Legislature(2009 - 2010)

04/03/2009 01:04 PM FIN

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* first hearing in first committee of referral
+ teleconferenced
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                  SENATE FINANCE COMMITTEE                                                                                      
                       April 3, 2009                                                                                            
                         1:04 p.m.                                                                                              
1:04:51 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stedman called the Senate  Finance Committee meeting                                                                   
to order at 1:04 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Johnny Ellis                                                                                                            
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Jay Livey,  Staff, Senator  Lyman Hoffman; JoEllen  Hanrahan,                                                                   
Senior  Policy  Analyst,  Office of  Budget  and  Management,                                                                   
Office of the  Governor; Larry Persily, Staff,  House Finance                                                                   
Committee;  Guy Bell,  Assistant  Commissioner and  Director,                                                                   
Division of Administrative Services,  Department of Labor and                                                                   
Workforce  Development; Eric Swanson,  Director, Division  of                                                                   
Administrative   Services,  Department   of   Administration;                                                                   
Amanda Ryder, Director, Division  of Administrative Services,                                                                   
Department of  Commerce, Community and Economic  Development;                                                                   
Les Morse, Deputy  Commissioner, Office of  the Commissioner,                                                                   
Department of Education and Early Development.                                                                                  
PRESENT VIA TELECONFERENCE                                                                                                    
SB 88     POWER COST EQUALIZATION                                                                                               
          SB 88 was REPORTED out of Committee with a "do                                                                        
          pass" recommendation and with attached new fiscal                                                                     
          note by the Department of Commerce, Community and                                                                     
          Economic Development.                                                                                                 
SB 161    APPROPS: NON-TRANSPORTATION STIMULUS                                                                                  
          SB 161 was HEARD and HELD in Committee for further                                                                    
SENATE BILL NO. 88                                                                                                            
     "An  Act   repealing  certain  provisions   relating  to                                                                   
     modifying  the  factors  that  apply  to  calculate  the                                                                   
     amount  of power  cost  equalization;  providing for  an                                                                   
     effective date  by repealing the effective  date of sec.                                                                   
     3, ch.  2, 4SSLA  2008; and  providing for an  effective                                                                   
1:05:40 PM                                                                                                                    
Co-Chair  Stedman   gave  an  overview  of   history  of  the                                                                   
JAY  LIVEY,   STAFF,  SENATOR  LYMAN  HOFFMAN,   provided  an                                                                   
overview  of the provisions  of the  Power Cost  Equalization                                                                   
(PCE) program.  The program  makes electricity affordable  to                                                                   
Alaskans. The law stipulates that  up to 500 kWh per month is                                                                   
eligible for PCE  assistance. The program is  administered by                                                                   
both the  Alaska Energy  Authority (AEA)  and the  Regulatory                                                                   
Commission  of  Alaska  (RCA);  RCA  takes  information  from                                                                   
utilities companies  and establishes  the PCE rate  according                                                                   
to statute.                                                                                                                     
Mr. Livey  explained  that the  bottom of the  rate range  is                                                                   
established by  averaging the cost of electricity  in Juneau,                                                                   
Anchorage,   and  Fairbanks;   the  top   of  the  range   is                                                                   
established in statute. The assistance  provided by PCE is 95                                                                   
percent. During  the special session,  a law was  passed that                                                                   
established the  top rate at $1.00  per kWh for one  year. If                                                                   
SB 88 did not pass, the one-year  change would revert back to                                                                   
the statutory  top rate of  $0.52 per  kWh and lower  rate of                                                                   
12.3 cents/kWh. Citizens in villages  would pay full cost for                                                                   
kWh  above  $0.52.  The  current rate  in  many  villages  is                                                                   
approximately  $0.65 to  $0.75. Therefore,  PCE would  make a                                                                   
significant difference  in energy  bills for rural  Alaskans.                                                                   
If SB  88 passes,  the upper rate  of $1.00/kWh would  become                                                                   
permanent  and provide  more dependable  assistance in  rural                                                                   
1:10:06 PM                                                                                                                    
Co-Chair Stedman noted that the  program applied to the first                                                                   
500 kWh,  the usage amount for  basic electric needs  such as                                                                   
lights  and electric  appliances, and  only a  little bit  of                                                                   
heating cost. Mr. Livey agreed.                                                                                                 
Co-Chair Hoffman MOVED to report  SB 88 out of Committee with                                                                   
individual recommendations and  the accompanying fiscal note.                                                                   
SB  88  was  REPORTED  out of  Committee  with  a  "do  pass"                                                                   
recommendation  and  with attached  new  fiscal  note by  the                                                                   
Department of Commerce, Community and Economic Development.                                                                     
SENATE BILL NO. 161                                                                                                           
     "An Act  making supplemental appropriations  and capital                                                                   
     appropriations;  amending appropriations;  and providing                                                                   
     for an effective date."                                                                                                    
Co-Chair  Stedman introduced  SB  161 as  appropriating  non-                                                                   
transportation federal stimulus funds.                                                                                          
1:11:58 PM                                                                                                                    
JOELLEN  HANRAHAN, SENIOR  POLICY ANALYST,  OFFICE OF  BUDGET                                                                   
AND  MANAGEMENT,  OFFICE  OF THE  GOVERNOR,  noted  that  the                                                                   
legislation included operating  items that could increase the                                                                   
operating budget.                                                                                                               
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT (DLWD)                                                                          
GUY BELL,  ASSISTANT COMMISSIONER  AND DIRECTOR,  DIVISION OF                                                                   
