1 HOUSE BILL 75 "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; and providing for an effective date." HOUSE BILL 76 "An Act making appropriations for the operating expenses of the state's integrated comprehensive mental health program; and providing for an effective date." DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS (DCRA) Representative Grussendorf MOVED to adopt DCRA-#1. [Copy on file]. Co-Chair Therriault OBJECTED. Representative Grussendorf explained that the amendment would provide the authority for the Department to receive federal funding for the first year of a three-year federal grant. The One-Stop project would aid Alaska in its efforts to streamline government and at the same time enhance services for individuals at a community level. Co-Chair Hanley interjected that his amendment, DCRA-#7, would also address that concern. The intent was not to allow any additional programs, but instead, consolidate current programs in order to save money. Co-Chair Therriault commented that his reason for objecting was that rarely are federal funds dispensed without a General Fund match. Representative Grussendorf noted that he understood no federal match would be required. Co-Chair Therriault WITHDREW the OBJECTION. Representative Kohring OBJECTED to adopting DCRA-#1. He elaborated that the Subcommittee did not believe that the expenditure was warranted. Following further discussion, Representative Kohring WITHDREW his OBJECTION to DCRA-#1. Representative G. Davis inquired if any of the funds had been used for lease payment. Representative Kohring stated that there was no lease money involved. The money would be used for the purchase of equipment and software. Representative Kohring decided to maintain his OBJECTION. A roll call vote was taken on the MOTION. IN FAVOR: Moses, J. Davies, G. Davis, Grussendorf, Hanley, Therriault OPPOSED: Martin, Foster, Kelly, Kohring 2 Representative Mulder was not present for the vote. The MOTION PASSED (6-4). Representative Grussendorf MOVED to adopt DCRA-#2. [Copy on file]. Representative Kohring OBJECTED. Representative Grussendorf explained that the amendment would allocate 100% federal funds to provide support services for the One-Stop Project. One-Stop is a three-year federal grant to aid Alaska in its efforts to streamline government and at the same time enhance services for individuals at a community level. Co-Chair Therriault questioned the administration and support component of the amendment. Representative Grussendorf commented that $3 million dollars would be used for computers and programming so that each department will be able to more efficiently "track" individuals. REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS, spoke to the money flow structure. The $100 thousand dollars would be Inter-Agency receipts from the One-Stop component; $3.6 million dollars was also established as a One-Stop shop component. The $100 thousand dollars was RSA'd from that component to the administrative data processing (DP) component. The DCRA DP staff will take the lead to develop the system throughout the State. Co-Chair Hanley asked if the Department had the ability to make the switch without the Legislature's approval. Mr. Henderson pointed out that the request includes costs for travel and directly related contractual expenditures. Transferring could be processed through an RP, although, the Department decided to show a true reflection of how the expenditures would be spent in data processing. Co-Chair Hanley pointed out that the intent was to co-locate all the training information offices to one location. Representative G. Davis suggested that there could be double-counting unless DCRA-#1 was reduced by the same amount. Co-Chair Hanley did not agree, pointing out the transfer and back-out at the bottom. Appropriations are made by the budget request unit and not by component. Representative Kohring echoed his concern that the program would not bring greater efficiency. Co-Chair Therriault voiced support for the amendment, pointing out that the money had already been authorized and that now the Department should be given direction on how to spend those funds. 3 Representative Martin recommended incorporating DCRA #1, #2, & #3 into one amendment. Mr. Henderson replied that within the DP component, the Department would not have the federal authority to receive the funds. DCRA-#2 allows the Department to RSA the money to the proper component. He stressed that "One-Stop" is the only component the Department could receive the federal funds in. Co-Chair Hanley MOVED to AMEND DCRA-#2, changing interagency receipts to federal receipts and at the same time reducing the One-Stop component by $100 thousand federal dollar receipts. There being NO OBJECTION, DCRA-#2 was amended. There being NO OBJECTION to the amended DCRA-#2, it was adopted. Representative Grussendorf revised DCRA-#3, substituting interagency receipts to federal receipts and adding a reduction of $97.7 thousand dollars from the One-Stop program. Representative Grussendorf MOVED to adopt the revised DCRA-#3. [Copy on file]. There being NO OBJECTION, DCRA-#3 was adopted. Representative Grussendorf MOVED to adopt DCRA-#4. [Copy on file]. Representative Kohring OBJECTED. Representative Grussendorf explained that DCRA-#4 would provide federal funding and a General Fund match for the Rural Utility Business