Legislature(1999 - 2000)
04/03/2000 09:05 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 3, 2000
9:05 AM
TAPES
SFC-00 # 74, Side A and Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:05 AM.
PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell,
Senator Al Adams, Senator Loren Leman, Senator Randy
Phillips, Senator Gary Wilken
Also Attending: SENATOR RICK HALFORD; SENATOR ROBIN TAYLOR;
JEFF JESSE, Executive Director, Alaska Mental Health Trust
Authority, Department of Revenue; RONALD HULL, Deputy
Director, Division of Employment Security, Department of
Labor and Workforce Development; TOM WYLIE, Unemployment
Insurance Actuary, Research and Analysis, Division of
Employment Security, Department of Labor and Workforce
Development; RICHARD CROSS, Commissioner, Department of
Education and Early Development; GARY BATER, Superintendent
of Schools, Juneau School District; CARL ROSE, Executive
Director, Association of Alaska School Boards; KATHLEEN
STRASBAUGH, Assistant Attorney General, Governmental
Affairs Section, Civil Division, Department of Law
Attending via Teleconference: From Delta Junction: DAN
BECK, Superintendent of Schools, Delta Junction; From
Fairbanks: MIKE FISHER, Assistant Superintendent, Business
Finance, Fairbanks School District
SUMMARY INFORMATION
HB 313-APPROPRIATIONS: MENTAL HEALTH
The Committee heard an overview on projects from the Alaska
Housing Finance Corporation. The bill was HELD in
Committee.
SB 289-TECH & VOC EDUC/ EMPLOYMENT ASSISTANCE
The Committee heard from the Department of Labor and
Workforce Development. The bill was held in Committee.
SB 290-PUBLIC SCHOOL FUNDING & EXPENDITURES
The Committee heard from the Department of Education and
Early Development and representatives from various school
boards in the state. The bill was held in Committee.
SJR 34-CONST AM: PERM FUND CORP BD/ PUB CORP BD.
The Committee heard from the sponsor, adopted a technical
amendment and reported the bill from Committee.
SJR 40-CONST AM: ELECTION & TERMS OF GOV & LT GOV
The Committee heard from the sponsor and the Department of
Law. The bill was held in Committee.
CS FOR HOUSE BILL NO. 313(FIN) am
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
Co-Chair Torgerson noted that during consideration of the
FY 01 operating budget, SB 312, the Committee had
previously adopted a committee substitute 1-LS1305\G to SB
313 as a workdraft. He explained the committee substitute
had removed all reference to capital projects from the
legislation. He said the intent of this meeting was to
consider the capital projects receiving funding from the
Mental Health Trust Authority (MHTA).
JEFF JESSE, Executive Director, Alaska Mental Health Trust
Authority, Department of Revenue, gave detail on the items
listed on the Mental Health Capital Projects, HB 313
spreadsheet. [Copy on file.]
Senior Services Data Integration Project - Department of
Administration
Mr. Jesse stated that MHTA funds would be used to help fund
this new project. He explained the project was to assist
the Division of Senior Services to increase efficiency of
the division's operations.
Telepsychiatry Video Communication System Equipment -
Department of Corrections
Mr. Jesse told the Committee this project was a
continuation of a $75,000 FY 00 project that the trustees
are involved in. He said the requested funds would assist
the department in upgrading their system. He remarked that
the Department of Corrections was a leader in utilizing
video conferencing technology to increase their ability to
provide psychiatry counseling and supervision to inmates in
all the correctional facilities from the central mental
health office in Anchorage. He spoke about how this project
has been showcased at national conferences as a model
program. He added that the program reduces professional and
travel costs for the state. He congratulated the department
for instituting this program using equipment that has a low
"band width" and noted this upgrade would increase the band
width to further increase the program's effectiveness.
Alaska Psychiatric Institute 2000: Replacement of Existing
Facility - Department of Health and Social Services
Mr. Jesse stated this was a continuation of the Trustees'
process of setting aside MHTA funds to further assist the
state in making the transition from the current Alaska
Psychiatric Institute (API) into the new facility, which he
hoped the negotiations with the charter would be concluded
shortly. He stated that the MHTA was working in tandem with
the federal funds secured through the assistance of US
Senator Ted Stevens.
Alaska Psychiatric Institute Stop-Gap Repairs - Department
of Health and Social Services
Mr. Jesse bemoaned, "unfortunately this is not a new
project at all." He continued that the stopgap repairs have
been an on-going concern although the MHTA has been able to
secure a matching program to utilize Alaska Housing Finance
Corporation (AHFC) receipts. He explained the intent of
this project is to keep the facilities operating as long as
possible or until the new facility was available for
occupancy.
Coordination and Resource Sharing Among Mental Health
Services Providers - Department of Health and Social
Services
Mr. Jesse shared that this was an exciting new project for
the MHTA. He explained that through the auspices of the
Governor's Council on Disabilities and Special Education
the proposal was to review how the state operates with all
the beneficiary nonprofit groups and providers. He said the
project hopes to identify whether efficiencies could be
gained and how the programs could become more results
based. Another intent, he added was to identify whether any
services can be integrated and the savings of which could
be reinvested into further services for the beneficiaries.
He summarized that this project was to improve the
infrastructure of the mental health grant system.
