Legislature(1995 - 1996)
03/25/1996 09:05 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
25 March 1996
9:05 A.M.
TAPES
SFC-96, #49, Sides 1 & 2
SFC-96, #50, Side 1
CALL TO ORDER
Senator Steve Frank, Co-chairman, convened the meeting at
approximately 9:05 A.M.
PRESENT
Co-chairman Frank along with Senators Phillips, Sharp,
Donley, Rieger were present when the meeting convened.
Senator Zharoff arrived later.
Also Attending: Sharon Barton, Director, Division of
Administrative Services, Department of Administration;
Alison Elgee, Deputy Commissioner, Department of
Administration; Dugan Petty, Director, Division of General
Services, Department of Administration; Guy Bell, Director,
Division of Administrative Services, Department of Commerce
and Economic Development; Tom Garrett, Director, Division of
Tourism, Department of Commerce and Economic Development;
Nancy Slagle, Director, Office of Management and Budget;
Barbara Ritchie, Deputy Attorney General, Civil Division,
Department of Law; Robert Cole, Director, Division of
Administrative Services, Department of Corrections; Karen
Rehfeld, Director, Division of Administrative Services,
Department of Education; Eddy Jeans, School Foundation,
Division of School Finance, Department of Education; Jim
Hayden, Storage Tank Program Manager, Division of Spill
Prevention and Response, Department of Environmental
Conservation; Janet Clarke, Director, Division of
Administrative Services, Department of Health and Social
Services; Joseph L. Perkins, Commissioner, Department of
Transportation and Public Facilities; Kathryn Daughhetee,
Fiscal Analyst, Division of Legislative Finance; and aides
to committee members.
Craig Tillery, Environmental Section, Civil Division,
Department of Law testified via teleconference.
SUMMARY INFORMATION
CS FOR HOUSE BILL NO. 468(FIN) am
"An Act making supplemental appropriations for the expenses
of state government and making and amending appropriations;
ratifying certain state expenditures; and providing for an
effective date."
Alison Elgee, Deputy Commissioner, Department of
Administration and Sharon Barton, Director, Division of
Administrative Services, Department of Administration were
invited to join the committee. Sharon Barton said that the
first request was to fund a new attorney in the Bethel
office of the public defender. There has been a growing
need for additional resources from both the prosecutor's
office and the public defender agency in Bethel. Last year
several cabinet members went to Bethel to assess that
situation and came back with the report that one attorney
for both the prosecutor's office and the public defender
agency needed to be added. The prosecutor's office has
already done so and a delete is proposed from the division
of finance based on early implementation of FY 97 reductions
to fund $49,000 for the remainder of the year. The second
request is the annual supplemental for the public defender
agency in the amount of $217,000. This should be funded
under Rule 39 Receipts which are available this year. This
is a personal services shortfall. Although cost savings
measures have been implemented throughout the year the
caseload, not only in Bethel, but in Anchorage and the
Valley has increased dramatically during 1996 and positions
could not be kept vacant as would have been done to live
within that authorized budget. The public defender agency
handled some 17,300 cases in 1995 and expects to handle over
18,000 in FY 96. That is more than 300 cases per attorney
per year. Co-chairman Frank asked that she prepare a report
that shows the public defender case load by offense so the
committee can see how many felonies and in particular how
many misdemeanors and what types.
Senator Phillips asked if PFD's were collected to pay for
the services requested from the public defender. Sharon
Barton indicated that Department of Law does collect PFD's
and is proposing that this supplemental be funded from those
collections. She said that Rule 39 allows the Court to
collect permanent fund dividends of convicted persons both
felons and misdemeanants. This has been done for the last
three years. She further explained the collection is for
services after the fact. Those who do not file for their
permanent fund dividend cannot be forced to. Alison Elgee
said that permanent funds were only withheld from persons
actually convicted of the crime for which they have been
charged. Permanent fund dividends are not withheld from
everyone because felons who serve any portion of time during
the course of the year are not eligible to receive a
dividend. The collection is handled by the Department of
Law under the court Rules. They file a judgment against the
individual at the time of conviction. Co-chairman Frank and
Senator Phillips think it is a good idea to collect up front
for public defender services but Alison Elgee said that the
Court is appointing these individuals to the public defender
agency. The dividend comes once a year and people do not
hold onto it in anticipation of committing a crime to pay
later. There are timing difficulties. Senator Phillips
said that the checks could be garnished later after the fact
and she said that is what is being done.
Senator Donley said the public defender agency was just
subject to audits showing they are defending too many people
and they are not trying to reduce the inflated budget they
have had for years. He stated his concern at seeing a
supplemental.
Co-chairman Frank asked Senator Phillips to take a look at
the audit. Senator Donley said as compared to other states
during the last three years none of their cases have been
overturned for lack of quality of counsel. There are two
public defenders for every one prosecutor in some towns.
They need to be cut this year.
Sharon Burton explained the situation with the office of
public advocacy and noted that they were requesting $356.4
for contractual services for contract attorneys, witnesses,
investigative fees and travel costs. They went into FY 96
believing they were close to full funding for OPA, however,
they have experienced case load increase. They opened 65%
more criminal defense cases in the first three months of
1996 than during the same period of 1995. It is expected
the 70 new police officers on the streets of Anchorage will
add to this growing case load. She will provide a breakdown
on percentages of child-in-need-of-aid versus criminal
defense. Alison Elgee said that OPA also does public
guardian work and represent parents in child-in-need-of-aid
cases through their contract attorneys. Senator Donley
asked for a list of costs for the public defender agency and
OPA and what their standards are and what quality of defense
they provide.
