Legislature(2001 - 2002)

04/15/2002 04:07 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 15, 2002                                                                                      
                              4:07 PM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 58, Side A                                                                                                             
SFC 02 # 58, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Dave Donley convened the meeting at approximately 4:07 PM.                                                             
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Lyda Green                                                                                                              
Senator Alan Austerman                                                                                                          
Senator Donald Olson                                                                                                            
Senator Loren Leman                                                                                                             
Senator Gary Wilken                                                                                                             
                                                                                                                                
Also Attending:   SUE ANN BEIERLY,  staff to Senator Ward;  LORETTA                                                           
BROWN, staff to Senator Ward                                                                                                    
                                                                                                                                
Attending  via  Teleconference:    There   were  no  teleconference                                                           
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 403-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
SB 289-APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                     
HB 404-APPROP: MENTAL HEALTH BUDGET                                                                                             
SB 288-APPROP: MENTAL HEALTH BUDGET                                                                                             
                                                                                                                                
The Committee heard budget subcommittee  reports for the Department                                                             
of  Administration,   Department  of  Environmental   Conservation,                                                             
Department  of Corrections,  Department of  Community and  Economic                                                             
Development, Department of Fish  and Game, Department of Health and                                                             
Social  Services, Department  of Education  and Early  Development,                                                             
Department of Law, and Department  of Revenue. No action was taken.                                                             
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 403(FIN) am(brf sup maj fld)(efd fld)                                                                
     "An  Act making  appropriations  for  the operating  and  loan                                                             
     program  expenses of state  government, for certain  programs,                                                             
     and to capitalize funds."                                                                                                  
                                                                                                                                
     SENATE BILL NO. 289                                                                                                        
     "An  Act making  appropriations  for  the operating  and  loan                                                             
     program  expenses of state  government, for certain  programs,                                                             
     and to capitalize funds; making  appropriations under art. IX,                                                             
     sec.  17(c), Constitution  of the  State of  Alaska, from  the                                                             
     constitutional  budget  reserve  fund;  and providing  for  an                                                             
     effective date."                                                                                                           
                                                                                                                                
     CS FOR HOUSE BILL NO. 404(FIN)                                                                                             
     "An Act  making appropriations  for the operating  and capital                                                             
     expenses of the state's integrated comprehensive mental health                                                             
     program; and providing for an effective date."                                                                             
                                                                                                                                
     SENATE BILL NO. 288                                                                                                        
     "An Act  making appropriations  for the operating  and capital                                                             
     expenses of the state's integrated comprehensive mental health                                                             
     program; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
Co-Chair Donley announced no public testimony would be taken at                                                                 
this meeting.                                                                                                                   
                                                                                                                                
[Note: The budget subcommittee reports cited are on file.]                                                                      
                                                                                                                                
Department of Administration                                                                                                  
                                                                                                                                
Senator Ward, Chair                                                                                                             
Senator Taylor                                                                                                                  
Senator Elton                                                                                                                   
                                                                                                                                
SUE ANN BEIERLY, staff to Senator Ward, presented the subcommittee                                                              
report as follows.                                                                                                              
                                                                                                                                
     The  FY  03 General  Fund  allocation  for the  Department  of                                                             
     Administration  is $156,029,900.  The Subcommittee began  with                                                             
     the  Senate  Intro Bill  and  made the  following  decrements,                                                             
     increments  and fund source changes  to meet our  General Fund                                                             
     (GF) allocation.                                                                                                           
                                                                                                                                
          The largest unallocated  reduction was initially included                                                             
          in  the Senate  Intro bill  for  $1,316,900. This  entire                                                             
          amount  has been spread back to the components  that have                                                             
          General Funds in Personal Services.                                                                                   
                                                                                                                                
          The House had taken  an additional $85,000 in unallocated                                                             
          travel reductions. The Senate Subcommittee did not accept                                                             
          this unallocated  reduction; instead, the  $85,000 GF cut                                                             
          was  spread  between Personnel  travel  ($9,000),  Public                                                             
          Broadcasting     Radio  ($69,900),  and  Public  Defender                                                             
          Agency travel ($6,100).                                                                                               
                                                                                                                                
          Senior Services:                                                                                                      
               $364,300  Assisted Living Rate Increase (GF)                                                                     
               $ 39,500  Eligibility Position for General Relief                                                                
                           & Medicaid Clients (GF)                                                                              
               $491,000  Fund switch to GF for General                                                                          
                           Relief/Assisted Living Program with a                                                                
                           subsequent reduction in MHTAAR funds                                                                 
               $ 75,500  Non-Permanent Position for Coordinated                                                                 
                           Public Awareness & Education                                                                         
                          (MHTAAR Funds)                                                                                        
                                                                                                                                
          Retirement & Benefits: $792,300 (Other Funds)   Additions                                                             
          to  the Division of Retirement  and Benefits  for various                                                             
          systems  enhancements  and increases  due to retiree  and                                                             
          benefit programs.                                                                                                     
                                                                                                                                
          Leases:  $3,684,800 (GF and Other Funds )    Full funding                                                             
          for  the Anchorage  Jail  Lease and  increases for  lease                                                             
          obligations  ($1,500,000 GF)  and increased authority  to                                                             
          receive  receipts from tenant agencies ($2,184,800  Other                                                             
          Funds)                                                                                                                
                                                                                                                                
