Legislature(1997 - 1998)

03/06/1998 03:30 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
    HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                
                   March 6, 1998                                               
                     3:30 p.m.                                                 
MEMBERS PRESENT                                                                
Representative Norman Rokeberg, Chairman                                       
Representative Joe Ryan                                                        
Representative Tom Brice                                                       
MEMBERS ABSENT                                                                 
Representative John Cowdery, Vice Chairman                                     
Representative Bill Hudson                                                     
Representative Jerry Sanders                                                   
Representative Gene Kubina                                                     
COMMITTEE CALENDAR                                                             
HOUSE BILL NO. 400                                                             
"An Act combining parts of the Department of Commerce and Economic             
Development and parts of the Department of Community and Regional              
Affairs by transferring some of their duties to a new Department of            
Commerce and Rural Development; transferring some of the duties of             
the Department of Commerce and Economic Development and the                    
Department of Community and Regional Affairs to other existing                 
agencies; eliminating the Department of Commerce and Economic                  
Development and the Department of Community and Regional Affairs;              
relating to the Department of Commerce and Rural Development;                  
adjusting the membership of certain multi-member bodies to reflect             
the transfer of duties among departments and the elimination of                
departments; and providing for an effective date."                             
     - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE                                
(* First public hearing)                                                       
PREVIOUS ACTION                                                                
BILL: HB 400                                                                   
SPONSOR(S): REPRESENTATIVES(S) KOHRING, Austerman, Barnes,                     
Cowdery, Hodgins, Kelly, Mulder, Ogan, Ryan, Therriault, Vezey                 
Jrn-Date    Jrn-Page           Action                                          
02/12/98      2307     (H)  READ THE FIRST TIME - REFERRAL(S)                  
02/12/98      2308     (H)  L&C, FINANCE                                       
02/23/98               (H)  L&C AT  3:15 PM CAPITOL 17                         
02/23/98               (H)  MINUTE(L&C)                                        
02/25/98               (H)  L&C AT  3:15 PM CAPITOL 17                         
02/25/98               (H)  MINUTE(L&C)                                        
02/27/98               (H)  L&C AT  3:15 PM CAPITOL 17                         
02/27/98               (H)  MINUTE(L&C)                                        
03/06/98               (H)  L&C AT  3:15 PM CAPITOL 17                         
WITNESS REGISTER                                                               
DAVID ALEXANDER                                                                
Alaska Adult Education Association                                             
125 West Fifth Avenue                                                          
Anchorage, Alaska 99501                                                        
Telephone:  (907) 279-7827                                                     
POSITION STATEMENT:  Testified against Section 65 of HB 400, which             
                     moves the Job Training Partnership Act                    
                     Program to the Department of Labor                        
REPRESENTATIVE VIC KOHRING                                                     
Alaska State Legislature                                                       
Capitol Building, Room 421                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-2186                                                     
POSITION STATEMENT:  Sponsor of HB 400.                                        
DAN KENNEDY                                                                    
851 East Westpoint Drive, Suite 108                                            
Wasilla, Alaska 99654                                                          
Telephone:  (907) 376-1272                                                     
POSITION STATEMENT:  Testified in support of HB 400.                           
MIKE KRIEBER, Legislative Administrative Assistant                             
   to Representative Vic Kohring                                               
Alaska State Legislature                                                       
Capitol Building, Room 421                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-6863                                                     
POSITION STATEMENT:  Provided information on HB 400.                           
TOM LAWSON, Director                                                           
Division of Administrative Services                                            
Department of Commerce and Economic Development                                
P.O. Box 110803                                                                
Juneau, Alaska 99811-0803                                                      
Telephone:  (907) 465-2505                                                     
POSITION STATEMENT:  Presented fiscal note for HB 400.                         
REMOND HENDERSON, Director                                                     
Division of Administrative Services                                            
Department of Community and Regional Affairs                                   
P.O. Box 112100                                                                
Juneau, Alaska 99811-2100                                                      
Telephone:  (907) 465-4708                                                     
POSITION STATEMENT:  Testified on the fiscal note for HB 400.                  
KEITH GERKEN, Architect                                                        
Division of General Services                                                   
Department of Administration                                                   
P.O. Box 110210                                                                
Juneau, Alaska 99811-0210                                                      
Telephone:  (907) 465-5683                                                     
POSITION STATEMENT:  Testified on the fiscal note for HB 400.                  
JOSEPH SPEARS, Data Processing Center Supervisor                               
Division of Administrative Services                                            
Department of Community and Regional Affairs                                   
333 West Fourth Avenue, Suite 220                                              
Anchorage, Alaska 99501                                                        
Telephone:  (907) 269-4513                                                     
POSITION STATEMENT:  Testified on the fiscal note for HB 400.                  
REPRESENTATIVE ALAN AUSTERMAN                                                  
Alaska State Legislature                                                       
Capitol Building, Room 434                                                     
Juneau, Alaska  99801                                                          
Telephone:  (907) 465-2487                                                     
POSITION STATEMENT:  Testified on HB 400.                                      
ACTION NARRATIVE                                                               
TAPE 98-26, SIDE A                                                             
Number 0001                                                                    
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                   
Standing Committee meeting to order at 3:30 p.m.  Members present              
at the call to order were Representatives Rokeberg and Ryan;                   
Representative Brice arrived at approximately 4:10 p.m.                        
HB 400 - DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT                              
Number 0050                                                                    
CHAIRMAN ROKEBERG announced the committee's order of business was              
HB 400, "An Act combining parts of the Department of Commerce and              
Economic Development and parts of the Department of Community and              
Regional Affairs by transferring some of their duties to a new                 
Department of Commerce and Rural Development; transferring some of             
the duties of the Department of Commerce and Economic Development              
and the Department of Community and Regional Affairs to other                  
existing agencies; eliminating the Department of Commerce and                  
Economic Development and the Department of Community and Regional              
Affairs; relating to the Department of Commerce and Rural                      
Development; adjusting the membership of certain multi-member                  
bodies to reflect the transfer of duties among departments and the             
elimination of departments; and providing for an effective date."              
Chairman Rokeberg stated the committee would take testimony for the            
record on HB 400, noting the purpose of the meeting had been to                
review the bill in greater detail.                                             
Number 0159                                                                    
DAVID ALEXANDER, Alaska Adult Education Association, testified via             
teleconference from Anchorage.  He said the association is a                   
provider of job training to adults throughout Alaska, with 20                  
centers in Alaska; the largest of those centers are located in                 
Juneau, Fairbanks, Anchorage, Soldotna and Wasilla.  Job Training              
Partnership Act (JTPA)-funded programs are occurring in each of                
those centers.  Mr. Alexander referred to Section 65 of HB 400                 
moving the JTPA Program from the Department of Community and                   
Regional Affairs (DCRA) to the Department of Labor (DOL).  He said             
the Alaska Adult Education Association would prefer have the JTPA              
administration left with the new Department of Commerce and Rural              
Development because DCRA's approach to delivery of job-training                
services has been effective.  He noted the three private industry              
councils have been much more sensitive to the needs of the business            
community in terms of orienting job-training programs toward                   
business's actual needs than many of the other job training                    
initiatives undertaken in the state.  He noted the councils are                
made up of private employers; there is one statewide council, and              
one council in each Anchorage and Fairbanks.                                   
Number 0338                                                                    
MR. ALEXANDER said the Alaska Adult Education Association is very              
much in favor of some of the DOL's work, but finds DOL is generally            
not a job-training agency and may not have the right philosophical             
orientation in this area.  He indicated the association believes               
the JTPA Program administration would be much more effective if the            
program is left in the new department.  Mr. Alexander commented on             
his 27 years of job-training experience working in Anchorage and               
statewide and noted he had also been on Alaska's models committee              
for the new "one-stop centers."  In his tours of about ten of these            
facilities he said he consistently found that the existing private             
industry council set-up in each city where an effective job                    
training program was going on was stimulated by the private                    
industry council members themselves, the private business community            
members involved in the job training program decisions.  He                    
indicated he feels the current private industry council arrangement            
is effective and said his association believes the new Department              
of Commerce and Rural Development is the best location for JTPA                
Number 0651                                                                    
CHAIRMAN ROKEBERG asked if he was a state employee or a contractor.            
MR. ALEXANDER replied that he is a contractor; he works for Nine               
Star Enterprises in Anchorage.  He noted it has Anchorage and                  
statewide JTPA programs recruiting, training and employing adults.             
He stated this year's current placement rate is between 62 and 67              
Number 0542                                                                    
CHAIRMAN ROKEBERG asked the amount of federal versus state money to            
finance the JTPA programs.                                                     
MR. ALEXANDER replied he did not know.                                         
Number 0559                                                                    
CHAIRMAN ROKEBERG asked why, in brief, Mr. Alexander's organization            
did not feel DOL would be effective with the JTPA Program.                     
