Legislature(2007 - 2008)SENATE FINANCE 532
02/27/2007 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB83 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 83 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
February 27, 2007
9:00 a.m.
CALL TO ORDER
Co-Chair Lyman Hoffman convened the meeting at approximately
9:00:58 AM.
PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice Chair
Senator Kim Elton
Senator Fred Dyson
Senator Joe Thomas
Senator Donny Olson
Also Attending: KAREN REHFELD, Director, Office of Management
and Budget, Office of the Governor; LAURA FLEMING,
Communications Director, Alaska Seafood Marketing Institute,
Department of Commerce, Community and Economic Development;
SAMUEL THOMAS, Director, Division of Administrative Services,
Department of Commerce, Community and Economic Development;
SHARLEEN GRIFFIN, Director, Division of Administrative Services,
Department of Corrections; JANET CLARKE, Assistant Commissioner,
Finance and Management Services, Department of Health and Social
Services; JAY BUTLER, Director, Division of Public Health,
Department of Health and Social Services;
Attending via Teleconference: KATE GIARD, Commissioner and
Chair, Regulatory Commission of Alaska, Department of Commerce,
Community and Economic Development; LYNN KENT, Director,
Division of Water, Department of Environmental Conservation.
SUMMARY INFORMATION
SB 83-SUPPLEMENTAL APPROPRIATIONS
The Committee heard department overviews from the Office of
Management and Budget, the Department of Commerce, Community and
Economic Development, the Department of Corrections, the
Department of Environmental Conservation, and the Department of
Health and Social Services. The bill was held in Committee.
9:01:05 AM
SENATE BILL NO. 83
"An Act making supplemental appropriations, capital
appropriations, and other appropriations; amending certain
appropriations; ratifying certain expenditures; making
appropriations to capitalize funds; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Hoffman announced he expected the Committee to meet in
executive session at a later date to discuss the lawsuit
involving Mercer Human Resource Consulting, as well as portions
of the Oil and Gas Supplemental bill.
9:02:03 AM
KAREN REHFELD, Director, Office of Management and Budget, Office
of the Governor, introduced the bill, and informed that the
first section included time-sensitive supplemental appropriation
requests. The requests contained in the bill as a whole totaled
$98 million, $51 million of which were general fund requests.
The various departments would be presenting their specific
requests to the Committee.
9:03:48 AM
Department of Commerce, Community and Economic Development
Section: 1(a)
Request Delivery Unit (RDU) or Component: ASMI
Supplemental Need: Increase the Alaska Seafood Marketing
Institute's National Consumer Campaign promoting Alaskan
seafood, as more than anticipated was received from
industry assessment.
Legislative Finance Division (LFD) Notes: For several
years, the Dept of Revenue has underestimated industry
assessments to ASMI. This request authorizes ASMI to spend
past collections. Funding will be used to expand
advertising for AK seafood on cable TV and in print media.
The recalculations have increased ASMI's annual revenue
projections:
Old projections: $5.5 to $6 million
New projections: $6 to $7 million
$2,000,000 Receipt Supported Services
LAURA FLEMING, Communications Director, Alaska Seafood Marketing
Institute (ASMI), Department of Commerce, Community and Economic
Development, informed that the funds requested were industry
taxes already remitted to the Department of Revenue, and ASMI
needed legislative authorization to expend the money. She added
that approximately $1.4 million of the requested funds was an
adjustment pass-through following an audit of industry receipts.
The remaining amount was industry receipts, which came in higher
than predicted due to a greater harvest value.
9:05:27 AM
Co-Chair Hoffman asked if ASMI's general fund request would be
reduced if the current receipt supported services request was
authorized.
Ms. Fleming did not anticipate a reduction in the general fund
request, as the $1 million in Governor Sarah Palin's requested
budget for fiscal year 2008 (FY08) would be the State's
participation in the "public/private partnership".
Co-Chair Hoffman inquired why this appropriation was deemed time
sensitive.
9:06:31 AM
Ms. Fleming reported that ASMI must purchase television and
print advertising time in advance, and although the Institute
received the funds, it did not yet have authorization to spend
them. The marketing board incorporated those funds into the
planned advertising campaign with the assumption that
authorization would occur.
9:07:36 AM
Section: 1(b)
RDU or Component: Regulatory Commission of Alaska
Supplemental Need: Outside council for litigation at the
Federal Energy Regulatory Commission (FERC) to defend RCA's
jurisdiction over intrastate rates on the Trans-Alaskan
Pipeline (TAPS; and for other TAPS-related litigation at
the Supreme Court of Alaska involving RCA.
LFD Notes: RCA anticipates that total litigation costs for
FY07 could exceed $1 million. Much of the requested funding
has already been expended. RCA anticipates that the TAPS
Pipeline case at FERC will last for years.
$750,000 RCA Receipts
SAMUEL THOMAS, Director, Division of Administrative Services,
Department of Commerce, Community and Economic Development,
outlined this request.
Co-Chair Hoffman asked if this was a one time request.
Mr. Thomas replied that an additional $600,000 had been included
in the FY08 budget due to the "uncertainty of the legal cost."
9:09:34 AM
KATE GIARD, Commissioner and Chair, Regulatory Commission of
Alaska, Department of Commerce, Community and Economic
Development testified via teleconference that she was available
to answer questions.
9:10:34 AM
Senator Huggins asked for an estimate as to how long the FERC
case would continue.
Ms. Giard responded that the case was currently before an
administrative law judge. After the judge ruled on the case, the
decision would most likely be appealed to the full FERC body,
followed by an appeal to the FERC appellate court, and possibly
an appeal to the Supreme Court. She anticipated a "long
progression" in the case.
Senator Huggins asked if Ms. Giard could estimate how many years
this process could take.
Ms. Giard projected the case to be active for three to six
years, with "significant beaks" in the litigation portion of the
case during the time the different levels of justices considered
arguments.