ADMINISTRATIVE  SERVICES, DEPARTMENT  OF LABOR AND  WORKFORCE                                                                   
DEVELOPMENT (DLWD), spoke to DLWD items in the legislation.                                                                     
     Item 19   Employment Training Services                                                                                     
     These funds  will be used  to hire an additional  8 full                                                                   
     time, front-line  service delivery staff to  assist with                                                                   
     the  increased volume  of labor  exchange customers  and                                                                   
     unemployment   insurance   claimants.   Six   Employment                                                                   
     Security  Specialist  II  positions (qualified  in  case                                                                   
     management)  will provide  job search assistance,  labor                                                                   
     market   information,   case   management,   and   other                                                                   
     reemployment services in  the job centers. Two Community                                                                   
     Development  Specialist  positions will  provide  career                                                                   
     support and training services  to unemployment insurance                                                                   
     claimants who  need training to upgrade  skills in order                                                                   
     to  obtain  employment. Funding  will  also  be used  to                                                                   
     support  salary  and benefit  costs  of existing  staff,                                                                   
     travel for  trainers, enhancements  to the Alaska  Labor                                                                   
     Exchange System (ALEXsys)  and equipment replacement and                                                                   
     upgrade  to support the  federal Stimulus effort.  These                                                                   
     efforts   include  continuing   to  provide   front-line                                                                   
     employment   and  reemployment   services,  and   career                                                                   
     support  and training services,  to an increased  volume                                                                   
     of  labor exchange  customers.  The outcome  will be  to                                                                   
     increase  the   number  of  customers   receiving  staff                                                                   
     assisted services by approximately 2,250.                                                                                  
Mr. Bell  added that  the department  intended to delete  the                                                                   
eight positions once the stimulus funds are depleted.                                                                           
Co-Chair  Stedman discussed  the  number  of full-time  state                                                                   
employees and  emphasized the importance of keeping  track of                                                                   
the  new  positions.  Mr. Bell  reiterated  the  department's                                                                   
intent to delete  the positions once the funds  were gone. He                                                                   
added that the department had  gone from 241 to 220 full-time                                                                   
positions  in the division.  The division,  which is  largely                                                                   
federally funded,  tends to shrink when the  economy is good.                                                                   
Service  levels increase  when  more people  are looking  for                                                                   
1:16:37 PM                                                                                                                    
Co-Chair  Stedman asked  for more  information regarding  the                                                                   
vacant  positions.  Mr.  Bell   stated  that  the  department                                                                   
preferred  to reduce through  attrition,  though one  year it                                                                   
had  to lay  off  20  individuals  in addition  to  attrition                                                                   
LARRY PERSILY,  STAFF, HOUSE  FINANCE COMMITTEE,  stated that                                                                   
the House Finance  Committee (HFIN) had no problems  with the                                                                   
item. The committee considered  the eight positions necessary                                                                   
because  of  rising  unemployment.  He  emphasized  that  the                                                                   
positions were fully covered by the stimulus funds.                                                                             
Mr. Bell continued with the next item.                                                                                          
     Item 20   Employment Training Services                                                                                     
     Funding will support additional  training and employment                                                                   
     opportunities   for   unemployed   low-income   seniors.                                                                   
     Grantees  will expand  the  number  of Senior  Community                                                                   
     Service   Employment   Program    (SCSEP)   participants                                                                   
     assigned to community service  work, especially in those                                                                   
     growth industries emphasized  in the Recovery Act (e.g.,                                                                   
     health care,  child care, education, green  jobs, energy                                                                   
     efficiency and  environmental services) and  in expanded                                                                   
     public  service  activities  that utilize  Recovery  Act                                                                   
     funds. The  funds will be  used to provide  high quality                                                                   
     job   training,  on-the-job   training  and   employment                                                                   
     assistance to  an estimated 80 low income  older workers                                                                   
     and  will  assist  employers  that are  faced  with  the                                                                   
     challenges of today's workplace.                                                                                           
Mr. Bell detailed  that the program was for  individuals over                                                                   
55 years of  age who meet criteria such as  being low-income.                                                                   
The  intention  of the  funding  is  that the  workers  would                                                                   
transition  from  subsidized   employment  to  non-subsidized                                                                   
employment. The  program requires a ten percent  state match;                                                                   
existing  funds have been  identified  in the state  training                                                                   
and employment program for the match.                                                                                           
1:18:57 PM                                                                                                                    
Mr. Bell presented the next item.                                                                                               
     Item 21   Unemployment Insurance                                                                                           
     Funds  will   be  used  to  upgrade  computers   on  the                                                                   
     department's  annual replacement  schedule,  UI tax  and                                                                   
     benefit  program enhancements,  software and  associated                                                                   
     data processing  costs, and office equipment.  The funds                                                                   
     will  support  a  UI claim  center  phone  call  routing                                                                   
     software package  along with licensing  and installation                                                                   
     charges.  They   will  also  purchase  a   Tax  auditing                                                                   
     software  package;  web   based  Quality  Control  audit                                                                   
     software; software  to record and retrieve  claim center                                                                   
