HB 55 FY 94 OPERATING BUDGET & LOAN PROGRAMS OFFICE OF BUDGET AND MANAGEMENT - FY 94 BUDGET OVERVIEW SHELBY STASTNY, DIRECTOR, OFFICE OF BUDGET AND MANAGEMENT, OFFICE OF THE GOVERNOR provided members with two handouts detailing the Governor's proposed appropriations for FY 94 (Attachments 1 and 2). He reviewed pie charts in Attachment 2, detailing categories of spending. He explained that the charts are based on FY 93 appropriations. He added that the FY 94 proposed budget will not vary greatly from FY 93. He observed that $3,895.7 or 81 percent of state spending is state funds. Mr. Stastny interjected that there are 77 different funds which are potential revenue sources. He discussed figure 2, noting that 59% of federal funding goes toward operating expenditures. Capital Budget expenditures account for 41 percent of federal funds. Mr. Stastny further identified the breakdown of state spending as provided in charts of Attachment 2. He pointed out that 59 percent of formula program spending is for education. Representative Navarre noted that there is little fat and inefficiency in the general government category. General government makes up 12 percent of all state spending as detailed in figure 6, Attachment 2. Representative Martin asked if 200 new positions have been added. Mr. Stastny asserted that the state budget has decreased by 11 percent in real dollars. He added that the current budget tracks real dollars as opposed to keeping a head count. He observed that the reopening of the Wildwood facility demanded 77 new positions. CHERYL FRASCA, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF THE GOVERNOR added that, to her knowledge, there are no increased positions in general government activities. She 2 noted that there have been increases in formula programs. Thirty-eight positions have been added in association with increased Medicare caseloads. Twenty positions were associated with the reopening of Harborview. She emphasized that the Governor's ceiling on new positions has been successful. She asserted that the Governor's ceiling has resulted in a 700 position decrease. Representative Martin emphasized that debt service has decreased. He expressed his concern that agencies are adding to their budgets through program receipts. Representative Navarre asked that reductions due to debt service be accounted for in calculating actual operating expenditures. Members discussed data computations and means to show actual state expenditures including supplementals and accounting for declines in school and G.O. debt retirement. Representative Navarre asserted that the supplemental process pressures legislators into approving funds that agencies have already spent. He suggested that supplementals be introduced no later than the second day of the legislative session. He added that supplementals not passed by the 30th day of the legislative session not be funded. This would allow agencies to make internal adjustments to reflect that their supplemental requests will not be funded. Members continued to discuss the history of the supplemental process. Representative Grussendorf expressed his preference for budget calculations demonstrating base and adjusted base. The Office of Management and Budget has provided these distinctions in past years. MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION noted that the Administration has changed their format. He assured members that the Legislative Finance Division is working on a file which will identify increments and decrements in the budget. Representative Martin expressed support for Representative Navarre's suggestion that early passage of supplementals be required. Mr. Stastny defended the new format used by the Office of Budget and Management to track the budget. He assured members that the Office of Budget and Management is willing to provide the legislature with needed data. He agreed with Representative Navarre that early passage of supplemental legislation is desirable. He discussed the need for a fast 3 track supplemental during the first session of the Eighteenth Legislature to fund the Division of Elections. He observed that the Governor's supplemental request will be for $40 million dollars. ALASKA COURT SYSTEM ARTHUR H. SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM provided members with a handout detailing the Alaska Court System's FY 94 Operating Budget Request (Attachment 3). He discussed Attachment 3. He noted that there are 677 positions in the Alaska Court System. He observed that the Alaska Court System's budget is only 2 percent of the state budget. He emphasized that 131,000 cases were filed in the past year. He noted that the per case cost is approximately $265 dollars. Mr. Snowden emphasized that the Alaska Court System has only grown by 1.5 percent annually since 1985. Excluding mandatory cost of living pay raises the growth rate is 0.2 percent annually. He asserted that this rate is lower than other agencies with which the courts work. He noted that felony and state filings have grown. (Tape Change, HFC 92-3, Side 2) Mr. Snowden added that nearly 95 percent of the Alaska Court System's operating costs are fixed. He asserted that the Alaska Court System's employees are the lowest paid in all three branches of government and that their work day is 2.5 hours longer. He noted that 80 percent of their budget is in personnel costs. He pointed out that 70 percent of the employees are range 15 or