1 HOUSE BILL NO. 468 "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." Co-Chair Hanley provided members with Work Draft for HB 468, Parnell MOVED to adopt Work Draft for HB 468, #9-GH2058\C, dated 1/16/96. There being NO OBJECTION, it was so ordered. Co-Chair Hanley provided members with a spread sheet of the Committee Substitute for HB 468 (FIN) (Attachment 1). He compared CSHB 468 (FIN) to HB 468. DEPARTMENT OF ADMINISTRATION Section 1(a) addresses the reduced centralized administrative, Division of Finance services shift to the Bethel Public Defender Office to meet increased caseloads in the amount of $49.0 thousand dollars. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 1(b) supplemental budget request in the amount of $217.0 thousand dollars to cover the operating cost shortage for the Public Defender agency (Rule 39 receipts for representation). Co-Chair Hanley explained that this request was included but that he recommended that it be reduced to $195.0 thousand dollars. Section 1(c) would provide for $356.4 thousand dollars for operating costs for the Office of Public Advocacy (OPA). Co-Chair Hanley stated that this section was retained at an amended amount of $335.1 thousand dollars in the Committee Substitute for HB 468 adopted by the Committee. Section 1(d) would provide $870.0 thousand dollars to fully fund leasing expenses. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 1(e) supplemental budget request in the amount of $450.0 thousand dollars would cover investment 2 management fees resulting from a higher than expected asset growth in Retirement and Benefits. Co-Chair Hanley observed that this section was included in the Committee Substitute for HB 468 adopted by the Committee. Section 1(f) supplemental budget request to ratify a FY95 over expenditure of $23.1 thousand dollars for longevity bonus grants. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 2 supplemental budget request of $61.2 thousand dollars to cover FY96 and FY97 costs for office space in Tokyo. Offices will be combined. The security deposit plus interest for an existing lease will be refunded and deposited into the general fund. Co-Chair Hanley stated that Section 2 was removed from the Committee Substitute for HB 468 adopted by the Committee. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Section 3(a) would provide revenue sharing costs for the Native Village of Kluti Kaah in northern Alaska. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Sections 3(c,d & e) were requested for capitalization of the Rural Development Initiative Loan Fund (RDILF). AIDEA would provide $650 thousand dollars to capitalize the Fund. Co-Chair Hanley observed that Section 3(c, d & e) were not included in the Committee Substitute for HB 468 adopted by the Committee. Sections 3(f&g) supplemental request for $200 thousand dollars for the Alaska Legal Service grant in lieu of pending legal fees. The request provides funding in anticipation of a federal dollar shortage. Co-Chair Hanley explained that Section 3(f&g) was not retained in the Committee Substitute for HB 468 adopted by the Committee. DEPARTMENT OF CORRECTIONS Section 4(a & b) supplemental request would cover the 3 Cleary court fines for FY95 and FY96 contempt case. Co-Chair Hanley explained that this section was included and adjusted to $936.6 to reflect the amount needed to cover court fines through the end of January 1996. DEPARTMENT OF EDUCATION Section 5(a) supplemental budget request identifies excess funds in the foundation program and then appropriates those funds as grants to school districts in order to address the disparity problem. Co-Chair Hanley stated that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 5(b) would extend the lapse date for the FY 96 K-12 appropriation. Co-Chair Hanley observed that Section 5(b) was not included in the Committee Substitute for HB 468 adopted by the Committee. He explained that the extension of the lapse will be part of the budget process. DEPARTMENT OF ENVIRONMENTAL CONSERVATION Section 6(a & b) would extend Spill Prevention Response/Underground Storage Tank lapsed funds and reappropriate encumbrances for the Storage Tank Assistance Program through June 30, 1997. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. He explained that the lapsed funds in Section 6(b) are extended for one year instead of two. The language in Section 6(b) remains the same as the Governor's original bill. DEPARTMENT OF FISH AND GAME Section 7 supplemental budget request for the Exxon Valdez Oil Spill Trustee Council would extend the lapse date for approved EVOSS projects to the end of FY97. These lapse dates have been approved by the Legislative Budget and Audit (LBA) Committee. Co-Chair Hanley observed that Section 7 was not included in the Committee Substitute for HB 468 adopted by the Committee. Section 8(a) supplemental budget request in the amount of $32.7 thousand dollars would pay increased vendor 4 compensation in increased sales of fish and game licenses. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 8(b) supplemental budget request would provide for a language change addressing the scope of the Arctic-Yukon-Kuskokwin salmon fisheries stock assessment for "equipment" to "projects", thus allowing for public participation. Co-Chair Hanley stated that Section 8(b) was not included in the Committee Substitute for HB 468 adopted by the Committee. He observed that this item will be considered for inclusion in the reappropriation bill. DEPARTMENT OF HEALTH AND SOCIAL SERVICES Section 9(a/1) supplemental budget request which would reduce Aid to Families with Dependent Children (AFDC) in order to fund other welfare reform programs (Public Assistance eligibility tracking system $3.5 thousand dollars; child care benefits, Jobs Program for $1 thousand dollars). Co-Chair Hanley explained that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 9(a/2) for $500 thousand dollars would be an investment to increased child care benefits and would be shifted from AFDC. Co-Chair Hanley noted that this section was included in the Committee Substitute for HB 468 adopted by the Committee. Section 9(b) supplemental budget request for $3.5 million dollars for the Eligibility Information System (EIS) which would provide changes to the main frame system to meet federal welfare reform requirements. The funds would be shifted from AFDC. Co-Chair Hanley explained that the $3.5 million dollar request was reduced to $1.9 million dollars in general fund authorization and $1.6 other funds. This is the amount of federal funds that the Division anticipates capturing by October 1, 1996. Section 9(c)(1&2) supplemental budget request transfer of $250 thousand dollars, from Family and Youth Services to fund Youth Facilities. These funds would 5 be used for the McLaughlin and Johnson Youth Centers. Co-Chair Hanley stated that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 9(c)(3)(d) supplemental budget request for a $3.5 million dollar reduction in the Medicaid program to fund the welfare reform proposal for the Alaska Family Independence (AFI) program. Co-Chair Hanley noted that this section was not retained in the Committee Substitute for HB 468 adopted by the Committee. He observed that this is a new program. He stressed that fiscal notes should accompany the legislation. Section 9(e) supplemental budget request in the amount of $426.9 thousand dollars would be used to pay the judgement in Helmuth v. State - API employee social services settlement. Co-Chair Hanley explained that this section was included in the Committee Substitute for HB 468 adopted by the Committee. DEPARTMENT OF LAW Section 10(a & b) supplemental budget request in the amount of $369.3 thousand dollars to be used for judgments and claims. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 10(c) judgement - Berger v. State. Co-Chair Hanley observed that this section was not included in the Committee Substitute for HB 468 adopted by the Committee. He recommended that Section 10(c) be reinstated to reflect the actual judgement amount. Section 10(d/1 & 2) supplemental budget transfer in the amount of $66.6 thousand dollars, reducing FY96, oil and gas litigation in order to fund an additional prosecutor in Bethel resulting from increased case loads. Co-Chair Hanley explained that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. He explained that the Committee may remove the section that reduces the amount out of Oil and Gas Litigation. He observed that there is some question if this 6 would take a three-quarter vote due to the Constitutional Budget Reserve Fund as the funding source. DEPARTMENT OF MILITARY AND VETERANS AFFAIRS Section 11(a) supplemental budget request in the amount of $1.4 million dollars for increased costs for the National Guard Retirement Fund based on updated actuarial reports. The current liability is funded at only 17%. Co-Chair Hanley noted that Section 11(a) was included in the Committee Substitute for HB 468 adopted by the Committee. Section 11(b) supplemental request in the amount of $557.3 thousand dollars for payment relief from disasters which have already been declared. Co-Chair Hanley stated that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. DEPARTMENT OF NATURAL RESOURCES Section 12 supplemental request in the amount of $5,258.0 million dollars would be allocated for fire suppression covering spring fire contracts and anticipated fire activity through the end of the fiscal year. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. DEPARTMENT OF PUBLIC SAFETY Section 13 request to amend FY 95 capital appropriation to include "equipment". Co-Chair Hanley noted that this request was not included in the Committee Substitute for HB 468 adopted by the Committee. DEPARTMENT OF REVENUE Section 14(a) supplemental budget request in the amount of $198.2 thousand dollars for unanticipated lease costs for AHFC. Co-Chair Hanley stated that this section was included in the Committee Substitute for HB 468 adopted by the Committee. Section 14(b) would transfer $67.0 thousand dollars between fund sources in the Alaska State Pension 7 Investment Board. Co-Chair Hanley observed that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES Section 15(a) supplemental budget request in the amount of $4 million dollars would be used for highway and bridge repair costs related to Southcentral flood disasters. Co-Chair Hanley noted that this section was included in the Committee Substitute for HB 468 adopted by the Committee. Section 15(b) supplemental budget request in the amount of $720 thousand dollars for the Copper River Highway restoration settlement. Co-Chair Hanley stated that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. UNIVERSITY OF ALASKA Section 16(a) supplemental budget request in the amount of $455.0 thousand dollars for the 1995 monetary terms agreement with the Classification Employee Association (CEA). Co-Chair Hanley noted that this section was not included in the Committee Substitute for HB 468 adopted by the Committee. Section 16(b) request in the amount of $473.0 thousand dollars would be used for the 1995 monetary terms agreement with the Alaska Community College Federation of Teachers (ACCFT). Co-Chair Hanley stated that this section was not included in the Committee Substitute for HB 468 adopted by the Committee. OFFICE OF THE GOVERNOR Section 17, $1.5 million dollars to the Office of Management and Budget for a small reserve to allow immediate response to anticipated FY 96 & FY 97 disasters and fires. Co-Chair Hanley noted that this section was not included in the Committee Substitute for HB 468 adopted by the 8 Committee. ALL DEPARTMENTS Sections 17(a), Miscellaneous Claims - general funds & Section 17(b), Miscellaneous Claims - other funds. Co-Chair Hanley stated that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. Section 18, Prior Year Ratification to straighten state accounting records. Co-Chair Hanley noted that this section was retained in the Committee Substitute for HB 468 adopted by the Committee. AMENDMENTS DEPARTMENT OF LAW - Section 10(c) Co-Chair Hanley provided members with a letter from Nancy Slagle, Director, Division of Budget Review, dated 2/16/96 requesting reinstatement of Section 10(c) at the amended amount of $3,605.8 million dollars. Representative Parnell MOVED to adopt Amendment 1, reinstate Section 10(c) at the amended amount of $3,605.8 million dollars. There being NO OBJECTION, it was so ordered. DEPARTMENT OF ADMINISTRATION - Section 1(b & c) Co-Chair Hanley stated that the addition of a $217.0 thousand dollar request when added to the FY 96 authorized amount results in a total FY 96 amount which is greater than the FY 97 request. He observed that there are $20.0 thousand dollars in interagency receipts intended for FY 97. SHARON BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF ADMINISTRATION explained that there are $25.0 thousand dollars in interagency receipts in the FY 96 operating budget and an unbudgeted RSA with Department of Health & Social Services for an additional $25.0 thousand dollars in FY 96. The Department only expects to receive $10.0 - $15.0 thousand dollars from this RSA. She stated that there will be no additional funding available in FY 96. In FY 97 they have requested $50.0 or $55.0 thousand dollars. She stated that the Office of Public Advocacy will need the full amount. She observed that there are additional Rule 39 monies available through general fund program receipts to make up the difference. She stated that the Department projects that the Public Defender Agency will need $195.0 thousand dollars to complete the fiscal year. 9 She asked that the Office of Public Advocacy be fully funded. Representative Navarre MOVED to adopt Amendment 2 (copy on file), Add Sections 1(b & c) with an amended number of $195.0 thousand dollars for Public Defender Agency and $356.4 thousand dollars for the Office of Public Advocacy. There being NO OBJECTION, it was so ordered. DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT - Section 2 Representative Navarre MOVED to adopt Amendment 3 (copy on file) to reinstate Section 2, $61.2 thousand dollars to cover FY96 and FY97 costs for office space in Tokyo. He spoke on behalf of Amendment 3. He emphasized that $50.0 thousand dollars will be saved by combining the offices of the Division of Trade and the Division of Tourism. He noted that the deposit on the existing space will not be returned for six months. The money will be returned in December. He noted that there will be a $50.0 thousand dollar on going savings. GUY BELL, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT explained that the contract is being renegotiated. He stated that notice has been given to the current landlords and a deposit has been placed on the new office space. Representative Navarre reiterated that the move will result in a savings. Representative Therriault questioned if a lack of funding would be absorbed in the Department of Commerce and Economic Development's budget. Mr. Bell noted that the Department had to make a decision in order to assure the savings in the next fiscal year. He observed that the FY 97 budget for the Department is smaller than FY 96. Representative Navarre suggested that the Legislative Budget and Audit Committee keep track of the deposit to assure that it is returned to the General Fund. Representative Navarre restated his motion to adopt