Senator Leman thought this item seemed more like an
operating item than a capital project and asked what
specifically would be provided with the $100,000.
Mr. Jesse replied that the governor's council proposed
convening a "think tank" of representatives of the four
boards involved with the MHTA to develop a list of areas
within the grant structure and the service provision system
to submit to an independent contractor. This contractor, he
continued would evaluate and make a series of
recommendations as to how the MHTA could improve the
efficiency and effectiveness of that system.
Mr. Jesse suggested the reason this project was classified
as a capital project was because it was unclear whether the
work could be completed in one fiscal year. He said the
MHTA thought that listing this as a capital project would
give the greatest flexibility.
Senator Green asked if it would be possible under the
governing federal mandate to streamline and merge some of
these services into one group rather than break them down
by the four distinct constituency groups.
Mr. Jesse said that was one of the goals of the project, to
identify what areas have such flexibility. He cautioned
that some programs have strict specific membership
requirements and missions from the federal government.
Fairbanks - Reopen Fahrenkamp Residential Facility -
Department of Health and Social Services
Mr. Jesse explained the goal of this project was to use the
center for its original purpose, as a residential
diagnostic treatment center for adolescents. He relayed
that for many years, the facility has been used as office
space and adolescent outpatient care by the Fairbanks
Mental Health Center. However, he stressed there is a
desperate need for residential services for this
population. He noted this is a matching funds program
between the trust and the state using AHFC receipts in
order to make the physical modifications to the portion of
the center that will house the adolescents and to but
necessary equipment.
Fairbanks Community Mental Health Center Relocation -
Department of Health and Social Services
Mr. Jesse pointed out that this project exclusively
utilizes MHTA funds to assist the center, which is
currently located in the Fahrenkamp facility and has been
paying only one dollar per year as rent. Because of the
plan to reconvert the Fahrenkamp to a residential facility,
he explained that these funds are to relocate the mental
health center and to pay additional rental costs for the
first year. He stated that the hope in the next year was to
include the increased operating costs due to space rental
into their operating budget. Otherwise, he added the center
would need to reduce its service capacity.
Housing Modifications for Mental Health Trust Beneficiaries
- Department of Health and Social Services
Mr. Jesse talked about how this continuing project
continues the relationship that the trust has developed
with the AHFC to identify ways to deliver housing
modifications for beneficiaries. He described some of the
people served, such as Alzheimer patients needing their
house modified so they could remain in their home. He
stressed that this has been a successful project in handing
out relatively small grants.
Mental Health Grants - Essential Program Equipment -
Department of Health and Social Services
Mr. Jesse told the Committee that the trust had originally
proposed this on-going project as a 50-50 matching program
with the state. However, he said that the Governor's Office
was only able to identify $50,000 of general funds to make
available. He stressed that the trust deemed these grants
particularly to smaller mental health centers, are
essential to maintaining their capacity to operate. He
listed computers and software as some of the items
purchased using these grant funds.
Mental Health Grants - Facilities Renovation and Deferred
Maintenance - Department of Health and Social Services
Mr. Jesse continued that this project is similar to the
previous in that it is an on-going program also proposed to
have a 50-50 general fund match, but that this does not
have the adequate general fund money to meet the match. He
explained the grants are used by non-profit organizations
for facility renovation and deferred maintenance. He
asserted these projects are a good investment in
maintaining the infrastructure of the mental health
program.
Spirit Camp Facility Development - Department of Health and
Social Services
Mr. Jesse explained this new project to assist what has
already been proven to be an effective culturally
appropriate way to allow local Native communities to take
responsibility for their own programs. He stated this
project helps communities develop programs that build upon
the cultural values and strengths of those communities
rather than simply imposing a more Anglo approach. He told
of efforts made on a smaller scale, saying that this is the
largest culturally relevant treatment project undertaken by
the trust.
Transitional Housing for Recovering Substance Abusers -
Department of Health and Social Services
Mr. Jesse stated that the purpose of this project is to
assist substance abusers who have completed treatment but
still need some supervision during a transition period into
their independent living situations.
Mental Health Trust Land Development and Value Enhancement
- Department of Natural Resources
Mr. Jesse stated that this is a continuing project and a
permanent part of the MHTA land office, to hire contractors
for subdivision sales, timber sales. He said the
contracting-out of these services is done in lieu of hiring
additional staff.
AHFC Beneficiary and Special Needs Housing - Department of
Revenue
Mr. Jesse explained this is also a continuing project, but
at a smaller amount this year. He stressed that this is a
critical part of the mental health program. He spoke of
"tremendous strides" the trust has made in the ability to
deliver treatment. However, he qualified the treatment
system often does not give full consideration to all the
facets of a person's life that are necessary to be
independent and become productive members of society. He
identified the need for developing safe, affordable housing
as one of the most critical items for successful recovery.
Senator Green asked if this was temporary housing.
Mr. Jesse replied that a variety of mechanisms have been
used to provide housing. He referred to a "Structured
Production Model" of developing supported housing. He
explained that in the past, the operational side of the
mental health program had operational money but didn't know
how to develop a housing project. On the other hand, he
pointed out, AHFC knew about housing but not how to deliver
necessary support. This project is to blend the two groups
together to supply adequate housing facilities and also
deliver services, according to Mr. Jesse. He added that
this project includes a plan to assist beneficiaries into a
home ownership situation. He stated that research shows
that an investment in home ownership is a powerful mental
health tool.