     calls  for   staff  performance  review;   software  for                                                                   
     managing  UI workflow and  documentation processes;  and                                                                   
     computer  enhancements to  existing Employment  Security                                                                   
     Division on-line systems integration.                                                                                      
Mr.  Bell stated  that  the department  intended  to use  the                                                                   
funds  for   short-term  improvements   or  improvements   to                                                                   
technology  to   increase  the  efficiency   of  unemployment                                                                   
insurance (UI) services.                                                                                                        
Co-Chair Stedman  queried the item's relationship  to SB 170,                                                                   
another piece  of legislation that modifies the  UI statutes.                                                                   
Mr.  Bell  answered  that  the  funding in  item  21  is  not                                                                   
connected with the funding that  would be available if SB 170                                                                   
were enacted.                                                                                                                   
Mr. Persily  noted that  HFIN had no  problems with  the item                                                                   
and saw  it as a  good one-time use  of the federal  stimulus                                                                   
1:20:25 PM                                                                                                                    
Mr. Bell continued with the next item.                                                                                          
     Item 22   Business Services                                                                                                
     Additional   funding  will   be  utilized  to   increase                                                                   
     workforce  development  training  opportunities  in  the                                                                   
     Workforce  Investment Act  programs for Adult  $1,679.5,                                                                   
     Dislocated Worker $3,546.4,  and Youth $3,936.1. It will                                                                   
     be used for personal services  to support existing staff                                                                   
     engaged  in  Stimulus  related   activities,  travel  to                                                                   
     monitor grantees,  commodities and contractual  services                                                                   
     for  normal   office  and   staff  related   costs,  and                                                                   
     contractual   services  and   grant  funds  to   provide                                                                   
     training.   It   is  estimated   to   provide   training                                                                   
     opportunities   to   an   additional  729   Adult,   733                                                                   
     Dislocated Worker and 1,681 Youth participants.                                                                            
Mr. Bell explained  that the basic purpose of the  item is to                                                                   
offer  training   opportunities  to  unemployed   and  under-                                                                   
employed Alaskans  and to enhance their skills  and make them                                                                   
more marketable. The youth funding  in particular would focus                                                                   
on summer  job opportunities  for low-income, at-risk  youth;                                                                   
adult funds  would target low-income  adults. The  funding is                                                                   
available for  a period of two  years; DLWD intends  to offer                                                                   
short-duration   training  that   would   make  people   more                                                                   
employable after the program.                                                                                                   
Co-Chair Stedman  affirmed that  the program would  return to                                                                   
existing levels after the two  years. Mr. Bell noted that the                                                                   
department  receives  influxes  of  federal  programming  for                                                                   
different  short-term  purposes,  such  as when  the  falling                                                                   
prices  of  salmon  resulted in  an  increase  of  unemployed                                                                   
fishermen.  The department  is  accustomed  to responding  to                                                                   
such circumstances and then returning to the status quo.                                                                        
Mr. Persily  reported that  HFIN had spent  a fair  amount of                                                                   
time discussing the youth summer  employment program, and was                                                                   
satisfied that  the program would  make good use of  the one-                                                                   
time boost in funding.                                                                                                          
Mr. Bell continued with the next item.                                                                                          
     Item 23   Client Services                                                                                                  
     Funding will provide vocational  rehabilitation services                                                                   
     and  grants  to  disabled  individuals.  These  services                                                                   
     include  assessment  for   determining  eligibility  for                                                                   
     services,  job  development,  orientation  and  mobility                                                                   
     services, and supported employment services.                                                                               
Mr.   Bell  explained   that  the   Division  of   Vocational                                                                   
Rehabilitation will  focus on enhancing job  preparedness for                                                                   
disabled individuals  and would also improve  technology used                                                                   
by both staff and customers.                                                                                                    
Mr. Persily noted  that no state match was  required with the                                                                   
1:24:07 PM                                                                                                                    
Mr. Bell discussed the next item.                                                                                               
     Item 24   Employment and Training Services                                                                                 
     The  ARRA  [American  Recovery   and  Reinvestment  Act]                                                                   
     reauthorized   and   permanently  expanded   the   Trade                                                                   
     Adjustment Assistance program.  Eligibility was expanded                                                                   
     to include  workers in the  services sector.   The funds                                                                   
     will be utilized to support  salary and benefit costs of                                                                   
     existing   staff   to  provide   employment   and   case                                                                   
     management   services  to   increased  participants   to                                                                   
     include  comprehensive  and  specialized  assessment  of                                                                   
     skill  levels  and  service  needs;  development  of  an                                                                   
     individual employment plan;  information on how to apply                                                                   
     for financial aid; information  on training available in                                                                   
     local  and  regional  areas;   short-term  prevocational                                                                   
     services;   individual  career  counseling;   employment                                                                   
     statistics  information;  and  information  relating  to                                                                   
     local occupations  that are  in demand and  the earnings                                                                   
     potential  of such occupations.  In addition,  the Trade                                                                   