Amendment 2. There being NO OBJECTION, it was so ordered. DEPARTMENT OF FISH AND GAME - Section 7 Co-Chair Hanley explained that Section 7 would extend the lapse dates on projects authorized by the Exxon Valdez Oil Spill Trustee Council. He observed that these projects have been approved by the Legislative Budget and Audit Committee through the end of FY 96. He noted that the federal 10 government is on a different fiscal year which begins October 1 and ends September 30. He questioned if authorization should be included in the operating budget under other funds. TRACY CRAMER, EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL, DEPARTMENT OF FISH AND GAME stated that the agencies that are receiving funding from the Trustee Council will include authorization to receive and expend funds in their FY 97 budget requests based upon their anticipation of the Trustee Council's FY 97 work plan. The FY 97 work plan begins on October 1, 1996 and ends September 30, 1997. It is set up on the federal fiscal year because of the type of projects involved. September is a better time for completion of field work. She noted that agencies have been asked to give serious consideration to projects that have been approved for FY 96 and put in their best guest. She observed that when the Trustee Council meets in August they will have an approved work plan. She noted that a comparison will be made between the work plan and the budget approved by the Legislature. Ms. Cramer expressed concern that if the funds are appropriated in a hybrid situation it will be difficult to make comparisons. She noted that one quarter of the FY 96 work plan would be included with three-quarters of the FY 97 work plan. She emphasized that they are not using federal funds. The funds are expendable trust funds in the General Fund. She observed that the Trustee Council is requiring specific projects in the agencies. There are approximately 65 Trustee Council projects. She asked that the funds be extended so that they can be expended in the same manner as they are accounted for in the Trustee Council. Co-Chair Hanley clarified that the extension of the lapsed date is for projects that have been approved by the Trustee Council and the Legislative Budget and Audit Committee. Ms. Cramer noted that the original request would extend the projects to June 30, 1997. She stated that the Trustee Council would support an amendment to extend the lapse to September 30, 1996. Ms. Cramer explained that the Trustee Council is requesting authority to receive and expend FY 96 projects based on what agencies think will be approved in the FY 97 work plan. Representative Martin stressed that the purpose is to let the Legislature know how much money is coming from the Exxon Valdez Oil Spill Settlement. The Department of Fish and Game, the Department of Natural Resources and the Department of Environmental Conservation receive the majority of EVOSS funds. He asked if the Trustee Council can anticipate the 11 amount of funds that will go to each department. Ms. Cramer stated that they know the bulk of the work plan. She emphasized the difficulty in accounting for the different fiscal year. MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION recommended that the section not be included in the supplemental. He explained that the authority for the projects has come through the Legislative Budget and Audit Committee process. He observed that this differs from other appropriations which come through the annual appropriations bill. Revised programs are submitted to the Legislative Budget and Audit Committee to modify or increase the authority. He noted that EVOSS appropriations have been authorized through the RPL process in the Legislative Budget and Audit Committee. He observed that the Legislative Budget and Audit Committee has concluded that the original authority for the projects should be included in the normal budget process. He noted that the Office of the Governor has agreed to included this in their budget amendment package. Mr. Greany stated that if Section 7 is reinstated that authorization would be duplicated. The existing projects approved in FY 96 would be authorized to continue in FY 97. Most of the projects are multiple year projects lasting 2 to 4 years. He suggested that the Committee follow the recommendation of the Legislative Budget and Audit Committee. He acknowledged problems with the opposing fiscal years. He stated that the lapse could be extended to September 30, 1996. He expressed concern with the administration burden placed on the Department of Fish and Game. He noted the effort needed to accommodate the opposing fiscal years. He stressed that the Department of Fish and Game should be requesting administrative support from this funding source to alleviate the drain placed on the Department in supporting EVOSS. In response to a question by Representative Therriault, Mr. Greany clarified that administration of EVOSS funds creates additional work for the Department of Fish and Game. He stressed that the Department is concerned that accounting changes to accommodate the switch to operating budget authorization will be