Senator Green suggested attaining additional support from
the residents. She asked if the housing provided included
monitoring to ensure the participants were safe and getting
necessary treatment.
Mr. Jesse affirmed.
AHFC Homeless Assistance Program
Mr. Jesse stated this is also a continuing project and is
instrumental in getting services to the most difficult to
serve populations in the state. He told of how many of
these people are not only unconnected with the normal
mental health services systems, but that they "often don't
want to be a member of the club." He detailed the
difficulties this segment of the population has in getting
employment and meeting other aspects of self-sufficiency.
Senator Phillips asked how many people are served in this
program.
Mr. Jesse began his response.
AT EASE 9:26 AM / 9:28 AM
Mr. Jesse did not have the exact data with him but noted
the performance measures for this project rely heavily on
how many people are served by the program. He said he would
supply the data to the Committee.
Senator Phillips asked for a breakdown showing the
different regions of the state.
Co-Chair Torgerson asked if this funding request would
supply the same level of support as the previous year.
Mr. Jesse replied that the $250,000 AHFC funding amount was
the same as the previous year and that the $200,000 of
MHTAAR receipts is new.
Coordinated Transportation and Vehicles - Department of
Transportation and Public Facilities
Mr. Jesse then told of this successful partnership project
that also utilizes federal transportation funds. He
described different non-profit groups each having a van to
serve only those in their mental health program. He said
this was because of the difficulties involved in
determining who would own, maintain and operate these
vehicles. The intent of this program, he explained, was to
combine the use of these vehicles to serve more than one
non-profit entity. He said that this project provides up-
front money to allow communities to establish a local
coordinated transportation system. He added that the
funding would also be used to purchase new vehicles where
necessary.
Planning for Juneau Senior Daycare Center $100,000
Mr. Jesse explained this item does not appear on the
spreadsheet because the governor had determined there was
not an adequate general fund match for the construction
costs. Mr. Jesse stated that the trustees want to utilize
MHTAAR funds for the planning process in anticipation that
once the community is able to develop a plan and identify
more accurate costs, there may be a variety of fund
mechanisms available to build the facility.
Co-Chair Torgerson asked if the witness was working with a
Committee member to propose such an amendment to the
budget.
Mr. Jesse believed so.
Co-Chair Torgerson announced a committee substitute would
be prepared to reflect the items on the spreadsheet and he
explained the amendment procedure.
Co-Chair Torgerson ordered the bill HELD in Committee.
CS FOR SENATE BILL NO. 289(L&C)
"An Act establishing and relating to the Alaska Board
of Technical and Vocational Education; and providing
for an effective date."
This was the second hearing for this bill in the Senate
Finance Committee. At the previous hearing, the Committee
adopted a committee substitute, 1-LS1525\M and Co-Chair
Torgerson asked the Department of Labor and Workforce
Development to detail how the program works and its
relation to language of the committee substitute.
AT EASE 9:33 AM / 9:35 AM
TOM WYLIE, Unemployment Insurance Actuary, Research and
Analysis, Division of Employment Security, Department of
Labor and Workforce Development, gave a presentation using
a handout. [Copy on file.] He addressed the "Basic Parts of
Unemployment Insurance (UI) Tax Rate Calculation"
flowchart. He detailed the "First Stage: Affects Employers
and Employees" shows the relationship of unemployment
benefit costs to total wages and taxable wages, and the
"Second Stage: Affects Employer Only" details the solvency
of the trust fund and if necessary either adds to or
subtracts from the UI tax rate.
Mr. Wylie explained that the calculations takes total
benefit cost over a three year period and defines them by
payroll tax cost, which then provides a ratio. He continued
that the ratio is then multiplied by the relationship
between taxable wages and the wage of pay by employers. He
noted that only certain portion of wages is taxable. He
established that the portion is $24,800 per year as set in
state statute. Once that average is produced, he said the
amount is divided into an employer tax and an employee tax
with the employer paying 80 percent and the employee paying
20 percent of that tax.
Mr. Wylie then detailed the second stage saying the trust
fund is examined to determine its solvency in relationship
to total payroll in the state. He told of a state UI
statute that sets out a process of dividing the trust fund
by total payroll and comparing it to a schedule. If the
trust fund has fallen below 3.3 percent of total payroll,
Mr. Wylie said an add-on tax is placed on top of the
employer's tax, but if the fund is above 3.3 percent, the
employer's tax is reduced. He noted that the employee tax
is not affected by the trust fund solvency.
Co-Chair Parnell asked when the last adjustment was made to
the employer's tax rate.
Mr. Wylie replied that the rate was adjusted downward in
the previous year and that there was no need for an
adjustment in the current year.
Co-Chair Torgerson asked the reason anyone would receive a
higher rate and whether experience was a factor.
Mr. Wylie explained how employers were placed into one of
21 rate classes depending on their experience with
unemployment, half of which were above the actual tax rate
and half were below.