Number 0581                                                                    
MR. ALEXANDER replied it is the association's perspective that DOL             
is focused on employment services where people come in, find out               
about jobs and take those jobs.  He noted he has worked with DOL               
and is pleased with a lot of its services, but does not think it is            
a job-training organization or currently oriented toward job                   
training.  Mr. Alexander said he thinks the private industry                   
council structure might not survive if DOL administered the JTPA               
funds, and he thinks a move away from the current business                     
orientation maintained by the three private industry councils would            
not be good for the people served.                                             
Number 0716                                                                    
CHAIRMAN ROKEBERG asked Representative Kohring to review the                   
documentation he has provided to the committee.  Chairman Rokeberg             
indicated after Representative Kohring's review the department                 
members would have an opportunity to testify or answer questions.              
Number 0778                                                                    
REPRESENTATIVE VIC KOHRING came forward to testify, noting the                 
presence of Mike Krieber to help answer questions.  Representative             
Kohring stated he chairs the Department of Commerce and Economic               
Development (DCED) and DCRA budget subcommittees; he feels he has              
a good understanding of those budgets and that it is consequently              
appropriate for him to pursue this legislation.  He stated HB 400              
would merge two economic development-related state government                  
entities, DCED and DCRA; with the expectation upper-management                 
dollars would be saved, taking the focus off of cutting specific               
programs within those two budgets.  He reiterated that they were               
speaking of streamlining and restructuring government with the                 
expectation that funding for these programs would go farther by                
eliminating upper management.  Representative Kohring reviewed a               
26-page packet of HB 400 materials distributed to the committee.               
He indicated the objective is to combine two departments, transfer             
certain programs out of these departments into more appropriate                
departments, and eliminate overlapping functions.  He gave the                 
examples of job training and child care as programs to be                      
transferred.  In addition to budget-cutting, a primary objective               
would be allowing the new department to focus on economic                      
development throughout the entire state.  House Bill 400 eliminates            
one of the two commissioner's offices and upper administrative                 
division staff in one of the two departments.  Representative                  
Kohring reiterated that it does not eliminate or cut programs or               
impact services.  He indicated, however, once the new department               
was in place some adjustments would probably be made after                     
duplicating functions were precisely identified.                               
Number 0997                                                                    
REPRESENTATIVE KOHRING said another feature of HB 400 would be to              
unify financial resources under a new division intended to provide             
optimum funding for private and public projects, and businesses.               
This would enhance the development of infrastructure, which is                 
inherent to the economic development and community self-                       
sufficiency.  Representative Kohring stressed that HB 400 would                
save approximately $1 million a year by eliminating one of the two             
commissioner's offices and the upper management staff.  He                     
indicated another benefit would the optimum funding of construction            
projects and the minimization of debt service for communities and              
private owners.  Economic development-related projects would be                
completed sooner because of quicker project funding identification,            
expediting economic development.  Businesses would benefit through             
"one-stop" access to various loan programs.  Representative Kohring            
referred to his previous testimony on HB 400, noting the new                   
department would be made up of four new divisions:  the Division of            
Rural Affairs, formerly DCRA; the Division of Statewide                        
Development, formerly DCED; the Division of Financial Resources,               
consolidating the various funding sources; and the Division of                 
Administration, providing payroll-related services, personnel                  
management, budgeting, et cetera.                                              
Number 1130                                                                    
DAN KENNEDY testified next via teleconference from the Matanuska-              
Susitna Legislative Information Office (Mat-Su LIO).  He stated he             
is a certified public accountant (CPA) and president of the greater            
Wasilla Chamber of Commerce).  Mr Kennedy said he was testifying on            
his own behalf in support of HB 400 but noted the Wasilla Chamber              
of Commerce board would have a resolution in support of HB 400                 
before it on March 25.  Mr. Kennedy said he feels like somewhat of             
an expert witness.  He commented he has been practicing as a CPA in            
Alaska for 18 years; 7 years with an international CPA firm in                 
Anchorage and 10 years as the chief financial officer, vice                    
president of finance, for Matanuska Telephone Association (MTA).               
He said he has been in public CPA practice with his wife, also a               
CPA, for the last two years.  He referred to his article entitled              
"The Re-engineering of Local Telecommunication Companies,"                     
published two years ago as he received his master's degree in                  
business administration (MBA) from Alaska Pacific University.  Mr.             
Kennedy said he feels very qualified to speak on the topic of                  
merging departments because he orchestrated the merger, or re-                 
engineering, of MTA's departments of finance and administrative                
services at the corporate headquarters in Palmer.  He commented MTA            
is the third largest local exchange carrier in Alaska with annual              
revenues greater than $40 million and he noted the company will                
save approximately $200,000 annually.                                          
Number 1264                                                                    
MR. KENNEDY congratulated the representatives who have brought HB
400 forward and indicated he believes future cost savings are very             
important to this task.  Mr. Kennedy commented he thinks                       
government, and even the private sector and corporate America to               
some degree, often improperly focuses on current year budgets or               
the current fiscal year (FY), overlooking long-term benefits or                
strategic planning efforts.  He indicated he believes HB 400 would             
result in significant cost savings to state government, urging the             
commissioners of both DCRA and DCED to "grasp onto" this concept in            
HB 400 and cooperate fully with the legislative re-engineering                 
efforts.  Mr. Kennedy said the commissioners should take the                   
initiative and show their leadership, noting both have tremendous              
private sector experience.  The way to become more effective, he               
said, at least in corporate America, is by always re-engineering,              
looking at the most efficient and effective method of organization.            
Mr. Kennedy also said, as a CPA and advisor of both large and small            
Alaska businesses, he was truly disappointed that the current                  
Administration continues to press for more government and more                 
spending.  He recommends state government follow the private                   
sector's leadership by becoming leaner and more effective.  Mr.                
Kennedy reiterated his support for the merger of DCED and DCRA,                
stating he was available for further testimony and noting his                  
expertise in this area.  He said he would also  be very interested             
in making a proposal in a public RFP (Request for Proposals)                   
process to assist with this merger.                                            
Number 1412                                                                    
CHAIRMAN ROKEBERG asked Mr. Kennedy how many people were in the two            
merged groups at MTA.                                                          
Number 1425                                                                    
MR. KENNEDY replied that there were 28 people in the finance                   
department and approximately 40 people in the administrative                   
services department, which included purchasing, procurement,                   
warehousing, contract administration and human resources.  He                  
noted, similar to HB 400, MTA removed an unnecessary top management            
level, eliminating a vice president and an executive assistant,                
saving approximately $200,000 without losing any particular thrust             
or important functions of the merged departments.                              
Number 1470                                                                    
CHAIRMAN ROKEBERG indicated Mr. Kennedy, as the vice president of              
finance, must have been the surviving head executive of the new                
Number 1478                                                                    
MR. KENNEDY answered in the negative, stating he "walked the talk."            
Because he felt so strongly that MTA had to become more competitive            
in an emerging, highly competitive industry, he eliminated his own             
position and started his CPA firm.                                             
Number 1509                                                                    
CHAIRMAN ROKEBERG asked Mr. Kennedy what he would include in an RFP            
to assist with this endeavor.                                                  
Number 1534                                                                    
MR. KENNEDY indicated the RFP should specify a firm with experience            
effectively merging either governments or departments in the                   
private sector, especially looking "for the seal of long-term                  
Alaskans for the work that the two departments do."  He said he is             
familiar with the work of the two departments, referring to                    
summaries from the departments' world wide web sites, and stated,              
"I think it's (indisc.) qualifications and understanding of Alaska             
needs are the two primary elements of the scope of that                        
CHAIRMAN ROKEBERG asked what the scope of work would be.                       
Number 1583                                                                    
MR. KENNEDY said he thought HB 400 recommended cost savings, first             
and foremost, by eliminating one of the commissioner positions.                
Secondly, he said, the re-engineering of an entity in the private              
sector is an extensive process with focus on gathering input from              
the employees.  He said he is a strong advocate of empowering                  
employees, noting employees at all levels in a company have a                  
tremendous understanding for the business they perform.  He thinks             
an engagement similar to the re-engineering concepts used                      
extensively in corporate America in the last four or five years                
would work very well here because these two departments interact               
often with the private sector.  Mr. Kennedy recommended gathering              
input from both the employees and the customers of these two                   
departments, i.e. the users of the services, for better and more               
effective management of this element of state government.                      
Number 1649                                                                    
CHAIRMAN ROKEBERG asked how the compensation was usually arranged              
in an RFP.                                                                     
MR. KENNEDY indicated he had seen it both by the hour and by                   
contract, noting he has seen RFPs through the state of Alaska and              
said he has seen (indisc.) within state government that could                  
better answer that question in accordance with state regulation.               
CHAIRMAN ROKEBERG asked Mr. Kennedy his "ballpark" cost estimate               
for a third-party contractor such as himself.                                  
MR. KENNEDY replied he thought it would be an engagement not to                
exceed $100,000.                                                               
CHAIRMAN ROKEBERG said the committee would appreciate Mr. Kennedy              
written input with further thoughts on this, particularly regarding            
what needs to be done to accomplish this.                                      
Number 1719                                                                    
REPRESENTATIVE KOHRING came forward to continue his review of HB
400, thanking Mr. Kennedy for his outstanding testimony.                       
Representative Kohring provided copies of addition written                     
testimony in support to the committee, indicating two were from                
witnesses who had testified at the February 27 public hearing.  He             
noted one of the other statements was from Don Tanner, a member of             
the Hickel Administration and former deputy commissioner of DCRA.              