burdensome. He reiterated that sufficient EVOSS funds should be provided for the administration of EVOSS projects to assure that the Department is not supporting the cost of the program. Co-Chair Hanley stressed that he did not want to see additional money spent on administration. (Tape Change, HFC 96-39, Side 2) 12 Mr. Greany suggested that if the House Finance Committee felt that a one time transition period was needed that the lapse could be extended till September 30, 1996. He clarified that his concern is that in trying to administer EVOSS projects that there is not a diversion of effort from other budgeted areas in the Department of Fish and Game. Ms. Cramer stressed that EVOSS projects are different from other types of projects by the Department of Environmental Conservation and Department of Fish and Game. Representative Brown MOVED to adopted Amendment 4, reinstate Section 7, with an amended lapse date of September 30, 1996. Mr. Greany noted that Amendment 4 included a new reference to RPL 11-6-9992. The Trustee Council provided members of the Committee with the amended lapse language in Amendment 4 (Attachment 3): EXXON VALDEZ OIL SPILL TRUSTEE COUNCIL. The appropriations to implement Trustee Council restoration projects for federal fiscal year 1996, which were made under the program review procedures of AS 37.07.080(h) and set out in revised programs 11-6-990 and 11-6-992, lapse into the funds from which they were appropriated September 30, 1996. There being NO OBJECTION, Amendment 4 was adopted. Section 3(f) Representative Navarre MOVED to adopt Amendment 5 (Attachment 4). Amendment 4 would reinstate 3(f) at a reduced level of $200.0 thousand dollars. Co-Chair Hanley explained that Amendment 5 would provided the Department of Community and Regional Affairs $200.0 of the anticipated $306.0 thousand dollars needed by the Alaska Legal Services for the remainder of FY 96. Representative Navarre explained that $200.0 thousand dollars would pay the majority of the attorney fees and allow Alaska Legal Services to continue on to other cases. BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, DEPARTMENT OF LAW pointed out that the potential liability to the State is in excess of $200.0 thousand dollars. Representative Parnell asked why the appropriation would be made to the Department of Community and Regional Affairs instead of to the Department of Law. Ms. Ritchie stated that the request is a early resolution to the issue. If it 13 was a straight grant to Alaska Legal Services it would be made to the Department of Community and Regional Affairs. She stated that the appropriation will resolve issues in respect to liability to Alaska Legal Services. It would not resolve liability in respect to co-counsel in the Quinhagak and Sorenson cases. Co-Chair Hanley noted that the Department of Law believes that the appropriation will save the State money. TECHNICAL CORRECTIONS BY THE OFFICE OF THE GOVERNOR NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR requested that Amendment 1 be amended to delete "settlement in lieu of" and insert "the". She explained that the amendment to Amendment 1 would clarify that the sum of $3,605.8 million dollars is appropriated to the Department of Law to pay for the judgement in Roger Berger d/b/a Frontier Financial Services v. The State of Alaska. Co-Chair Hanley MOVED to amend Section 10(c) to delete "settlement in lieu of" and insert "the". Amendment 1 appropriates the sum of $3,605.8 million dollars to the Department of Law to pay for the judgement in Roger Berger d/b/a Frontier Financial Services v. The State of Alaska. Section 2(b) Ms. Slagle requested that language be amended on page 3, line 14. She proposed that "into the general fund" be deleted and be replaced with "lapses into the fund from which it was appropriated." She explained that this would clarify that part of the appropriation in Section 2(b) is federal funds. Federal funds would be restricted. This would only extend general funds. She clarified that no additional federal funds were received. The authority to receive federal funds would be lapsed. Members discussed the grammatical structure of the amendment. Representative Parnell suggested that the amendment read "lapses on June 30, 1997 into the fund from which it was appropriated." Representative Parnell MOVED to adopt a conceptional amendment to Section 2(b) by deleting "into the general fund" and inserting "lapses on June 30, 1997 into the fund from which it was appropriated." There being NO OBJECTION, it was so ordered. Section 5(a) 14 Ms. Slagle noted that Section 5(a) on page 5, line 15 has the same problem. She requested that the same change be made in Section 5(a). Representative Parnell MOVED to adopt a conceptional amendment to Section 5(a) by deleting "into the general fund" and inserting "lapses on June 30, 1997 into the fund from which it was appropriated." There being NO OBJECTION, it was so ordered. OFFICE OF THE GOVERNOR - Section 17 Ms. Slagle stressed that problems will occur if Section 17 is not adopted. She stated that the Office of the Governor will not have the ability to respond to disasters. Co-Chair