9:12:09 AM
Department of Corrections
Section: 1(c)
RDU or Component: Inmate Health Care
Supplemental Need: The funding is needed to meet the
medical obligations for the aging and increased offender
population. The driving factors are the sharp increase in
the number of offenders needing treatment, the cost of
dialysis and cancer treatments and the growing number of
life-threatening cases. The department will potentially run
out of funds as early as March 2007 and not be able to pay
vendors for services provided. $439,000 of this request is
related to nurses' market-based pay increase.
LFD Notes: Department projects that it may run out of funds
as early as March. $3,464,400 is for increased health care
costs. $439,000 is requested for Market-Based pay increases
for Nurses. Although the nurses received a two-range
increase in FY07, the department requested and received
funding for a one-range increase.
$3,903,400 General Funds
SHARLEEN GRIFFIN, Director, Division of Administrative Services,
Department of Corrections, told that this time-sensitive request
included funding for the second of a two-range increase for
nurses, the first of which was funded the prior year.
Catastrophic cases accounted for approximately $1.5 million
expended thus far in FY07, with an aging and increased
population contributing to the increased health care costs.
9:13:23 AM
Co-Chair Hoffman asked if the Department's FY08 request would be
adequate to address inmate health care.
Ms. Griffin answered that the Department's new commissioner was
currently reviewing the request, and examining inmate health
care for cost saving options.
Co-Chair Hoffman understood that the Department may not request
supplemental funding the following year.
Ms. Griffin replied that it was possible that the Department
would not make a supplemental request for FY08, but this
depended on the accomplishments of the Medical Advisory
Committee to contain the increasing medical costs.
9:14:31 AM
Senator Elton understood that the medical cost review could be
completed within the next month.
Ms. Griffin explained that was the target, and added that out-
of-state medical costs were also being reviewed.
9:15:21 AM
Senator Huggins asked regarding heart transplants or other
extremely expensive medical procedures for inmates.
Ms. Griffin had no knowledge of such situations. The Medical
Advisory Committee reviews and elects the least expensive
solution for necessary medical care. There had not been a heart
transplant performed on an inmate in Alaska.
9:16:15 AM
Section: 1(d)
RDU or Component: Anchorage Correctional Complex
Supplemental Need: The Anchorage Correctional complex is
housing 50 offenders in crisis overflow beds in the gym due
to overcrowding in the facility. This request is for
required overtime for an additional security post which
translates into four positions. The projected expenditures
indicate that the component will run out of funds by the
middle of April.
LFD Notes: The Department projects that current funding
will be exhausted by the middle of April. According to the
agency, as of December 13, 2006, overtime at ACC is
equivalent to 21 FTE's. the overcrowding results in an
additional five correctional officers stationed around the
clock.
$1,082,700 General Funds
Ms. Griffin spoke to this request.
Co-Chair Hoffman clarified that this request would cover the
last six months of the current fiscal year.
Ms. Griffin explained that this request is to fund all FY07
expenditures.
Co-Chair Hoffman inquired if the additional positions would also
be required in FY08.
Ms. Griffin expressed that the administration was reviewing
population management and hoped to reduce inmate populations by
placing offenders in Community Residential Centers (CRCs) and by
using electronic monitoring. In addition to overcrowding, vacant
correctional officer positions have contributed to overtime
costs. Vacancies had been reduced from approximately 90 to 95 at
the beginning of the fiscal year to approximately 60 open
positions currently.
9:19:33 AM
Co-Chair Stedman was curious what the Committee could do to
avoid supplemental requests through the Operating Budget
process. He asked if prison overcrowding had been anticipated
the previous year.
Ms. Griffin responded that the overcrowding in the Anchorage
Correctional Complex (ACC) amounts to nearly 100 offenders, 50
of whom are housed in the gym. The placement of inmates in the
gym is what created the need for an additional post. She
stressed the importance of population management to the current
administration, and was hopeful that better management would
allow improved foresight in budgetary matters.
Co-Chair Hoffman recalled that the number of CRC "beds" was
reduced the previous year.
9:21:14 AM
Ms. Griffin confirmed, adding that when the Palin Administration
took office there were 100 empty CRC beds, which are now being
more effectively utilized.
Co-Chair Hoffman asked why the Department was not attempting to
"resurrect" those 100 CRC beds, rather than request such a
significant increase in personnel costs. He understood that
offenders confined to a CRC were much less expensive to house
than prison inmates.
9:21:56 AM
Ms. Griffin replied that the issue was under review, and the
Department anticipated it would better utilize the option of CRC
placement.
Co-Chair Hoffman surmised that the CRC option should have been
exhausted before a request for additional funding was made. He
asked if the inmates removed from CRCs the prior year had
required continued incarceration.
Ms. Griffin told that offenders were not transferred from CRC
facilities. At the time of the "reduction" there were 100 empty
beds in CRCs. The use of CRCs as an alternative to incarceration
is an issue of risk management and a policy decision concerning
how much risk to expose the public to. While some pretrial
offenders could be housed in CRCs, others, such as sex
offenders, would be more appropriately incarcerated pending
trial. The administration was reviewing the issue of risk
management, and what types of offenders could safely be placed
in CRCs.
9:23:53 AM
Co-Chair Hoffman asked for an estimate of the anticipated
overtime hours for the ACC in the current fiscal year.
Ms. Griffin would provide the requested information.
9:24:15 AM
Section: 3(a)
RDU or Component: Out-of-State Contractual
Supplemental Need: FY 07 budget was based on 900 prisoners
to be sent to Arizona. The current number of prisoners in
Arizona is 1060 and the department anticipates the need for
a total of 1,250 beds to assist in meeting the growing
prisoner population.
LFD Notes: The Governor's FY08 budget includes $8.1 million
to increase the number of contract beds from 900 to 1250.
$1,338,500 General Funds
Ms. Griffin informed that the FY07 budget included funding for
900 prisoners to be housed at the Red Rock, Arizona facility.
There were currently 1,060 Alaskan prisoners at that facility,
and this request would provide funding for 1250 inmates. The
population management team would review this and may amend the
request.
Co-Chair Hoffman asked if the amendment would increase or
decrease the requested funding level.