          State  Owned Facilities: $680,700  (Other Funds)    State                                                             
          Owned Facilities Public Building Operations Costs                                                                     
                                                                                                                                
          Information Technology Group: $12,650,000 (Other Funds)                                                               
          Increased  expenditure authority  to handle  pass-through                                                             
          moneys from other state agencies for services provided by                                                             
          the state's new telecommunications partner                                                                            
                                                                                                                                
          Risk  Management: ($1,064,400)(Other  Funds)    Increased                                                             
          Cost  of   Risk  for  Workers'  Compensation   and  Other                                                             
          Insurance                                                                                                             
                                                                                                                                
          Alaska  Longevity Programs  Management: ($50,000)  (Other                                                             
          Funds)    Partial Funding for Geriatric Nurse  Consultant                                                             
                                                                                                                                
          Alaska  Oil  and Gas  Conservation  Commission:  $680,600                                                             
          (Other   Funds)     Increases  for  additional   drilling                                                             
          activity  costs and for  salary adjustments and  position                                                             
          reclassification costs                                                                                                
                                                                                                                                
     Summary                                                                                                                    
     Reductions in General Fund  expenditures necessary to meet the                                                             
     Department's General Fund allocation of $159,026,900 were met.                                                             
     Approving the Department's  other requested changes in funding                                                             
     and  authorization  brings the  Department's  total  operating                                                             
     budget for FY 03 to $300,514,400.                                                                                          
                                                                                                                                
Senator  Austerman informed  the Committee  that the Department  of                                                             
Military  and Veterans  Affairs  and the  Department  of Labor  and                                                             
Workforce Development  budget recommendations  would return  to the                                                             
subcommittees for reconsideration.                                                                                              
                                                                                                                                
Department of Environmental Conservation                                                                                      
                                                                                                                                
Senator Leman, Chair                                                                                                            
Senator Torgerson                                                                                                               
Senator Olson                                                                                                                   
                                                                                                                                
Senator Leman testified  the subcommittee recommendation  is within                                                             
the  general fund  spending limitation  established  by the  Senate                                                             
Majority. He listed the Governor's  request of $55,059,300 compared                                                             
to  $53,303,600 allocated  in  FY 02.  He stated  the  subcommittee                                                             
recommendation "generally  disallowed most of the increments",  did                                                             
not provide increased  funding for travel, and in most  components,                                                             
reduced  the appropriation  for travel. He  noted the  Department's                                                             
travel budget  would be $2.8 million,  which is $200,000  more than                                                             
allocated in FY 02.                                                                                                             
                                                                                                                                
Senator Leman stated the subcommittee's directive to the Department                                                             
is to  plan travel as  far in advance  whenever possible  to obtain                                                             
lower fares.                                                                                                                    
                                                                                                                                
Senator Leman  noted the subcommittee  recommends holding  harmless                                                             
the  Industry   Preparedness  and   Pipeline  Response   component,                                                             
recommends  increased  travel  funding   and  recommends  continued                                                             
appropriation  of $600,000 from the  BP/ARCO charter agreement  for                                                             
increased North Slope oversight.                                                                                                
                                                                                                                                
Senator Leman  commented that the  Department "targeted"  its water                                                             
program several  years ago,  although not at  the direction  of the                                                             
Legislature.  As a  result, he  stated  that neither  the House  of                                                             
Representatives   nor  the  Senate   Finance  budget   subcommittee                                                             
recommends unallocated budget reductions  for this program in FY 03                                                             
to avoid the complications incurred earlier.                                                                                    
                                                                                                                                
Senator  Leman  noted  the  Food  Safety   and  Sanitation  program                                                             
continues  to  be  "problematic".  He  informed   the  subcommittee                                                             
recommended utilizing  a portion of the homeland security  funds to                                                             
replace general  funds for  this program, but  was informed  by the                                                             
Department  this is  not  possible. However,  he  noted the  Budget                                                             
Request  Unit  (BRU) is  funded  at approximately  70  percent  not                                                             
including homeland  security funds, and if it were  confirmed these                                                             
funds could not be  utilized, he would recommend receipt-supported                                                              
services to fund the remainder  of the program. He expressed intent                                                             
in the  future to transfer  these duties  in larger communities  to                                                             
local governments.                                                                                                              
                                                                                                                                
Department of Corrections                                                                                                     
                                                                                                                                
Senator Ward, Chair                                                                                                             
Senator Cowdery                                                                                                                 
Senator Therriault                                                                                                              
Senator Lincoln                                                                                                                 
                                                                                                                                
LORETTA BROWN,  Staff to Senator  Ward, presented the  subcommittee                                                             
report as follows.                                                                                                              
                                                                                                                                
     The  FY  03 General  Fund  allocation  for the  Department  of                                                             
     Corrections  is $148,268,500. The Subcommittee  began with the                                                             
     Senate   Intro  Bill  and   made  the  following   decrements,                                                             
     increments  and fund  changes to  meet our  General Fund  (GF)                                                             
     allocation.                                                                                                                
                                                                                                                                
          The unallocated  reduction associated with GF labor costs                                                             
          in  the  Commissioner's  Office  was distributed  to  all                                                             
          components affected.                                                                                                  
                                                                                                                                