Mr. Wylie then stated that the committee substitute does
not interface with the UI tax rate. Instead, he explained
it proposes a new tax of .15 percent on both the employer
and the employee using the UI mechanism to set the taxable
income amount and also using the UI office to collect the
taxes.
At the request of Co-Chair Torgerson, Mr. Wylie then
explained the STEP program. He told how current statute
requires diverting 0.1 percent of the employee's taxable
wages from the trust fund into the STEP program. The
employee's UI tax rate is then credited and the employee
has met the UI contribution requirement. This information
was detailed on the second page of the handout.
Co-Chair Torgerson asked if an amount would be collected
for vocational training assessment separately from the
usual UI mechanism.
Mr. Wylie affirmed and stated that the UI tax office would
collect this tax because it is the most convenient method,
but that the funds would not be deposited into a separate
account than the UI trust fund. He described how the money
would be diverted into this account.
Co-Chair Torgerson asked for verification that the
employee's deduction would not be affected.
Mr. Wylie assured him that was correct.
Co-Chair Torgerson began to address where the adjustment
would be made to allow for the vocation training assessment
fund.
Mr. Wylie stated that further implications of this
additional fund would be the resulting diversion away from
the UI trust fund and the lower collection into the trust
fund. He noted the impact would not be seen during the
first stage of the tax collection, but would be seen in the
second because the calculations would show a need to
increase the employer's tax rate to build up the balance of
the trust.
RONALD HULL, Deputy Director, Division of Employment
Security, Department of Labor and Workforce Development,
noted the committee substitute is not like the STEP program
because there is no credit and requires an additional add-
on tax. He stated there are two different options to fund
the vocational training assessment program, one that does
not affect the UI tax rates and the other that does.
Co-Chair Torgerson said that the UI tax rate would not
necessarily be affected by the add-on tax if 0.2 percent of
the employee's tax was used and depending on the strength
and solvency of the fund.
Mr. Wylie agreed and explained the likelihood that once the
program was established the tax for the vocational fund
would be indiscernible from the many other factors
influencing the amount of the total UI tax.
Senator P. Kelly asked how the credit was calculated for
the employee portion of the tax.
Mr. Wylie clarified this bill has no credit and he
explained the current STEP process. He said that Co-Chair
Torgerson approach, as proposed in the committee
substitute, was to fund the vocational training component
differently.
There was further discussion between Senator P. Kelly and
the witness regarding the current calculation of the UI
taxes.
Senator Phillips referred to page 6 of bill and asked if
state or federal law prohibited private schools from
receiving funds generated from this source.
Co-Chair Torgerson stated that the money collected this
year would be disbursed under the current method and the
money collected the next year would go to accredited
institutions. He stressed that there were no limitations on
private schools receiving the funds other than that they
must be accredited.
Senator Phillips then asked why there was a special
provision for a transitional period.
Co-Chair Torgerson responded that he used his discretion as
chair in making that decision.
Senator Phillips asked the witness to look into whether
there were any state or federal laws restricting which
schools received these funds.
Senator Wilken referred to the flowchart and asked that
even with the decrease of 0.2 percent funding the trust
fund, if the balance went down and total wages increased,
there would be no difference to the amount taxed.
Mr. Hull replied that because the Alaskan economy varies
greatly over time, many of the changes to the tax amount
could be "overwhelmed by economic forces within the state."
Therefore, he said Senator Wilken's question couldn't be
answered unless all other factors were equal. He used the
current year as an example of how the proposed provisions
would affect the tax amount. He stated that if employment
greatly increased and unemployment was reduced, the trust
fund might then increase on its own and there would be no
need to increase the tax.
Tape: SFC - 00 #74, Side B 9:55 AM
Mr. Hull continued explaining how different factor affect
the trust fund.
Senator Wilken commented that as a small business employer
he was not interested in imposing a higher tax rate, but at
the same time, wanted a fully trained workforce. He noted
that this legislation does not necessarily increase the tax
rates automatically and that they could actually decrease.
Mr. Wylie agreed.
Co-Chair Torgerson ordered the bill HELD in Committee and
announced his intention to amend the bill to mirror the
STEP program. He stated it was not his intent to jeopardize
the trust fund.
SENATE BILL NO. 290
"An Act relating to state funding for transportation
of public school students; and providing for an
effective date."
This was the second hearing for this bill in the Senate
Finance Committee. The original version of the bill, 1-
LS1555\A, was unchanged.
DAN BECK, Superintendent of Schools, Delta Junction,
testified via teleconference from Delta Junction to ask
what would happen if a new route were established and if
the district would have to pay 50 percent of that cost.
Co-Chair Torgerson answered that according to the
legislation, the district would pay 50-percent of all new
costs incurred after the FY 01 base was established.
Mr. Beck stated that he therefore did not support the bill.
He said that during this time when the state is trying to
put more money directly into instruction, this bill would
hamper that effort.
Co-Chair Torgerson commented that recent Alaska Board of
Education action gave districts more flexibility in
classifying administrative costs as instructional. The
board adopted regulations allowing the entire
administrative expenditure category of the uniform
accounting system to be considered as instructional rather
than administrative.