under. Mr. Snowden discussed page 1, Attachment 3. He observed that new positions and funding requests are itemized. He noted the need for new space to comply with handicap access requirements. He observed that the Alaska Court System is requesting an increase in jury compensation. He noted the need for an additional position to assist in the Mental Health Trust case. He detailed other requests for funding as outlined in Attachment 3. Representative Parnell asked what issues will increase demand on the Alaska Court System over the next years. Mr. Snowden noted that a greater burden will be placed on the courts to interpret for individuals who have English as a second language. He added that additional cases will be filed on behalf of the elderly. He noted that the Alaska Court System does not take positions regarding new state legislation. He added that new legislation will result in 4 additional fiscal notes. Representative Parnell asked for information regarding the data base being created by the Alaska Judicial Council. WILLIAM COTTON, EXECUTIVE DIRECTOR, ALASKA JUDICIAL COUNCIL discussed the data base being created by the Alaska Judicial Council. He acknowledged the desire to coordinate data with the Department of Public Safety and Department of Law. He observed that their data base was designed to help in policy recommendations. He elucidated that the ultimate goal of one unified data base is not currently feasible. Co-Chair Larson asked if the one time appropriation of $88.4 thousand dollars to establish a data base would be carried over into the next fiscal year. Mr. Cotton affirmed that funds would be carried over to continue one position. Representative Martin questioned Mr. Snowden in regards to airline frequent travel mileage. Mr. Snowden noted that the airlines do not currently allow transfer of individuals mileage to the agency. He added that mileage gained by using ALASCOM is used to pay the most expensive travel. Representative Martin asked if costs associated with the Victim Rights Act could be paid under the Felony Act pertaining to Alaska permanent fund dividend checks. Mr. Snowden did not know. Mr. Snowden further discussed increased costs associated with the Victims Rights Act. Mr. Snowden emphasized the need for funding to provide magistrate trainers for each district. Co-Chair Larson noted that the Victims Rights Act has not been funded. He asked how Mr. Snowden has provided for the requirements of the Act. Mr. Snowden assured him that the Alaska Court System is following the directives of the Act. He emphasized that the additional requirements without passage of the associated funding has resulted in a further backlog in the courts. He noted that a 4 to 6 month reservation is needed to go to jail to serve a DWI jail term conviction. Co-Chair Larson noted that the Alaska Court System Subcommittee consists of Representatives Parnell, Barnes, Porter, Navarre, and Grussendorf. DEPARTMENT OF ADMINISTRATION NANCY BEAR-USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION provided members with an overview of the Department of Administration's FY 94 budget request (Attachment 4). She 5 observed that the Department of Administration consists of core governmental programs: personnel, finance, risk management, retirement and computer support. She asserted that the Department of Administration's FY 94 budget request is a maintenance budget. She emphasized that FY 94 general government spending has not changed. She noted that the Department of Administration issues 9,500 warrants a day. Commissioner Usera discussed divisions within the agency. She referred to page 4, Attachment 4. She compared the Department of Administration's budget to the total state budget. She reviewed the allocation of funding categories demonstrated on page 5, Attachment 4. Commissioner Usera emphasized the need to fully fund the Public Defender and Office of Public Advocacy. She asserted that these budgets have been intentionally short funded. Short funding has resulted in yearly supplementals. Commissioner Usera commented on issues for FY 94. The Department's number one priority is the Longevity Bonus Program. She discussed legislation to be introduced by the Governor. She stated that the proposed legislation will provide a three year transition. The program will not contain an annuity provision. She asserted that the State of Alaska cannot afford an annuity provision. She added that other investment opportunities exist. Commissioner Usera observed that elder abuse and adult protection functions within the Department of Health and Social Services will be transferred to the Department of Administration. Assisted living under project CHOICE will be expanded and incorporated into the Department of Administration. She emphasized that seniors are supportive of this change. Commissioner Usera discussed pioneer resident requirements. Commissioner Usera reviewed personnel consolidation within the Department of Administration. She estimates a savings of $1.14 million dollars. She identified three areas in need of attention: the merit system, career development, and training of human resource management. Commissioner Usera addressed labor negotiations. She noted that the general bargaining unit has been in negotiation for seventeen months. Commissioner Usera referred to EO 87 which would consolidate building leasing. She asserted that leasing space will be maximized by this