HOUSE BILL NO. 150 "An Act extending the unemployment contributions for the Alaska technical and vocational education program." 11:13:00 AM REPRESENTATIVE MARK NEUMAN, SPONSOR, discussed the legislation. He shared that he had carried a related bill in the past that had extended the sunset date for the Technical Vocational Education Program (TVEP). He noted that a flow chart was present in members' packets ["State of Alaska Tax Flow Chart: Unemployment Insurance, State Traiining and Employment Program, Technical and Vocational Education Program"] (copy on file). Co-Chair Stoltze relayed that the committee would hear a presentation by Vice-Chair Neuman and would then hear public testimony prior to any questions. Vice-Chair Neuman believed an important part of the discussion pertained to the origin and flow of the money (shown in the flow chart). The bill also included a sunset date on the extension. The chart showed federal withholding taxes for several programs. He detailed that TVEP came out of the unemployment insurance tax rate; the rate had been 0.1 percent in the past and had increased to 1.5 percent a few years back. The federal funds were distributed by the Department of Labor and Workforce Development (DLWD) through the schools. He noted that the bill contained a chart showing how the money was distributed; money was spread across various geographical locations. He remarked that some forthcoming issues had come to light. He pointed to the bill's immediate effective date on page 2, line 7. He believed the committee was addressing bill version U [actual bill version before the committee was version N]. He relayed the importance of taking action in the current fiscal year so that federal funding was not lost. He pointed out that there were schools hoping to be added to the list included in the legislation. He noted that Representative Peggy Wilson had a school in her district that was interested in receiving some of the funds. Additionally, he had spoken with Representative Costello about DLWD money included in the department's operating budget. He relayed that HB 150 had been included in Section 17 of the governor's education bill. He had spoken with DLWD Commissioner Blumer who had communicated the department's intent to remove some language. He discussed the governor's proposed education bill and relayed that Sections 1 through 5 had described the requirement to report funding to DEED and DLWD. Many of the school districts had struggled with the requirement because it included social security numbers for youths under 18 years of age. Subsequently, the discussion with Commissioner Blumer had been to remove the related requirements. He discussed the priority of putting the money to work. 11:17:31 AM Vice-Chair Neuman continued to explain that the bill. He relayed that DLWD would ensure that the vocational schools covered under the legislation were truly teaching vocational programs. He stated that the bill pertained to all Alaskans because of the unemployment insurance benefits; the goal was to ensure that adult training programs were available. The programs had been incorporated together and comprised a great training tool for the schools; it provided the opportunity for adults and younger students to work together at the same level. He relayed that work with Commissioner Blumer was ongoing. He referred to discussion about adding more schools and surmised that the conversation would continue. The bill before the committee only made a change to the sunset date [the sunset would be extended to June 30, 2024]. He noted that the program would be examined in the governor's education bill as well. He preferred to address the effective date as contained in HB 150. On a separate note, he believed there needed to be discussion about how the funds were distributed to the various schools. Currently DLWD had some regulations, but he believed sideboards related to qualification for funds should be implemented. He thought that various issues should be addressed including how the money was distributed geographically, was the funding even, and was the program competing for funds with university programs. He suggested that any added schools receive funds out of the 50 percent allotted to the University of Alaska given that its budget was the largest. There was currently about $10.8 million available for the program. He believed it was appropriate to address the issues in the committee process. He recognized that changes to the formula calculation could be made by the legislature in the future. He corrected that the bill before the committee was version N. 11:20:43 AM Representative Costello appreciated the legislation and believed that vocational education and jobs were a significant part of the state's work. She mentioned that the Southern Southeast Technical Education Center and Ilisagvak College's community and workforce development program were likely candidates to receive some of the funds. She wanted to hear from the department about how some entities made it on the list and others did not. She shared that the funding did not really fit in the current Department of Commerce, Community and Economic Development budget; she believed the list in the bill made sense. She asked if the sponsor planned to talk about the effective date. Co-Chair Stoltze asked Representative Costello to formally move bill version N before the committee for consideration. Representative Costello MOVED to place House Labor and Commerce version N before the committee as a working document. Vice-Chair Neuman believed Representative Costello had made some good points related to how the money was distributed and used to ensure there was equality across the state. He agreed that the school mentioned in Southeast was a probable candidate for the funds; however, he sensed that the numbers had been determined based on which programs had applied in the beginning. He was unsure the method was the best way to distribute education funds. He agreed that the committee may want to look at changing the effective date from immediate to June 30, 2014. He wanted to ensure that funding would not be lost. He noted that further discussion on the issue could be addressed in the governor's education legislation. 