Amendment #1: This amendment inserts new language into the
title of the bill and adds a new section as follows:
Page 1, line 1, following "students;":
Insert "and to minimum expenditure for
instruction;"
Page 1, following line 13:
Insert a new bill section to read:
"Section 2. AS 14.17.520 is amended to read:
(a) A district shall budget for and spend a
minimum of 80 [70] percent of its school operating
expenditures in each fiscal year on the instructional
component of the district budget."
New text underlined [DELETED TEXT BRACKETED]
[Note: This amendment was never offered but was discussed.]
MIKE FISHER, Assistant Superintendent, Business Finance,
Fairbanks School District, testified via teleconference
from Fairbanks talked about the district's pride in the low
percentage spent on administrative costs and how this bill
would adversely affect their efforts. He spoke of the
district's efforts to meet an 80-percent for instruction
goal, saying that for some districts this figure could be
unrealistic.
Co-Chair Torgerson agreed that 80 percent of funds as a
minimum allowed for instructional costs was "a shot in the
dark." He again referred to the Board of Education's
actions, which essentially lowered the percentage to 75.5.
Senator Wilken asked the witness if there was a principal
for every school.
Mr. Fisher responded there is.
Senator Wilken wanted to know who decides on the number of
assistant principals and support staff for the assistant
principals.
Mr. Fisher answered the number of assistant principal
positions was a school board decision and that the
principal of each school has discretion as to how many
support staff positions are incurred. He noted these
positions along with the principal are a strong component
of the school level administration.
Senator Wilken spoke of the accounting methods for showing
these administrative costs. He asked if a new category
"405" could be added to list assistant principals and their
support staff separately.
Mr. Fisher assured that the district would have no problem
accounting for those positions separately. He said that it
could affect the instructional percentage by 2.5 to three
percent.
Senator Wilken asked if the witness thought that most other
school districts in the state could also follow this
method.
Mr. Fisher replied that most districts could adjust their
system to separately account for their assistant principals
and support staff.
Senator Wilken commented that was the same issue he and Co-
Chair Torgerson talked about when testifying before the
Board of Education. Senator Wilken stressed this was simply
a function of cost accounting to isolate the cost of
administration. He warned that if the legislature allows
school districts, school boards and principals to determine
what qualifies as an instructional component, the system is
opened up to creative accounting. That was the reason he
was in support of a sub-account to account for principals
and assistant principals.
Senator Green asked if this matter was before the
Committee.
Co-Chair Torgerson replied that a proposed amendment was
distributed but that a motion was not on the table.
RICHARD CROSS, Commissioner, Department of Education and
Early Development, spoke to the proposed amendment to
increase the percentage of expenditures for instructional
purposed from 70 percent to 80 percent. He urged the
Committee not adopt the amendment, in part because the
department has supported the legislature's efforts to
reduce administrative costs. He stressed that school
districts did not support this provision in SB 36 from the
20th legislative session, saying it was an oversimplified
answer to a complex problem. He said the department could
not oppose the concept of moving administrative
expenditures to instructional areas.
Mr. Cross disagreed with Senator Wilken's statement that a
sub-account for assistant principals and support staff is a
matter of cost accounting, saying it is instead a matter of
how schools work. He stressed that the principals directly
supervise the teachers, which improves the quality of
instruction. He stated that creative accounting is already
occurring with some districts that list their assistant
principals as head teachers. He said that head teachers are
not required to hold an Alaska Type B certificate but that
without this certificate, the teacher cannot evaluate other
teachers. As a result, he lamented, teachers are being
evaluated by people who do not work in the same school
building but rather central office administrators, thus
there is no direct supervision. He cautioned that this is
not effective supervision of instruction. He said that the
department is attempting to remedy this by including those
positions that are directly involved in the supervision of
instruction as a part of the instruction component. The
current categories are too broad in his opinion. He
suggested further delineation, as proposed by Senator
Wilken to separate those administrators that directly
supervise instruction. Other costs that are not directly
related to instruction, he felt should not be classified as
instructional.
Mr. Cross spoke of the progress made with the school
districts in their willingness to strive toward the 70
percent for instruction provision. He urged that this sub-
account be created and that those costs be considered
instructional to allow the districts to meet the 70 percent
goal. He warned that by simply raising the percentage, most
districts would be unable to meet that goal and that so
many would require waivers, the test would not be taken
seriously.
Co-Chair Torgerson interjected saying that the witness's
proposed sub-account method was not what the Board of
Education implemented. Instead, he admonished, the board
allowed the entire "400" component, to be considered
instructional, which includes supplies, travel expenses and
all support staff working in a central administrative
facility. He stated that if the board had made allowances
only for principals and assistant principals, the proposed
amendment would not have been drafted.
Mr. Cross defended the board's action saying the "400"
component was not delineated at this time to allow for
specific instructional expenditures. He said the board gave
specific direction to the department to break down the
expenditures afterwards to ensure that those administrators
directly involved with instruction were classified
separately.
Co-Chair Torgerson accused the department of counting the
administrative costs twice, once as instructional and again
as administrative.
Mr. Cross disagreed with the assessment.
Co-Chair Torgerson asked what deductions are being made to
teachers and instruction costs versus administrators and
administrative costs under the current school budget
deliberations.