Hanley summarized that the issue is where the funding will occur. He noted that discussions have occurred regarding placement of the funds in the Department of Military and Veterans Affairs with a caveat requiring some concurrence by the Office of the Governor before the money is spent. He noted that there are no parameters for funding under the Office of the Governor. Representative Grussendorf noted that communities often contact the Office of the Governor when problems arise. He maintained that the Office of the Governor is able to act swiftly. He spoke in support of reinstating Section 17. Representative Martin spoke in support of authorizing the appropriation to the Department of Military and Veterans Affairs. Discussion ensued regarding funding the appropriation through the Office of the Governor or the Department of Military and Veterans Affairs. Representative Martin stressed that the Department of Military and Veterans Affairs must evaluate the situation. Representative Grussendorf emphasized that the Office of the Governor can respond quickly. Co-Chair Hanley observed that Title 26 states that it is the intent of the Legislature and declared to be the policy of the State that funds to meet disaster emergencies will always be available. He noted that the first recourse shall be the money regularly appropriated to state and local agencies and that the second recourse shall be the money available under the Disaster Relief Fund or under the Oil and Hazardous Substance Release Response Fund. It further states that if the Governor finds that these sources are insufficient the Governor may transfer and spend money appropriated for any other purposes or borrow money for a term not to exceed two years. He noted that money has generally been appropriated to the Disaster Relief Fund. He concluded that the Governor's concern is not the access of funds but the elimination of some expenditures. 15 Representative Grussendorf restated that it is important that the Governor have some money available to meet disaster needs. In response to a question by Representative Brown, Ms. Slagle stated that the $557.0 thousand dollar request is to meet disasters that have occur. CAROL CAROLL, LEGISLATIVE LIAISON, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS clarified that there will be no funds remaining in the Disaster Relief Fund after current disasters are covered. Co-Chair Hanley noted that of the $5.6 million dollar supplemental request $2.0 million dollars is for major fire response. There is no money in the Office of the Governor available for disasters. Co-Chair Hanley asked for a written explanation of funds, balances, and cash flow for disaster expenses. Ms. Slagle stated that fire suppression expenses have been paid and that there are no funds remaining. (Tape Change, HFC 96-40, Side 1) Ms. Slagle discussed procedures for obtaining additional disaster funds during the interim. She observed that the Senate President and House Speaker would be notified. Additional authority is given for potential lapses in anticipation of a supplemental request. Co-Chair Hanley noted that he will continue to work with the Office of Management and Budget on this item. DEPARTMENT OF HEALTH AND SOCIAL SERVICES - Section 9(d) Ms. Slagle pointed out that the Office of Management and Budget is concerned regarding the denial of Section 9(d). Co-Chair Hanley explained that fiscal notes should accompany the establishment of the Fund. He observed that the Alaska Family Independence Program is a two year fund to help with the federal transition. He noted that the legislation has not been adopted. Co-Chair Hanley reiterated that the $3.5 million dollar request in Section 9(b) was reduced to $1.9 million dollars in general fund authorization and $1.6 other funds. UNIVERSITY OF ALASKA - Section 16(a & b) Co-Chair Hanley noted that Sections 16(a&b) were not included in the Committee Substitute. Representative Martin MOVED to reinstate Sections 16(a&b). He spoke in support of 16 the University of Alaska employee contracts. MICHAEL MAYBERRY, FIRST VICE PRESIDENT, CLASSIFIED EMPLOYEES ASSOCIATION, UNIVERSITY OF ALASKA, FAIRBANKS spoke in support of reinstating Section 16(a). He noted that the University of Alaska and the Classified Employees Association (CEA) signed a contract on February 20, 1995. He observed that HB 305 was submitted to ratify the agreement. He stressed that no Cost of Living Agreements are contained in the contract. He noted that the contract contains steps and ranges which average 11 percent below that of the State. He emphasized that the lawsuit introduced by CEA against the University of Alaska would not be needed if the contract is funded. He clarified that the money contained in HB 305 is the same as that contained in Section 16(a). He restated that CEA is 11 percent below Local 71 employees. In response to a question by Representative Navarre, Mr. Mayberry observed that new employees are hired under the negotiated salary schedule. RALPH MCGRATH, PRESIDENT, ALASKA COMMUNITY COLLEGE FEDERATION OF TEACHERS (ACCFT) spoke in support of reinstatement of Section 16(b). He observed that