Mr. Tanner's letter reiterates the merits of HB 400:  unnecessary              
overhead would be cut; efficiencies in implementing programs would             
be increased; and economic growth, particularly in rural Alaska,               
would be enhanced.  Representative Kohring said Mr. Tanner feels               
the departments do perform similar tasks in spite of previous                  
testimony to the contrary, Mr. Tanner thinks HB 400 would be good              
for rural Alaska, and he thinks HB 400 would be good for the state             
budget.  Representative Kohring noted helping economic development             
in rural Alaska is one of the goals.  Representative Kohring                   
referred to additional support letters in the HB 400 packet, noting            
three were from people representing Tamsure Construction (ph), a               
Wasilla-area general contracting firm.  Representative Kohring also            
provided a two-page summary to the committee containing answers to             
frequently asked questions about HB 400.                                       
Number 1829                                                                    
REPRESENTATIVE KOHRING referred to page three of the packet,                   
"Overlapping Economic Development Related Activities of DCED and               
DCRA."  He commented one of the major points he is trying to make              
with this legislation, in addition to cutting the budget and                   
enhancing economic development, is that these two entities are very            
much related in the sense they are economic development                        
organizations trying to spur growth in Alaska's economy.                       
Representative Kohring noted they examined the missions of DCRA's              
and DCED's different programs to see where that overlap is                     
occurring.  He commented that the activity categories are listed in            
the left column, the middle column lists corresponding DCRA                    
programs, and the right column lists corresponding DCED programs.              
The activities categories are:  rural economic/business                        
development; rural tourism; rural sanitation and infrastructure                
projects: planning/funding/management/operations; energy/electrical            
development and funding; utility assistance; assistance to                     
economically distressed regions; fisheries.  Representative Kohring            
stated there aren't necessarily identical programs in both                     
entities, but there are certainly related programs which tie into              
these activity categories.                                                     
Number 1889                                                                    
CHAIRMAN ROKEBERG noted the former Division of Tourism was not                 
listed in the tourism activity category for DCED.  He asked if the             
former division was now being called the Office of Tourism.                    
Number 1908                                                                    
REPRESENTATIVE KOHRING said there was a new Budget Review Unit                 
(BRU) calling it the Office of Trade and Tourism, which reflected              
their changes in Finance last year.  He commented that should have             
been noted and was an oversight.                                               
Number 1919                                                                    
MIKE KRIEBER, Legislative Administrative Assistant to                          
Representative Vic Kohring, said they were focusing on the rural               
aspects of tourism; in particular, efforts toward rural development            
in the tourism industry.                                                       
Number 1930                                                                    
CHAIRMAN ROKEBERG noted, however, the title is "Overlapping                    
Economic Development Related Activities of DCED and DCRA,"  and                
said he thought they were supposed to be merging the departments.              
Number 1940                                                                    
REPRESENTATIVE KOHRING noted he wouldn't go into each specific                 
program because of time constraints, but said he wanted to show the            
committee DCED's and DCRA's different programs relating to the                 
major activity areas identified in that left column.  He stated the            
committee could see there are many programs that not only relate to            
economic development but are also similar to each other.                       
Representative Kohring stated the next page gives the actual cost              
savings of HB 400.  He commented the bill calls for the elimination            
of the DCRA commissioner's office, but the composition of the upper            
management team would actually be up to the Governor.                          
Representative Kohring listed the savings:  $458,000 from the                  
elimination of the commissioner's office specifically; $421,000                
from the elimination of the administrative services office;                    
$102,000 from the elimination of the Division of Community and                 
Rural ["regional" stated on tape] Development (DCRD) director                  
position; $73,000 from the elimination of miscellaneous expenses               
such as travel, contractual and supplies, for a total of $1,054,000            
in savings.  Representative Kohring indicated those are significant            
savings, and he emphasized the savings would be ongoing for every              
future year, an important consideration for the committee.                     
Number 2016                                                                    
REPRESENTATIVE KOHRING indicated further justification for HB 400              
is that the one-time implementation costs would be more than offset            
by the many millions the state would save over time.  He referred              
to the next page, "Evaluation of New Department Staffing Levels,"              
stating he wanted the committee to see how the DCED and DCRA                   
compare to other state government departments.  He commented                   
concern was expressed at the last hearing that a merger would                  
create a cumbersome colossus which would be difficult manage                   
without incurring extra personnel expense.  He said DCED currently             
has only 348 employees and DCRA has 180 employees for a combined               
total of 528.  He said the total would be just under 500 employees             
after some positions are eliminated, commenting it would still be              
a small department , the fourth smallest in state government.                  
Representative Kohring said they feel it would still very much be              
a manageable department.                                                       
Number 2088                                                                    
CHAIRMAN ROKEBERG commented that a battalion size in the United                
States (US) Army was around 400 or 500, noting Representative                  
Kohring might want to check this.  There was some discussion                   
regarding the sizes of US Army divisions and Roman legions.                    
Number 2128                                                                    
REPRESENTATIVE KOHRING said the packet's last section contained his            
rebuttals to DCRA and DCED staff testimony at the February 25                  
hearing, and to concerns expressed by Mr. Perkins, Special                     
Assistant, DOL.  Representative Kohring said the deputy                        
commissioner who spoke [note: both the DCRA and DCED deputy                    
commissioners testified at the February 25 hearing] noted DCED has             
a fundamentally different mission from DCRA, and DCED programs                 
focus more on private sector businesses while DCRA focuses more on             
public.  Representative Kohring said the deputy commissioner was               
essentially saying the missions of the departments are separate                
because one is public and the other is private, and Representative             
Kohring indicated he disagrees.  He stated DCED does provide                   
funding for publicly-owned projects not just private.  He noted the            
Governor's proposed FY 1999 capital budget includes $16.8 million              
in Alaska Industrial Development and Export Authority (AIDEA)                  
funds; including monies for DCRA, the departments of                           
Administration, Corrections, Environmental Conservation (DEC),                 
Transportation and Public Facilities (DOT/PF), Revenue, Natural                
Resources (DNR), Military and Veterans Affairs, et cetera.                     
Number 2189                                                                    
CHAIRMAN ROKEBERG said, "You mean these agencies are ripping off               
AIDEA for this amount of money?"  He asked, "Or is this capital                
budget grants ...?"                                                            
REPRESENTATIVE KOHRING confirmed it was capital budget grants, and             
also part of the Governor's proposed budget, not necessarily what              
the legislature was going to authorize.  However, it does                      
underscore the fact, he said, that DCED is not simply involved with            
the private sector; it is providing monies for the public sector as            
well, contrary to previous testimony.  Representative Kohring also             
noted that the Alaska Public Utilities Commission (APUC) oversees              
private and public utilities, and is inherently involved in public             
and public infrastructure development as well; including water,                
sewer, natural gas, telecommunications and various other utilities.            
Thirdly, Representative Kohring commented on a quote in DCED's                 
operational budget overview document for FY 1999 which states that             
one of the functions of the Division of Trade and Development is               
"helping communities develop needed infrastructure,"   which he                
said further underscores DCED deals with public financing not just             
private.  In explanation, Representative Kohring indicated that                
public financing, as also done by the legislature, involves                    
spending monies dealing with infrastructure development impacting              
the public sector.  In summary, he said, both DCED and DCRA                    
participate in planning and funding of public and private projects             
and he thinks it is pretty clear the deputy commissioner's position            
in that regard was not completely accurate.  Representative Kohring            
commented he has tried to clearly note that there are multiple                 
examples of duplicating, related functions and programs dealing                
with economic development in both departments.  He referred to                 
Exhibit 1, noting there are many types of overlapping functions                
despite the deputy commissioner's testimony that there were                    
literally no duplicating functions within DCRA.  Representative                
Kohring said the duplicating functions include rural tourism,                  
infrastructure and community facilities [order in packet: 1)                   
sponsor's rebuttals to DCED; 2) sponsor's rebuttals to DCRA; 3)                
sponsor's rebuttals to DOL; 4) 5-page Exhibit 1; 5) 1-page Exhibit             
2; 6) 2-page Exhibit 3.  There is also a small section identified              
as Exhibit 1 on page 2 of the rebuttal to DCRA].                               
Number 2285                                                                    
CHAIRMAN ROKEBERG indicated Exhibit 1 referred to the DCRA Rural               
Development Initiative Fund (RDIF) loan summary.                               
Number 2295                                                                    
REPRESENTATIVE KOHRING reviewed the materials and indicated he made            
a misstatement about the deputy commissioner's testimony regarding             
duplication.  Representative Kohring said, "He feels that there's              
no connection between the two, that there's no duplicating                     
functions between DCED and DCRA, and if you'll note ... on Exhibit             
1, you'll see that DCRA does, in fact, have functions that relate              
to DCED and economic development here, particularly when it comes              
to private organizations that have been the recipient[s] of funds."            
Number 2317                                                                    
CHAIRMAN ROKEBERG referred to the various loan programs, grants, et            
cetera, in Exhibit 1 and asked if that was what Representative                 
Kohring was referring to as far economic development-related                   
REPRESENTATIVE KOHRING referred the question to Mr. Krieber.                   