     Adjustment Assistance database  will need to be upgraded                                                                   
     as mandated  by new  federal regulations. The  estimated                                                                   
     outcome   is  115   participants   will  utilize   Trade                                                                   
     Adjustment  Assistance  program  benefits  such  as  job                                                                   
     search   activities,  relocation   benefits,   training,                                                                   
     health   care  tax   credits   and  trade   readjustment                                                                   
     allowance benefits.                                                                                                        
Mr.  Bell  pointed   out  that  there  was   no  state  match                                                                   
requirement. The program was expanded  in the stimulus act to                                                                   
provide assistance  to people  who are unemployed  because of                                                                   
competition  created  by  foreign   trade.  The  program  was                                                                   
expanded  to include  the  service sector  as  well to  allow                                                                   
communities  to   apply  for  funding.  He   noted  that  the                                                                   
department  is  waiting  for more  guidance  related  to  the                                                                   
Mr.  Persily  reported  that  HFIN had  no  issues  with  the                                                                   
appropriation  and noted  that  the program  was an  existing                                                                   
1:25:44 PM                                                                                                                    
Mr. Bell turned to the department's last item.                                                                                  
     Item 25   Independent Living Rehabilitation                                                                                
     These  funds will  be granted  to the  four Centers  for                                                                   
     Independent  Living (CILs)  to  support activities  that                                                                   
     lead to  competitive employment, independent  living and                                                                   
     business  ownership   by  Alaskans  with   disabilities.                                                                   
     Activities   include   providing    home   accessibility                                                                   
     modifications,  adaptive equipment and/or  services that                                                                   
     allow people  to remain in their homes  and communities.                                                                   
     Funds  will also  be used to  expand independent  living                                                                   
     services statewide, including  rural and remote areas of                                                                   
     the  state, by  encouraging partnerships,  collaborative                                                                   
     efforts, training and outreach.                                                                                            
     The  funds will  also support  operations  of the  State                                                                   
     Independent Living  Council (SILC), examining  the State                                                                   
     Plan for  Independent Living resource plan  to determine                                                                   
     if it needs to be updated.                                                                                                 
Mr. Bell  detailed  that the purpose  of the  program was  to                                                                   
assist   individuals  with   severe   disabilities  to   live                                                                   
independently.   The  department   administers  grants   with                                                                   
multiple entities in Alaska that provide the services.                                                                          
Mr. Persily reported  that HFIN had learned a  lot more about                                                                   
labor programs.                                                                                                                 
Mr. Bell directed  attention to another item not  on the list                                                                   
related to SB 170. He explained  an ARRA provision that gives                                                                   
incentive  to  modernize  UI systems.  States  need  to  meet                                                                   
various  conditions to  receive the funds.  The total  amount                                                                   
available  to   Alaska  would   be  $15.6  million.   If  the                                                                   
conditions  of the  provision were  met, the  funds would  be                                                                   
deposited in the  Alaska UI trust. The Department  of Law has                                                                   
determined that  one statutory change  would need to  be made                                                                   
to  Alaska law  in order  to pursue  the funding,  to add  an                                                                   
alternate base period in qualifying individuals for UI.                                                                         
Co-Chair Stedman  asked if  DLWD supported  SB 170.  Mr. Bell                                                                   
stated that  the department  did not have  a position  on the                                                                   
1:28:11 PM                                                                                                                    
Co-Chair  Stedman  asked  if  the  department  would  have  a                                                                   
position.  Mr. Bell  replied that  he would  get back to  the                                                                   
Senator Huggins  asked if  SB 170  would cost employers  more                                                                   
money. Mr. Bell  reported that the department  had calculated                                                                   
that there  would be  a relative  increase to employers,  but                                                                   
the analysis was not complete.                                                                                                  
Mr. Persily added that there would  be a cost to employers of                                                                   
approximately $10 per worker if  the legislature were to take                                                                   
the  take the  entire $15.6  million and  appropriate it  out                                                                   
immediately  to  improvements  in the  unemployment  and  job                                                                   
center  programs. Rates  would still  go down,  but would  go                                                                   
down less.  Keeping the funds  in the trust where  they would                                                                   
earn interest  would negate  the need  for employer  taxes to                                                                   
unemployment.  The HFIN CS  to HB 199  (the equivalent  to SB
170)  did  not  make  appropriations;  with  passage  of  the                                                                   
legislation,  the $15  million  will flow  directly into  the                                                                   
trust  and  start  earning  money.   At  a  later  date,  the                                                                   
legislature  could  appropriate  out  of  the  fund.  In  the                                                                   
meantime, the fund would be protected.                                                                                          
1:30:41 PM                                                                                                                    
Ms. Hanrahan warned  the committee that the  operating budget                                                                   
increase would  be sizeable, at  least $15 million,  but that                                                                   
services would  be expanded. The  number of people  receiving                                                                   
unemployment  would be  increased. She  pointed out  that the                                                                   
services would  end abruptly  when the money  is gone  in two                                                                   
years. Funding for the trade adjustment  program is scheduled                                                                   
to end in two years, although the law will not change.                                                                          
Co-Chair  Stedman  concurred  with  concern  about  operating                                                                   