Ms. Griffin expected any change would be a decrease in funding.
9:25:34 AM
Section: 3(b)
RDU or Component: Institution Director's Office
Supplemental Need:
1) Correctional officer overtime is taking place due
to vacant correctional officer positions and
facilities overcrowding. When the offender population
exceeds the emergency capacity in the facility, it
becomes necessary to employ additional security staff
for public safety and protection. $2,096,500
2) The facilities are also dealing with costs
resulting directly from prisoner overcrowding and the
increased costs of goods and services. This is
attributable to setting up crisis overflow beds.
$2,000,000
3) Electrical costs have also increased in all
institutions. $300,000
4) Funding transfer from Statewide Probation and
Parole to offset increased costs in the institutions.
LFD Notes: The funding transfer from Statewide Probation
and Parole is $100,000 GF.
$4,496,500 General Funds
Ms. Griffin told that this request related to all correctional
facilities, and was necessitated by overtime costs and the
increased cost of goods and utilities. She noted the $100,000
transfer from the Probation and Parole RDU, listed in Section
3(k) of this bill.
9:26:39 AM
Co-Chair Hoffman asked if the "substantial increase" in
operating costs reflected by this request was incorporated in
the Department's regular operating request for FY 08.
Ms. Griffin replied that the Department had collaborated with
the Office of Management and Budget to review budget amendments,
and predicted that changes would be made.
9:27:16 AM
Senator Elton noticed that Section 3(b) contained some of the
same costs listed in Section 1(b), and asked if Section 3(b)
represented the "net" of the Anchorage costs.
Ms. Griffin responded that the ACC was listed separately as a
time sensitive request in Section 1(b), and Section 3(b)
reflects the remaining need.
Senator Elton asked for an estimated percentage of costs
incurred by repeat violators.
9:28:45 AM
Ms. Griffin recalled that the Department witnessed 22,000
instances of reincarceration of offenders on probation, 1,600 of
which were for new offences. The remaining arrests were due to
probation violations.
Senator Elton continued, asking if the Department had cooperated
with the Division of Probation and Parole to devise alternatives
to reincarceration for probation violators.
Ms. Griffin told that the current administration was examining
possible alternatives, and opined that probation violations were
an area in which "soft beds", or placement in a CRC, would be
appropriate.
9:30:00 AM
Section: 3(d)
RDU or Component: Inmate Transportation
Supplemental Need: More prisoner transports between Alaska
and Arizona due to management of the increased inmate
population in the state.
LFD Notes: The number of contract beds increased from the
budgeted 900 to 1060 in FY07--resulting in an increase in
prisoner transportation costs.
$90,000 General Funds
Ms. Griffin reviewed the request.
Co-Chair Hoffman commented that he would expect the Department
to be able to absorb the funding for inmate transportation, as
it was a small supplemental request.
9:30:35 AM
Section: 3(e)
RDU or Component: Anchorage Correctional Complex
Supplemental Need: Revenue shortfall in federal manday
billings is due to the reduction in federal detainees and
the number of days these prisoners are held in this
facility.
LFD Notes: A decline in the number of federal prisoners
(and the number of days federal prisoners are incarcerated)
reduces federal receipts, but costs have not declined--
hence a request for GF to fill the gap. This subsection is
linked to 3(f), below. According to subsection 3(f), if
federal funds received exceed $2,508,200 (which is $1
million below the FY07 authorization), this appropriation
is reduced accordingly.
$1,000,000
Ms. Griffin explained that 3(e) and 3(f) could be considered
together. The Department anticipated under-collecting for these
costs by approximately $1 million. The ACC bills the federal
government for the housing of federal prisoners, and the
Department anticipates under-collecting for those services.
Section 3(f) contains language to allow for the reduction in the
supplemental appropriation if more federal receipts were
collected.
Co-Chair Hoffman asked the reason for the decline in the number
of federal prisoners.
Ms. Griffin was unsure. The Department had historically housed
more federal offenders than it was under contract to, but in
recent years the number of federal prisoners had returned to
approximately 60 as specified by the contract. She added that
some funds had been available through the federal State Criminal
Alien Assistance Program (SCAAP) which could be placed in the
receipt authority. SCAPP funds had been completely exhausted the
previous year.
9:32:48 AM
Senator Huggins asked how the State billed for incarcerating
federal prisoners.
Ms. Griffin informed that the federal government is billed by
the day for those costs.
Senator Huggins asked the rate at which the federal government
is billed.
Ms. Griffin replied that the rate had recently been
recalculated, and increased from $107.42 per day to $121.60 per
day. She hoped this new rate would assist the Department in
funding the $1 million shortage.
Senator Huggins understood that the Department had anticipated
housing 100 federal prisoners but would actually be billing for
only 60, and that difference created $1 million funding gap.
Ms. Griffin responded that the difference of 40 federal
prisoners would not solely create the $1 million shortfall, but
the Department's budget had assumed that the need for care of
federal inmates would be greater.
Senator Huggins summarized the issue as a "charge per day"
calculation.
9:34:20 AM
Section: 3(f)
RDU or Component: Anchorage Correctional Complex
Supplemental Need: If manday billings are greater than
anticipated, the appropriation in 4(j) is reduced by an
equivalent amount.
LFD Notes: This subsection is linked to subsection 3(e),
above. According to this subsection, if federal funds
received exceed $2,508,200 (which is $1 million below the
FY07 authorization), the appropriation made in subsection
3(e) is reduced accordingly.
$0.0 Total Funds
Ms. Griffin noted that this language section applied to section
3(e) and limits the expenditure of supplemental funds if more
federal funds were collected.
9:34:41 AM
Section: 3(g)
RDU or Component: Hiland Mountain Correctional Center
Supplemental Need: The facility's well water system did not
meet the EPA and DEC standards and therefore was
decommissioned and demolished. The new system was connected
to the Anchorage Water and Wastewater Utility system.
Funding is needed for the increased costs of the new water
system.
LFD Notes: Water system was connected in January and is
expected to cost $14,000/month. The FY08 budget included an
increment request for $90,000.