MR. KRIEBER answered in the affirmative.                                       
Number 2330                                                                    
REPRESENTATIVE KOHRING indicated there are many types of                       
overlapping functions of these departments.  He summarized that                
they have found many examples which indicate overlapping functions             
exist and that there is much in the way of duplication occurring               
between these two agencies.  Representative Kohring noted the                  
deputy commissioner said many staff would have to be relocated due             
to the merger.  Representative Kohring also referred to the fiscal             
note which Mr. Lawson would present later and indicated DCED's                 
perspective is that the merger would require relocating many                   
personnel.  Representative Kohring disagreed, noting the DCED                  
deputy commissioner also noted two full-time space planners would              
be necessary for office space consolidation because DCED felt all              
of these staff people would have to be put in one location.                    
Representative Kohring disagreed with that also, referring to                  
Exhibit 3 which points out that DCED currently occupies multiple               
locations and is functioning fine without being consolidated.                  
Kohring continued, "I'd also like to point out that a few other -              
a few programs ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE]                     
TAPE 98-26, SIDE B                                                             
Number 0001                                                                    
REPRESENTATIVE KOHRING continued, "... being transferred to other              
departments as well, and what that really means is there's gonna be            
a very minimal number of employees that are going to be transferred            
to other locations."  He indicated a maximum would be 19 people                
being moved and it could be as few as 3.  Three people would                   
essentially be moved across the street with the transfer of the                
Head Start Program to the Department of Health and Social Services             
(H&SS) from its current DCRA location.  He said relocating 19                  
people would cost $95,000 at most, based on the standard $5,000                
used by the department.  Representative Kohring referred to Item 4             
in the rebuttal to DCED, noting the deputy commissioner indicated              
the new department would require two deputy commissioners.                     
Representative Kohring rebutted that, commenting the new department            
would have under 500 employees, approximately 350 employees if the             
104 people in the independent entities were excluded.                          
Representative Kohring referred to his earlier testimony on                    
department sizes, noting that was a relatively small department and            
there are only three departments in state government currently with            
two deputy commissioners.  Representative Kohring noted the new                
department would retain the DCED special assistant.  Representative            
Kohring said the DCRA deputy commissioner indicated during his                 
February 25 testimony that DCED funds public and private projects,             
but DCRA only funds public entities.  However Representative                   
Kohring referred to Exhibit 1, noting there are 34 different                   
private entity recipients of RDIF loans.  Page 2 of Exhibit 1 shows            
that DCRA has a mini-grant award program with a total of 6 public              
and private partnership grants.  Representative Kohring indicated              
this further underscores that private parties as well as a public              
entity are involved.                                                           
Number 0146                                                                    
CHAIRMAN ROKEBERG referred to one RDIF loan entries in Exhibit 1,              
stating he assumed Tailor Made Pizza (in McCarthy) was a private               
Number 0150                                                                    
REPRESENTATIVE KOHRING answered in the affirmative.  Representative            
Kohring next addressed DCRA's claim that it does not participate in            
rural tourism development.  He said the committee can see that                 
there are rural tourism development-related programs funded through            
DCRA.  He next addressed the commissioner of DCRA's assertion that             
DCRA funds mostly publicly-owned infrastructure projects, stating              
that is completely incorrect.  Referring again to Exhibit 1,                   
Representative Kohring noted DCRA's RDIF loan program shows only               
one of 34 loans used for infrastructure and that loan was for a                
privately-owned RV (recreational vehicle) park.  The mini-grant                
program list shows none of the 23 grants were actually used for                
infrastructure.  In summary, both DCED and DCRA fund and administer            
private and public projects; rural tourism projects as well as                 
infrastructure and community facility energy electric-related                  
projects, and he asked, "Why do we have two departments that                   
perform these same tasks?  We should merge these two departments               
together if they're in fact out there performing the same tasks."              
Number 0215                                                                    
REPRESENTATIVE KOHRING referred to the February 27 memorandum to               
the committee from Lamar Cotten, Deputy Commissioner, DCRA, noting             
there were disagreements there also.  He commented Mr. Cotten                  
stated DCRA has limited involvement in assisting communities to                
develop a community strategy for health and safety, community                  
infrastructure, and jobs and economic development and so forth.  In            
rebuttal, Representative Kohring asked if rural communities would              
ever become independent if only a few communities were actually                
receiving limited assistance from DCRA, indicating DCRA's function             
is to help rural communities attain economic self-sufficiency.                 
Representative Kohring said HB 400 would provide the framework to              
enable rural Alaska a chance to build its economy through greater              
coordinated assistance for rural communities through these programs            
administered through the new department.  He agrees a comprehensive            
approach to economic development is needed, but it seems an                    
effective strategy is especially needed because of the many factors            
affecting economic development.  Representative Kohring said DCRA              
is inherently involved in such a strategy but he indicated there               
isn't a good focus on effective development in the present                     
situation, the focus the new department would provide.  The next               
rebuttal items deals with the DCRA's assertion that it refers                  
community officials to other agencies including DCED after a                   
development strategy is determined.  Representative Kohring noted              
DCRA is not involved with developing this strategy and only serves             
as a "middleman" agency; therefore, DCRA should be merged into DCED            
where such coordination would be more effective.  Another point in             
the memorandum is that DCRA's regional development efforts are                 
primarily provided through funding and administrative support of               
the Alaska Regional Development Organization Program (ARDOR).                  
Number 0303                                                                    
CHAIRMAN ROKEBERG indicated the ARDOR Program has been in two or               
three departments in the past three years.                                     
Number 0313                                                                    
REPRESENTATIVE KOHRING noted the ARDOR Program funding comes                   
through interagency receipts from DCED and under HB 400 this                   
program would be funded directly through the new department,                   
eliminating DCRA's current middleman role and creating greater                 
Number 0338                                                                    
REPRESENTATIVE JOE RYAN asked if Representative Kohring had                    
identified the costs involved in this transfer of funds.                       
REPRESENTATIVE KOHRING said they haven't specifically identified               
the resulting savings from addressing the duplicating functions.               
REPRESENTATIVE RYAN indicated he thought there would be associated             
administrative and auditing costs with this transfer of funds.                 
Number 0355                                                                    
REPRESENTATIVE KOHRING said they would expect the departments, if              
merged, to examine and recognize that there are duplicating                    
functions, combining those programs with resulting more efficient              
use of funds in delivering the same programs.  Representative                  
Kohring referred Item 4 in his rebuttal to DCRA, saying DCRA states            
its RDIF program differs from DCED's small business economic                   
development revolving loan program because they serve different                
clienteles.  In rebuttal, Representative Kohring referred again to             
Exhibit 1, noting DCED is also involved in the RDIF program, and he            
said they feel efficiencies in management can be achieved if this              
program is operated under one department.  He asked, "Why should we            
have this RDIF loan program providing loans through DCRA and also              
providing loans through DCED?" noting that is another example of               
duplicating functions where greater efficiencies could be achieved             
through merging.  Referring to Item 5, he said DCRA indicated it               
agrees that it provides infrastructure scoping, planning and                   
funding.  He said DCRA states also that it provides rural                      
sanitation, in this case rural sanitation business management                  
assistance.  However, he said DCRA said DCED does not perform these            
Number 0425                                                                    
REPRESENTATIVE KOHRING pointed out that DCED does perform these                
tasks, and it is another example of DCRA doing something similar to            
DCED.  Representative Kohring more specifically pointed to AIDEA,              
noting AIDEA is an important part of DCED relating to economic                 
development, international and domestic trade.  He stated, "Again,             
we've got AIDEA running under this auspices referring to DCED and              
then we've got the - the other program under DCRA, so there are                
very similar functions there."  He also noted that AIDEA is                    
apparently involved in early scoping and planning in the course of             
funding these projects and its participation in the Southeast                  
Alaska Community Economic Revitalization Team [SE-CERT], despite               
the deputy commissioner's assertion.                                           
Number 0466                                                                    
CHAIRMAN ROKEBERG pointed out AIDEA is an independent agency,                  
indicating this would be discussed later.                                      
Number 0473                                                                    
REPRESENTATIVE KOHRING summarized in response to the deputy                    
commissioners of both DCED and DCRA that there is ample evidence               
all kinds of duplicating activities are currently occurring.  He               
said that again, it is not precisely the same, necessarily, in some            
cases yes, but by and large they are speaking about related                    
economic development programs being administered in both DCRA and              
DCED.  He said they think that further justifies merging the two               
departments, noting the departments are both economic development              
entities, commenting that they should put the two together under               
one "management roof," saving themselves that $1 million in costly             
and expensive upper management bureaucracy.                                    
Number 0508                                                                    
REPRESENTATIVE RYAN asked Representative Kohring if he knew offhand            
the number of child care functions are performed by the state,                 
commenting he knew of three:  child care assistance under H&SS                 
which goes to municipalities, Division of Family and Youth Services            
(DFYS) which pays for babysitters for people, AFDC (Aid to Families            
with Dependent Children) in the "welfare to work" program, and he              
imagines there are a few more.                                                 
Number 0525                                                                    
REPRESENTATIVE KOHRING stated he was not really familiar with all              
of the programs under H&SS, but they feel H&SS would be a much                 
improved fit for the child care and Head Start programs currently              
in DCRA, since there are child care and early child development-               
related programs in H&SS.                                                      
Number 0542                                                                    
MR. KRIEBER indicated there were three child-related programs with             
DCRA:  the Head Start Program, the Child Care Program and the day              
care assistance program.                                                       
Number 0568                                                                    
REPRESENTATIVE KOHRING noted he disagreed with the comments of Mr.             