Assistance (RUBA) program. Passage of the amendment would provide the State a savings of $4.5 million dollars. Without the funding, the program will suffer management problems. He added that the program had been created through the Environmental Protection Agency (EPA). Co-Chair Hanley asked if those funds could be received without the General Fund portion. Mr. Henderson commented that there was a 25% federal match component. Co-Chair Therriault questioned the need to have a separate program in DCRA when there already exists a maintenance program in the Department of Environmental Conservation (DEC). Mr. Henderson responded that RUBA was a technical assistance program. Employed individuals in that component are local government specialists, located in Fairbanks and Anchorage; a portion of the money would also fund contracts in St. Mary's. The contracts provide assistance to individuals teaching techniques to operate the utilities for generating greater revenue. Mr. Henderson clarified that the $225 thousand dollars was not new money. It had previously been budgeted in the Capital Budget and now was being moved to the operating 4 budget. Representative J. Davies pointed out that a rural sanitation council had been established under both Governor Hickel and Governor Knowles representing the State and federal government and the private sector. Their foremost recommendation was to strengthen the RUBA program. Representative Kohring countered that the program to date had a "poor" track record. Representative Grussendorf argued that RUBA was an excellent program serving rural Alaska. Co-Chair Hanley noted that he was supportive of the federal fund receipts portion of the amendment. Representative Grussendorf MOVED to AMEND DCRA- $225.0 thousand dollars. There being NO OBJECTION to the proposed change, it was incorporated. Representative Martin OBJECTED to the amended DCRA-#4. A roll call vote was taken on the MOTION. IN FAVOR: Moses, J. Davies, G. Davis, Grussendorf, Foster, Kelly, Therriault, Hanley OPPOSED: Kohring, Martin Representative Mulder was not present for the vote. The MOTION PASSED (8-2). Representative Grussendorf MOVED to adopt DCRA-#5. [Copy on file]. Representative Kohring OBJECTED. Representative Grussendorf explained that the amendment would restore funding to the Child Care program which provides grants to licensed child care providers and deletes the funding from the Day Care Assistance Programs which would provide subsidies to low and moderate income families. Representative Grussendorf amended DCRA-#5, changing the General Fund amount in the Child Assistance portion from $2.3 million dollars to $1.6 million dollars. There being NO OBJECTION to the proposed change, it was made. Representative Kohring reiterated his objection to the amended DCRA-#5. He discussed the subcommittee's objective to reduce overall spending, while investigating subsidies that go directly to the facilities. The subcommittee felt that it was inappropriate that dollars go directly to the facilities and instead recommended that all funding go into the day care assistance components. (Tape Change HFC 97-75, Side 2). Representative Kohring cited his "philosophical 5 disagreement" with the State subsidizing facility owners and businesses. Representative Martin agreed with Representative Kohring supporting that the two components be combined. Representative Grussendorf countered that there was not a single large business in the State that was not receiving some sort of State subsidy or break. The purpose of the amendment would be to provide facilities and or environments to keep children from being "warehoused". The State must be willing to invest that kind of money into an environment for youngsters in order to create socially responsible people. He emphasized that day care providers do not make a lot of money. Their work is about service, providing a valuable service to adults in the work force. Representative J. Davies elaborated on the value of funding for child care facilities. They can not operate on the revenues received from the parents. Day care workers are some of the lowest paid workers in the State, consequently, causing a high turnover rate. He implied that a quick turnover of teachers for the age group being considered is not a good thing. Preschoolers need continuity and stability. Also, facilities do not qualify for the grants unless they are licensed. That is the important difference between grant money and the child care assistance program. Representative Davies suggested that child care facilities are as important as the public school system. He stressed that the child care grant program is essential. In response to Co-Chair Hanley, Mr. Henderson explained that the statute allows for a maximum of $50 dollars per child distributed through the child care grant program and which is based upon children in a licensed facility program. Representative Kohring determined that there was no guarantee that the day care program would be one of quality because they were licensed by the State. He cited known problems within child care facilities. He believed by not adopting the amendment, parents would then be more empowered in deciding how the funding for their children would be spent. Co-Chair Hanley asked if the amendment was not funded, would the grant amount per month per child be increased. Mr. Henderson indicated