consolidation. Commissioner Usera discussed telecommunications. She noted 6 that the Telecommunications Information Council has been reactivated. She stated that a state information services plan will be developed. She emphasized the possibility of a common delivery system for telecommunication programs. She observed that digital compression video technology is being developed. (Tape Change, HFC 92-4, Side 1) Co-Chair Larson announced that the Department of Administration Subcommittee consists of Representatives Larson, Kott, Green, Brown and Hoffman. Representative Hoffman questioned the State of Alaska's Native hire record. He pointed out that the State of Alaska has some of the highest paying jobs and benefits and that native communities have the lowest standards of income. Commissioner Usera agreed that the State needs to improve its record regarding Native hiring. She observed that the State's workforce is 7 percent Native. Natives represent 14 percent of the State's population. She noted that Native communities are often geographically removed from the State's hiring centers. Representative Martin questioned the Commissioner regarding program receipts. He noted that the Department of Administration has requested additional program receipts promptly after adjournment. He asked if program receipts can be anticipated. Commissioner Usera replied that she would need to know specifically which program receipts are in question. She noted that the Department of Administration receives program receipts from pioneer homes and inter agency charge-backs. Representative Martin observed that information centers are being consolidated. He emphasized the need to see corresponding reductions of positions within the agencies. Commissioner Usera emphasized that under EO 87 the Department of Administration will no longer manage the Department of Transportation and Public Facilities' leases. The Department will gain positions from the Department of Health and Social Services under reallocations of senior functions. Representative Grussendorf asked if the proposed one year residency requirement for pioneer homes could be extended to two years. Commissioner Usera discussed residency requirements and discrimination. Representative Navarre suggested that a fund be capitalized for eligible seniors. Members discussed 7 a draw down approach. In response to questions by Co-Chair Larson, Commissioner Usera stated that there would be a supplemental request by the Department of Administration to cover a longevity bonus shortfall. If the fifteen year requirement for pioneer homes is reduced to one year costs could remain the same. She stated that Medicare eligible individuals can be provided for through private nursing homes. The Department of Administration will meet with the Alaska Labor Relations Agency, on January 27, to determine whether the State was eligible to adjust state health benefits. OFFICE OF THE GOVERNOR MIKE NIZICH, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, OFFICE OF THE GOVERNOR discussed the proposed FY 94 budget. He noted that there are four appropriation levels: Special Offices and Commissions, Executive Operations, Office of Budget and Management, and Elective Operations. There are also fourteen separate components composed of support functions to the Governor for management of the Executive Branch. Mr. Nizich stressed that the proposed FY 94 budget for the Office of the Governor is a maintenance budget. He noted that there will be a reduction in Elective Operations. There are 171 full-time, 4 part-time, and 19 temporary positions. The Human Rights Commission is recommending a $7.2 thousand dollar general fund reduction. The Governor is recommending the discontinuation of the Sentencing Commission. Executive Order 84 would merge the Alaska Women's Commission with the Alaska Children's Commission to maximize efficiency of available funds. Mr. Nizich observed that there will be a shift of $36.8 thousand dollars from the Department of Administration to the Office of the Governor. This represents the lease budget for the Office of the Governor in Washington D.C. Mr. Nizich discussed the Media Center. The budget for the Media Center is $391.0 thousand dollars. Mr. Nizich summarized other realignments, increments and decrements. The Office of Budget and Management will be reduced by $289.9 thousand dollars. The Office Governmental Coordination will receive a decrease of $62.6 thousand federal fund dollars. The Division of Elections is seeking a $90.0 thousand dollars fast track supplemental to cover REAA elections. They are also requesting an operating supplemental of $800.0 thousand dollars. There is a total 8 reduction in the Office of the Governor of $1,895.1 million dollars. Representative Grussendorf referred to the Media Center. He noted that the Media Center was created as a cost neutral program. Mr. Nizich further discussed operations of the Media Center. He concluded that there is a need to create a section or division to manage functions of the Media Center. Co-Chair Larson announced that the Office of the Governor Subcommittee consists of Representatives MacLean and Larson as Co-Chairs, Hanley, and Navarre. Representative Martin expressed his concern that agencies transferring media functions to the Media Center show corresponding reductions in their budgets. Co-Chair Larson provided members with a memorandum concerning subcommittee budget instructions (Attachment 5).