$84,100 Total Funds
Ms. Griffin told that this request would fund partial-year costs
of the new water system at the Hiland Mountain Correctional
Center.
Senator Elton assumed that the State prison system provided for
prisoners sentenced by the Municipality of Anchorage, and
wondered if the Municipality contributed to those housing
expenses.
Ms. Griffin confirmed that the State prisons do quarter
Municipal prisoners, and the State has a contract with the
Municipality. Anchorage is charged $2 million per year for
incarceration costs, with $500,000 forgiven for programs offered
to inmates by the Municipality.
9:36:19 AM
Senator Elton asked if the Department had determined that the
payments by the Municipality were adequate to fund the number of
prisoners in custody.
Ms. Griffin replied that the Department had reviewed the
contract, and the payments by the Municipality were not
sufficient to provide for the number of prisoners housed. The
charges would be "a few million" dollars more than the contract
provided for.
Senator Elton commented that if Anchorage intended to charge the
State for services such as water utilities, the State ought to
reexamine the amount charged for the incarceration of municipal
prisoners.
9:37:15 AM
Senator Dyson asked if there was a means to reopen the State's
contracts with municipalities.
Ms. Griffin informed that the State and the Municipality were
currently meeting with attorneys to address the 20-year
contract, and may resolve the issue in court.
Co-Chair Hoffman asked when the contract was signed.
Ms. Griffin recalled the contract was signed six or seven years
ago.
9:38:20 AM
Co-Chair Hoffman asked that the Department provide a copy of the
contract to his office.
Senator Dyson asked for a copy of the contract as well.
9:38:39 AM
Section: 3(h)
RDU or Component: Fairbanks Correctional Center
Supplemental Need: The 50% increase in the prisoner
population in Fairbanks created the need to expand staffing
at the facility to maintain public safety. Funding is
requested for the 19 new permanent full-time positions that
have been established in FY2007
LFD Notes: These positions were established in the FY07
management plan. The FY08 budget includes an increment
request for $1,255,500 GF (and 19 positions).
$729,900 Total Funds
Ms. Griffin reported that the request funds positions created
the prior year. She recounted an incident in FY05 in which a
front-end loader was driven through a wall of the structure in
an escape attempt, and another planned "major incident" at the
facility on June 6, 2006 (6-6-06) that was prevented. She
exampled these incidents as illustrative of the problems
overcrowding had caused and the threat to public safety.
9:40:34 AM
Co-Chair Hoffman, referencing the "dramatic increase" in the
prison population, asked what alternatives had been considered
other than the increased staffing in an overcrowded prison.
Ms. Griffin believed that options were reviewed, but the
Department found it difficult to move prisoners out of
Fairbanks, as much of that inmate population was unsentenced and
awaiting trial.
Co-Chair Hoffman requested an explanation of the large
population increase.
Ms. Griffin told that the administration was reviewing the
issue. A year ago the Department was told that bail for
offenders charged with Driving While Intoxicated (DWI offences)
was a major contributor to increased prison populations, but
Department officials had recently indicated that was no longer
the case, as the judge responsible for those bail restrictions
had retired. Thus the reason for the increase remains unknown.
She informed that the Superintendent of that facility cited
6,500 remanded prisoners in one year, 1,600 of which were
remanded under Title 47.
9:42:41 AM
Senator Huggins asked the definition of "Title 47".
Ms. Griffin responded that Title 47 violators are intoxicated
individuals who may injure themselves or pose a threat to
others.
Senator Huggins asked if the Department anticipated adjusting
the number of new positions from the current 19.
Ms. Griffin allowed that an adjustment was possible as the
administration was reviewing staffing at all facilities.
Co-Chair Hoffman understood the 19 positions were included in
the FY08 budget request and were expected to continue to be
funded.
Ms. Griffin affirmed.
9:43:46 AM
Section: 3(i)
RDU or Component: Fairbanks Correctional Center
Supplemental Need: Unpaid FY2006 water and sewer bills.
LFD Notes: This request is to pay Golden Heart Utility
Company FY06 invoices.
$18,700 Total Funds
Ms. Griffin told that there were not sufficient FY06 lapse funds
to pay this invoice.
9:44:23 AM
Section: 3(j)
RDU or Component: Existing Community Residential Centers
Supplemental Need: Funding is needed to pay contractors for
housing offenders at the Community Residential Centers
(CRCs) for the remainder of the fiscal year. The department
has professional service contracts with CRC providers to
help meet the security and residential needs of adult
offenders. Part of the increase is based on the CPI rate
for the community in which the CRC is located and due to
two re-negotiated contracts.
LFD Notes: Increase is partly due to renegotiated contracts
with Tundra and Glacier CRCs as of 12/1/06.
$553,500 Total Funds
Ms. Griffin informed that this supplemental request was due to
renegotiated contracts and increases in the Consumer Price Index
(CPI), and would not fund a full year of increases. The
Department applied funds for unused "per diem beds" towards this
request, and the $553,500 requested represents the balance.
Co-Chair Hoffman referred to intent language inserted for this
line item in the previous year, and asked why it was not
followed.
9:45:10 AM
Ms. Griffin did not recall the intent language.
Co-Chair Hoffman informed that the intent language had
instructed the Department to close Parkview Community
Residential Center and have other CRCs absorb that population.
Ms. Griffin recollected that provision, and told that 100 CRC
beds were deleted within the Department. A contractor
successfully urged former Commissioner Antrim to allow Parkview
to remain open and instead reduce beds in other facilities.
Those actions reduced the CRC costs to meet the budget
appropriation the previous year.
9:46:14 AM
Senator Elton identified an increment for the current fiscal
year, but understood Ms. Griffin claimed to have reduced costs.
Ms. Griffin explained that per the intent of the Committee, 100
beds were closed and funding was not appropriated. This request
represents the remaining contracts, some of which were
renegotiated and renewed in August. The new contracts were
negotiated at increased rates.
9:47:27 AM
Senator Olson asked if the intent language was overlooked.