          Lost  Federal Violent Offenders  Incarceration  (VOI) and                                                             
          State  Criminal Alien  Assistance  Program (SCAAP)  funds                                                             
          were replaced with  GF. We replaced 2.9 million VOI funds                                                             
          and 1.1 million SCAAP funds.                                                                                          
                                                                                                                                
          The  new  Anchorage   Jail  received  a  1.8  million  GF                                                             
          increment   to  fund  the  start  up.  The  Sixth  Avenue                                                             
          Correctional   Center  budget  was  transferred   to  the                                                             
          Anchorage Jail.                                                                                                       
                                                                                                                                
          638.8  thousand  in new  PFD funds  was  allowed for  the                                                             
          continuation of the Department's MIS development program.                                                             
                                                                                                                                
          The subcommittee  honored the second year of a three-year                                                             
          commitment  with the Mental  Health Trust to fund  a sub-                                                             
          acute   and  juvenile  offender  unit  at   Spring  Creek                                                             
          Correctional Center  by switching 25 thousand MHTAAR with                                                             
          State GF.                                                                                                             
                                                                                                                                
          A weighted  reduction in general funds was  taken in each                                                             
          component  with the  exception  of Community  Residential                                                             
          Centers   (CRC)  in  order  to  meet  the   general  fund                                                             
          allocation.                                                                                                           
                                                                                                                                
          Other  changes  in authority  and  funding  that did  not                                                             
          affect   GF  were  accepted  and  incorporate   into  the                                                             
          Subcommittee's Proposed Operating Budget                                                                              
                                                                                                                                
     Summary                                                                                                                    
                                                                                                                                
     Reductions in General Fund  expenditures necessary to meet the                                                             
     Department's General Fund allocation of $148,268,500 were met.                                                             
     Approving the Department's  other requested changes in funding                                                             
     and  authorization  brings the  Department's  total  operating                                                             
     budget for FY 03 to $174,274,000.                                                                                          
                                                                                                                                
Co-Chair Donley noted the Senate Majority target funding is several                                                             
million   dollars   greater  than   approved   by   the  House   of                                                             
Representatives.                                                                                                                
                                                                                                                                
Senator Ward explained the House  of Representatives version of the                                                             
budget  relies  on funding  community  jails  with funds  from  the                                                             
permanent fund as stipulated in HB 20. He stated the Senate Finance                                                             
budget  subcommittee recommends  funding the  community jails  with                                                             
general funds.                                                                                                                  
                                                                                                                                
Department of Community and Economic Development                                                                              
                                                                                                                                
Senator Kelly, Chair                                                                                                            
Senator Phillips                                                                                                                
Senator Torgerson                                                                                                               
Senator Lincoln                                                                                                                 
                                                                                                                                
Co-Chair Kelly testified the Senate Majority general fund limit for                                                             
FY  03 is  $2,601,300  less  than the  FY  02 Management  Plan.  He                                                             
described  how this  was accomplished  by  citing the  subcommittee                                                             
report as follows.                                                                                                              
                                                                                                                                
     There has been  an updating of the DCED cost allocation  plan.                                                             
     This  has resulted in  $22,400 in  Receipt Supported  Services                                                             
     from Investments  and $13,700 in Commercial Fishing  Revolving                                                             
     Loan  funds from  Banking, Securities  and Corporations  being                                                             
     transferred  to  the  Commissioner's  Office  component.  This                                                             
     allows for a reduction of  $36,100 in GF. This also results in                                                             
     $108.200  in Receipt Supported  Services from Investments  and                                                             
     $138,900  in  Commercial   Fishing  Loan  Fund  receipts  from                                                             
     Banking, Securities and Corporations  being transferred to the                                                             
     Admin  Services  component. This  allows  for  a reduction  of                                                             
     $247,100 in GF.                                                                                                            
                                                                                                                                
     In an attempt  to have programs that bring in  revenue pay for                                                             
     themselves  and others  that  benefit them.  Business  License                                                             
     Receipts  (BLR) will  be used in  three different  components.                                                             
     There is a fund source switch of $546,600 from GF/PR to BLR in                                                             
     Occupational  Licensing.  There  is a  fund source  switch  of                                                             
     $300,000 from International Trade and Development funds to BLR                                                             
     in International Trade and  Market Development. And there is a                                                             
     fund  source   switch  of  $1,053,400   from  GF  to   BLR  in                                                             
     International Trade and Market Development.                                                                                
                                                                                                                                
     In  the  Qualified   Trade  Association  Contract,   there  is                                                             
     recommended a decrement of  $600,000 in general funds. This is                                                             
     to bring the  contract to $4,005,100, the state  funding level                                                             
     called  for  in  statute and  recommended  by  the  Governor's                                                             
     budget.                                                                                                                    
                                                                                                                                
     In the Department of Community  and Economic Development State                                                             
     Rent component, there is a  $188,900 increment in I/A Receipts                                                             
     coming in  to pay for state  rent. These funds are  $74,700 in                                                             
     receipt  supported   services  from  Occupational   Licensing,                                                             
     $57,600   in  receipt   supported   services  from   Insurance                                                             
     Operations,   $42,600  in  receipt  supported   services  from                                                             
     Banking, Securities and Corporations and $14,300 in Commercial                                                             
     Fishing Revolving Loan funds from Investments.                                                                             
                                                                                                                                