the issue has been in dispute with the University of Alaska. The contract was approved by the Legislature in May 1992. The Board of Regents' policy was put in place calling for a 3 percent annual compensation increase. The University of Alaska decided to suspend the policy a year and a half ago. The issue was taken to arbitration. The arbitration process was decided in favor of ACCFT. He clarified that litigation is aimed at the suspension of the 3 percent annual increase. The litigation would continue on the 1995 portion. In response to a question by Co-Chair Hanley, Mr. McGrath clarified that no legislation was submitted for the appropriation in the past legislative session. Representative Therriault noted that the Arbitrator ruled that the University of Alaska did not have the power to set aside the 3 percent annual increase provision. Mr. McGrath stated that the Arbitrator determined that the 3 percent increase is incorporated into the ACCFT contract and cannot be removed at the discretion of the University. The Board of Regents' policy remains in place until a new contract is negotiated. He stated that ACCFT's legal case is based on the fact that the request was not brought before the Legislature. In response to a question by Representative Brown, Mr. McGrath observed that the contract terms were initially from May 8, 1992 to June 30, 1994. The terms and conditions of 17 the contract remain in place until a successor agreement is negotiated. He observed that contract negotiations have been in progress since April 1994. Representative Brown spoke in support of reinstatement of Section 16(b). She emphasized that the state of Alaska should support its contracts. Representative Navarre maintained that the University of Alaska is responsible for funding the contracts through their existing appropriation even if the Legislature does not appropriate additional funds. Members debated whether the contract could be turned down by the Legislature in the current fiscal year. Representative Navarre suggested that the contracts could not be turned down for FY 96 because the obligation for the 3 percent increase began in July 1995. Co-Chair Hanley disagreed with his interpretation. Representative Martin asked for a comparison of ACCFT salaries to other faculty members. In response to a question by Representative Martin, Mr. McGrath clarified that a successor contract has not been negotiated. He noted that contracts cannot be negotiated for over 3 years. He observed that ACCFT did not have a contract for five years because the University broke state law and violated their contract. He maintained that ACCFT employees' production level is high. He noted that ACCFT faculty members teach 4 classes each. Members were provided with a comparison of teacher's salaries (Attachment 5). Mr. McGrath disagreed with conclusions in Attachment 5. He noted that the graph was not compiled with ACCFT's help or knowledge. Representative Navarre echoed Mr. McGrath's comments regarding the objectivity of the graph contained in Attachment 5. Co-Chair Hanley clarified that the graph was prepared for Representative Martin. WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA observed that only a portion of the faculty at the Fairbanks campus are at the doctrinal level. She clarified that the FY 96 portion of the ACCFT request was not requested in the prior year. She observed that the arbitration was resolved in April 1995. She clarified that the FY 95 request was presented to the House Finance Committee in the previous year. Co-Chair Hanley disagreed that the FY 96 request would automatically go into effect if it was never submitted to the Legislature. He maintained that it is appropriate to consider the FY 96 request. He stated that it did not seem 18 proper to say that since the Legislature did not reject the annual 3 percent increase that it has to be paid or the University must fund it when it was never presented to the Legislature. Representative Navarre maintained that there was time for the Legislature to consider the 3 percent increase as part of the budget. Co-Chair Hanley spoke against inclusion of Section 16(a&b). He pointed out that the Committee will hold hearings on all contracts. In response to a question by Representative Kelly, Ms. Redmond clarified that the CEA contract is contained in HB 305 which was not acted upon in FY 96. The FY 95 portion of the ACCFT contract was included in Administration's FY 95 request. This is the first request before the Legislature for the FY 96 ACCFT contract increase. Ms. Redmond added that the full cost of implementation of the CEA contract is contained in the request. Annual increases are subject to annual appropriations. Ms. Redmond further clarified that ACCFT accepted the same pay scale as other non-organized university employees. That pay scale went into effect on July 1, 1995. New employees are being placed under the new contract. She explained that the ACCFT contract called for existing employees to be placed under the pay scale beginning July 1, 1995. She concluded that since existing employees were not placed under the new pay scale that new employees