Mr. Cross responded that school districts were making
decisions to reclassify personnel in include them in
instruction costs. He thought those decisions were not in
the best interest of improving the quality of teacher
performance. He gave the replacement of assistant
principals with head teachers as an example. He stressed
that the department's interest was not cost accounting but
placing those administrators who make decisions regarding
improving teachers' performance in the school rather than
at a central office.
Senator Wilken gave a scenario of a district currently at
68 percent for instruction and its attempt at reaching 70
percent the next year by simply hiring an assistant
principal and support staff and classifying them as
instructional expenditures.
Mr. Cross replied that would be a decision that could work
under the Board of Education's recent action to allow
principals to be classified as instructional expenditures.
Senator Wilken asked if the department was working to
develop sub-accounts for principals and support staff
within the "400" category.
Mr. Cross responded that the Board of Education when
adopting the aforementioned regulations, gave the
department specific instructions to separate the costs of
those personnel directly related to instruction. He said
the board does not agree that the other costs should be
considered instructional and directed the department to
report back with the specific figures.
Co-Chair Torgerson remarked that the board adopted
regulations to allow the entire "400" category anyway.
Mr. Cross agreed the board did allow the entire category,
but that it was the only option available to them.
Senator Leman asked if the Board of Education's
deliberations suggested that a principal could be both
supervising instruction and also performing other non-
instruction related administrative duties. He wanted to
know if accounting of the position could be broken down to
reflect the amount of time spend on each area.
Mr. Cross answered that the breakdown can be done and that
principals in many small schools supervise instruction and
also directly provide instruction. In larger schools, he
said, it was unreasonable to expect one principal to
provide supervision to all the teachers and that a vice-
principal is also necessary to assist with supervision. He
continued that an additional vice-principal might be
necessary to provide discipline or over see other
activities. He stressed that school leaders' efforts to
improve the quality of teaching are an important part of
instruction.
Senator Leman asked if those personnel who perform duel
roles could break down the time spent on each function.
Mr. Cross responded that kind of cost accounting can be
done, but should be avoided. He talked about federal
requirements for timesheets and the need to account
incremental minutes for each federal program. He cautioned
that too much time spent on cost accounting wastes money
and negates any efficiency gained.
Senator Adams commented that while we all want the most
money spent in classroom as possible, there were problems
getting funding for students in rural Alaska. He asked how
many waivers were granted in the previous year for those
districts meeting 65 percent of expenditures to
instruction. He then asked if this amendment were adopted
how many waivers would be necessary.
Mr. Cross believed that 13 waivers were considered in the
current year to schools meeting 65 percent of expenditures
for instruction.
Senator Adams wanted to know how many school districts met
the 80 percent to instruction criteria.
Mr. Cross answered that almost all of districts met this
goal.
Senator Green commented that all staff is included in the
formula when miscellaneous school expenditures are
calculated using the Pupil Teacher Ratio (PTR)
calculations, a process she has questioned. She suggested
that if the PTR calculation process was used in preparing
SB 36 it may have been a mistake.
Co-Chair Torgerson replied that the calculations used were
recommended in the McDowell study on school funding and
that he did not think PTR was considered.
Senator Wilken noted that the Committee had found in its
consideration of SB 36, that four school districts had more
money going to administration than to the classroom.
Senator Wilken next relayed the two important elements of
cost accounting. First, he said is the need for clear
definitions of the uniform chart of accounts and the second
element is to analyze as a function of time and track
changes. Therefore, he stated that if the legislature
allows school districts, school boards or individual
schools to vary the definitions, the changes over time are
meaningless. He understood the importance of assistant
principals, but thought those positions need to be in a
sub-account category that could be observed and compared
against other districts.
For Senator Green's benefit, Mr. Cross repeated the earlier
conversation regarding the B certificates required by
evaluating teachers but not by head teachers. He again
stressed the department's belief that teachers need to be
supervised on a daily basis by someone working in the same
school rather than a removed central administration
facility.
Co-Chair Torgerson noted that some rural schools were
showing zero percentage of expenditures spent on
administrative costs because they were already shifting
their accounts.
Senator Green wondered if the administrative percent
includes superintendents hired under contract.
GARY BATER, Superintendent of Schools, Juneau School
District, spoke in opposition to the bill. He stressed that
the hardest addition to a school district's budget is an
administrative position. He stated that whenever cuts are
proposed, the public clamors to eliminate administrators.
He thought school districts were under constraint with or
without the 70 percent for instruction restrictions.
He stated that SB 290 is about shifting future increases of
pupil transportation to local school districts and away
from the state. He said pupil transportation was an
essential component of education. He thought the current
law has worked well. He believed the Juneau School
District's rate of growth and pupil transportation costs
have been below the rate of inflation once adjusted for
increased enrollment.
Senator Wilken asked how the school district views its
participation with pupil transportation.
Mr. Bater responded that the district does not make any
changes without approval from the Department of Education
and Early Development. Rather, he said the district
proposes to the department for approval of a new route when
enrollment increases and busses become overcrowded. He
asserted the department asks tough questions and is
thorough in its review. He detailed the process to obtain a
new bus route. He stated that the district views itself as
an agent of the department.
Senator Wilken and the witness discussed the levels of bus
routes and the ability to change from a three-tier system
to a two-tier system and the expense involved.
Senator Green pointed out that the state is not required to
cover the pupil transportation costs, noting the word,
"may" rather than "shall" in statute.