     In the Commissioner's Office  there has been a department wide                                                             
     unallocated reduction of $284,100  that was necessary to reach                                                             
     our allocation.                                                                                                            
                                                                                                                                
Co-Chair Donley surmised the subcommittee recommends fully funding                                                              
tourism marketing.                                                                                                              
                                                                                                                                
Co-Chair Kelly affirmed and clarified the funding would be provided                                                             
at the "agreed upon statutory level".                                                                                           
                                                                                                                                
Department of Fish and Game                                                                                                   
                                                                                                                                
Senator Kelly, Chair                                                                                                            
Senator Austerman                                                                                                               
Senator Cowdery                                                                                                                 
Senator Halford                                                                                                                 
Senator Hoffman                                                                                                                 
                                                                                                                                
Co-Chair  Kelly  noted  the  subcommittee  recommended  eliminating                                                             
certain services. He read from  the subcommittee report as follows.                                                             
                                                                                                                                
     Commercial Fisheries                                                                                                       
     In the Westward Region Fisheries Management component, general                                                             
     funds  of  $741,000   for  the  Bering  Sea/Aleutian   Islands                                                             
     Shellfish Management  Program have been eliminated.  The State                                                             
     is not  statutorily required  to manage  this program  and has                                                             
     been doing  it under delegation  from the federal  government.                                                             
     There  is  almost  $2 million  in  federal  funding  for  this                                                             
     program,  although   the  expectation  is  that   the  federal                                                             
     government  will probably  begin to hire  their own people  to                                                             
     manage it.                                                                                                                 
                                                                                                                                
     In the  Headquarters Fisheries  Management component,  general                                                             
     funds  of  $744,700  for  the  Commercial  Fisheries  Genetics                                                             
     Program  have  been  eliminated.   In  weighing  the  possible                                                             
     programs for elimination,  this was lower on the priority list                                                             
     for the Department. There  is $815,000 in non-GF funds in this                                                             
     program.                                                                                                                   
                                                                                                                                
     Wildlife Conservation                                                                                                      
     In  the Wildlife  Conservation  Restoration  Program,  general                                                             
     funds of $223,700 for Wildlife  Conservation Non-Game Programs                                                             
     have been reduced. This will  result in a reduction in federal                                                             
     funds  into this  program. However,  there may  be options  to                                                             
     replace the match with other  funds and still receive the same                                                             
     level  of federal  funding.  This reduction  was necessary  to                                                             
     reach our allocation for the department.                                                                                   
                                                                                                                                
Co-Chair  Kelly commented  it  was  determined to  eliminate  these                                                             
programs rather than reduce funding for all programs.                                                                           
                                                                                                                                
Senator Austerman  voiced concern  about reducing funding  for this                                                             
Department because it involves  natural resources. He stressed that                                                             
in order to  assert rights to manage  these resources,  Alaska must                                                             
have the ability to manage them.  He also emphasized the importance                                                             
of managing  renewable  resources  for the  time when  nonrenewable                                                             
resources are depleted. He warned  that by eliminating the Westward                                                             
Region   Fisheries  Management   component,   the  Legislature   is                                                             
eliminating the State's ability to manage the crab fisheries in the                                                             
Bering Sea.                                                                                                                     
                                                                                                                                
Senator Olson asked  if the programs would be eliminated  entirely.                                                             
                                                                                                                                
Co-Chair  Kelly  affirmed  the  aforementioned  programs  would  be                                                             
eliminated with the exception of the Wildlife Conservation Non-Game                                                             
Programs, which would be reduced.  He qualified that the Department                                                             
indicated  eliminating these  programs is  the preferred method  to                                                             
operate with the proposed budget reductions.                                                                                    
                                                                                                                                
Senator Olson asked if other "mechanisms"  were available to assume                                                             
management of the shellfish.                                                                                                    
                                                                                                                                
Co-Chair Kelly answered yes, the federal government could undertake                                                             
these duties.                                                                                                                   
                                                                                                                                
Department of Health and Social Services                                                                                      
                                                                                                                                
Senator Green, Chair                                                                                                            
Senator Kelly                                                                                                                   
Senator Therriault                                                                                                              
Senator Davis                                                                                                                   
                                                                                                                                
Senator  Green  presented   the  subcommittee  recommendations   as                                                             
follows.                                                                                                                        
                                                                                                                                
     After  netting  out the  FY 02  supplementals  and the  double                                                             
     counted  "fair-share" and "pro-share"  money in Medicaid,  the                                                             
     total  real new  spending for  Health and  Social Services  is                                                             
     around $105  million.  Most of  this increase is  in Medicaid,                                                             
     much  of  the  increase  in Medicaid  is  in  community  based                                                             
     services  for  older Alaskans  and  Disabled Alaskans.    This                                                             
     increase  will result  in hundreds of  new healthcare  related                                                             
     jobs  throughout  Alaska.    Over  the  past  ten  years,  the                                                             
     population  of Alaska  has increased  by about  20% while  the                                                             
     number  of jobs in  the healthcare  industry has increased  by                                                             
     about 60%.                                                                                                                 
                                                                                                                                