Ms. Griffin replied that the intent language requiring the
closure of Parkview facility was considered. The vendor that
operated CRCs in the Anchorage area proposed an alternative to
closing Parkview, with a net effect of reducing 100 beds as
required. If Parkview had been closed when contracts were up for
renegotiation, Parkview could have bid on the available
contracts and reopened as the State could not alter the
procurement process. The Department thus believed it had
complied with the legislature's intent to reduce the number of
CRC beds by approximately 100, although this reduction did not
occur at the Parkview facility.
9:49:17 AM
Senator Olson asked if the current year's budget would include
similar intent language.
Co-Chair Hoffman stated that the Committee would await the
recommendations of the Department of Corrections subcommittee
chair.
9:49:48 AM
Senator Thomas inquired what the Department does to assist with
the problems of alcohol and drug misuse that had resulted in the
ballooning prison population.
Ms. Griffin told that the administration was reviewing the
programs offered at the correctional facilities throughout the
State in order to allow programs to be consistent statewide. The
Department currently offers residential substance abuse
treatment programs in the Wildwood and Hiland Mountain
Correctional Centers, as wells as at Red Rock facility in
Arizona. The administration would strive to create a Department-
wide program to "affect positive change" while offenders were
incarcerated.
9:52:04 AM
Senator Thomas recounted his recent visit to the Fairbanks
Correctional Center, and opined that the placement of offenders
in the gym seemed "accepted" as a long-term solution. He asked
if that level of overcrowding existed statewide.
Ms. Griffin confirmed that many of the facilities are that
crowded. Funding had been appropriated to convert the
Correctional Industries building at the Fairbanks Correctional
Center to a 50-bed dormitory. The conversion had not yet begun,
and the administration was reviewing the project, as the space
would still qualify only as "crisis overflow" housing.
9:53:33 AM
Senator Huggins asked the Department's total supplemental
request for the current fiscal year.
Ms. Griffin estimated the request at approximately $13.5
million.
Senator Huggins asked if the Department had a target for budget
reductions in the coming year.
Ms. Griffin stated the target was $19 million.
Senator Huggins identified a "clash in capability versus wishes"
with reference to the targeted budget reductions.
9:54:10 AM
Ms. Griffin set forth that the Department had collaborated with
Governor Palin's Office of Management and Budget to achieve a
viable plan to manage the prison population while operating as
conservatively as possible.
9:54:35 AM
Senator Huggins admitted the Department's "tough task" in
educing its operating budget by $19 million given the
supplemental requests amount of $13.5 million.
Co-Chair Hoffman asked if the increases in Title 47
incarcerations in Fairbanks were due to a policy change.
9:55:16 AM
Ms. Griffin answered that the administration was reviewing the
situation in Fairbanks to determine the cause of the increase.
9:55:31 AM
Section: 3(k)
RDU: Statewide Probation and Parole
Supplemental Need: Transfer to Institution Director's
Office to assist in meeting the institutions' increased
costs. Funding is available due to lag time in creating and
filling probation officer positions in FY 07.
LFD Notes: The FY 08 budget includes this transfer
($100,000) General Funds
Ms. Griffin noted that she spoke to this fund transfer earlier.
The funds were available for transfer due to position vacancies
and recently added judge positions earlier in the year, and
would assist in offsetting increased institutional costs.
9:56:20 AM
Section: 14(c)
Ratification
Supplemental Need: Internal department RSA from
Administration and Support (AR50560-06) to Institutional
Facilities (AR50580-06) to cover inmate costs.
LFD Notes: The FY 08 budget includes this transfer
$600,807,000 General Funds
Ms. Griffin reported that this ratification was to the
Department's FY 06 supplemental request for out-of-state
contracts to a private prison in Florence, Arizona. At the time
the Department was prepared to make the prisoner transfers to
Florence, that facility did not have availability to receive the
inmates. The delay in sending the prisoners to Florence caused
the facilities they were housed at to incur additional costs,
and this transfer would provide for a reimbursable service
agreement between the Administration and Support RDU and the
Institutional Facilities RDU. The transfer had been reviewed and
recommended by the Division of Legislative Finance.
9:58:02 AM
Senator Elton returned to section 3(k) to ask the reasoning
behind the transfer of funds to the Institution Director's
Office, rather than to one of the other supplemental request
areas.
Ms. Griffin replied that the $100,000 transfer to the Director's
Office would be applied to shortfalls in all facilities. The
request for the institutional supplemental would be distributed
to all facilities with shortages.
9:59:12 AM
Senator Elton opined that the request seemed vague, with no
"activity connected to the request."
Ms. Griffin understood the concern, and clarified that the
$100,000 transfer from Statewide Probation and Parole had
reduced the supplemental request for Institutions from
$4,596,000 to $4,496,000.
9:59:57 AM
Senator Olson asked the "net effect" of the decommissioning of
the jet purchased by former Governor Murkowski.
Ms. Griffin informed that the Department of Corrections did not
receive additional funding to use the jet, and it was very
expensive to operate. She characterized the lack of jet use as
"cost avoidance".
10:00:51 AM
Department of Environmental Conservation
Section: 1(e)
RDU: Water Quality
Supplemental Need: The cruise ship head tax ballot
initiative was adopted by voters during the August 2006
primary election. Passage of the initiative, however, did
not result in an appropriation for the program. DEC needs a
current year appropriation to cover costs that are being
incurred in order to make a good faith effort to implement
the program within the initiative's timeline. FY2007
expenditures are occurring to establish the program.
LFD Notes: Ballot Measure 2 took effect in December 2006.
An initiative has no funding method similar to fiscal
notes, so a supplemental appropriation is required to begin
the program during FY07. Because cruise vessels register by
3/1/07 for the coming season--with arrivals beginning in
May--revenues from the $4/berth fee will be available in
FY07.