CARL ROSE, Executive Director, Association of Alaska School
Boards spoke specifically to the issue of requiring the
districts to co-pay any increased costs, saying it was
inappropriate at this time. He spoke of aligned contracts,
which were too recent to see any realized savings. He also
stressed how funds allocated to classroom instruction would
be further stretched to cover pupil transportation costs.
He called the bill an unfunded mandate.
Mr. Rose continued that when the co-pay issue is raised in
the future, the foundation formula should be adjusted to
increase revenue to cover the district's costs of pupil
transportation. He suggested that an incentive should be
created to allow any realized pupil transportation savings
to be retained by the district.
Co-Chair Torgerson interrupted to ask if the witness
believed that a 48 percent increase to the cost of pupil
transportation was entirely attributable to an adjustment
to the contracts.
Mr. Rose responded that he thought there were a number of
reasons the costs increased. He pointed out that other
costs incurred in the previous contracts were omitted from
the new contracts.
Co-Chair Torgerson said he has offered to all parties the
opportunity to present a better system. However, he said
there has been no suggestions other than having the state
pay the entire cost and if savings can be identified with
the contracts, having the state pay to the district the
difference.
Mr. Rose appreciated the co-chair's concerns but warned
about later costs and an unfunded mandate.
Mr. Rose commented on the accounting of assistant principal
positions separately saying he agreed with this suggestion,
but that he did not see any advantage to a breakdown
between assistant principal and principal positions. He
also opposed changing the total instructional percentage to
80 percent of expenditures. He asked the Committee to have
patience in allowing the 70 percent goal to be reached.
Amendment #2: This amendment inserts language on page 1,
line 13, following "district" as follows:
"; the 50 percent limitation imposed under this
paragraph does not apply to student transportation
system operating costs that are incurred as a result
of an increase in student enrollment"
[Note: This amendment was never offered but was discussed.]
Mr. Rose stated that he supported this amendment. He
commented that the overall impact of the bill was yet to be
seen and listed figures of recent student enrollment.
Co-Chair Torgerson asked for explanation of the witness's
implication that costs have been passed along to local
communities.
Mr. Rose listed the reduction of state revenues provided to
the school districts and the possible reduction in
municipal assistance grants. He predicted that the local
residents could be required to pay an additional $6
million.
Co-Chair Torgerson asked if the witness was suggesting
throwing the entire foundation funding formula out.
Mr. Rose clarified that was not his suggestion but that the
association wanted a certain percentage of funds spent on
instruction. However, he stated that the state is
allocating less money to districts by the state and that
the percentage of local contributions is subsequently
rising.
Mr. Rose then asked the co-chair if SB 105, relating to
public school buildings was being considered for inclusion
in SB 290.
Co-Chair Torgerson answered that it may be.
Co-Chair Torgerson ordered the bill HELD in Committee.
Tape: SFC - 00 #75, Side A 10:42 AM.
CS FOR SENATE JOINT RESOLUTION NO. 34(L&C)
Proposing amendments to the Constitution of the State
of Alaska relating to departments, agencies, and
public corporations.
This was the first hearing for this bill in the Senate
Finance Committee.
SENATOR RICK HALFORD stated that this issue of appointing
officers to state-owned corporations has been before the
legislature many times since the creation of the permanent
fund. He directed the members' attention to a list of all
state-owned corporations. [Copy on file.]
Senator Halford referred to an amendment considered by the
Senate Labor and Commerce Committee sponsored by Senator
Drue Pearce relating to "overhang commissioners." Although
this amendment was not adopted, he stated a related title
change was inadvertently made to the legislation.
Senator Halford then addressed the constitutional amendment
itself explaining how the legislature confirms members to
State Of Alaska boards and commissions. However, he
stressed, the legislature has no control over the
appointment of members to the boards of directors of the
Permanent Fund Corporation, the Alaska Housing Finance
Corporation (AHFC), the Alaska Industrial Export Authority
and the other state-operated corporations.
Senator Halford stated that of all the relating
constitutional amendments he has seen attempting to address
this issue, this was the simplest, the most straightforward
and the most justified. He surmised that if corporations
of the size and scope of the aforementioned existed at the
time of statehood, the framers of the constitution would
have included them with the board and commissions'
requirements for legislative confirmation of membership
appointments.
Senator Halford assured that this legislation makes no
major changes to the constitution other than to provide for
the legislative confirmation of appointments to the boards
of state-owned corporations.
Senator Halford detailed the previous proposals made in the
Senate to require these legislative confirmations.
Senator Phillips referred to language on page one, line
ten, stating that members "may be removed as provided by
law" and asked if the standards are the same for the
corporations as they are for the other boards and
commissions already included in the legislative
confirmation process.
Senator Halford responded that the standards are not the
same, and that they are the standards provided in the law
that created the particular state-owned corporations. He
said that some board member dismissals can be made only
"for cause" and others can be made at the pleasure of the
governor.
Senator Leman supported the intent of the sponsor and
agreed this legislation is simple and necessary but he
argued that it was not the simplest and most necessary.
Senator Halford responded that he believed if the framers
of the state constitution had an indication of the
magnitude of these corporations, they would have written
the legislative confirmation provision directly into the
constitution. He stated that he had not heard opposition by
those framers on this matter as had been heard on other
matters.