Senator Sharp asked the difference in the requirement for
criminal defense between the public defender agency and OPA.
Sharon Barton explained that if there is a conflict of
interest at the public defender agency it was then given to
OPA. The public defender cannot refuse any case other than
for conflict of interest. Senator Sharp asked about the
amount of involvement in criminal procedures by OPA has
risen measureably over the last year and does that equate to
an equal increase in indictments or prosecution by the DA's
office or is this just OPA out hustling clients? Alison
Elgee explained that there are a number of factors that are
increasing the caseload for both agencies; the new police
officers in Anchorage; impacts of newly passed legislation;
third DWI felony offense. The fiscal notes were cut in half
by this body and if they had been fully funded still
understated what in fact is being seen as a result of that
legislation. There are more murder felony trials going on.
Senator Sharp said that they were told by the Department of
Law prosecutors that as the new laws came on they would have
to let others drop because they could only handle a certain
volume. Has the volume increased dramatically on the number
of prosecution cases out of the DA's office? Alison Elgee
said that it is the DA's choice whether to bring charges and
file against these cases. Senator Sharp asked if there were
more indigent people involved on DWI's than on the others?
Alison Elgee said the DA's office is seeing the same case
load increase in the DWI felony as we are. Co-chairman
Frank asked Kathryn Daughhetee to look at the last decade of
the public defender and OPA as relates to their criminal
defense and how it has compared to the prosecutor's office
to see if the growth has been commensurate.
Senator Rieger asked if other than DWI cases were there very
many misdemeanor cases that resulted in a jail term. Alison
Elgee said they would check into it.
Sharon Barton referred to leasing and said the request was
for $170,000. The conference committee FY 96 budget was
$1.2 million short of anticipated lease obligations. It was
at the Senate's initiative that $300,000 was put as a last
minute supplemental to pre-pay some of the FY 96 costs. In
pre-paying we were able to reduce the shortfall for FY 96
obviously and saved the State some
$18,000 in discounts for pre-payment. In 1996 there was an
unanticipated additional cost of $96,000 arising from the
need to enter into leasing on the Juneau Subport land which
is now held by the Alaska Mental Health Land Trust. For the
first time we were required to pay rental to the Trust.
That pushed the shortfall back over $1 million. General
Services has done everything possible to reduce FY 96 costs
and was able to manage that figure down from over $1 million
to $870,000 but has no avenue left to reduce it further in
1996.
Senator Sharp said there was a new procurement act that
covers leasing and how it allows Department of
Administration to enter into new leases or renewal leases
that was being looked at in State Affairs without
legislative approval if they get over 5% or 10% savings.
Has there been any savings in the last twelve months by
renewed, replacement or renegotiated leases?
Dugan Petty, Director, Division of General Services,
Department of Administration was invited to join the
committee. He said there had been nothing specifically for
lease extensions and returns for rent concessions. This
committee made an amendment to legislation to allow us to do
that. There was an 18-month window which expired December
last year. During this fiscal year period we have been
without the opportunity to enter in to lease extensions in
return for rent concessions. If we are able to get that
ability into law again there are more opportunities that
would present themselves for lease extensions in return for
rent concessions. Co-chairman Frank asked if OMB has
provided any instructions relative to the space
considerations in lease renewals? How does this work when
the department would like more space or conversely, has OMB
told the departments to do with less space? Mr. Petty said
that for a number of years a set of space standards has been
established within the Department of Administration. Co-
chairman Frank asked Mr. Petty to give a break down of the
leasing budget by department for over the last several
years.
Sharon Barton said the request for Retirement & Benefits is
$450,000 of benefit receipts. This request is to cover
increased cost for investment management and record keeping
services for the supplemental benefit annuity plan and the
deferred compensation plan. Fees are paid by each member
for this purpose and are tied directly to the investment
return of the plan. The costs have increased somewhat this
year for investment management and record keeping because of
our dramatic increase in our investment return in SBS. It
has been about 25% this year where we had anticipated and
budgeted for about 8% - 10% return. Success in that area
has resulted in the need for this supplemental. The other
piece that has contributed to the supplemental is the need
to educate SBS members about the shift to self-directed
investment which has taken place in SBS. Benefit receipts
are available to cover this cost because it has already been
charged to the members based on the increased value of the
assets.
Senator Rieger asked if the compensation for the managers is
based on the total market value of the assets under
management or based on the return. Sharon Barton said it
was based on the assets. Co-chairman Frank concurred in
reading the book and asked Senator Rieger to look into the
matter. Janet Parker from Retirement & Benefits confirmed
that it was based on assets.