budget increases.                                                                                                               
1:32:34 PM                                                                                                                    
DEPARTMENT OF ADMINISTRATION                                                                                                  
ERIC SWANSON, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT  OF  ADMINISTRATION,  described  the  department's                                                                   
first item.                                                                                                                     
     Item 1    Premium Assistance for COBRA Benefits                                                                            
     This provides  for a federally funded subsidy  for COBRA                                                                   
     health   insurance  coverage   to  assistance   eligible                                                                   
     individuals (AEIs). AEI is  defined as an individual who                                                                   
     is  involuntarily  terminated  from  employment  between                                                                   
     September 1,  2008 and December 31, 2009,  who elects to                                                                   
     receive COBRA  coverage and pays 35% of  the premium due                                                                   
     as of  March 1,  2009. The  employer pays the  remaining                                                                   
     65%  of the  premium and  is reimbursed  by the  federal                                                                   
     government  by withholding  premiums  paid from  payroll                                                                   
     taxes reported on the quarterly 941 employer tax form.                                                                     
Mr. Swanson  added that  the program  provides for  a maximum                                                                   
coverage period  of nine months,  has specific  beginning and                                                                   
ending dates,  and would not  continue after September  2010.                                                                   
The $1,489,000 is the department's estimate of costs.                                                                           
Co-Chair   Stedman  queried   the   mailing  of   information                                                                   
regarding the  item. Mr. Swanson  was not aware of  a mailing                                                                   
and offered to get information.                                                                                                 
Mr.  Persily  noted  HFIN's  understanding   that  under  the                                                                   
stimulus  act,  the federal  government  would  subsidize  65                                                                   
percent of the  COBRA premium for laid-off workers,  and that                                                                   
the employer would  initially pay the money  to the insurance                                                                   
company,  but  immediately  take  a  credit  against  payroll                                                                   
taxes. The net  effect would be no cost to the  state for the                                                                   
program. In addition, the program is federally required.                                                                        
Mr.  Swanson  reported  that the  department  concurred  with                                                                   
HFIN's conclusions.                                                                                                             
Mr. Swanson turned  to item 2, $149,000 for  the Crime Victim                                                                   
Compensation  Grant. The  funding has  been allocated  to the                                                                   
state through  ARRA and  offers compensation  to victims  and                                                                   
survivors  of  criminal  violence.   He  commented  that  the                                                                   
funding  cannot be  used to  supplant  existing funding.  The                                                                   
grant is available for use until September 2012.                                                                                
Mr. Persily reported that HFIN had no issue with the item.                                                                      
1:35:55 PM                                                                                                                    
Senator  Huggins   confirmed  that  state  money   cannot  be                                                                   
supplanted with  federal money. He emphasized  the importance                                                                   
that the  ARRA funds  are to stimulate  and not supplant  the                                                                   
1:37:00 PM                                                                                                                    
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT                                                                    
AMANDA RYDER, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT OF  COMMERCE, COMMUNITY AND ECONOMIC  DEVELOPMENT,                                                                   
turned attention to first item.                                                                                                 
     Item 3    Alaska State Community Services Commission                                                                       
     Funding will provide grants to existing AmeriCorps                                                                         
     grantees for performing volunteer programs.                                                                                
Ms. Ryder explained that the grants  would be awarded to non-                                                                   
profits  to  promote  volunteer   programs  meeting  critical                                                                   
community needs in education,  public safety, health, and the                                                                   
environment.  The grants  could be used  for activities  like                                                                   
tutoring, mentoring youth, and assisting crime victims.                                                                         
Co-Chair  Stedman  asked what  would  happen  after the  $1.5                                                                   
million was  expended. Ms. Ryder  assured the  committee that                                                                   
the  non-profits are  aware  of the  one-time  nature of  the                                                                   
funding. She  gave the example  of a summer program  that the                                                                   
Sitka School District would provide.                                                                                            
Mr. Persily said HFIN had no issues with the item.                                                                              
1:39:11 PM                                                                                                                    
Senator  Huggins asked  for the grant  number for  AmeriCorps                                                                   
program. Ms. Ryder  replied that the existing  program is for                                                                   
approximately $3  million in the operating budget;  there are                                                                   
five sub-grantees.  Only two sub-grantees are  applying for a                                                                   
portion of the  $1.5 million; the other three  decided not to                                                                   
apply. She  noted that  there may  be other opportunities  to                                                                   
apply for the funds at a later date.                                                                                            
Senator Huggins expressed concern  that people were not aware                                                                   
of opportunities  to  apply. He  questioned whether  Alaskans                                                                   
would benefit  from the clearinghouse nature  of the funding.                                                                   
Ms. Ryder  assured him that  the five sub-grantees  were very                                                                   
knowledgeable of  the process, but  have chosen not  to apply                                                                   
for various reasons.                                                                                                            
1:41:39 PM                                                                                                                    
     Item 32   Community Development Block Grant Program                                                                        
     This program  provides grants  (not to exceed  $850,000)                                                                   
     to    municipalities     for    planning     activities,                                                                   
     infrastructure   projects,   and  economic   development                                                                   