     The Subcommittee budget supports efforts of the Legislature to                                                             
     provide  regional  youth  corrections   facilities  throughout                                                             
     Alaska.    Full  operating funding  for  these  facilities  is                                                             
     provided,  including  a  full  year  of funding  for  the  new                                                             
     facility in Ketchikan.                                                                                                     
                                                                                                                                
     The Subcommittee  budget supports efforts to downsize  API and                                                             
     to  operate  API at  its  current  level until  new  community                                                             
     support infrastructure is developed.                                                                                       
                                                                                                                                
     The  Subcommittee   budget  supports   the  efforts   of  this                                                             
     Legislature to provide the necessary Social Workers to respond                                                             
     to reports of harm.                                                                                                        
                                                                                                                                
     The  Subcommittee  budget  supports  to  the  efforts  of  the                                                             
     Legislature  to respond to concerns over the nursing  shortage                                                             
     by funding increases to nurses' salaries.                                                                                  
                                                                                                                                
     The  Subcommittee  budget  seeks  to eliminate  the  need  for                                                             
     supplemental appropriations by funding formula programs nearly                                                             
     at the requested  level.  Also by funding the  Balloon Program                                                             
     the budget seeks to reduce future foster care costs.                                                                       
                                                                                                                                
     The  Subcommittee  budget   addresses  the  need  to  increase                                                             
     administrative    efficiencies   by   cutting    funding   for                                                             
     administrative functions in the Department by 3%-5%.                                                                       
                                                                                                                                
     The Subcommittee budget reduces  alcohol and drug abuse grants                                                             
     by some 20%, while protecting  some specific functions such as                                                             
     the dual diagnosis program in Anchorage that helps keep people                                                             
     out  of API.   These cuts  need to  be looked  at in light  of                                                             
     increased  direct federal and  private foundation grants  that                                                             
     are  used for  these  same clients  and  an increased  use  of                                                             
     Medicaid funding to address these clients medical needs.                                                                   
                                                                                                                                
     Tobacco  cessation programs  are  funded at  the current  year                                                             
     level.  Additional tobacco settlement funds are being directed                                                             
     to Medicaid to help fill the  gap in match money that was left                                                             
     when the Governor  failed to request funds to  cover the $10.8                                                             
     million FMAP change                                                                                                        
                                                                                                                                
Senator Austerman  asked about a  statute passed the previous  year                                                             
that  stipulates 20  percent  of the  tobacco  settlement funds  be                                                             
appropriated to smoking cessation  and tobacco prevention programs.                                                             
                                                                                                                                
Senator Green replied the funding is the same as the year prior.                                                                
                                                                                                                                
Department of Education and Early Development                                                                                 
                                                                                                                                
Senator Wilken, Chair                                                                                                           
Senator Torgerson                                                                                                               
Senator Elton                                                                                                                   
                                                                                                                                
Senator  Wilken  stated  the  total  funding  for  this  Department                                                             
recommended   by  the  subcommittee   is  $992,500,000;   of  which                                                             
$748,523,000 is general  funds, $179,000,000 is federal  funds, and                                                             
$65,000,000  is other  funds. He  compared the  general funding  to                                                             
$723,804,000  in FY 01  and $754,442,000  in FY  02. He listed  the                                                             
funding target established  by the Senate Majority  is $748,523,400                                                             
and  includes  pupil  transportation  and  the  foundation  funding                                                             
formula. He stated this represents a .78 percent reduction in total                                                             
general funds  and a 5.4 percent  reduction in agency-only  general                                                             
funds. He  noted the Senate Majority  amount is $465,000  more than                                                             
approved by the House of Representatives.                                                                                       
                                                                                                                                
Senator Wilken read from the subcommittee  report, specifically the                                                             
comments column of the spreadsheet titled, "Department of Education                                                             
and Early Development, Passed by  the Finance Subcommittee on April                                                             
10, 2002, General Purpose Fund Group Only".                                                                                     
                                                                                                                                
     K-12 Support BRU                                                                                                           
        Foundation Program component                                                                                            
          (1) Include $12,372,000 for Learning Opportunity Grants                                                               
          (LOG) (in language section)                                                                                           
          (2) Fund the Foundation Program at the FY 02 student                                                                  
          dollar level                                                                                                          
          (3) Reduction in GF due to increase required local                                                                    
          contribution and reduction of funding floor, an increased                                                             
          PL874 payments                                                                                                        
          (4) Increase in Public School Trust Fund revenues                                                                     
          ($665,700)                                                                                                            
          (5) Reduction of $500,000 GF to match the GF/PR amount                                                                
          for Alyeska Central School Summer Program                                                                             
                                                                                                                                
Senator Wilken cited Summer 2000 enrollment for the Alyeska Central                                                             
School Summer  Program was  4,170 courses at  the beginning  of the                                                             
summer; however only 33 percent of those courses were completed. He                                                             
noted the  Department must provide  staff and materials,  whether a                                                             
course  is  completed  or  not.  As  a  result,  he  informed,  the                                                             
subcommittee proposes  intent language to authorize  the Department                                                             
to  collect  $100  per  course.  He  surmised  this  would  provide                                                             
financial incentive to complete courses.                                                                                        
                                                                                                                                