Perkins, the DOL's special assistant, on February 27 that DOL would            
not be a "good fit" for the JTPA Program to be transferred from                
DCRA.  Representative Kohring referred to the DOL's mission per AS             
     AS 23.05.010. Purpose.  The Department of Labor shall                     
     foster and promote the welfare of the wage earners of the                 
     state, improve their working conditions and advance their                 
     opportunities for profitable employment.                                  
REPRESENTATIVE KOHRING noted the language "advance their                       
opportunities for profitable employment." which he believes refers             
to job training.  If DOL's statutory mission is to provide for job             
training, then it only makes sense to put JTPA in DOL.  Also,                  
Representative Kohring pointed out that the transfer of JTPA, the              
State Training Employment Program (STEP) and the "one-stop"                    
programs from DCRA into DOL are consistent with the statutory                  
purpose.  Representative Kohring noted currently DCRA refers JTPA              
and STEP trainees to employment services at DOL, providing the                 
funding to DOL for this service, and he said they question why a               
middleman is even involved.                                                    
Number 0635                                                                    
CHAIRMAN ROKEBERG confirmed that DOL collects the STEP money "from             
unemployment compensation" and turns it over to DCRA to expending              
Number 0659                                                                    
REPRESENTATIVE KOHRING answered in the affirmative, noting they                
feel it would more appropriate for DOL to keep and spend that money            
with JTPA under its management auspices.  He indicated that                    
concluded his presentation, noting they had a relatively lengthy               
rebuttal, probably Representative Brice's benefit, justifying the              
transfer of the child care and Head Start programs to H&SS.                    
REPRESENTATIVE TOM BRICE requested a copy.                                     
CHAIRMAN ROKEBERG said anything Representative Kohring had in that             
regard should be in the record.                                                
Number 0697                                                                    
REPRESENTATIVE KOHRING indicated they think moving these programs              
to H&SS will provide the administration the opportunity to gain                
greater efficiencies as far as providing improved services to                  
Alaska's families.  He said this newly-established federal child               
care and development fund, which is part of the federal                        
government's welfare reform package, does require the various                  
states to "serve families through a single integrated child care               
system," indicating putting all the various child-related services             
into one integrated child care system would satisfy this mandate of            
the federal government.  He commented this was also based on their             
belief that having everything under one roof would provide much                
better service for the residents of the state.                                 
Number 0759                                                                    
REPRESENTATIVE BRICE noted the day care, child care and Head Start             
programs in DCRA were not all income-based programs and he                     
indicated he was concerned that moving these programs into the                 
welfare programs would take child care away from families needing              
child care assistance in order to stay off welfare.  He indicated              
putting these DCRA programs, not strictly income-based programs,               
under the new Alaska Temporary Assistance Program (ATAP), formerly             
AFDC, made them strictly income eligibility-types of programs.  He             
was concerned because he thought they would end up putting 10,000              
or 12,000 working families on welfare, or taking away their child              
care, and thought there would be major problems if these families              
were paying the full amount for their child care.  He indicated a              
somewhat associated problem would be the effect on programs                    
directed toward operators of day care centers rather than                      
individual families, questioning whether this would require those              
centers to be completely income-based if receiving those benefits.             
Number 0841                                                                    
REPRESENTATIVE KOHRING referred to his involvement with the DCRA               
and DCED budgets the last two years and said that issue had been               
addressed last year concerning the two child care-related programs,            
the day care assistance program and Child Care Program.  House Bill            
400 would not make any changes to those programs but there is a                
possibility that the budget subcommittee might take action to                  
combine the two programs, as it tried to last year.                            
Number 0860                                                                    
REPRESENTATIVE BRICE reiterated his concern about the effect of                
possibly turning a non-income-based program into an income-based               
program on those people on the margin of eligibility who need a                
small amount of child care assistance in order to work                         
Number 0889                                                                    
CHAIRMAN ROKEBERG asked how these families would lose their                    
benefit, questioning whether it was a federal criteria.                        
Number 0893                                                                    
REPRESENTATIVE BRICE answered in the affirmative.  He said the                 
income standards for ATAP qualification are statutorily established            
in Alaska at approximately 70, 75 percent federal poverty levels               
(FPL).  He said a lot of these people are probably at 85, 90                   
percent FPL, or 100 or 110 percent FPL which is approximately                  
$12,000 to $14,000 a year.                                                     
Number 0926                                                                    
CHAIRMAN ROKEBERG indicated he didn't think an administrative                  
merger alone would have an effect, mentioning the possibility of               
having bifurcated criteria.                                                    
Number 0935                                                                    
REPRESENTATIVE BRICE commented about possible effects of putting it            
all within the "child care providers" under H&SS, stating, "In                 
other words, if you take this pot of money, throw it in that pot of            
money, it's going to be required that those standards by which that            
pot of money is administered is going to be applied to everything              
within that pot."                                                              
Number 0955                                                                    
CHAIRMAN ROKEBERG said, however, that HB 400 doesn't provide for               
that, and confirmed it would be up to the budget subcommittee to               
give direction within the budget document.                                     
Number 0961                                                                    
REPRESENTATIVE BRICE stated that was the next question:  Whether or            
not that will happen?  He said then it also becomes a question also            
of playing the people who aren't on welfare off against the people             
who are on welfare, asking "And how do you provide adequate child              
care in both instances?"                                                       
CHAIRMAN ROKEBERG asked if that was the threat by removing them                
from DCRA and putting them into H&SS, questioning whether                      
Representative Brice was suggesting the department wouldn't follow             
the statutory direction.                                                       
Number 0989                                                                    
REPRESENTATIVE BRICE said the question is not whether the                      
department would but whether the legislature would.  He stated                 
these programs also subsidize those centers so things like snacks              
can be provided for some kids.  Representative Brice indicated that            
the legislature's actions are appropriate because of the                       
legislative process, but he questions is how the administration of             
these programs is seen and how that will work in the long run.                 
Number 1023                                                                    
REPRESENTATIVE KOHRING said he didn't think the administration of              
those programs would change through moving them to H&SS, other than            
perhaps being run with greater efficiency by being run with similar            
programs.  He reiterated that the legislation doesn't call for any             
changes in the child care assistance program or the day care                   
program, noting the idea of merging the two came from the budget               
subcommittee the previous year and could come up again this year.              
REPRESENTATIVE BRICE emphasized that the Head Start Program is not             
like those other programs, indicating it provides unique services.             
REPRESENTATIVE RYAN noted the importance of flexible child care in             
"welfare to work" programs and urged that the integrity of these               
programs be kept if transferred.                                               
Number 1116                                                                    
CHAIRMAN ROKEBERG stated he had more questions for the sponsor                 
regarding scoping for the subcommittee, but wished Mr. Lawson to               
present the fiscal note at this time.                                          
Number 1190                                                                    
TOM LAWSON, Director, Division of Administrative Services,                     
Department of Commerce and Economic Development, came forward to               
testify with Mr. Henderson of DCRA and Mr. Gerken of the Department            
of Administration.                                                             
Number 1205                                                                    
REMOND HENDERSON, Director, Division of Administrative Services,               
Department of Community and Regional Affairs, came forward to                  
Number 1208                                                                    
KEITH GERKEN, Architect, Facilities, Division of General Services,             
Department of Administration, came forward to testify.                         
Number 1211                                                                    
MR. LAWSON explained the fiscal note.  He stated this fiscal note              
represented their best estimate of one-time costs and future                   
savings, noting they worked with all the state agencies that would             
be impacted by HB 400.  As a footnote, he said it was a best guess             
and many of the numbers would need to be "fleshed out."  House Bill            
400 impacts four state agencies, more than $200 million in                     
programs, and more than 500 state employees.  He said it was fairly            
difficult to quantify the fiscal impacts because of the movement of            
the programs and the somewhat limited time they have had.  Mr.                 
Lawson commented it would be easier to explain page 2 of the fiscal            
note first and then page 1.  The first item is the staff savings.              
Based on past program movements to different state agencies, he                
said experience indicates it takes about 24 months (two years) for             
programs to be fully transferred and operating fairly accurately.              
One of the commissioners and secretaries would be deleted                      
immediately, an administrative services director would be                      
downgraded to a deputy and the DCRD director would be reduced to a             
program coordinator.  This would result in $208,000 in savings.                
During the first 12 months of implementation, deleting one of the              
deputy commissioners, one of the special assistants, and possible              
downgrades of the division directors would be examined.  Mr. Lawson            
noted they expect the administrative staff workload to increase                
rather than decrease because of the merger, and, at least during               
the first 12 months, no administrative staff would be cut.  During             
the second year of implementation the administrative staff in the              
division of administration, as well as in each of the divisions,               
would be examined for possible reductions.                                     