$811,300 CPVEC Funds
LYNN KENT, Director, Division of Water, Department of
Environmental Conservation, testified via teleconference from an
offnet location that the initiative contained a head tax on
cruise ship passengers, as well as requirements of the
Department, including the Ocean Ranger program. That program
mandates that large cruise ships have a Coast Guard licensed
marine engineer, or "Ocean Ranger", aboard when entering State
waters. The Ocean Ranger will serve as an independent observer
to monitor State and federal requirements for marine discharge
and pollution, and ensure proper sanitation practices.
Ms. Kent informed that the initiative levied a $4 per person tax
to support this program, which would be deposited into the
Commercial Passenger Vessel Environmental Compliance (CPVEC)
fund. Cruise ship revenues would not be available until later in
the fiscal year, and therefore the Department requested a
supplemental appropriation to provide training for the Ocean
Ranger positions.
Co-Chair Hoffman asked the number of positions that would be
required.
10:03:08 AM
Ms. Kent replied that the Department did not yet know how many
positions would be necessary, as the initiative did not specify
the level of coverage required. An Ocean Ranger may be needed
for a 12-hour shift, a 24-hour shift, or perhaps to ride between
two Alaskan ports to monitor activity.
Co-Chair Hoffman asked the option this request would fund.
Ms. Kent answered that the supplemental request would provide
for a single Ocean Ranger on board every vessel for a 12-hour
shift. She noted that should the Department elect less coverage,
any unspent funds would be redeposited into the CPVEC fund.
Co-Chair Hoffman understood the request to be the "minimal"
amount of funding necessary.
Ms. Kent characterized it as a "middle of the road" request.
10:04:22 AM
Senator Dyson understood that the House Transportation Committee
was currently considering a less costly alternative, and asked
if the Department was aware of those discussions.
Ms. Kent told that the House Transportation Committee had
contemplated using the existing environmental officer, who is an
employee of the cruise ship company, to serve as the Ocean
Ranger. She was doubtful that this option would be acceptable,
as the initiative required an "independent observer".
10:05:39 AM
Senator Elton asked if the Department had solicited for Ocean
Rangers.
Ms. Kent responded that the Department did not yet have State
employee job descriptions or class specifications established.
The initiative allowed for Ocean Rangers to be State employees
or contract employees, and the Department had not decided which
option would be more appropriate. The Department had hired a
contractor to evaluate the options, and assist in establishing a
training program.
Senator Elton understood the training would be significant, and
asked how long the training program was expected to last.
10:07:03 AM
Ms. Kent did not know the duration of the training. The U.S.
Coast Guard requires training in the operations and machinery of
the vessel systems, but does not provide instruction on State
and federal health and safety laws.
Senator Elton reiterated that the Department needed to recruit
Ocean Rangers, develop a training program, and train the
recruits. He asked the probability that the program would be
fully operational and able to utilize the requested funds.
Ms. Kent could not commit to spend the entire amount of the
supplemental request, but assured that the Department was
dedicated to developing a program that could be implemented in
the current fiscal year. One of the biggest challenges was
locating a sufficient number of Coast Guard licensed engineers.
10:08:54 AM
Senator Elton stated that the Department of Environmental
Conservation was expecting $3.6 million to be generated from the
$4 per person tax in the coming cruise ship season, yet was
requesting General Fund dollars to supplement the Ocean Rangers
program. He asked if that funding request was still supported by
the Department.
Ms. Kent told that the $5.6 estimate contained in the FY08
budget was based on 24-hour coverage of every large vessel while
in State waters. A change in funding from General Funds to CPVEC
funds was under consideration, as was a lesser rate of coverage.
10:10:23 AM
Senator Huggins commented that the current discussion was
illustrative of why he voted against the tax. He opined that
funds could be more effectively expended monitoring higher risk
areas, such as the North Slope, and was concerned about the
direction the State was headed.
10:11:20 AM
Department of Health and Social Services
Section: 1(f)
RDU: Capital
Supplemental Need: Fairbanks Virology Laboratory
Completion. Costs have risen over what was originally
determined, particularly the costs of steel,
transportation, and petroleum based products. The
miscellaneous receipts come from interest earnings on the
Certificate of Participation (COP) which is being used to
fund the majority of the project. The original
appropriation was $24.2 million in FY06.
LFD Notes: The Dept. states that if funds are not received
(1) the lab will not be constructed;
(2) the IRS will restrict the construction fund due to
non-expenditure of bond proceeds; and
(3) cost projections will increase by 10%-15%
annually.
The miscellaneous earnings from these COPs may be used for
this project, but cannot be used for other projects. The
requested amount of Misc Earnings includes all earnings to
date plus about $1.7 million of anticipated earnings.
$3,500,000 General Funds
$3,000,000 Miscellaneous Receipts
$6,500,000 Total Funds
JANET CLARKE, Assistant Commissioner, Finance and Management
Services, Department of Health and Social Services testified
that this request for the Fairbanks Virology Laboratory was
time-sensitive. She reminded that when the Department approached
the legislature two years prior for the Certificates of
Participation (COPs) the estimate was based on a feasibility
study completed the previous year. The feasibility study assumed
that construction of the Laboratory would be 50 percent
completed at the present time, but construction progress had
lagged, thus adding an additional year of inflation. Material
costs and inflation were underestimated, as were "soft costs"
related to building the Laboratory, and Laboratory equipment
costs.
Ms. Clarke informed that when the Department realized the
escalating costs a year ago, she and then Public Health Director
Dr. Mandsager attempted to contain costs by reducing the square
footage of the Laboratory from 26,000 to 18,000 square feet,
"tightening up" the construction schedule, and "innovating" the
procurement process. The request is considered time-sensitive to
allow site work during the summer and initial construction
before winter weather hampers efforts.
10:14:51 AM
JAY BUTLER, Director, Division of Public Health, Department of
Health and Social Services, spoke to the need for a virology
laboratory. The virology laboratory in Fairbanks receives
approximately one-third of the specimens tested by the Division
annually. These tests include the detection of influenza,
rabies, AIDS/HIV, hepatitis, and SARS. The lab is also crucial
to the State's ability to respond to the threat of Avian flu.