Sharon Barton said that longevity bonus was requesting
ratification of $23,100 spent in FY 95 to complete the final
payment in FY 95 of longevity bonus grants. Last year the
longevity bonus program ended up $23,000 short. That
shortfall was covered from the administrative component that
has administrative responsibilities over the program but
because it is in another appropriation we need to request
legislative ratification for that expenditure. Senator
Sharp asked if this was clean-up for 1995 and Sharon Barton
indicated that it was. He asked if the department had any
statistics available for the amount of attrition by debt or
loss of eligibility of the $250 per month participants
compared to how many new ones are coming in at $100 per
month and also has a short term absence from the State the
amount they lose when they are out for thirty days or longer
has that trended up or down? It seems there should be some
dramatic savings here very shortly after the end of this
year with no new entrants and natural attrition taking hold
at the high end. It would be logical the $250 people would
be the highest attrition level. Sharon Barton said what
has been discovered is that the national mortality tables
are in fact too high and have been overstating mortality in
this population. Adjustments are being made. It is correct
that the $250 group is realizing the greatest mortality
because they are the oldest population group in this
program. After the end of this calendar year we will be
closed to new participants but we will not see the effects
of that down turn until fiscal year 98 because we will
continue to bring people on to the program during the first
six months of fiscal year 97, only realizing those people in
the program for a full year in the fiscal year 98 cycle.
Senator Sharp indicated that there would be a bubble of new
applicants coming in that far exceed two for one on those
that are exiting the program because of one problem or the
other. She said there was a new bulge in terms of new
applicants and a lot of them could have applied much earlier
for one of the higher bonus levels but for whatever reason
chose not to and now are getting into the program before
that opportunity is closed to them. Co-chairman Frank asked
if that is people who have lived here for some time and just
had not applied? He asked her to provide a report on the
nature of the new applicants and to include a state of
origin. She said they must have resided in the state for a
year prior to their application for the longevity bonus
program. Information as to where they resided prior to that
application may not be available. Co-chairman Frank asked
how they prove they had been in the state for a year. She
said it was through a certification that they had been there
for a year and would provide a copy of the application one
has to fill out. She felt it is a misconception that we are
seeing a lot of in-migration particularly relative to this
program. Alaska is a net out-migration state which exceeds
the in-migration by about 2% in that population group.
There is an aging in place that is quite dramatic for people
who have lived here for a number of years and are no longer
leaving the State when they reach retirement age. He asked
her to provide the committee any information she had
regarding this matter and a projection for both years as
soon as the information is available.
Guy Bell, Director, Administrative Services, Department of
Commerce and Economic Development and Tom Garrett, Director,
Division of tourism, Department of Commerce and Economic
Development were invited to join the committee. Mr. Bell
advised that they had one request for $61,200 to cover the
cost of combining the tourism and trade offices in Tokyo.
This will reduce the annual lease cost by about $50,000 and
the general fund will be reimbursed as full amount when the
deposit on existing space is returned December 1996. He
said the new deposit was $31,000. This request is for an
offset to what the general fund will be getting back in
December. Senator Rieger asked for the total of the old
lease and new lease cost. Mr. Bell said the combined leased
cost is $11,000 per month. The new leased space will be
approximately $7,000 per month. Co-chairman Frank asked how
many square feet the new office was and Mr. Garrett
indicated that it was approximately 31 square meters.
Nancy Slagle, Director, Office of Management and Budget was
invited to join the committee and testified on behalf of
Department of Community and Regional Affairs. She said that
under section three, the department requested $8,300 be
transferred from local government assistance to municipal
revenue sharing to cover the expense of an FY 95 revenue
sharing payment for the native village of Kluti-Kaah. This
is in response to the community misplacing their revenue
sharing check. Senator Sharp asked if this village had
received municipal assistance previously and she indicated
that she believed it had but would find out exactly.
Senator Donley voiced concern on behalf of co-chairman
Halford regarding sovereignty issues and wondered if this
was one of the areas that was recognized as a tribe. Co-
chairman Frank highlighted the matter for co-chairman
Halford. Nancy Slagle said there were many tribal units
that did receive money for unincorporated communities under
the revenue sharing program as well as under the capital
matching grants program. She said Kluti-Kaah identified
itself as a native village rather than a tribal council.
Senator Phillips referred briefly to Title 29 (AS
29.61.040). She indicated that the funding agreement
resolution and native village council waiver of sovereign
immunity had all been taken care of. Senator Rieger asked
if the misplaced warrant was for a prior year and why
issuing a duplicate check would change the aggregate size of
the appropriation that was to cover all the original checks.
She indicated that the check could not be re-issued without
an appropriation and since it was an FY 95 expenditure there
was no access to FY 95 revenue sharing appropriation. Those
funds have lapsed. Senator Rieger asked why they could not
make use of the old appropriation to do them any good. She
indicated that the FY 96 appropriation was being amended not
FY 95. The money is being added to this current year so
that the expenditure can be paid. Senator Rieger referred
to local government assistance and asked what it covered
different from what is covered in municipal revenue sharing
or state revenue sharing. She said it was the
administrative operations of that division. No money is
being asked for and it is just being shifted from that
appropriation to the revenue sharing appropriation. It will
not have any effect on any proration.
Nancy Slagle referred to rural development grants, section
3(b). There is a problem every year with the completion of
those grants within an annual appropriation. They are
basically for small construction projects that go out to
local communities. The FY 97 request includes those
actually in the capital budget to eliminate this problem in
not being able to complete them on an annual basis. She
will provide the exact dollar amount to the committee.