Number 1415                                                                    
CHAIRMAN ROKEBERG commented that this was not reflected in the                 
fiscal note.                                                                   
Number 1417                                                                    
MR. LAWSON replied that this was because they didn't know whether              
staff would be eliminated or downgraded, this was an estimate they             
weren't ready to make.  Addressing the moving costs, he said they              
estimate the total cost of the merger to be $1,849,000; which                  
includes costs from three different components:  moving costs; one-            
time computer system costs; and leasing new space, meeting                     
regulations, et cetera.  The moving cost is estimated to be                    
$1,695,000.  They reached this figure through a two-step process.              
First, they estimated a moving factor per worker with the help of              
Mr. Gerken and his shop because they thought multiple moves would              
be necessary.  Mr. Gerken's estimate of $6,100 per person was based            
on recent moves in both Juneau and Anchorage, and is an increase               
from the $5,000 per person figure.  The second step, on pages 4 and            
5 of the fiscal note, was the creation of a grid locating the                  
existing DCED and DCRA employees in both Juneau and Anchorage.  Mr.            
Lawson said they came up with what they think is a reasonable                  
scenario for staff location, noting they felt 259 positions would              
need to be relocated, resulting in a cost of $1,579,900.  He stated            
the 7 positions of the statewide service delivery program would be             
relocated from DCRA to DOL.  He noted the rest of the spreadsheet              
indicates the balance of the DCRA and DCED staff that would be                 
moved to the new agency.  He said they feel it is necessary to                 
literally have the staff under one roof if they are to meet the                
intent of the bill, as they understand it, of better coordination,             
integration, et cetera.  The Juneau spreadsheet shows the remaining            
DCRA staff would be moved to the ninth floor of the State Office               
Building (SOB).  It was felt that, of the divisions within DCED,               
the Division of Occupational Licensing would best be able to stand             
alone, and so would be moved into the DCRA building.  The idea is              
to integrate the DCRA and DCED administrative services staffs and              
programs so they can benefit from co-location.                                 
Number 1720                                                                    
CHAIRMAN ROKEBERG confirmed the top half of the spread sheet showed            
the existing configuration and indicated there was some confusion              
about the preferred option shown below.                                        
MR. LAWSON explained that 34 people would be moved out of the DCRA             
building into the SOB, 7 people would be moved out of the DCRA                 
building to the DOL building, and the Division of Occupational                 
Licensing consisting of 37 people would be moved from the SOB to               
the DCRA building, for a total of 81 moves.  He indicated the                  
Anchorage moves were more complex because of the distribution of               
office space all over Anchorage, referring to page 5 of the fiscal             
note.  The top two rows of the spreadsheet show the transfer of the            
JTPA Program and the statewide service delivery program transfer to            
the DOL.  He noted there was no room at the DOL's current Anchorage            
location, but through Mr. Gerken's estimate, they feel there would             
be no increase in lease costs to find space for these programs.                
There is no current space with H&SS in the Frontier Building for               
the ten staff of the child care assistance program currently                   
located at the Post Office Mall, noting page 2 showed that cost.               
He stated the rest of the inventory showed DCRA and DCED staff,                
indicating new office space would be the best option for location              
of the combined staff because of the high cost of leases and                   
upcoming lease expirations in the Frontier Building and the lack of            
space at the Post Office Mall.  No new lease costs are necessary               
because of the combined current costs of the existing leases.  He              
noted the independent agencies were being left in their current                
locations because of their independent status.                                 
Number 2027                                                                    
MR. LAWSON stated the fiscal note also did not show movement of                
DCRA or DCED staff outside Anchorage and Juneau:  both agencies                
have Fairbanks staff, DCED has staff in Tok and Seattle, and DCRA              
has staff in field offices statewide.  He stated there was no                  
effort to merge any of these offices at this point.  Referring to              
page 2 and the top of page 3 of the fiscal note, he said the                   
Division of General Services felt that contracted space design                 
assistance would be necessary because of the size of staff                     
movement.  The estimated cost would be $50,000:  $25,000 in Juneau             
and $25,000 in Anchorage.  $65,100 is the estimated cost for                   
Frontier building space for the ten child care office staff ($2.17             
per square foot over the course of a year).  He said the one-time              
computer system costs are estimated at $125,000, with the major                
cost being the merger of the two separate DCRA and DCED systems.               
The other costs were costs for systems for the child care                      
assistance program in Anchorage and for the DOL office in                      
Anchorage.  Continuing, he said they don't see a need for two                  
purchasing agents for 1 year, but do feel an individual would be               
needed half-time for one year or full-time for 6 months at a cost              
of $29,100.                                                                    
Number 2315                                                                    
CHAIRMAN ROKEBERG asked for clarification.                                     
MR. LAWSON explained the purchasing agent was to make sure                     
regulations were properly followed, et cetera, for leasing bids.               
CHAIRMAN ROKEBERG asked if there was an interagency charge for                 
leasing services from GSA (ph).                                                
MR. LAWSON said they were trying to represent the costs of the                 
bill.  He indicated HB 400 was the reason they would be going out              
to bid for this new office.                                                    
CHAIRMAN ROKEBERG asked if it was a cost in the time allocation of             
an existing position.                                                          
MR. LAWSON replied that it could be, or a temporary position.                  
TAPE 98-27, SIDE A                                                             
Number 0001                                                                    
MR. LAWSON summed up his testimony.  He referred to the $175,500               
"personal services" cost on page 1 of the fiscal note.  He said,               
"That is general fund, that doesn't total the $208,000."                       
["$280,000" stated on tape]  Under the funding source, there is                
also $32,500 shown as interagency receipts.  He explained that as              
the commissioner's office and the Division of Administrative                   
Services have incurred budget cuts, they have gone to the various              
divisions for "charge-back" of services.                                       
CHAIRMAN ROKEBERG asked if there would be a decrease in charge-                
MR. LAWSON replied there would be a decrease in charge-backs but               
indicated there would only be $175,500 of general fund savings                 
because of the charge-backs.  He said the $1,849,100 capital                   
expenditures represents the total of the moving costs, computer                
system costs, and space planning and leasing costs.  He indicated              
the net cost for the first year, FY 1999 would be $1,640,900, under            
the funding source, and from that point on it would be a savings of            
$208,200.  He added, referring to the chairman's first question,               
that there might be further savings in the second and third years              
as they evaluate top management and administrative positions.                  
Number 0208                                                                    
REPRESENTATIVE RYAN said in his four years as a legislative aide               
and in his second year as a Representative, he's seen various                  
fiscal notes and he indicated he feels the Administration gives                
high fiscal notes for legislation it does not like.  He referred to            
Commissioner-designee Sedwick of DCED's confirmation hearing in the            
House Labor and Commerce Standing Committee on March 4, 1998,                  
noting she had mentioned weekly meetings with her directors.                   
Representative Ryan said he felt the physical location of the                  
various departments was irrelevant because of telephones and the               
computer network and that the fiscal note was unjustified.  In his             
opinion, the computer system upgrade is a management problem.  He              
indicated he saw a few potential moves but did not agree with                  
majority of moves in the fiscal note, commenting he thought the DOL            
should come in with an appropriate fiscal note if the department               
was going to be affected.                                                      
Number 0475                                                                    
CHAIRMAN ROKEBERG asked Mr Gerken for an abstract in the form of a             
recap of every lease covered by the fiscal note, including the                 
square footage, amount of people, et cetera, so the committee could            
make an analysis of available space within all the affected                    
departments.  He asked that this also include things like available            
space in these buildings, existing leases with no allocation, and              
progress on the 550 West Seventh Avenue Bank of America building               
(to be renamed the Robert B. Atwood Building), noting this would               
assist with the subcommittee proceedings.  Chairman Rokeberg asked             
for Mr. Gerken's basis for the $6,100 per person moving cost and               
information on the computer systems.                                           
Number 0605                                                                    
MR. GERKEN replied the Department of Administration runs the                   
mainframe computer with the personnel and accounting systems.  He              
believes the systems in question belong to the individual                      
CHAIRMAN ROKEBERG asked if there is any standardized policy for the            
acquisition of computer hardware and software in the state of                  
MR. GERKEN indicated he could provide some information.                        
Number 0640                                                                    
MR. HENDERSON asked if Mr. Spears with DCRA was still on                       
teleconference in Anchorage.                                                   
Number 0655                                                                    
REPRESENTATIVE RYAN indicted the chairman had spoken very much in              
favor of the acquisition of the 550 West Seventh building ["720                
Fifth building" stated on tape] the previous year which was                    
intended to solve the problem of high costs associated with the                
Frontier Building.  He commented on approximately $26 million paid             
the previous year and asked the chairman when they were going to be            
able to house some of these people.                                            
CHAIRMAN ROKEBERG replied it was an incremental move, asking Mr.               