who are under it can be hired at a higher salary. (Tape Change, HFC 96-40, Side 2) Representative Therriault asked if there was a policy decision by the Board of Regents. Mr. McGrath stated that the Board of Regents and CEA are working together to fund the contract. Representative Therriault stated that it was his impression that the Legislature in rejecting all the contracts before it intentionally chose to turn down the contract. He disagreed that the Legislature must fund the pay raise. Representative Navarre asked if the ACCFT contract provided that the annual increase would be submitted to the Legislature each year. Ms. Redmond explained that the original contract cited that ACCFT would have the same salary compensation increase policy that applied to all non- organized employees. The contract cited the Board's policy. At that time, the Board's policy was that 3 percent salary increases would be requested each year. Subsequently the Board suspended the policy based on budget reductions. The union filed a series of four grievances based on the Board's action. The Arbitrator ruled in the University's favor on three of the grievances. The Arbitrator ruled that the 19 Board is still bound by the policy that was in place in 1992 when the contract was negotiated. She read from the contract (Attachment 6). She summarized that the contract directs the University to make the request and to implement funding if the request is approved. She observed that the University and the unions disagree on the interpretation of the contract. Representative Navarre summarized that specific contracts were rejected in FY 96. He pointed out that this contract was not specifically turned down. He reiterated his belief that the University will have to absorb the cost of the contract if it is not appropriated by the Legislature. Co-Chair Hanley stated that the contracts could be specifically turned down. He discussed the CEA contract as contained in HB 305. He summarized that if the employees win the lawsuit, the University will have to assume the cost of the raise. If the University wins the lawsuit and a specific appropriation is not included, the employees will not receive the increase Co-Chair Hanley discussed the contract request for ACCFT. He concluded that if Section 16(b) is taken out and language is substituted stating that the request is not approved the request would be turned down by the Legislature. Co-Chair Hanley stressed that if the funding requests are included that the contracts will be approved. He stated that they can be discussed with other labor contracts. Mr. Mayberry emphasized that Section 16(a) represents placement on a salary schedule. He pointed out that the CEA contract does not contain a COLA. Representative Grussendorf asked if general fund program receipts or other funds can be used to implement the contract. Ms. Redmond noted that the request contains a proportional assignment to the same other funds as are used for other salaries. Program receipt authority is being requested as part of the total funding package. Mr. Mayberry stressed that the contract states appropriate action or supplemental appropriation. Representative Navarre asked if the University has submitted the 3 percent ACCFT increase in a separate appropriation for FY 97. Ms. Redmond stated that the submission was made in the Governor's FY 97 operating budget. He suggested that retroactively turning down a request that was not acted on in the previous year is unfair and questionable. Co-Chair Hanley noted that if the University wants a request to go 20 forward they could withhold the request to prevent the Legislature from turning the request down. Representative Kelly spoke in support of addressing Section 16(a) through the legislative process. Ms. Redmond noted that there is a statutory deadline on when budget amendments can be made. She observed that the University's request was made after the deadline for FY 96 amendments. Representative Grussendorf summarized that no matter how much land the University is given negotiated wages will still be appropriated through the Legislature. Representative Navarre asserted that the University has submitted amendments past the legislative deadline through legislators by request. He maintained that the University could have submitted the issue in the past year. Representative Grussendorf asked how the ACCFT contract will be addressed. He spoke in support of the request. Co-Chair Hanley stated that the request could be included in HB 305. He noted that other contracts are included in the budget process and will be discussed in the Committee. Representative Martin WITHDREW his motion to reinstate 16(a&b). Representative Navarre MOVED to included Section 16(a&b). Representative Kohring OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Parnell, Therriault, Foster, Hanley Representative Mulder was absent from the vote. The MOTION FAILED (3-7). Representative Navarre MOVED to report CSHB 468 (FIN) out of Committee with individual recommendations. There being NO OBJECTION, it was so ordered. CSHB 468 (FIN) was reported out of Committee with a "do pass" recommendation.