the
end of the fiscal year. The agency was working on what its
plan moving forward would be. She clarified that the
reduction did not mean the agency would not come back to
the legislature for funding in the future once it had a
developed plan.
Representative Knopp stated that the [administration's]
request had come in before the Federal Energy Regulatory
Commission (FERC) had moved the process back by four months
for the environmental impact statement (EIS), which would
extend AGDC's timeframe. He asked if the administration
believed AGDC could get through with the remaining funds.
Ms. Sanders responded that it was her understanding that
AGDC's remaining funds were sufficient to get the agency
through the end of the fiscal year.
Representative Carpenter asked when the money had been
identified and when the administration had been notified to
include it on the spreadsheet.
Ms. Sanders answered that supplementals had been put
forward on January 28. She shared that if there was a
concern, AGDC would reach out to OMB; she had not heard
anything from the agency.
3:01:53 PM
Vice-Chair Ortiz pointed to item 12 - a $20 million
reduction to DEED [for the repeal of one-time state aid to
school districts for FY 19]. He referenced discussion in an
informational hearing about the distribution of funds to
the district. He recalled hearing the distribution would be
made as soon as some type of action was taken by the
legislature.
Ms. Sanders replied in the affirmative. She detailed that
the funding would be distributed if the legislature took
action and the requested repeal proposal was not moved
forward.
Vice-Chair Ortiz stated it was his understanding that the
previous legislature had already taken the necessary action
for the $20 million to be distributed to districts. He
thought the scenario presented was a catch-22. He believed
action was only necessary if the legislature decided not to
distribute the money. He asked if the legislature could
issue an intent statement indicating its desire to follow
the action taken in 2018.
Co-Chair Foster replied that the item could be left out of
the supplemental that would ultimately be passed by the
House. Additionally, the House could issue a sense of the
House or the House and Senate could issue a joint
resolution to send a message of the legislature's intent.
Vice-Chair Ortiz remarked that action on the supplemental
would be necessary [to provide clarity on the issue]. He
remarked that districts were in limbo until action was
taken on the bill. He asked if there was action the
legislature could take outside the supplemental to allow
the distribution of the funds.
Co-Chair Foster responded that he did not envision taking
months to pass the supplemental. He estimated it may be one
month. He noted that if there were issues in the meantime,
the committee could talk about the options. He did not
believe the supplemental process would be drawn out.
HB 54 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster canceled the 9:00 a.m. meeting for the
following Monday. He reviewed the schedule for the
following week.
ADJOURNMENT
3:06:12 PM
The meeting was adjourned at 3:06 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFC 3.8.19 HB 53 - FY2019 Disaster Relief Supplemental Overview.pdf |
HFIN 3/8/2019 1:30:00 PM |
HB 53 |
| HFC 3.8.19 HB 54 - FY2019 Supplemental Overview.pdf |
HFIN 3/8/2019 1:30:00 PM |
HB 54 |
| FY19 Supplemental Summary 3.8.19.pdf |
HFIN 3/8/2019 1:30:00 PM |
HB 54 |
| FY2020 Gov Amend Budget to HFC 3.8.19 DEED.pdf |
HFIN 3/8/2019 1:30:00 PM |
HFIN - DEED Budget Overview |
| FY2020GovAmdK-12FundingReductions_2-15-2019.pdf |
HFIN 3/8/2019 1:30:00 PM |
HFIN - DEED |
| Modified Education Aid.pdf |
HFIN 3/8/2019 1:30:00 PM |
HFIN - DEED |
| Moore vs State Settlement Agreement.pdf |
HFIN 3/8/2019 1:30:00 PM |
HB 53 HB 54 |
| House Finance 3.8.19 OMB Response.pdf |
HFIN 3/8/2019 1:30:00 PM |
HB 53 |
| DRF - SFY16 - SFY19 by BGR transaction Updated 3.8.19.pdf |
HFIN 3/8/2019 1:30:00 PM |
HB 53 HB 54 |