10:16:02 AM
Co-Chair Hoffman commented that the justification for the
laboratory was not in question, but that overrun costs were. He
asked the effect on the laboratory if the supplemental request
was not appropriated.
Ms. Clarke answered that without supplemental funding the
project would not be viable. The square footage had already been
reduced, and further decreases would render the laboratory non-
functional.
Co-Chair Hoffman asked how much of the original $24.2 million
had been expended.
Ms. Clarke was unsure, and referred the question to the
Department of Revenue, as COPs had already been sold.
10:17:40 AM
Co-Chair Hoffman requested that information, as well as the
amount of funding used for administrative purposes.
10:17:58 AM
Senator Olson commented that the safe operation of a virology
laboratory requires space to accommodate necessary equipment. He
asked who paid for the design changes.
Ms. Clarke replied that the Department of Health and Social
Services was managing the project through the Department of
Transportation and Public Facilities and in cooperation with the
University of Alaska, as the laboratory is on the University
campus. The original COPs have funded the design changes.
10:19:23 AM
Senator Olson wondered if the State's virology needs could be
addressed more economically by building the laboratory in
another location.
Ms. Clarke believed that the issue had been examined when the
initial authorization was issued several years prior. At that
time, the legislature and the University had discussed
partnerships between University scientists and Department
scientists, and decided to build the laboratory where it
currently existed in Fairbanks.
10:20:28 AM
Senator Huggins asked if the laboratory would be able to detect
Avian influenza.
Mr. Butler affirmed.
10:20:41 AM
Section: 1(g)
RDU or Component: Capital
Supplemental Need: Title change: "Juneau Pioneer Home Roof
Replacement" to "Pioneer Homes Roof Repair and
Replacement". The department would like to use excess funds
from the original project to repair Sitka Pioneer Home
roof.
LFD Notes: DOT/PF estimates that a balance of $350,000 will
remain when the Juneau Pioneer Home's roof project is
completed. The estimated cost of repairs for the Sitka
Pioneer Home ranges from $300,000-$350,000. If the Sitka
repairs are completed for less than estimated, remaining
funds will be used for other pioneer home roof needs, such
as the Palmer Veterans Home.
$0.00 Total Funds
Ms. Clarke informed that the Juneau Pioneer Home roof
replacement came in under the $1 million appropriated and this
request would allow for those excess funds to be used to address
roofing needs at the Sitka Pioneer Home. The Sitka Pioneer Home
had severe leaks, which the Department had documented with
photographs. This request was a language expansion to allow the
Department to utilize excess funds at other Pioneer Homes as
needed for roofing issues.
10:22:12 AM
Senator Huggins asked the number of residents at the Sitka
Pioneer Home, and the capacity of that facility.
Ms. Clarke believed there to be 40 to 45 residents at the Sitka
Pioneer Home, and would provide exact details. The facility was
not operating at full capacity, due to recent staffing
difficulties.
10:22:51 AM
Senator Elton asked if there consideration had been given to
inclusion of the Juneau or other Pioneer Homes in the public
building fund.
Ms. Clarke responded that the Department had had internal
discussions regarding long-term care, as some Homes are at
capacity and others are underutilized. There had been no
finalized plans or reports.
10:23:56 AM
Senator Elton was unclear as to who performed maintenance on the
Pioneer Homes.
Ms. Clarke clarified that the Department of Health and Social
Services employed staff at the Homes to complete routine
maintenance, and annual deferred maintenance appropriations
funded complex projects to be contracted through the Department
of Transportation and Public Facilities.
Senator Elton commented that the Juneau public building fund
administered to a pool of buildings providing for on-going
maintenance, and thus avoided some of the more costly deferred
maintenance expenditures.
10:24:58 AM
Co-Chair Stedman added that the Pioneers Home Advisory Board was
interested in a planning study to determine the long-term
direction of the Homes.
10:25:31 AM
Section: 6(a)
RDU or component: Pioneer Homes
Supplemental Need: Receipt supported services authority to
cover
1) nurses' salaries $86,900
2) funds to offset uncollectible federal revenues
$231,000
3) safety, sanitation and operating costs $482,100
LFD Notes: The receipts are derived from payments by
Pioneers who live in the homes.
$800,000 Receipt Supported Services
Ms. Clarke informed that the Department had underestimated the
amount of receipt supported services needed in the FY07 budget,
and therefore requested additional authority.
10:27:21 AM
Co-Chair Hoffman asked why the legislature should replace the
$231,000 of uncollectible federal revenues for the Palmer
Veterans Home.
Ms. Clarke explained that the Palmer Veterans Home only recently
received federal certification, and the budget was based an
assumption that the Home would have been certified and
generating revenue earlier.
10:28:23 AM
Section: 6(b)
RDU or component: Behavior Health Medicaid Services
Supplemental Need: Cost recovery of overpayments to comply
with provisions of SB 41 (CH. 66, SLA 03) related to
audits.
LFD Notes: The legislation requires annual audits and the
collections of overpayments from providers. In calendar
year 2006, the department collected $579,800 in recovered
overpayments for the Medicaid program. On a department-wide
basis, the total cost recovery for Medicated overpayments
in the FY 07 supplemental request is $2.2 million.
$600,000 Statutory Designated Program Receipts
Ms. Clarke outlined this item noting it was the first of several
requests for Statutory Designated Program Receipts for Medicaid.
Co-Chair Hoffman asked why reauthorization was necessary if the
monies were already considered spent.
10:29:57 AM
Ms. Clarke replied that the audits were conducted "after the
fact," thus the funds were from prior years. The federal
government requires that it be reimbursed for its share of the
overpayment within 60 days, so this request would provide the
authority for that compensation.
10:30:39 AM
Section: 6(c)
RDU or component: Children's Medicaid Services
Supplemental Need: Cost recovery of overpayments to comply
with provisions of SB 41 (CH. 66, SLA 03) related to
audits.
LFD Notes: The legislation requires annual audits and the
collections of overpayments from providers. In calendar
year 2006, the department collected $579,800 in recovered
overpayments for the Medicaid program. On a department-wide
basis, the total cost recovery for Medicated overpayments
in the FY 07 supplemental request is $2.2 million.
