HOUSE BILL NO. 441 An Act making appropriations for the operating expenses of the University of Alaska; making appropriations under art. IX, sec. 17c, Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. MARK HAMILTON, PRESIDENT, STATEWIDE PROGRAMS AND SERVICES, UNIVERSITY OF ALASKA, FAIRBANKS, stated that House Bill 441 invests a one-time, state funded $34,000,000 appropriation to the University of Alaska with a two-year lapse date. In total, it would invest $532,654,800 in operations to the University of Alaska. The bill responds to the University's Board of Regents request to help the University by making a significant and multi-year commitment to a new direction. President Hamilton pointed out that House Bill 441, in an innovative fashion, would address the needs of the University of Alaska. The bill invests a total of $532,654,800 for operation of the University of Alaska. That would include $66,284,700 ($34,000,000 in state funds) with a two-year lapse date so the University could retool to meet Alaska's changing needs. President Hamilton noted that HB 441 would provide $466,370,100 (including $172,143,300 in state funds) as basic funding for FY 01. Funds 6/30/01 Lapse 6/30/O2 Lapse State Funds 172,143,300 34,000,000 Other funds 294,226,800 32,284,700 Total funds 466,370,100 66,284,700 The separate, two-year allocation to the University budget would allow the Board of Regents stability in funding for new programs and additional flexibility in meeting the evolving needs of the students and the State. The University would be able to begin programs with the assurance that second year funding would be available. The two year time span would allow new and modified programs to begin functioning so that they can be reasonably measured as the FY 03 budget is being considered. President Hamilton stated that HB 441 would establish goals for the University to meet, including providing more Alaska trained teachers, helping diversify our economy, providing education and training for jobs and professions that are developing in Alaska. The Legislature expects the University to offer quality education to its students and retain students through graduation. It also expects the University forge partnerships with the private sector. To accomplish these goals, the University will need to review all its programs and facilities and eliminate or revamp those not contributing to these new goals. President Hamilton urged a change to the existing document. He stated that it was his intent, to pay from that same sum, the salary increase agreed to through the contracts. He noted that the faculty deserves those raises and that it would not require extra dollars. He reiterated that the legislation is innovative and enlightened. Co-Chair Mulder asked for more information regarding the new programs which would be coming on line. President Hamilton explained that there would be programs in some direct service areas, addressing long-term existing requirements for the production of quality teachers in the State. Additionally, there would be a two-year nursing graduate program, several allied health fields, heavy equipment operator program, additional opportunities in logistics as well as informatics, and a degree in financing. Co-Chair Mulder asked for further discussion on the continuation of the four-year program and how that would "fit" with the five-year program system. President Hamilton noted that a State University is directed to do a four-year program. He stated that the University was faced with a dilemma three years ago which was either to do "quality" or "quantity". The quality piece tried to get in consort with the Alaska quality schools initiative. At that time, it was assumed that the University would produce another year of graduate level participation. He hoped that there was a potential to merge those two programs and save a couple faculty positions. President Hamilton stated that the University would now offer a four-year program and wanted to keep the five-year program. Representative Williams questioned investment of teacher qualifications and expertise of the faculty and training of the students. President Hamilton responded that the system is improving and the programs are being revamped. Representative Williams advised that "something is currently broken" in the University system as it now exists. President Hamilton assured members that many changes need to happen which the University is now attempting. Funding this legislation will enable these things to be addressed. President Hamilton stated that there has been a significant loss of confidence from loosing the accreditation by the University of Alaska-Fairbanks. He believed that there was great failure on the part of the University not to have dealt with that publicly. The report that removed the accreditation, at the same time, praised the quality of the faculty and the quality of the students. He emphasized that a university needs to produce the majority of the teachers in that state. That is fundamental to the long-term support of the community in terms of recruitment. President Hamilton pointed out that only 15% of the faculty of the Alaska school system come from residents within the State. Most other states have 40% of their teachers having been trained in their state. He reiterated that this is not a broken system, however, it does have a bad reputation. Co-Chair Mulder asked about the logistics program and the vision for that program in the future. President Hamilton advised that logistics at large has an enormous potential in the State of Alaska. He noted that Anchorage is #2 in the global exchange with the airport and that Fairbanks is #9. It appears that the free market believes that this is a good place (Alaska) to undertake this "stuff". He added that many industries within the State have indicated their commitment by donating approximately $1 million dollars to the University to expand that program. President Hamilton noted that through discussions with the military installations, there is a great deal of interest in the possibility of out-sourcing the logistics schools. President Hamilton stressed that the State would be hard pressed to understand the impact this. Representative Williams questioned what the extra funding would be used for. President Hamilton offered to outline prioritized programs. (TAPE CHANGE, HFC 00 - 105, Side 1). **Tape out of place** Co-Chair Mulder spoke to the contracts and recognized President Hamilton's desire to treat all his employees equally. Co-Chair Mulder commented that the Legislature is trying to treat all the contracts consistently. President Hamilton stated that was fair. He added that it is his intent to construct a "contract continuation" which would not change the financial terms of the previous contract. This was constructed in time so that it could be considered along with everything else. He indicated that this is not a small point and urged that be reconsidered. Representative G. Davis asked if the amount of the new contract was known. (TAPE CHANGE, HFC 00 - 107, Side 1). DAVE LEWIS, OPERATIONS MANAGER, ALASKA FIBERSTAR, EAGLE RIVER, ALASKA, spoke on behalf and in support of greater funding for the University of Alaska. He stressed that the State needs the University for the State's economy. He advised that it is difficult to hire from within the State when all the children of the State move out of state for training. Ultimately, they end up living where they graduate from college. BOB CONDON, PRESIDENT, ALASKA FEDERATION OF TEACHERS FOR COMMUNITY COLLEGES, testified in support of HB 441. He noted that their union was not included on the list proposed by the University. He emphasized that the amount of money needed would not change regardless of whether they were on the list or not. Mr. Condon provided a history of their contract. He urged that they be placed on the list. Vice Chair Bunde questioned how many people were in that union. Mr. Condon replied that he represented about 260 employees. There are 1,000 or more of non-represented members and 1,000 with the United Academics. In response to a question by Vice Chair Bunde, Mr. Condon pointed out that their union has historically led the fight for better working conditions and salaries. Representative Bunde MOVED a conceptual amendment. Co-Chair Mulder interjected that it was his intention to hold the bill until tomorrow to discuss these issues. Representative Bunde WITHDREW the conceptual amendment. Co-Chair Mulder commented that it was his intent to treat all new contracts as a "separate package". Mr. Condon recognized that the legislation appears to have a two-year prohibition. HB 441 was heard and HELD in Committee for further consideration.