     activities   which  benefit   low-  to   moderate-income                                                                   
Ms.   Ryder  explained   that   the  grants   would  be   for                                                                   
municipalities to  create suitable and affordable  housing as                                                                   
well as  economic opportunities  for qualifying  individuals.                                                                   
The program  is an  existing capital  program to which  funds                                                                   
were added.                                                                                                                     
Mr. Persily said that HFIN had no issues with the item.                                                                         
     Item 33   Community Services Block Grant Program                                                                           
     The  CSBG program  is  designed to  provide  a range  of                                                                   
     services  which  assist   low-income  people  to  attain                                                                   
     skills,  knowledge and motivation  necessary to  achieve                                                                   
     self-sufficiency.  The  program  may also  provide  low-                                                                   
     income people  immediate life necessities such  as food,                                                                   
     shelter, medicine, etc. As  authorized by federal Public                                                                   
     Law  97-35,  the U.S.  Department  of Health  and  Human                                                                   
     Services  (H&HS)  has designated  950  Community  Action                                                                   
     Agencies (CAAs) -- all of  whom may then receive federal                                                                   
     funding  that  passes through  their  appropriate  state                                                                   
     agency.  Within Alaska the  federal H&HS has  designated                                                                   
     only one CAA. That entity  is the non-profit corporation                                                                   
     Rural Alaska  Community Action  Program, referred  to as                                                                   
     RurAL CAP.                                                                                                                 
Ms. Ryder  detailed that  the funds used  by RurAL  CAP would                                                                   
provide  energy  burden  reduction   and  Alaska  foreclosure                                                                   
prevention.  The   energy  burden  reduction  would   be  for                                                                   
weatherization   in  25  rural   communities  that   are  not                                                                   
currently  receiving  weatherization funds.  The  foreclosure                                                                   
prevention  funds will  be used for  financial counseling  to                                                                   
traditional homeowners in Anchorage,  Palmer, Wasilla, Kenai,                                                                   
Soldotna,  and  Homer. The  goal  is  also to  offer  at-home                                                                   
credit counseling services to more than 1,000 Alaskans.                                                                         
Co-Chair Stedman asked about funds  to Southeast Alaska.  Ms.                                                                   
Ryder replied that  she would ask RurAL CAP  how they planned                                                                   
to use the funds.                                                                                                               
Mr. Persily  reported that HFIN  had discussed the  plan with                                                                   
RurAL CAP and felt the money would be used well.                                                                                
1:44:16 PM                                                                                                                    
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT                                                                                 
LES MORSE, DEPUTY  COMMISSIONER, OFFICE OF  THE COMMISSIONER,                                                                   
DEPARTMENT  OF   EDUCATION  AND  EARLY  DEVELOPMENT   (DEED),                                                                   
informed  the  committee  that  the  first  four  items  were                                                                   
current  formula fund  programs.  The stimulus  law does  not                                                                   
change the programs, but provides additional funding.                                                                           
     Item 4    Student and School Achievement                                                                                   
     ESEA [Elementary and Secondary  Education Act] Title I-A                                                                   
     Grants to  LEAs and School Improvement Grants  will help                                                                   
     school districts  mitigate the  effect of the  reduction                                                                   
     in  local revenues  and State support  for education  by                                                                   
     distributing  funding to  schools  and school  districts                                                                   
     with  a  high percentage  of  students  from  low-income                                                                   
     families,   and  by  providing   funding  for   academic                                                                   
     assessment, LEA and school improvement.                                                                                    
Mr. Morse  explained that Title  I-A dollars are  intended to                                                                   
improve  academic achievement  for  low-income students.  The                                                                   
funds are given to local school districts.                                                                                      
     Item 5    Student and School Achievement                                                                                   
     ESEA  Title   II-D  Education  Technology   Grants  will                                                                   
     improve   student  achievement   through   the  use   of                                                                   
     technology in elementary and secondary schools.                                                                            
Mr.  Morse  detailed  that Title  II-D  provides  information                                                                   
technology dollars to improve student achievement.                                                                              
     Item 6    Student and School Achievement                                                                                   
     McKinney  Vento  Homeless  Assistance Grants  to  ensure                                                                   
     that  homeless  children,   including  preschoolers  and                                                                   
     youth,  have  equal  access   to  free  and  appropriate                                                                   
Mr. Morse  added that  the assistance can  be used  to ensure                                                                   
that students  who move  to different  homeless shelters  are                                                                   
able to stay in one school and get tutorial assistance.                                                                         
     Item 7    Student and School Achievement                                                                                   
     IDEA  [Individual  Disabilities  Education Act]  Part  B                                                                   
     (611  and 619)  Grants to  States,  Preschool Grants  to                                                                   
     provide  services  to students  with  disabilities  ages                                                                   
     three  through twenty-one  who are  enrolled in  special                                                                   
     education   programs.  The   state   will  receive   the                                                                   
     allocation as a grant and  pass-through to LEAs based on                                                                   
     the  number  of  children   with  disabilities  who  are                                                                   
     receiving  special   education  and  related   services.                                                                   
     Funding will  also be provided for services  to children                                                                   
     with   disabilities  ages   three   through  five   (and                                                                   
     optionally  to two-year olds  who turn three  during the                                                                   