Senator Wilken next pointed out the Tuition Students, Boarding Home                                                             
Grants,  Youth  in  Detention,  and  Schools  for  the  Handicapped                                                             
components within the K-12 Support BRU are each funded at the FY 02                                                             
Management Plan level. He noted the Community Schools component was                                                             
not  funded  in  the  House  of Representatives   approved  budget,                                                             
although the Senate Finance budget  subcommittee includes $300,000,                                                             
which is $200,000 less than appropriated in FY 02.                                                                              
                                                                                                                                
Senator  Wilken stated  subcommittee recommends  fully funding  the                                                             
Pupil Transportation BRU at $3.69  million. He remarked this amount                                                             
reflects the increases in negotiated contracts.                                                                                 
                                                                                                                                
Senator  Wilken then addressed  the  Executive Administration  BRU,                                                             
directing attention to the proposed  $30,000 reduction for personal                                                             
services  and travel  in the  Commissioner's  Office component.  He                                                             
explained. "This is where the unallocated reduction for salaries is                                                             
imbedded." He summarized  that the total budget, as  recommended by                                                             
the  subcommittee, contains  a reduction  of  $710,600 in  personal                                                             
services and travel divided between all BRUs.                                                                                   
                                                                                                                                
Senator  Wilken  continued  that the  subcommittee  recommends  the                                                             
Special  and Supplemental  Service  component in  the Teaching  and                                                             
Learning  Support BRU  receive the  same funding  as  in FY 02.  He                                                             
commented  the Quality  Schools  component should  receive  partial                                                             
increment of $429,400 for McGraw-Hill contract costs for assessment                                                             
and bookmarking for the purposes  of the high school graduation and                                                             
benchmark  examinations.  In  addition, he  said  the  subcommittee                                                             
recommends  the  Education  Special  Projects   component  maintain                                                             
$50,000  funding  for  the Alaska  Minerals  and  Energy  Resources                                                             
Education Fund (AMEREF) program.                                                                                                
                                                                                                                                
Senator  Wilken spoke  to  the Early  Development  BRU, noting  the                                                             
subcommittee  recommends transferring  $350,000 general funds  from                                                             
the Child Care Assistance and Licensing component to the Head Start                                                             
Grants component. He explained these funds replace one-time funding                                                             
with the net result that the Head Start Grants component remains at                                                             
the FY  02 Management Plan  level.  He  furthered the  subcommittee                                                             
recommends  authorizing $3,859,100  Temporary Assistance  for Needy                                                             
Families  (TANF) funds  from the  Department of  Health and  Social                                                             
Services to the Child Care Assistance and Licensing component.                                                                  
                                                                                                                                
Senator  Wilken commented  the Children's  Trust Programs BRU,  the                                                             
Alaska Community  Service BRU and  the Alaska State Council  on the                                                             
Arts component in the Commissions and Boards BRU are "insignificant                                                             
in  this budget",  and  that  the Education  Support  Services  BRU                                                             
receives  a  reduction  of  $190,000  general  funds  for  personal                                                             
services and travel, according to the subcommittee report.                                                                      
                                                                                                                                
Senator Wilken told the Committee that the subcommittee recommended                                                             
the House of Representatives  proposal to replace $470,000  general                                                             
funds  with Alaska  Commission  on Postsecondary  Education  (ACPE)                                                             
funds and deleted $130,000 general funds for the Kotzebue Technical                                                             
Center BRU, Kotzebue Tech Operations Grants component.                                                                          
                                                                                                                                
Senator  Wilken  continued  that the  Alaska  Vocational  Technical                                                             
Center  (AVTEC) BRU,  AVTEC Operations  component  is suggested  to                                                             
receive $75,000  fewer general funds  from the FY 02  appropriation                                                             
and  the  Mt.  Edgecumbe  Boarding  School  BRU  and  component  is                                                             
suggested to  receive a reduction  of $50,000 general  funds; these                                                             
are to be taken from personal services and travel.                                                                              
                                                                                                                                
Senator  Wilken stated the  State Facilities  Maintenance BRU,  EED                                                             
State Facilities Rent component would maintain the FY 02 Management                                                             
Plan level of funding under the subcommittee's proposed budget.                                                                 
                                                                                                                                
Senator  Wilken   pointed  out  the  subcommittee   recommends  the                                                             
elimination  of the  Statewide  Library Electronic  Doorway  (SLED)                                                             
program  within  the  Alaska  Library   and  Museums  BRU,  Library                                                             
Operations component.  He stated this  could result in the  loss of                                                             
one position at the University of Alaska-Fairbanks; however, "given                                                             
the budget constraints  this may be the time to find  other ways to                                                             
fund SLED".                                                                                                                     
                                                                                                                                
Senator  Wilken  noted  funding for  the  Student  Loan  Operations                                                             
component  and  the Washington,  Wyoming,  Alaska,  Montana,  Idaho                                                             
(WWAMI)  Medical Education  component in  the Alaska  Postsecondary                                                             
Education Commission BRU are transfers.                                                                                         
                                                                                                                                
Senator  Wilken detailed  a  handout he  provided,  which reads  as                                                             
follows.                                                                                                                        
                                                                                                                                