(tape SFC-96, #49 switch to side 2)
Senator Rieger referred to the spread sheet and asked her to
explain the extended lapse date and the grey shaded area
which says "not accepted in the original bill" and the
Governor's amended request line where there are dollar
figures re-entered. She said on the rural development
initiative loan fund request it had been asked that the fund
be capitalized with monies from AIDEA. They wanted to
continue this basic loan fund which is running out of money.
There are applications outstanding for projects that they
would like to be able to fund and continue. The House
Finance Committee decided that they would pull this section
out to deal with under the capital budget side. It has been
requested as an amendment to the capital budget for
consideration.
Barbara Ritchie, Deputy Attorney General, Civil Division,
Department of Law was invited to join the committee. She
explained subsection (c) and (d) and informed that these
would settle up front early pending attorney fees and claims
in these three cases. Basically it is set up as a pre-pay
so there would be a discount on the amount that the State
owes. Two of these cases, since the bill was introduced
have been resolved. This proposed settlement for the three
would only cover attorney fees and costs, resolving the fee
and cost issues between the state and Alaska Legal Services.
It does not include co-counsel. With respect to the
language saying that no pending issues exist the intent
there is that no pending issues exist as of the time of that
notification. There is a stipulation pending on two of them
which largely vacates the Superior Court judgment and all
the items that were a problem for the State and the attorney
fees are settled in that case for $60,000. In the "Decker"
case, which was a medical assistance case, since this bill
has been pending the matter of attorney fees have continued
on in motion practice in the Superior Court and an order was
received ten days ago for attorney fees and costs in that
case in the amount of $3,661. The only one remaining
unresolved is the "Quinahak" case and it is more problematic
as far as resolving it. At this point a decision was made
to wait and see what happened at the Senate Finance level
with regard to that. We did not want to enter into a
settlement of that case on attorney fees if this
appropriation did not come through. "Quinahak" is in
litigation and the matter of attorney fees is still pending.
Co-chairman Frank asked why this was being done differently
than other cases against the state? Why is it not C&RA's
budget as opposed to Department of Law's budget for other
judgments, claims and settlements. Nancy Slagle advised
that Community and Regional Affairs already has a grant
agreement with Alaska Legal Services that is included in
their annual budget in the commissioner's office. Co-
chairman Frank said that his expectation when Alaska Legal
Services was funded was so they could represent these people
not only in suits against the State but in anything they
need. Barbara Ritchie said that this was not the typical
way one would see attorney fees issues come forward. The
concept was to try and make a proposal to basically pre-pay
them either with or without a settlement at a discount and
this would constitute the settlement that wasn't otherwise
agreed to by the parties. Senator Rieger asked about
"Sorenson" and "Decker". Barbara Ritchie said attorney fees
and costs were $3,661.68. "Sorenson" is $60,000. The
"Decker" case question was whether the Division of Medical
Insurance had erred in it's denial of Mr. Decker's request
for medical assistance for re-imbursement for dentures. The
main issue on attorney fees was whether this was public
interest litigation or not and Alaska Legal Services was
claiming about $11,600 for full fees. The Court did not
order those and that one was resolved against the State.
The fee level came in significantly lower than they had
asked. "Sorensen" was a class action challenging the Tier 2
subsistence permit system in the regulations for moose
hunting in game management unit 16(b). Several of the
claims were either abandoned or determined in the State's
favour. The Superior Court ruled against the State on the
parties' cross-motion for summary judgment. It held the
board of game had improperly determined the number of moose
needed to provide a reasonable opportunity for subsistence;
that the board had improperly permitted sport and Tier 2
subsistence seasons on the same population; and the
department of fish and game appeal process was inadequate.
What the parties ended up doing because neither side was
totally satisfied was coming up with a settlement acceptable
to both parties and part of the terms of the settlement was
to essentially ask the Superior Court to vacate significant
portions of the actual findings in the Superior Court order,
leaving it with the bottom line of the final order but
taking out the reasoning that was problematic for the board
of game. Senator Rieger asked if the $60,000 was stipulated
to and she indicated that was correct. In the motions
practice Legal Services had requested about $68,000 in
attorney fees. It was an agreement of some $8,000 less than
had been sought. Senator Phillips referred to the "Decker"
case. She will provide further information for the
committee. Co-chairman Frank asked Senator Phillips to
review matter and give the committee a recommendation.
Senator Donley asked what percentage of Alaska Legal
Services budget comes from the State and from other sources.
Barbara Ritchie said that they are largely federal funded
via the Legal Services Corporation which is on the federal
level. The state funding is a relatively small percentage
of that. It is not a match. Senator Donley said it is
pretty illogical for us to be funding an agency and then
they use that money to sue us and then we have to pay them
for their time that we already paid for in the first place.
Co-chairman Frank asked Senator Donley to work with Senator
Phillips to come up with a recommendation regarding this
matter.
Nancy Slagle advised that under section 4, Department of
Corrections was $936,600 for "Cleary" fines. That is based
on calculations through January of the fines that are due.
Co-chairman Frank asked if these were for overcrowding or
other violations? He said the fines showed through 1995.
Robert Cole, Director, Division of Administrative Services,
Department of Corrections was invited to join the committee.
Nancy Slagle advised that an amendment to the bill in House
Finance included fines calculated through January. Co-
chairman Frank asked if we were suffering a fine today? Mr.
Cole advised that we were being assessed fines this very day
from about seven facilities.