11:23:30 AM Co-Chair Stoltze wanted to address why the University of Alaska and the University of Alaska Southeast (UAS) were listed as two separate recipients in the bill. Representative Munoz believed the reason UAS had been designated as a separate entity was because it had had trouble accessing the funding despite an active and successful vocational education program. Co-Chair Stoltze thought that the University of Alaska Anchorage may want the same thing as UAS to guarantee a spot at the table. Vice-Chair Neuman remarked on the possibility of taking some of the funds away from the university. He relayed that many of the schools contracted with the university for services. 11:25:16 AM Co-Chair Stoltze relayed that if departments had concerns they should speak to the entire committee. CHARLES EDWARDSON, SOUTHERN SOUTHEAST ALASKA TECHNICAL EDUCATION CENTER (SSEATEC), discussed a brief history related to the center. He relayed that the center was currently building dormitories that had been funded with state capital appropriations and $5 million of the center's own funds. He read a statement: This isn't just funding for school funding just for funding sake. What this is is a workforce development effort to support economic development in our region. Economic development has been identified in all of our respective areas as a priority. Truly sustainable economic development relies on strong workforce development efforts to train our local residents in the relevant industries in our respective areas. Our strong point at SSEATEC is working with industry. Mr. Edwardson communicated that the center had a significant ratio of investment; the center had invested a significant portion of its own funds into the effort. SSEATEC was a vocational facility that offered certified postsecondary courses. The facility housed the high schools and the alternative high school in Ketchikan; students received math and elective credits. The center identified the relevant industries in Southeast Alaska and developed its curriculum based on the information. He relayed that the center partnered with many of the industries; the mining industry had been identified as a target industry. The center also used Department of Labor and Workforce Development (DLWD) statistics on projected job growth. He relayed that the center had been in close contact with Ucore Rare Metals Inc. regarding its plan to develop a rare earth mine on Prince of Wales Island; the company had agreed to priority hire of SSEATEC program graduates and had provided a letter of support to the legislature (copy on file). The Alaska Ship and Dry Dock directly hired out of the Ketchikan Construction Academy that was housed in the SSEATEC facility. Mr. Edwardson shared that the construction academy had 100 percent job placement with 78 percent of the students going into the construction field. He relayed that the statistics were reported to the DLWD; he reported the information to the Construction Education Foundation. He referenced signed guarantees from five additional general contracting companies located in Ketchikan. He believed the center qualified to be included in HB 150. He recognized concerns about how the funds were allocated to the various included entities. He stated that the unemployment contribution was increasing and projected to increase as a result of job placement of local residents; the tax funded the workforce development and vocational training. He stressed the center's success. He believed that it was the right time to double down on the center's efforts. He communicated that in an effort to sustain the economic development it was necessary to continue funding facilities such as SSEATEC. Mr. Edwardson stated that throughout the bill's history when a facility came online adjustments had been made. He believed that if vocational training programs acted as a team people would continue to be put into the workforce successfully; however, if the center was stifled for funding it would not be possible to sustain its own investment. The center needed the state's help to address workforce development needs in Ketchikan. 11:32:22 AM Mr. Edwardson relayed that the center was a public facility. He detailed that it was a subsidiary of the Ketchikan Indian Community. He pointed to the constitutional right to enter into profitable businesses. He acknowledged that education was not incredibly profitable, but it was available to all Alaskans. Co-Chair Stoltze asked for verification that the concept was an example of educational choice at work. Mr. Edwardson agreed. He addressed a concern that the facility should be open to all Alaskans; he assured the committee that it was a public facility open to all Alaskans. He noted that the state had contributed $3.3 million into the center. He stated that the center paid $1.2 million in education efforts annually. He discussed state and its own expenditures. He relayed that the prior year he had requested an operational match for $1.2 million; however, he had selected a percentage based on other schools of the center's size and activity. Ideally he would like a $1.2 million state match. He thanked the sponsor for pointing out geographical concerns related to the distribution of funds. He communicated that the southern Southeast region of Alaska was not represented other than the University of Alaska Southeast (UAS). He shared that the center worked in close partnership with UAS; the entities had a working agreement that the center's programs would complement UAS programs. He stated that funding did not exist for a true vocational technical center focused on industry demands. Co-Chair Stoltze observed that Mr. Edwardson would be a continued part of the discussion. Mr. Edwardson was happy to address any questions or concerns. Co-Chair Stoltze remarked that there would be questions at some time. Mr. Edwardson noted that how the funds would be divided would be up to the legislature. Co-Chair Stoltze believed Mr. Edwardson should play a part in determining the fund source. Mr. Edwardson did have methods he could discuss. Co-Chair Stoltze relayed that the issue would be addressed at a later date. Representative Wilson asked for further information on how the program's outcomes were measured. She wanted to understand how many people the center put to work and where the students came from. She wanted to receive the same information from each entity interested in the funds. Mr. Edwardson agreed. 