     FY 03 K-12 Public Education GF Requirement                                                                                 
          Change from FY 02 to FY 03                                                                                            
          Based on Per Student Value of $4,010 per student                                                                      
          (dollars expressed in 1000s)                                                                                          
                                                                                                                                
     FY 02  Enrollment and Authorized Funding                                                                                   
        Total Average Daily Membership                        133,304                                                           
        Total K-12 Education General Fund State Support                                                                         
          (including LOGs)                                 $663,781.0                                                           
                                                                                                                                
     FY 03  Projected Enrollment and Funding                                                                                    
        Projected Total Average Daily Membership                                                                                
          (Plus 151 New Students)                             133,455                                                           
        Projected K-12 Education General Fund State Support                                                                     
          (including LOGs)                                  656,921.9                                                           
                                                                                                                                
               Change from FY 02 to FY 03                  ($6,859.1)                                                           
                                                                                                                                
     FY 03  K-12 Education Funding Formula                                                                                      
        Increased General Fund Requirement                                                                                      
          Increase State Support due to                                                                                         
             Increase Enrollment                                                                                                
             (151 Students)                    $764.4                                                                           
          Decrease in Federal Impact Aid                                                                                        
             Deductible                         $94.9                                                                           
          Increase of Quality School Grant                                                                                      
             due to New Student Enrollment       $7.8                                                                           
               Total Increased General Fund Requirement       $867.1                                                            
                                                                                                                                
     Decreased General Fund Requirement                                                                                         
          Increase in Required Local Taxpayer                                                                                   
             Effort                                                                                                             
             (4 mils/45% of Basic Need)    ($5,916.6)                                                                           
          Transition Supplemental Funding  ($1,143.9)                                                                           
          Increase in Public School Trust                                                                                       
             Fund Support                                                                                                       
             (Results in GF Savings)          ($665.7)                                                                          
               Total Decreased General Fund Requirement  ($7,726.2)                                                             
                                                                                                                                
     Net General Fund Requirement                        ($6,859.1)                                                             
                                                                                                                                
Senator Wilken suggested the fund savings reflected above should                                                                
remain in the K-12 Education BRU.                                                                                               
                                                                                                                                
Senator Wilken then addressed the FY 02 Supplemental budget, noting                                                             
a  $498,000 request  for  contractual  obligations  to McGraw  Hill                                                             
relating to the high school graduation  and benchmark examinations,                                                             
of which he is "fully supportive".                                                                                              
                                                                                                                                
Senator Wilken next spoke to proposed intent language to accompany                                                              
the following components and to read as follows.                                                                                
                                                                                                                                
     Teaching and Learning Support                                                                                              
     Teaching Certification                                                                                                     
          Conditional Language                                                                                                  
          The  amount appropriated  by this appropriation  includes                                                             
          the unexpended  and unobligated balance on June 30, 2002,                                                             
          of  the Department  of  Education and  Early  Development                                                             
          receipts   from  teacher  certification   fees  under  AS                                                             
          14.20.020(c).                                                                                                         
                                                                                                                                
     Alyeska Central School                                                                                                     
          Intent                                                                                                                
          It is the intent  of the legislature that Alyeska Central                                                             
          School  adopt course fees  for its summer school  program                                                             
          that  will encourage  high  school  students to  complete                                                             
          required  course assignments and to help  offset the cost                                                             
          of course materials and instruction.                                                                                  
          It  is also the  intent of the  legislature that  Alyeska                                                             
          Central   School  provide  a  partial  fee   refund  upon                                                             
          successful course completion.                                                                                         
                                                                                                                                
     AK Vocational Technical Center                                                                                             
          Intent                                                                                                                
          It  is  the intent  of  the legislature  that  the  $75.0                                                             
          personal services  and travel reduction not result in the                                                             
          cancellation  or delay of  the Certified Nurse  Assistant                                                             
          Training   Program  offered  by  the  Alaska   Vocational                                                             
          Technical Center.                                                                                                     
                                                                                                                                
Senator Wilken listed the "head count of this budget" is "plus 12",                                                             
although  there  is  no  general  fund  increase.  He  stated  that                                                             
approximately 20 were requested and all generally funded increments                                                             
were denied, with the approved increases funded with federal funds.                                                             
                                                                                                                                
Senator Wilken told of an error  of $130,000 in the FY 02 operating                                                             
budget  regarding SB  133  and relating  to assessment  of  special                                                             
education children. He explained the 24-hour time lapse between the                                                             
budget closeout  and passage of SB  133. He referenced a  letter he                                                             
authored addressed to Co-Chair  Donley addressing this matter [Copy                                                             
not provided] and informed that the same amount is contained in the                                                             
subcommittee's  recommendation  for  FY 03.  He remarked  that  the                                                             
Division  of  Legislative  Finance  agrees this  amount  should  be                                                             
included in the FY 03 operating budget.                                                                                         
                                                                                                                                
Department of Law                                                                                                             
                                                                                                                                
Senator Wilken, Chair                                                                                                           
Senator Taylor                                                                                                                  
Senator Ellis                                                                                                                   
                                                                                                                                
Senator Wilken  listed the  total agency expenditures  in FY  01 at                                                             
$26,515,400;  $26,737,100   in  FY  02,  and  the  Senate  Majority                                                             
established amount for FY 03 of $25,132,900.                                                                                    
                                                                                                                                