Co-Chair Parnell read language from the sponsor statement,
"It would ensure that the people who control Alaska's
largest assets are subject to a formal appointment,
confirmation and removal process, not the whim of a newly
elected governor." He asked if the sponsor was aware of any
problems with these boards.
Senator Halford shared that the past two governors had
entirely changed the board members of the permanent fund,
while the previous governors did not make those drastic
changes. While he did not disagree with any of the actual
appointments, he did not believe the entire management team
of a large corporation should be changed all at once. He
pointed out that during a governor's administration,
several board member terms would expire and therefore, the
governor still has a great impact on the makeup of these
boards.
Co-Chair Torgerson asked about any necessary statutory
changes to implement this constitutional amendment.
Senator Halford replied that the Department of Law had made
recommendations and that there are certain political
implications of this legislation. He stated that the larger
corporations would be subject to legislative confirmation
but that exemptions could be made for some of the smaller
corporations.
Senator Adams asked why the legislation includes the Alaska
Railroad Corporation and the AHFC when the only board with
a significant amount of money under its authority is the
Permanent Fund Corporation.
Senator Halford responded that there was a strong belief
that any entity that handles millions of dollars should
have some oversight. He gave details on the large holdings
of the railroad corporation.
Amendment #1: This technical, conceptual amendment deletes
"department, agencies and" from the title on page 1, line 2
of CS SJR 34 (RES).
Senator Phillips moved to adopt the amendment. There was no
objection and it was ADOPTED.
Senator Phillips offered a motion to report from Committee,
SJR 34, 1-LS1373\G, as amended. Without objection, the
resolution MOVED FROM COMMITTEE.
SENATE JOINT RESOLUTION NO. 40
Proposing amendments to the Constitution of the State
of Alaska providing that the governor, United States
senators, United States representative, and electors
of the President and Vice-President of the United
States be elected by a majority vote.
This was the first hearing for this bill in the Senate
Finance Committee.
SENATOR ROBIN TAYLOR expressed that in light of elections
won by candidates, who received less than a majority of the
votes, he believed the constitution should be amended to
require a winning candidate to secure more than 50 percent
of the votes.
Senator Taylor stipulated that this amendment would result
in a runoff election should a candidate receive less than
50 percent of the ballots cast.
Senator Taylor stated that he supported the resolution,
which he said was sponsored by the Senate Judiciary
Committee at the request of the Senate Majority.
Co-Chair Torgerson asked why the president and vice-
president were included in this resolution.
Senator Taylor replied that the president and vice-
president are actually elected through the Electoral
College and that the delegates themselves are elected. He
asserted that the delegates should receive a majority of
the votes as well rather than a plurality.
Senator Phillips asked for clarification of the definition
of "majority" in the resolution.
Senator Taylor answered a majority is 50 percent plus one
vote. He did not know if the definition was specifically
described in state statute, but argued this is what
majority means.
Co-Chair Torgerson said he inquired on the definition of
majority from Department of Law and was supplied with the
same answer as listed in a Black's Law Dictionary and
others.
KATHLEEN STRASBAUGH, Assistant Attorney General,
Governmental Affairs Section, Civil Division, Department of
Law, brought three items to the Committee's attention.
First, she stated was the definition of majority, which
caused confusion among others besides members of the
Committee. She suggested that the definition should be
detailed in the constitution along with this amendment.
The second issue Ms. Strasbaugh brought up was the language
on page 1 line 16, through page 2, line 1 of the resolution
stipulating that the legislature determines the procedure
for arriving at a majority vote. She cautioned that this
language could give the legislature more latitude than the
resolution drafters intended.
Ms. Strasbaugh continued with the third item concerning the
delegates to the Electorate College. She referenced AS
15.30 that stipulates "a vote for the president is a vote
for the elector." Article 5 Section 1 of the Alaska
Constitution relates to the election of the president and
the vice-president. She warned against enshrining the
electorate in the constitution and then have the Electorate
College extinguished, which she stressed, is a threatened
possibility. She suggested leaving the existing language
regarding the election of the president and vice president
unchanged in the constitution.
Senator Adams asked if this resolution is a constitutional
amendment or a revision.
Ms. Strasbaugh replied that the full implications of the
outcome of Bess vs. Ulmer were not yet known and that this
constitutional amendment litigation could change the
resolution from an amendment to a proposed revision. She
commented that this legislation looked simple but that it
does propose changes to the state's electoral process,
which might have other affects.
Senator Adams wanted to get a legal opinion on whether this
resolution is considered an amendment or a revision. He
stressed that without an opinion, a "gray area" would exist
regarding this issue.
Co-Chair Torgerson commented that until the Supreme Court
has ruled on the case, he thought it would not be possible
to get a legal opinion. However, he requested the
department try to prepare an opinion.
Co-Chair Torgerson requested that Senator Taylor prepare
answers to the questions posed by the department and he
ordered the bill HELD in Committee.
Co-Chair Torgerson recessed the meeting to the call of the
chair at 11:00 AM.
ADJOURNED
Senator Torgerson adjourned the meeting at 2:10 PM.
SFC-00 (28) 04/03/00
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