Co-chairman Frank asked if those fines were based upon State
law or not. Mr. Cole said they were in the "Cleary" order.
Senator Donley asked if in the "Cleary" case was there a
section that set a time certain or was it something being
extended year to year by the State? Mr. Cole said that it
is an on-going sanction and believed it was a permanent
settlement. It is down to overcrowding and how women are
treated in the facilities, including the availability of
programs. There is a possibility the Department of Law can
basically settle the "Cleary" case with the Court if these
two or three issues can be ironed out. Senator Donley said
the sooner this was behind us we would be better off
negotiating a new deal. There will always be a new lawsuit
everyday in the corrections system as long as there is
Federal Habeas Corpus. He does have a proposal to amend the
State constitution to adopt the same standard for penal
administration which would give a much larger body of law to
deal with and more solid ground.
Senator Zharoff asked where the fines go. Co-chairman Frank
said it has not been approved but it should go to the
general fund. Mr. Cole said the way the appropriation is
written section 4 has a subsection (b) that says the
appropriation made by this section is contingent upon the
attorney general's notification of the revise of statutes at
OMB that no pending issues exist on the status of payment of
fines and no Court order has been entered in "Cleary" that
precludes the Alaska Court System from depositing the funds
collected under (a) of this section in the general funds.
The intent is to make sure the fines can only be deposited
to the general funds.
Nancy Slagle said section 5 deals with the foundation
program and utilizes $1,225 million of anticipated lapsed
funds to go out to additional districts to support them to
deal with the disparity issue.
Karen Rehfeld, Department of Education and Eddy Jeans,
School Finance were invited to join the committee. Mrs.
Rehfeld said since the State of Alaska recognized impact aid
in the calculation of State aid for the school foundation
program it was required that a federal disparity test be
met. Changes to the federal impact aid law reduced that
test limit from 25% to 20%. In order to continue to
recognize that impact aid the ability to utilize current
year funds for named recipient grants to the REAA's that are
at the bottom end of the scale for the purpose of the
disparity scale to bring them within the 20% is being
requested.
Mr. Jeans answered technical questions regarding disparity.
He said the administrations bill would increase the
deductible impact aid for REAA's from 90% to 95% which
would offset this cost. The net increase would be
approximately $223,000. Co-chairman Frank asked why that
wasn't proposed for FY 96 to balance out against this
distribution. Mrs. Rehfeld said that because the
legislation to deal with FY 97 was prepared they felt they
couldn't get the legislation through to count for the
current year and that the supplemental approach would give
the time for the bill to be reviewed by the legislature and
incorporated for FY 97. Co-chairman Frank said his concern
was if the disparity problem was going to be cured through
this mechanism it seems it should cover both years on the
increase and the deduct so there won't be a situation where
they will take the money, spend it and then feel like they
have a budget cut next year. Senator Rieger asked if this
would trigger a hold harmless that exists in the foundation
formula for budget cuts. Mr. Jeans said that these funds
would not affect the hold harmless within the foundation
program. These funds would secure the State's ability to
measure impact aid in determining the State allocation.
Senator Rieger said that he felt the committee needed to
decide as a finance committee policy or legislative policy
whether to challenge the Feds on their change from a 25% to
20% and whether to take this head on or just acquiesce when
they change the rules and essentially require millions of
dollars to be expended because they decide a 20% disparity
is better policy than 25%. Mr. Jeans said that the impact
aid law was amended in 1994 and was moved into Federal law.
There is not much room for negotiation. Senator Rieger said
that at some point it must be decided how far we are willing
to go to let that $30 million we get from the Feds drive our
$600 million program. We are just being tied around in
knots. Senator Donley said that this disparity standard is
based somewhat on State assessments. Mr. Jeans said under
the foundation program municipalities are allowed to
contribute local revenue of over and above the four mill
required local effort. Disparity is a measurement of
equity, a measurement of revenues. Senator Donley said that
some of it is driven by how the state statutes are written.
Co-chairman Frank asked about dollars per child. If one
looks at dollars per student it doesn't seem that we would
be out of disparity. Some districts are getting more than
Anchorage or Fairbanks per student. Lower Kuskokwim as an
example. How many dollars are they getting per student
versus Anchorage? Mr. Jeans said that the impact aid law
allows disparity to be measured on whatever mechanism is
utilized to distribute State aid. Co-chairman Frank said
the way State aid was distributed should be changed.
Senator Donley said it was a State problem not a Federal
problem. Co-chairman Frank said more money was going to the
districts that are getting the most dollars per student now.
Mr. Jeans said that they would be out of compliance in FY 96
if they did not receive these supplemental payments.
Therefore, the State will not be allowed under the Federal
law to consider impact aid in our 1998 distribution.
Senator Sharp said it is hard to believe that if another
$1.2 million is not added to last year's budget this year in
June we are going to be out of compliance for next year if
we already have passed statute that takes care of the
problem that has been proposed by the administration that we
would lose next year's $35 million. Mr. Jeans said the way
the disparity standard is measured is on the data from two
years prior. To meet the 1998 Federal disparity of 20% the
measurement must be using FY 96 data. Currently the
foundation law allows municipalities to contribute 23% over
and above basic need and that is what causes our disparity.