$100,000 Statutory Designated Program Receipts
Ms. Clarke remarked that this request was for the same
authorization as in 6(b), but related to Children's Medicaid
services.
Section: 6(d)
RDU or component: Medicaid Services
Supplemental Need: Alaska Regional Hospital Medicaid Rate
Settlement for 1991 through 2000. Settlement agreement has
been signed.
LFD Notes: According to the department, the settlement is
eligible for reimbursement through Medicaid at the regular
FMAP of 57.58% for SFY 2007. The Department of Law is
recommending settlement of this long standing rate dispute.
$3,393,600 General Funds
$4,606,400 Federal Funds
$8,000,000 Total Funds
Ms. Clarke told that this request was a Medicaid rate settlement
with the Alaska Regional Hospital, which applied to the years
1991 through 2000. This would settle all rate issues between the
hospital and the State during that ten-year period.
10:31:30 AM
Section: 6(e)
RDU or component: Medicaid Services
Supplemental Need: Cost Recovery of overpayments to comply
with provisions of SB 41 (CH 66, SLA 03) related to audits.
LFD Notes: $700,000 is for overpayment recoveries. $300,000
is for School Based Services - The school based services
allows schools to bill and receive Medicaid reimbursement
for health services provided in the school situation. The
school is responsible to pay the match portion of this,
which is received as SDPR. The request will allow the
Medicaid program to collect and expend the receipts above
the current authorization.
$1,000,000 Statutory Designated Program Receipts
Ms. Clarke informed that this was an overpayment issue for
Medicaid related to health care services.
10:31:48 AM
Section: 6(f)
RDU or component: Probation Services
Supplemental Need: Court ordered costs. The legislature has
directed the department to bring the costs forward in a
supplemental each year.
LFD Notes: The FY 05 supplemental totaled $194,100. The FY
06 supplemental totaled $295,400.
$206,500 General Funds
Ms. Clarke summarized this request as relating to court-ordered
costs for the juvenile justice component. The Department had
previously included a court-ordered cost budget component in
annual budget requests. The legislature asked that that general
fund request be eliminated, and the Department specify the exact
costs each year. Detailed back-up was available for this
request.
10:32:45 AM
Section: 6(g)
RDU or component: Adult Public Assistance
Supplemental Need: Formula program reduction. Savings are
from a combination of continued savings in Interim
Assistance from nurse reviews and payment size per client
decreases as clients have more pension income.
($750,000) General Funds
Section: 6(h)
RDU or component: Senior Care
Supplemental Need: Caseload reduction; people are not
applying for the pharmacy benefit as much as anticipated.
$1,500,000 General Funds
Section: 6(i)
RDU or component: Senior and Disabilities Services
Appropriation
Supplemental Need: The Senior and Disabilities Services
appropriation decreases by $5,000,000 from $334,174,200 to
$329,174,200 because of the allocation change below:
$0.00
Section: 6(j)
RDU or component: Senior and Disabilities Medicaid Services
Allocation
Supplemental Need: Savings in the personal care attendant
program due to implementation of regulations which did such
things as requiring medical determinations by department
staff or designee (had been done by the provider), limiting
hours of service, limiting to one attendant a household
with more than one person qualifying for PCA, and other
cost savings.
LFD Notes: According to the Department, a 4% reduction is
expected in FY 08 for PCAs, bringing the projected costs
down to $77 million (vs. $80 million in FY 07). FY 08
increment to $21.7 million is included in the FY 08
request.
($5,000,000) General Funds
AND
RDU or component: Senior and Disabilities Medicaid Services
Supplemental Need: Cost recovery of overpayments to comply
with provisions of SB 41 (CH 66, SLA 03) related to audits.
LFD Notes: Legislation passed in 2003 requiring the State
to bill agencies to collect Medicaid overpayments. Through
an audit process, it may be discovered that there was a
claiming discrepancy or an incorrect eligibility
determination, annual audits and the collections of
overpayments from providers. In calendar year 2006, the
department collected $579,800 in recovered overpayments for
the Medicaid program. On a department-wide basis, the total
cost recovery for Medicaid overpayments in the FY 07
supplemental request is $2.2 million.
$800,000 Statutory Designated Program Receipts
Ms. Clarke stated that Section 6(g) reflected a reduction in the
general funds needed for the adult public assistance program,
achieved due to cost containment efforts and the fact that
eligible individuals have more income so payments are smaller
despite the program serving more individuals.
10:33:53 AM
Senator Olson asked if the cost containment efforts denied
services to individuals who would otherwise be eligible.
Ms. Clarke explained that the cost containment efforts related
only to interim assistance. Interim assistance is paid to people
who have applied for Social Security disability benefits, but
had not yet been deemed eligible for that assistance by the
federal government. Previously, the State would provide a
benefit of $280 per month while a person awaited permanent
disability benefits from Social Security. It was revealed the 40
to 50 percent of those who applied for disability were ruled
ineligible by the federal government, and the State had no
method of recouping interim assistance payments. The State now
conducts an initial medical review before granting interim
assistance.
Senator Olson asked the number of people affected by this
practice.
Ms. Clarke would provide that information.
10:35:19 AM
Section: 14(b)(3)
Ratification
Supplemental Need: AR23020-05 Behavioral Health Medicaid
$3,051,744.30 General Funds
Section: 14(b)(4)
Ratification
Supplemental Need: AR23301-05 Medicaid Services
$2,606,666.14 General Funds
Section: 14(b)(5)
Ratification
Supplemental Need: AR23551-05 Senior and Disabilities
Medicaid
$349,170.66 General Funds
Ms. Clarke informed that these requests related to Medicaid. The
Department was requesting ratification of those expenditures
from FY05. The ratification was due to under-collection of
federal receipts and higher costs than expected. In this case,
expenditures were "very close" to what the Department
anticipated, but federal collections were less than expected.
ADJOURNMENT
Co-Chair Lyman Hoffman adjourned the meeting at 10:37:13 AM
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