     school year).  The state will receive the  allocation as                                                                   
     a grant  and pass-through  to LEAs based  on population,                                                                   
     including  consideration  for  the  number  of  children                                                                   
     living in poverty.                                                                                                         
Co-Chair Stedman  asked what would happen when  the money was                                                                   
expended. Mr. Morse  replied that the programs  would go back                                                                   
to  their  previous  levels,  although  there  are  reporting                                                                   
1:48:42 PM                                                                                                                    
Senator  Thomas supported  the grants  for homeless kids  and                                                                   
noted  problems  in keeping  consistent  school  records.  He                                                                   
asked if the grants would be used  to keep records. Mr. Morse                                                                   
responded that the intent is to  keep disruption to a minimum                                                                   
for   homeless  students,   so  keeping   records  would   be                                                                   
appropriate use of the money.                                                                                                   
Mr. Persily stated that HFIN had  discussed whether the state                                                                   
could  mandate by  statute how  the districts  could use  the                                                                   
money. The  U.S. Department  of Education  has said  that the                                                                   
states  may not  impose direction  on  school districts.  The                                                                   
House  Finance  Committee  put  intent  language  in  the  CS                                                                   
advising  districts to  look for  one-time expenditures  with                                                                   
long-term gains, and  not to expect the money  to be replaced                                                                   
with general funds in the future.                                                                                               
1:50:51 PM                                                                                                                    
In  response to  a  question by  Senator  Huggins, Mr.  Morse                                                                   
explained  that none of  the items  on the  list were  in the                                                                   
governor's proposal for stimulus funds.                                                                                         
Senator  Huggins asked  how  DEED communicates  the  one-time                                                                   
nature  of  the funds  to  the  school districts.  Mr.  Morse                                                                   
replied that  the districts  are asked to  sign off  on clear                                                                   
assurances. The  U.S. Department  of Education used  language                                                                   
that clearly  described the one-time  nature of  the funding.                                                                   
School  districts use  grants frequently  and understand  the                                                                   
nature of the grants.                                                                                                           
Senator  Huggins wondered  why the  state would  not want  to                                                                   
receive  the  stimulus  money  for  education.  Ms.  Hanrahan                                                                   
thought  it  was very  important  to  accept the  money.  She                                                                   
emphasized that the services would  abruptly end in two years                                                                   
unless the  general fund  was used to  fund them.  She wanted                                                                   
the public  to understand that  the money will delay  but not                                                                   
prevent layoffs in the school  systems. She stressed the need                                                                   
for public  discussion and  legislative oversight.  The state                                                                   
has little  control over how  the districts spend  the funds,                                                                   
although the state will be held fully accountable.                                                                              
1:55:40 PM                                                                                                                    
Senator Huggins asked if the administration  could adequately                                                                   
communicate  the  concerns  to local  school  districts.  Ms.                                                                   
Hanrahan replied  that the communication process  had already                                                                   
begun. The federal OMB office  has realized the importance of                                                                   
the  issue and  recommended ladder  assurances. She  stressed                                                                   
the importance of close scrutiny.                                                                                               
Senator  Huggins opined  that  other states  had started  the                                                                   
process  with  worse  financial situations.  He  thought  the                                                                   
committee  understood  both  the importance  of  keeping  the                                                                   
operating  budget reasonable  and  the importance  of  bridge                                                                   
funding.  He thought  people competent  enough to  understand                                                                   
the meaning  of one-time  funding. He  asked if other  states                                                                   
were wrestling  with similar questions. Ms.  Hanrahan thought                                                                   
other  states   had  similar   issues.  She  noted   national                                                                   
conferences looking at ways to minimize risk.                                                                                   
1:58:28 PM                                                                                                                    
Co-Chair Stedman clarified the  amount of the energy dividend                                                                   
as $1,200.                                                                                                                      
Mr. Persily noted that the state  receives approximately $2.5                                                                   
billion  per year  in federal  money that is  already in  the                                                                   
budget; there  are accountability, controls, and  auditing on                                                                   
that money. The House Finance  Committee did not think taking                                                                   
the stimulus  funds would  cause the  school districts  undue                                                                   
trouble. Intent language was placed  in the HFIN CS requiring                                                                   
school  districts that  receive  stimulus money  to submit  a                                                                   
letter  to  DEED  signed by  the  school  superintendent  and                                                                   
school  board   president  acknowledging  the   one-time  and                                                                   
temporary nature of the funds.                                                                                                  
Mr. Persily  added that certain  stimulus funds  not expended                                                                   
will  be  returned  for  use by  other  states.  The  measure                                                                   
applies   to    fiscal   stabilization   funds    (item   8),                                                                   
transportation  dollars,  the  special education  funds,  and                                                                   
some of the unemployment funds.                                                                                                 
Co-Chair Hoffman wondered if unaccepted  weatherization funds                                                                   
would  be returned.  Ms. Hanrahan  reported  that the  energy                                                                   
money  would  not  necessarily  be  re-allocated  to  another                                                                   
state, according  to the attorney  general's office.  She did                                                                   