The disparity for FY 96 without the supplemental
appropriation was anticipated to be over 20%. He said that
any revenues allocated to the school districts through the
foundation program or other allocations that have happened
over the past few years are included in the disparity test.
Co-chairman Frank said that disparity was measured based
upon how it was sent out. Mr. Jeans clarified that when the
revenues were computed per pupil the State of Alaska does
not allocate the funds on a per pupil basis. It is
allocated on instructional units. All the revenues within
the school district's operating funds are taken and they are
divided by their instructional units as opposed to their
pupils. Co-chairman Frank said that an alternative formula
could be devised that did not use the word "instructional
unit" but just divided on the basis of how many students
they had. Mr. Jeans concurred. Senator Sharp asked how
many years the foundation formula was going to be reworked
to something everyone understood and is fair. There is no
justification for the $1.2 million.
Senator Rieger asked as an alternative to changing from an
instructional unit to an ADM would the revision of the
geographic cost of living differentials also bring the
disparity back within bounds? Mr. Jeans said the disparity
is computed on adjusted instructional units. If the area
cost differentials are adjusted it is just reallocating the
monies within the formula. It would not bring disparity
down. He said there were a number of ways the disparity
test could be run. Adjustments can be made for cost
differentials or special needs groups and any other
adjusting factor within the foundation program itself. In
this state all the adjustment factors are included to run
the disparity on the adjusted units. The special education
and bilingual are included and the area cost differential is
also included when the disparity test is run. Senator
Rieger said that to the extent that the area differential is
counted it is a matter of dividing by the area differential
to adjust downward back to an equivalent base $100. Mr.
Jeans concurred but noted the differentials were included in
the disparity test. They are not adjusted back out. He said
that the formula says, based on the adjusted units, everyone
gets the same dollar amount which would be the $61,000 per
instructional unit. The area differentials are included in
the disparity test. One of the reasons for this would be
the additional local contribution that municipalities are
allowed to contribute is a product of 23% of basic needs.
When basic needs are computed adjusted units are taken times
the unit value of $61,000. It provides a higher base for
municipalities to contribute their excess local
contribution.
Karen Rehfeld said there was an original request in the
supplemental bill to allow for carrying forward of any
unexpended balances of the current year foundation
appropriation that would offset the need to utilize the
public school fund revenues that had been proposed in the FY
97 budget. The house version of the bill did not include
that language. Co-chairman Frank asked how much it was
expected to be and Mrs. Rehfeld said that it was the
anticipated amount in addition to the $1.2 that is asked
for. Senator Phillips said this is $3 million.
Nancy Slagle introduced section 6, Department of
Environmental Conservation, extending the lab state of the
spill prevention and response underground storage tank
assistance program.
Jim Hayden, Storage Tank Program Manager, Division of Spill
Prevention and Response, Department of Environmental
Conservation was invited to join the committee. He said the
carry forward presented originally requested that FY 96
grant dollars be extended until FY 98 and that was changed
in the house version to FY 97. The second part (b) asked
that prior year appropriations that are remaining be carried
forward to 1997 to give some extra time to close out about
forty grants that are currently operating to continue clean-
up on some sites from spills.
Nancy Slagle introduced section 7, Department of Fish and
Game and noted that $32,700 was being requested to allow for
the reimbursement of vendor compensation for sale of fish
and game licenses and tags. This was an increased need over
what was originally appropriated. A title change on a
capital appropriation for Arctic-Yukon-Kuskokwim Salmon
Fisheries stock assessment was requested. It was taken out
by house finance and included as an amendment to the capital
budget request.
Section 8, Department of Health and Social Services,
subsection (a) deals with the use of the anticipated lapsed
funds in the public assistance area of $4 million in general
funds and $500,000 in other funds.
Janet Clarke, Director, Division of Administrative Services,
Department of Health and Social Services was invited to join
the committee. She said the case load for AFDC had
declined this year. Originally a budget was predicated on
an average of 13,700 families. The case load is actually
about 12,500 families. When the supplemental needs for the
department were looked at, because there was such a large
projected case load reduction, areas in the budget were
looked for where it seemed like a good use of additional
funds. The $4 million reduction in general funds was
originally to be spent for $500,000 in child care benefits
because there is an increase demand on the child care
program. That is where the $500,000 in the federal receipts
is being spent in the next section. The federal authority
was not reduced. The funds will be restricted within the
AFDC program. Since the reduction of $4 million has been
submitted there has been a little change in the thinking of
their ability to receive federal receipts. Perhaps if this
were to be done again reduction in federal authority could
be shown in the AFDC program. Those federal receipts will
not be spent because that is a 50/50 match program. Senator
Phillips asked why there was a reduction in the AFDC
request. She said they feel it has something to do with
their efforts in the JOBS program and getting people off
AFDC and getting them to work and some of the efforts to
change the culture of the eligibility determination office.
Economy also plays a big part in any reduction in case load
in AFDC. There are a number of other factors that lead to
case load reduction. Senator Phillips asked if it had
anything to do with welfare reform. She said it had not
been investigated but clearly with all the talk about
welfare reform it is likely to have some impact on someone
choosing to seek assistance. Co-chairman Frank asked what
the $1.9 million and $500,000 were being spent on now. She
said that was subsection (b) and it is the eligibility
information system. There have been a number of
appropriations. Co-chairman Frank asked if this was
software or hardware. She said it was both. The
eligibility information system is a mainframe system and has
been for a number of years. It is not very flexible and as
the welfare system is being changed in the offices it does
not work very well for the current interview techniques.