11:36:29 AM Vice-Chair Neuman asked if the educational program was operated through a for-profit company. Mr. Edwardson replied that the program had the ability to be for-profit, but he noted that education was not profitable. He shared that it had been necessary to form a business outside of the corporation in order to make the program available to the public. The entity had its own business license and line item in the budget; it had been necessary to separate the entity from the tribe. 11:37:53 AM STEVEN ANGASAN, SOUTH WEST ALASKA VOCATIONAL AND EDUCATION CENTER, KING SALMON (via teleconference), spoke in support of the legislation. He noted that the committee had a letter of support for the entity in its packets (copy on file). He discussed changes that had occurred in the past three to four months. The center had received a federal grant for a rural jobs accelerator program from the United States Department of Agriculture; the grant was one of 15 awarded nationwide. The grant provided for fisheries job training; however, the grant did not cover a significant portion of the items the center hoped to accomplish. The center had partnered with a regional community development quota (CDQ) group based on a large number of courses in the past quarter. He explained that the center compiled reports with the state management team; the center had discovered that its numbers in the last three months were larger than the numbers in center's report in member's documentation for 2010. He communicated that the center had made historic steps towards providing a career guide for fisheries. He believed DLWD was also working in the same direction. The center had recently released a career guide and would provide copies to committee members. He stressed without funding from unemployment tax, entities like the center would not exist. He relayed that state funding provided was vital to all of the regional training centers. He noted that financial difficulties in recent years had resulted in cuts to the entity's regional meetings. He applauded Vice- Chair Neuman for bringing the bill forward. He stated that the bill would do much in the future for the region. He relayed that the center had one of the highest outcomes of wages in the state. He thanked the committee for working on the legislation. He hoped the finances would be available in the future. 11:42:39 AM KAREN CEDZO, DELTA CAREER ADVANCEMENT CENTER AND PARTNERS FOR PROGRESS IN DELTA, DELTA JUNCTION (via teleconference), testified in support of the bill. She relayed that the TVEP funds made available to Delta Junction had been life- changing for youth and adults in the community. She communicated that the goal was to provide training and education to enable the students to pursue careers or other. She expressed intent to provide additional information throughout the bill process. PEARL BROWER, PRESIDENT, ILISAGVIK COLLEGE, recognized that the bill focused on the extension of the sunset date. She understood that the funds were incredibly important to the state. She asked that the college be considered as a candidate for funding moving forward. She relayed that the college was designated as a regional training center through its connection with the North Slope Training and Education Cooperative. She shared that the college had offered 247 workforce development classes with close to 1,900 students in the last fiscal year. She believed the college was meeting the workforce development training needs across the state; it had had programs in Barrow to Metlakatla. She stressed that the college was a statewide entity and she looked forward to being part of the conversation going forward. Representative Gara agreed that the sunset should be extended. He noted that Anchorage had vocational education needs as well, but they were not as severe as needs in small communities. He addressed that if funds were expanded to additional entities that a portion of funds would be taken from one of the other recipients. He wondered about any recommendations. Ms. Brower answered that she did not currently have recommendations. The college had not been aware of TVEP funding until recently. She was unsure why the college, as a regional training center, had not been included in the initial list of recipients. She would be grateful to be a part of the conversation going forward. Representative Gara replied that he hoped the college would be a part of the conversation as well. Co-Chair Stoltze believed he had visited all of the facilities that were on the list and that hoped to be on the list. He remarked that it was not possible to give 110 percent to the budget. He expressed frustration that DWLD had been unable to answer a handful of questions. He believed the department had provided an embarrassing performance. He was frustrated when the public's money was treated in a cavalier fashion. 11:48:53 AM Representative Wilson replied that the subject was on the upcoming DLWD budget subcommittee meeting. She would make sure the questions were reiterated and answered. She had also asked the department whether the funding percentage could be changed. Co-Chair Stoltze remarked that the legislature could make the change. Representative Gara agreed that answers were necessary in order to make decisions during the legislative session. He had been disturbed by testimony provided by DEED earlier in the week related to the Base Student Allocation (BSA). He understood the frustrations. Representative Costello thanked Ms. Brower for her testimony. She had been to Ilisagvik College and was impressed by the entity. She relayed that its funding currently fell within the Department of Commerce, Community and Economic Development operating budget. She noted it was difficult to determine where the funds for the college should come from; the legislature had also discussed providing funds from the capital budget. She appreciated Ms. Brower's testimony and hoped that there could be continued discussion about including other entities deserving of the funds. 11:51:43 AM Co-Chair Stoltze remarked on the complexity of the issue. Vice-Chair Neuman understood that the issue was not simple. He believed it may be prudent for the committee to look at how the funds were distributed. Co-Chair Stoltze remarked that the discussion would continue. He recognized the importance of the issue to many Alaskans. He commented that criteria other than merit could have entered into the picture when it had been determined which entities would receive the funding. He appreciated the sponsor's work on the subject. He thanked the committee for its participation. HB 150 was HEARD and HELD in committee for further consideration.