that it would not. He pointed out that most areas of the State do not have a waiting list for day care assistance and perhaps the funding could be used to increase the subsidy amount to lower economic parents. Representative J. Davies ascertained that by not allocating funding for these facilities would cause rates to increase 6 as well as Alaska loosing the federal match dollars. He stressed that studies clearly demonstrate that licensed day care is "better quality care" than the non-licensed care. Co-Chair Hanley asked if federal funds were attached to the child care program. Mr. Henderson replied there are no federal funds associated with the child care grant program. Representative Kelly echoed Representative Kohring's concern with the amendment. By putting the money into the hands of the "users of the service" will provide them more power in the marketplace. He pointed out that the State would never offer such an advantage to the oil industry. Representative Grussendorf strongly disagreed. He listed multiple breaks given to the oil industry through tax reductions and subsidies. He referenced the bulk fuel and gasohol situation. Representative Kelly argued that removal of taxes was a "far cry" from tax subsidies. He criticized the fact that families put their children in day care centers, when rather they should be encouraged to raise children themselves at home. Representative J. Davies rebutted that if the money was placed into the hands of the parents, there would be no direct incentive to be licensed. The parents are economically strapped and they will be looking for the least costly facilities. Those will be the ones that do not spend money on training their staff or money on appropriate toys for that level of child. Low income parents do not often know that this is important criteria. He stressed that the State system will pay in the end with increased juvenile delinquency, increased problems in schools and increased people in jail. Mr. Henderson noted that parents have the option of where to place their children, whether it be in a licensed or non licensed facility. Co-Chair Hanley asked if the day care assistance program included a requirement that those children be placed in a licensed day care facility. Mr. Henderson stated that there was no requirement that the child go to a licensed facility. In response to a comment made by Representative Kelly, Mr. Henderson explained that day care licensing was provided through the Department of Health and Social Services and that he understood licensing requirements were very stringent. A roll call vote was taken on the MOTION. IN FAVOR: J. Davies, G. Davis, Grussendorf, Moses, 7 Hanley, Therriault OPPOSED: Foster, Kelly, Kohring, Martin Representative Mulder was not present for the vote. The MOTION PASSED (6-4). Representative Grussendorf WITHDREW DCRA-#6. [Copy on file]. There being NO OBJECTION, it was withdrawn. Co-Chair Hanley WITHDREW DCRA-#7. [Copy on file]. There being NO OBJECTION, it was withdrawn. Co-Chair Hanley MOVED to adopt DCRA-#8. [Copy on file]. Representative J. Davies OBJECTED for the purpose of discussion. Co-Chair Hanley explained that DCRA-#8 would provide a reduction to Municipal Assistance and Revenue Sharing, an additional reduction from the Governor's request, equaling 6% below the amount appropriated for FY97. A roll call vote was taken on the MOTION. IN FAVOR: G. Davis, Grussendorf, Kelly, Martin, Hanley, Therriault OPPOSED: J. Davies, Foster, Kohring, Moses Representative Mulder was not present for the vote. The MOTION PASSED (6-4). Representative Kohring noted for the record that his "no" vote was because the cuts were not deep enough. Representative J. Davies stated for the record that his "no" vote was cast because he did not support property taxes being raised. Representative Grussendorf MOVED to adopt DCRA-#9. [Copy on file]. Co-Chair Hanley OBJECTED for the purpose of discussion. Representative Grussendorf explained that DCRA-#9 would restore the $913.4 thousand dollars, cut by the subcommittee from Energy Operations and would spread the restoration to the components reduced to fund the circuit rider program ($425.0). The net effect to the rural energy program would be a $442.7 thousand dollar reduction restoring seven of the fifteen positions. The proposed subcommittee reduction would be added to the $400.0 thousand dollar reduction included in the Governor's proposed FY98 budget. 8 Representative Kohring pointed out that the restoration would "blow" the cap that the subcommittee worked hard to achieve. They decided to cut this item, following a recommendation from a previous House Speaker who had been involved in establishing the program. She stated that the intent was that there would be seven personnel positions. The bureaucracy has blossomed from the original program to twenty-four individuals. Representative Kohring spoke to Representative Ivan's concern that there be technical assistance within the program for the rural areas in order to provide the needed funding to run the facilities. (Tape Change HFC 97-76, Side 1). A roll call vote was taken on the MOTION. IN FAVOR: Foster, Grussendorf, Moses, J. Davies OPPOSED: G. Davis, Kelly, Kohring, Martin, Therriault, Hanley Representative Mulder was not present for the vote. The MOTION FAILED (4-6). HB 75 and HB 76 were HELD in Committee for further consideration.