This $3.5 million allows one-time money that would otherwise
elapse, allows purchase of front-end PC's that can
interphase with the mainframe system, allows contracts with
the software developer that can build those systems that the
eligibility workers can use that will get people back to
work. Co-chairman Frank asked about $1.9 on one line and
$500,000 on the other and are they both the same thing? She
said there were two subsections, (a) and (b). The first
subsection is actually a delete add into the childcare
benefit program. Last year the budget was predicated on
having an average of 1,400 children in childcare and the
case load has increased to about 1,600. This is all good
news because there are more people working who need
childcare assistance. Part of this assistance is
transitional where former AFDC clients are entitled to one
year of child care benefits after they get off of AFDC.
There are real families and children who are using the child
care benefits. Senator Rieger asked about the eligibility
information system and asked if the house did not allow the
$1.6 million of federal receipts but only $1.9 million of
general funds or is the whole thing in there? She said the
house did allow the $1.6 million in receipts. There could
have been a reduction of the same amount shown of federal
receipts in AFDC. Senator Rieger said the required match by
the Feds for computer eligibility projects was a more
attractive match perhaps 3 to 1. She said that in the past
they had been very successful in getting one time federal
appropriations for the eligibility information system. It
has been about 78% federal funds. That happened to occur
with one time federal participation. The typical match rate
is about 55% federal participation because only some state
programs are run. The eligibility information system
manages the adult public assistance program. Federal match
cannot be claimed on that part of any change made. She went
on to subsection (c) and said that it was a delete add
supplemental. Within the division of family and youth
services between the regional components where the social
workers and juvenile probation officers are funded and into
the youth facilities. What happened this year is that
unfortunately they were not successful in either one of
these areas in getting registers available to hire either
social workers or youth counselors. Since there were no
registers available overtime had to be paid in order to
staff facilities.
(tape change to SFC-96, #50, Side 1)
She further indicated this was a delete add supplemental.
OMB suggested they look for delete add supplementals
wherever they could so that it would be a net zero request
when they came before the legislature. Senator Donley said
the youth counselor excesses were from their own management
decisions. She said they spent considerable time with the
Division of Personnel suggesting, convincing, justifying,
opening up these registers for continuous recruitment.
These registers have been closed for about two years.
Senator Donley said maybe an adjustment could have been made
by closing the facility for one day a week. She indicated
that these were 24-hour detention facilities and cannot be
closed for a day. Specifically, Johnson and McGlaughlin
Youth Centers. The department was requesting delegated
authority to do their own examining and recruiting. Co-
chairman Frank said the Department of Corrections had
authority to do their own registers and perhaps Department
of Personnel in the Division of Administration should be
gotten rid of and let the departments do their own.
Ms. Clarke went on to the medicaid program and said the
budget that had been put forward had been predicated upon a
growth rate of 10.6% in the medicaid program. The growth
rate is reduced to about 6% and this is a reduction of
general funds. The federal funds will not be spent but they
will be restricted internally. This is a reduction of $7
million totally to the medicaid program and funds that will
not be spent. Subsection (d) is a superior court judgment
case involving a former employee of the Alaska Psychiatric
Institute. The individual was laid off in the summer of
1992 and the individual was able to show the court an
incident that occurred six months prior to her layoff
involving a sexual harassment case was the reason the
department laid her off. Co-chairman Frank wanted to know
why the matter was not in the Department of Law. Nancy
Slagle said there were no hard and fast rules about what
would appear in Department of Law as opposed to the
agencies. In the past most of the amounts which appear in
the Department of Law's judgments and claims sections deal
with attorney fees and costs. Anything else beyond that
normally goes into agency requests. That is not always
adhered to, however. Co-chairman Frank asked if the person
got re-hired. Ms. Clarke indicated no. Co-chairman Frank
said if the layoff was proven to be the result of a sexual
harassment incident the individual was not asking to be
rehired, but rather she just wanted a big settlement. Ms.
Clarke concurred and noted that the Superior Court did order
punitive damages which are on appeal. That is not included
in the supplemental. The actual award was $263,000 in
compensatory damages, although the court awarded interest
back to the time she was laid off. There are several years
of interest plus attorney fees within this dollar amount. A
significant part of this is not related to the actual award
for the individual. Co-chairman Frank asked how the Court
looked at the fact that she did not ask for her job back.
How did they determine the appropriate amount for damages?
She said it was unusual because this individual took this
case to court and did not really go through the normal
grievance arbitration process because there was a link to a
sexual harassment incident.
Senator Rieger referred to the findings and fact of the
judgment. He wanted to know if that included an itemization
of what added up to the $263,000 of compensatory damages.
She said that there was a summary and noted that they were
not paying the punitive damage of the award. Senator
Phillips asked who made the request for a trial without
jury.