Senator  Wilken   cited  recommended   funding  amounts   from  the                                                             
spreadsheet  titled "Department of  Law, Considered by  the Finance                                                             
Subcommittee on April 12, 2002, General Purpose Fund Group Only" as                                                             
follows.                                                                                                                        
                                                                                                                                
     Office of the  Attorney General            ($161,500)                                                                      
     Criminal Division                        $13,558,800                                                                       
     Civil Division                            $7,309,800                                                                       
     Statehood Defense                         $1,114,500                                                                       
     Oil & Gas Litigation  and Legal Services  $2,721,300                                                                       
     Administration  and Support                 $590,000                                                                       
                                                                                                                                
Senator Wilken next referenced  the Change Detail spreadsheet [copy                                                             
on file],  indicating that it  summarizes the Governor's  requested                                                             
amounts compared to the subcommittee recommendations.                                                                           
                                                                                                                                
Senator  Wilken stated  the  subcommittee  recommendations  include                                                             
three additional positions.                                                                                                     
                                                                                                                                
Department of Revenue                                                                                                         
                                                                                                                                
Senator Leman, Chair                                                                                                            
Senator Phillips                                                                                                                
Senator Ellis                                                                                                                   
                                                                                                                                
Senator  Leman appreciated  the constructive  assistance from  this                                                             
Department in developing the subcommittee budget recommendation.                                                                
                                                                                                                                
Senator Leman listed the Governor's  proposed FY 03 budget for this                                                             
Department  is $12.7 million,  the FY 02  Management Plan  is $12.4                                                             
million  and  the  FY 03  Senate  Majority  established  amount  is                                                             
approximately $11.7.                                                                                                            
                                                                                                                                
Senator Leman stated the subcommittee recommendation "generally did                                                             
not fund the general fund increment requests".                                                                                  
                                                                                                                                
Senator  Leman suggested  that the  full Senate  Finance  Committee                                                             
consider  the  Alcohol  Beverage  Control (ABC)  Board  request  of                                                             
funding for additional enforcement.  He opined this is a reasonable                                                             
request,  but that  given  the budget  limitations  imposed by  the                                                             
Senate Majority, the decision whether  to fund it could not be made                                                             
at the subcommittee level.                                                                                                      
                                                                                                                                
Senator Leman continued that the  subcommittee recommends accepting                                                             
the $432,000 savings  of the Permanent Fund Corporation.  He stated                                                             
the subcommittee also recommends  authorizing allocation of federal                                                             
receipts  as requested by  the Alaska  Housing Finance  Corporation                                                             
(AHFC)  for temporary  labor, although  the  subcommittee does  not                                                             
recommend  the  additional  positions   and  instead  suggests  the                                                             
Department  employ  an  outside  contractor.  He  commented  he  is                                                             
"hesitant" to increase  staffing utilizing non-continuing  funding.                                                             
                                                                                                                                
Senator Leman next addressed the  Long Term Care Ombudsman, stating                                                             
the subcommittee recommends fully funding this position and support                                                             
staff positions.                                                                                                                
                                                                                                                                
Senator  Leman pointed  out the  Division  of Treasury,  Investment                                                             
Officer  salary increases  request  is funded  in the  subcommittee                                                             
recommendation as well. He commented that a valid argument was made                                                             
to  maintain the  salaries of  these  positions at  a level  close,                                                             
although not equal, to counterparts in private industry; this is to                                                             
avoid "hemorrhaging" of the State's top investment officers.                                                                    
                                                                                                                                
Department of Law (cont.)                                                                                                     
                                                                                                                                
Senator  Wilken clarified  the  subcommittee  recommendation of  an                                                             
unallocated  reduction  of  $506,300  to  the  Office  of  Attorney                                                             
General. He  explained this includes  funding for salary  increases                                                             
plus an additional $40,700 reduction.  He summarized the allocation                                                             
to this BRU would be $344,800 according  to the subcommittee report                                                             
and  the reduction  of $506,300  "would  be spread  throughout  the                                                             
budget, which  when you  net it out,  shows the negative  $161,500"                                                             
reflected on the spreadsheet.                                                                                                   
                                                                                                                                
Co-Chair Donley noted a large increment of this Department's budget                                                             
has traditionally been for oil and gas litigation activities and he                                                             
noted the subcommittee proposes  reduced funding for this. He asked                                                             
if the activities are "winding  down" and inquired as to the nature                                                             
of Department testimony to the subcommittee on this matter.                                                                     
                                                                                                                                
Senator Wilken stated  the subcommittee recommends  the same amount                                                             
as approved  by the House  of Representatives.   He qualified  that                                                             
funding for this  BRU is estimated each year and, if  inadequate, a                                                             
supplemental appropriation is made.                                                                                             
                                                                                                                                
                                                                                                                                
SFC 02 # 58, Side B 04:55 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair Donley understood the same.                                                                                            
                                                                                                                                
Senator Wilken  stressed this is  an important expenditure  because                                                             
these efforts generate more than  expended. He agreed with Co-Chair                                                             
Donley that the BRU  requires less funding since the  resolution of                                                             
the 1995 "tax issue".                                                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Dave Donley adjourned the meeting at 04:56 PM                                                                          

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