Gerken to review the time frame.                                               
MR. GERKEN replied he would be happy to provide written information            
on that status, noting the Frontier Building leases essentially                
expire in January and September of 2000.                                       
CHAIRMAN ROKEBERG noted Mr. Spears was available in Anchorage via              
Number 0730                                                                    
MR. HENDERSON said there were a number of things he would like to              
address but noted the specific question had been to data                       
processing, computer hardware and software.  He asked Mr. Spears to            
give a brief explanation of the data processing costs associated               
with the merger.                                                               
Number 0760                                                                    
JOSEPH SPEARS, Data Processing Center Supervisor, Division of                  
Administrative Services, Department of Community and Regional                  
Affairs, testified via teleconference from Anchorage.  He indicated            
he is the director of data processing for that department and                  
explained the cost estimates he put together for the fiscal note.              
He said the costs are basically broken down into three pieces:  1)             
A one-time cost of setting up a network site for a child care                  
office.  2) Setting up a similar stand-alone office for the JTPA               
Program office (JTPO) related staff if room in the DOL's Anchorage             
lease space is not available.  He indicated some infrastructure                
build-up is necessary when creating two new offices by splitting an            
existing office into three different entities.  3) Converting                  
DCED's network system to be compatible with DCRA's, or vice versa.             
He said the first two parts would each be a quarter of the costs               
and the conversion would be the other half.  He noted the absence              
of a worldwide standard network operating system and indicated that            
is some explanation for the various computer systems, network                  
operating systems, e-mail and application systems within Alaska's              
state government.                                                              
Number 0903                                                                    
REPRESENTATIVE RYAN asked about the creation of local area networks            
or connection to wide area networks when an office is established.             
MR. SPEARS answered in the affirmative, and said that is what these            
costs reflect.                                                                 
REPRESENTATIVE RYAN asked if they were talking about a router.                 
MR. SPEARS replied that router expenses are part of the new offices            
for the Child Care Program and JTPO.  He said the Division of                  
Information Services (DIS) [now Information Technology Group]                  
basically charges for connecting to the wide area network wherever             
the office is located.                                                         
Number 0932                                                                    
REPRESENTATIVE RYAN referred to his previous question, asking why              
there has not been uniformity throughout state government in this              
area and asking if this is due to management decisions.  He                    
referred to the antiquity of the legislature's Lotus cc:Mail e-mail            
MR. SPEARS replied he might not be the best person to answer that              
type of a question.  He indicated he didn't know whether the                   
creation and funding of these standards were management or                     
political types of decisions.  He noted Lotus cc:Mail is an antique            
but commented he thinks about eight departments were standardized              
on that program.                                                               
REPRESENTATIVE RYAN indicated major corporations use uniform                   
systems, commenting on the use of Microsoft Windows NT, and he                 
couldn't understand why the state of Alaska didn't.  He asked for              
information on who made these decisions, stating he thinks they                
should make a policy on this.                                                  
Number 1038                                                                    
REPRESENTATIVE KOHRING asked why the fiscal note is so much larger             
than the one for Representative Kelly's bill two years ago, noting             
the costs then were estimated at $1,600,000 and these costs are                
$200,000 more.  He commented that bill called for moving 161 people            
and HB 400 calls for moving a maximum of 19 and maybe as few as                
CHAIRMAN ROKEBERG commented that this fiscal note called for 259               
positions to be moved.                                                         
REPRESENTATIVE KOHRING said that was part of his question as well,             
asking where that number came from and why were they dealing with              
a much larger fiscal note.  He said it seems like an attempt to                
discredit his efforts.                                                         
Number 1108                                                                    
MR. HENDERSON explained he thinks that if the idea is to                       
consolidate services so that the various programs are more                     
efficient, this part of the fiscal note addresses the issue of co-             
locating those people.  As Mr. Lawson indicated, no costs were                 
associated with staff located in various field offices.  The costs             
only reflect moves within the Anchorage and Juneau locations.  In              
summary, if the idea of this bill is to consolidate these programs             
and services, the people need to be moved so that they are working             
together.  If they are not going to be moved so that they are                  
working in the same environment, he said it begs a question of why             
do a consolidation.                                                            
Number 1162                                                                    
REPRESENTATIVE KOHRING responded, referring to his presentation,               
that DCED and DCRA are working well in scattered locations                     
throughout the state.  He said Mr. Henderson is kind of countering             
the way the entity currently operates.  Representative Kohring said            
his question in return would be that if it's already working                   
scattered throughout the state, why did they suddenly feel it all              
had to be consolidated under one roof.                                         
Number 1210                                                                    
MR. HENDERSON replied it was not their bill and the bill says                  
consolidate programs.  He stated they think it is working fine                 
right now, there is no duplication, and there is no reason to                  
consolidate the programs.  If programs are going to be consolidated            
for efficiency purposes, the people need to be moved together.                 
Number 1229                                                                    
CHAIRMAN ROKEBERG asked about the $50,000 space planner estimate,              
questioning whether that was the administration's problem and                  
addressing the question to "Pete (ph)" in the audience.  Chairman              
Rokeberg indicated he was not sure the committee or the bill                   
sponsor had contemplated moving 259 people, and he feels that is an            
issue.  He confirmed that the Department of Administration and                 
Division of General Services contracted out for those services.                
MR. GERKEN answered that was essentially correct, and it was                   
anticipated a private architectural firm would be hired for space              
CHAIRMAN ROKEBERG said, however, the only time a space planner was             
necessary was when premises were remodeled and staff were relocated            
in the remodeled premises.  He indicated that only a plan based on             
the utilization of existing space would be necessary in this case.             
Number 1324                                                                    
MR. GERKEN indicated that normally, when different groups of people            
move into different spaces, figuring out how that space needs to be            
reconfigured for the uses of the new group is necessary, and this              
the anticipated scope.                                                         
CHAIRMAN ROKEBERG stated, "So you anticipate that you would have to            
do a complete reconfiguration of the (indisc.) improvement layout              
of the particular premise you were dealing with and - and the                  
totality of the premises here I take it."  He indicated he did not             
think that was necessary, based on his 25 years of experience.                 
Additionally, he asked why telephone and telecommunications line               
items were omitted from the fiscal note.                                       
Number 1365                                                                    
MR. GERKEN indicated that was in the $6,100 per worker moving cost             
which he was providing more information to the committee on.  He               
said this cost is made up of five elements:  physically moving                 
people, moving phones, computer wiring, systems furniture                      
reconfiguration and (indisc.) improvements.                                    
CHAIRMAN ROKEBERG asked Mr. Gerken to add a short narrative on the             
cost of new furniture to the abstract he was providing the                     
MR. GERKEN replied that no new furniture would be purchased, they              
were simply taking the systems furniture down and setting it back              
CHAIRMAN ROKEBERG confirmed it was a relocation.                               
MR. GERKEN answered in the affirmative.                                        
CHAIRMAN ROKEBERG asked why the furniture couldn't just be left in             
MR. GERKEN replied that the existing furniture, in terms of desks              
and partitions, can be used but, in his experience, will be                    
reconfigured almost every time to accommodate a different group of             
people.  He confirmed that the systems furniture could be taken                
apart and put back together to do this but there was an associated             
CHAIRMAN ROKEBERG noted any comments Mr. Gerken had on that which              
could be helpful to the committee would be appreciated.                        
Number 1428                                                                    
REPRESENTATIVE KOHRING stated he was absolutely shocked it was                 
being proposed that they spend $1.8 million, with $1.6 in moving               
costs.  He noted his presentation of the bill said they would be               
moving 19 people and questioned that it would cost $1.6 million to             
move 19 people, stating that was asinine.                                      
Number 1439                                                                    
CHAIRMAN ROKEBERG indicated they were trying to figure out whether             
that was what HB 400 required the departments to do, commenting he             
thinks this is an issue.  Additional, Chairman Rokeberg said the               
bill contemplates the conversion to four divisions and then takes              
a number of independent agencies and turns them, via amendment he              
believes, into what the sponsor is calling an office.  Chairman                
Rokeberg indicated that particularly these quasi-judicial or                   
separate agencies have division directors, and he asked if there               
was a specific salary or compensation level that would be changed              
by altering the nomenclature in the affected statute.                          
Number 1495                                                                    
MR. LAWSON replied that the bill as written does created four                  
separate divisions, however there are other divisions set in                   
statue, and, he said, at least the first version of the bill does              
not mandate that those divisions go away.  He indicated the                    
elimination of any of the other divisions is not reflected in the              
fiscal note.  He thinks the sponsor does have amendments to correct            
that, and the fiscal note would have to be amended to address that.            
Mr. Lawson said he thinks the chairman is right, that there would              
be problems with the personnel Act and all that.  In essence, the              
division directors which go away would have to be downgraded to                
office managers or some such classification.                                   
CHAIRMAN ROKEBERG said he is not sure that was the bill sponsor's              
intention, commenting he was not sure of the sponsor's goals here.             
He questioned whether changing the names impacted the compensation             
levels and if there was a problem statutorily.                                 
MR. LAWSON responded that he couldn't answer that.                             
Number 1567                                                                    
CHAIRMAN ROKEBERG asked Representative Kohring for his intention,              
mentioning the divisions of Insurance; and Banking, Securities and             
Corporations; as well as the agency directors.                                 
REPRESENTATIVE KOHRING responded it was his expectation that the               
compensation levels would be reduced if the job titles are reduced.            