Barbara Ritchie, Deputy Attorney General, Civil Division,
Department of Law was invited to join the committee. She
said either side could request a trial by court. She
referred to a prior sexual harassment case. She clarified a
few matters on the judgment saying the $200,000 awarded on
punitive damages is not being paid as it is on appeal. The
court did cut the punitive damages claim in half. For pain
and suffering the individual had claimed $100,000 and the
court cut that in half to $50,000. The court denied any
relief for future economic losses. The plaintiff has cross-
appealed on that issue as to the future damages. The
outcome of this trial was well within the assessed risk of
going to trial. Prior attempts to settle the case before
going to trial had been unsuccessful. The plaintiff had
wanted a settlement well in excess of $500,000. Senators
Phillips and Rieger asked for a break down of the Court
award. Co-chairman Frank indicated that co-chairman Halford
would look into the requests and give the committee a
recommendation. He put Ms. Ritchie's testimony on hold in
order to take up the Department of Transportation.
Nancy Slagle introduced section 13(a) dealing with emergency
repairs related to southcentral flood disaster highway and
bridge repair in the amount of $4 million. $1.10 million is
general fund and $3 million are federal funds.
Mr. Joseph L. Perkins, Commissioner, Department of
Transportation and Public Facilities was invited to join the
committee. He indicated he would answer any questions on
the Copper Highway Bridge relating to the $1 million bridge
work that was going to be done or if there were further
questions on the flood portion of this. He said $800,000 of
the match money covers about $7.5 million of new federal
funds. These are not in the program but rather emergency
funds. There is authority in place for $4.5 million so
authority is needed for $3 million which makes the total of
$7.5 million. Co-chairman Frank indicated there was a
question on the over expenditure of DOTPF's prior year
ratification noted in section 15.
Nancy Slagle indicated that legislative audit has gone
through and identified several areas where there are over
expenditures or undercollection of revenues in going back to
1983 and has recommended that agencies come forward with
ratification requests to take care those if they can not be
dealt with administratively. There is a review that was
done by the division of audit and management services
concerning the ratification process and a response has been
provided to the committee. DOT has a request of $5,923,400
which takes care of all ratification problems that they have
had and brings them current. There are problems that occur
when revenues are collected one year but the expenditures do
not take place until the following year or vice versa.
Senator Rieger asked if there was anything available in the
State's general fund or was there any change. Ms. Slagle
indicated there was no change. This was an accounting
clean-up as opposed to an additional need for general funds.
These expenditures have already taken place.
Senator Sharp referred to section 13(b) and asked if the
$720,000 was all in restoration or are there legal fees or
payments to third parties included. He indicated that he
had read in the paper that all the costs basically were to
restore and put back into shape any stream crossings or
trees that fell off the cliff down in the Copper River or if
there were legal fees. Senator Phillips indicated that in
the department's back up material it states that not
included in the estimate are legal fees due the Department
of Law, attorney fees for the Trustees of Alaska or costs
incurred by Resources or Fish and Game. Senator Donley said
the committee wanted to know what they were getting for
$720,000.
Commissioner Perkins said that the department had agreed to
have public service announcements as far as the wetlands 404
program is concerned. That has been in settlement for the
last two years. It is not a big problem and the state will
get some benefits if wetland violations can be cut down.
Next, environmental training for the department staff. The
department is involved in extensive programs in all of the
regions with the maintenance and construction people to make
them aware of what comprises 404 for wetland violations. A
person has been hired to deal with the Corp of Engineers on
all permitting matters. This was necessary and should have
been done because there are so many cases of disaster type
situations where the law can be violated just as easily. He
cited the example of the flood in Seward and gave a brief
synopsis on the Copper River situation. Senator Sharp asked
for clarification on the statement that "these estimates are
for the year 1997" and then the second set which says "not
included are the following...", which are the Department of
Law, Trustees for Alaska, Fish & Game and DNR.
Commissioner Perkins said they would like to have the option
within the $125,000 for fisheries enhancement and a good
project is developed by Fish and Game we would want to RSA
them to do the work rather than DOT.
Ms. Slagle indicated that although this referred to a FY 97
activity it actually needs to begin this year. There are
some bid contracts being opened up now. There are
requirements of that settlement that certain things take
place within a certain number of days. Senator Sharp asked
if there was an estimate for the "future requirements of the
consent decree" that must be met? Commissioner Perkins said
he did not have a cost estimate on that. Co-chairman Frank
asked that a copy of the consent decree be provided. He
also asked where the attorney fees for the Trustees for
Alaska was coming from.
Craig Tillory, Environmental Section, Civil Division,
Department of Law testified via teleconference. He
indicated that the last item for $125,000 for structural
repairs and fish path construction is not a fish and game
item. Those are to put in culverts in locations where
material filled in previous fish passages to ensure the fish
can move back and forth. He said the provision of
settlement was to pay $40,000 to the Trustees for Alaska.
That is not in this amount. The Court is waiting on the
United States Department of Justice to file a motion to
approve the settlement which we have been waiting for
approximately one and a half months. In addition there will
be an environmental project done at a cost of not less than
$400,000, something the legislature approves of and will
have to be done before the year 2003. There will also be a
fisheries enhancement project in the State of Alaska that
Fish and Game will be working on for not less than $50,000.
Senator Zharoff asked about the highways and the bridges
that were damaged during the flood. Can the bridges be
relocated? Commissioner Perkins said it had been looked but
the capital cost of replacing the bridges or realigning the
roads is prohibitive.
ADJOURNMENT
The meeting adjourned at approximately 11:10 A.M. to
reconvene tomorrow at 8:00 A.M.
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