not know if the case was the same for the education money.                                                                      
Co-Chair  Hoffman  asked  whether   other  states  could  use                                                                   
rejected funds  in the same  category. Mr. Morse  opined that                                                                   
there  would   be  deadlines  for  accepting   or  obligating                                                                   
stimulus   funds,  at   which  point   the  funds  would   be                                                                   
redistributed to other states.                                                                                                  
Co-Chair Hoffman queried the process  by which the funds were                                                                   
re-distributed to other states.  Mr. Persily replied that the                                                                   
formula  used for  the awarded  funds would  be used for  re-                                                                   
2:03:34 PM                                                                                                                    
Ms.  Hanrahan  offered to  follow  up with  more  information                                                                   
regarding re-distribution.                                                                                                      
     Item 8    Student and School Achievement                                                                                   
     State Stabilization Funds  (base) will be distributed by                                                                   
     the department to LEAs based  on their relative share of                                                                   
     funding under  Title I-A grants for 2009.   LEAs may use                                                                   
     the  funds  for  activities authorized  by  ESEA,  IDEA,                                                                   
     Adult Family  Literacy Act,  Carl D. Perkins  Career and                                                                   
     Technology  Act,  or for  the repair,  modernization  or                                                                   
     renovation   of  public   school   facilities  that   is                                                                   
     consistent with State law.                                                                                                 
Mr. Morse  explained that there  were two parts to  the fund.                                                                   
One part is included  in the budget item; the  other part not                                                                   
included  for $20.7 million  was included  in the  governor's                                                                   
original  request. Item  8 was  originally  designed to  make                                                                   
sure the state  fully restores the level of  state support to                                                                   
school  districts and  institutions  of  higher education  to                                                                   
meet the higher  of the contributions to the  systems in FY08                                                                   
and  FY09.  If there  is  a  gap  in the  funding  and  money                                                                   
remains,  then   the  remainder  of  the  dollars   would  be                                                                   
distributed  to school  districts  according  to the  formula                                                                   
used for  Title I funds. For  example, if a district  gets 19                                                                   
percent  of  the state's  Title  I  funds,  it would  get  19                                                                   
percent of the $93 million.                                                                                                     
Mr.  Morse  added  that  school   districts  are  given  wide                                                                   
latitude  regarding  how  the   funds  are  used.  He  listed                                                                   
examples, including repair, modernization,  and renovation of                                                                   
public school facilities.                                                                                                       
2:06:55 PM                                                                                                                    
Mr.  Persily  added  that  DEED   had  issued  100  pages  of                                                                   
guidelines  for  application   for  the  state  stabilization                                                                   
funds,  including  that school  districts  can  also use  the                                                                   
funds for construction. The Secretary  of the U.S. Department                                                                   
of Education confirmed  that states cannot take  just part B.                                                                   
States must take both or neither.                                                                                               
     Item 9    Child Nutrition                                                                                                  
     Temporary   Emergency  Food   Assistance  Program   will                                                                   
     provide  funding  for  the   emergency  food  assistance                                                                   
     program, allocated as a grant  to the State distributing                                                                   
     agency  who  then  distributes   to  public  or  private                                                                   
     nonprofit organizations that  provide food and nutrition                                                                   
     assistance to the needy.                                                                                                   
Mr. Persily  noted a conflict  of interest because  he served                                                                   
on the  board of  directors of  the Food  Bank of Alaska.  He                                                                   
also reported that HFIN had put the item in the CS.                                                                             
2:09:07 PM                                                                                                                    
     Item 10   Child Nutrition                                                                                                  
     National  School Lunch Program  Grants provides  funding                                                                   
     to  the   state  for   National  School  Lunch   Program                                                                   
     equipment  assistance  in   proportion  to  the  State's                                                                   
     administrative  expense allocation.  In turn,  the state                                                                   
     will   provide  competitive   grants   to  school   food                                                                   
     authorities based  on the need for  equipment assistance                                                                   
     in participating  schools. Priority given  to schools in                                                                   
     which  at least  50% of  the students  are eligible  for                                                                   
     free or reduced priced meals.                                                                                              
2:10:00 PM                                                                                                                    
     Item 11   Alaska State Council on the Arts                                                                                 
     National Endowment  for the  Arts Funding to  provide an                                                                   
     additional distribution to  State Art Agencies. The Arts                                                                   
     Council  submitted  an application  for  the  additional                                                                   
     funds by the March 13, 2009 deadline.                                                                                      
Mr. Morse  detailed  that the  funds would  go for grants  to                                                                   
nonprofits,   art  organizations,   or  salaries  to   artist                                                                   
contracts. The art would be distributed  through the council.                                                                   
He noted that the council is aware of the one-time nature of                                                                    
the funding.                                                                                                                    
SB 161 was HEARD and HELD in Committee for further                                                                              
2:10:54 PM                                                                                                                    
The meeting was adjourned at 2:10 PM.                                                                                           

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