CHAIRMAN ROKEBERG noted Representative Kohring's chart did not show            
Number 1601                                                                    
REPRESENTATIVE KOHRING agreed, stating it is not reflected in their            
documents.  He said it would be his expectation once the bill is               
implemented that the decrease in the salaries would be reflective              
of the title changes, and he noted the title changes were contained            
in one of the three amendments the committee had before it [Note:              
four proposed amendments were distributed to the committee at this             
Number 1615                                                                    
CHAIRMAN ROKEBERG stated he was concerned about that, noting he                
wanted to know if it was the sponsor's intention to demote these               
people, and if so, he said it should be reflected in the sponsor's             
cost savings analysis.                                                         
Number 1626                                                                    
REPRESENTATIVE KOHRING responded that it is not really intention               
but it is his expectation that there would be a change in title and            
a commensurate change in salary and benefits package, noting a                 
division director is certainly expected to make much more than an              
office manager.                                                                
Number 1639                                                                    
CHAIRMAN ROKEBERG indicated the committee is working with what the             
bill requires, not necessarily with intentions or expectations, and            
that is what the committee is trying to figure out.                            
Number 1648                                                                    
REPRESENTATIVE KOHRING indicated that once the amendment is adopted            
the bill would reflect the fact that the division directors become             
office managers.  He stated that whatever happens from that point              
on is up to the department and whatever the department chooses to              
pay those individuals based on the new titles.                                 
CHAIRMAN ROKEBERG suggested they might talk about it later.                    
Number 1664                                                                    
REPRESENTATIVE RYAN said he was going to suggest probably the same             
thing.  He indicated grievances and other problems could result and            
a modification to the statute might be necessary so that the                   
downgrading could occur.                                                       
CHAIRMAN ROKEBERG suggested the sponsor speak with the chairman                
about that.                                                                    
Number 1696                                                                    
REPRESENTATIVE ALAN AUSTERMAN came forward to testify.  From a                 
philosophical point, he indicated he thinks more of these types of             
efforts will come from legislators as they look more at combining              
and the efficiency of government.  He noted, referring to                      
Representative Kohring's consolidation effort, that he sees                    
efficiencies coming out of consolidation but he doesn't see                    
efficiencies in number of people coming out of anything they are               
being given.  Representative Austerman said he would think "putting            
all these people in one building and bring them under one umbrella"            
would result in some kind of efficiencies; he stated he would like             
to see something regarding the real plan in bringing all these                 
people together and why there are no efficiencies.                             
Number 1759                                                                    
CHAIRMAN ROKEBERG stated that was one thing he would address                   
shortly.  He said Representative Kohring indicated his desire in               
his presentation to delete certain personnel positions and asked if            
that wasn't reflected in the legislation.                                      
Number 1779                                                                    
MR. HENDERSON replied he thinks the Administration's fiscal note               
reflects that there will be an analysis after or during the first              
12 months to determine what additional positions could be deleted,             
looking at programmatic and administrative positions.  He also                 
noted there are some examples where they can show there are                    
differences of opinion in terms of the sponsor's fiscal note and               
cost savings that are not really attributable to consolidation of              
some of these positions.  For example, he said, there is an                    
identification of a $71,000 cost savings through elimination of a              
special assistant in DCRA.  He stated none of those funds are                  
general fund dollars, they are funded from interagency receipts.               
Mr. Henderson said he would like an opportunity sometime to point              
out those types of things and talk about the sponsor's fiscal note.            
Number 1832                                                                    
CHAIRMAN ROKEBERG said he appreciated Mr. Henderson bring the issue            
up and requested a memorandum from him to the committee.  He said              
DCED had a similar situation and the committee would be interested             
in knowing any positions or other funds.                                       
REPRESENTATIVE RYAN stated the charge-backs could be traced in the             
various department budgets and general fund savings could be                   
Number 1853                                                                    
CHAIRMAN ROKEBERG commented unless they were federal funds or                  
something like that, noting DCRA received "ag" funds or other                  
federal funds for rural economic development.  He noted                        
identification of those would be helpful.  He also stated he was               
concerned the bill does not contain any transitional provisions,               
and stated he thinks the bill needs more statutory direction                   
regarding what the bill is requesting and what needs to be done.               
He noted he feels this may be helpful and asked if they thought if             
more specific time frames, methods of consolidation including                  
premises even, and the elimination of particular positions                     
including time frames, would be more helpful.  He asked if more                
specificity would be a positive or negative to the two departments.            
Number 1928                                                                    
MR. LAWSON replied he thought that would be very helpful because he            
thinks they have struggled with some of the sponsor's statements               
versus what the language of the bill.  He indicated any specificity            
in terms of time frames, methods, and a quick overview of any                  
proposed amendments was movement toward that goal.                             
Number 1953                                                                    
CHAIRMAN ROKEBERG indicated he feels the original bill version                 
lacks direction to the departments.  He indicated he also wanted to            
look at ways to reorganize the responsibilities of the remaining               
commissioner in relation to the number of boards and positions in              
the new department, noting that most provided for designees.  There            
has also been a question, he said, about DCRA's Division of                    
Energy's (DOE) location in the new department, commenting he thinks            
there is a split between the DOE rural projects and the "four dam              
pool."  He asked if DOE goes into AIDEA, indicating that would be              
a problem.  He also asked what happens to the statewide assessor,              
referring the question to Mr. Krieber.  Chairman Rokeberg asked if             
the fact that both the commissioner of DCED and the commissioner of            
DCRA both sit on the Coastal Policy Council had been addressed.  He            
commented, as the chairman of the House Labor and Commerce Standing            
Committee, he is not happy with the way the bill takes existing                
independence away from certain groups and agencies for the sake of             
creating another division.  He stated he thinks that is a mistake              
and will be "generating more heat than light by doing that because             
these - these are really stand-alone agencies," noting the examples            
of APUC; AIDEA; the Division of Insurance; and the Division of                 
Banking, Securities and Corporations.  He noted these entities, as             
examples, are not integrated to the functions of either department.            
He said it would be his preference to keep those as independent                
agencies, not line agencies, and he noted the existence of                     
statutory mandates.  Chairman Rokeberg indicated he thought leaving            
these agencies independent would not harm the bill or its concept,             
noting there weren't any reductions in those areas in the sponsor's            
initial fiscal management plan.  He referred the discussion about              
maybe doing that, commenting he felt it was unnecessary and that               
these agencies be on a stand-alone direction out of the                        
commissioner's office.  He asked Mr. Lawson for his comments on the            
responsibilities of those particular groups and their present                  
relationship with the commissioner, questioning whether they were              
just involved in the weekly director's meeting.                                
Number 2146                                                                    
MR. LAWSON agreed, stating the policies, work tasks, et cetera, for            
the independent agencies are set either by the commission, as in               
the case of APUC, or by the boards, giving the example of AIDEA.               
He noted DCED probably has more independent agencies than any other            
state department with some directors attending a weekly directors'             
meeting, but he indicated that is about the extent of DCED's                   
involvement.  He noted the divisions are line divisions under DCED.            
Number 2180                                                                    
CHAIRMAN ROKEBERG indicated the Aerospace Development Corporation              
(AADC) in Representative Austerman's district was one of the                   
entities concerned.  He asked rhetorically if this director would              
be known as the office manager on his business cards, commenting he            
didn't think they wanted this to happen.                                       
Number 2192                                                                    
REPRESENTATIVE KOHRING said this was certainly something that could            
be adjusted to alleviate that concern.  He emphasized the focus of             
what they were trying to accomplish is simply saving money by                  
eliminating some of the upper bureaucracy and he has no problem                
with maintaining the integrity of programs like AIDEA, AADC and                
Number 2219                                                                    
CHAIRMAN ROKEBERG indicated Representative Kohring showed there is             
true commonality in the area of economic development and he would              
like the subcommittee to look into this.  He commented he has                  
always been philosophically troubled by the two separation between             
rural economic development and mainstream economic development,                
like DCED has been doing "big" projects and rural development has              
been doing "little" projects, or subsidized or federally-funded                
ones.  He commented he thinks there are synergies there, savings               
can be made in those areas through consolidation and the two areas             
are better off cooperating rather than separate.  He noted that if             
one area in the two departments really goes together, it is that               
Number 2269                                                                    
REPRESENTATIVE RYAN commented he thought the chairman was correct,             
noting they have been very fortunate to have Willis Kirkpatrick as             
the director of the Division of Banking, Securities and                        
Corporations for a long time, also mentioning David Walsh [previous            
director] and Marianne Burke [current director] at the Division of             
Insurance.  He said, "The 'departments' are humming along, and I               
think you'd be remiss in lowering those people because I don't know            
if they would want to stay."  Mentioning the statewide assessor, he            
referred to his time on the borough assembly and his                           
dissatisfaction with what he considered were imprecise methods for             
determining the assessment for education, noting he felt there                 
should be a better way.                                                        
Number 2313                                                                    
CHAIRMAN ROKEBERG assigned HB 400 to a subcommittee, appointing                
Representative Cowdery as chairman, Representative Ryan and                    
Representative Kubina to that subcommittee.                                    
Number 2326                                                                    
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing              
Committee meeting at 5:40 p.m.                                                 

Document Name Date/Time Subjects