SENATE BILL NO. 83 "An Act making an appropriation for management fees for the constitutional budget reserve fund (art. IX, sec. 17, Constitution of the State of Alaska); and providing for an effective date." Co-chair Pearce reconvened the meeting and noted they would be working from a CS draft O-LS0537\B. Senator Phillips moved CSSB 83(FIN) work draft for discussion purposes and without objection it was adopted. She referred to a spread sheet showing differences in the Governor's request, HB 113 as it came to the committee and the CS now before the committee. The leasing number in the draft was the same as the house passed over in their bill. They decided, that while they knew a supplemental of $993.7 thousand had been requested, to underfund that while they continued discussion of how to bring leasing costs down in the long run. She noted the committee's frustration with the large lease obligations, however the department had been asked to bring these costs down. Annalee McConnell was invited to join the committee. She explained the total amount needed to fulfil lease commitments in 1998 had been identified however they had only put the amount that had been in the 1997 budget in the back-up. She referred to a letter to Representative Hanley that they would be supportive of reducing the amount anticipated next year for supplementals by $1.9 million so they could fully fund leasing, OPA and PD at the projected 1998 requirement. The next issue was incentives to bring down the overall cost of leasing. Previously, there had been efforts to reduce the amount of the leasing budget in order to seek opportunities to renegotiate leases. There were presently efforts underway to pick up additional savings in future years through space utilization and looking at getting out from leases. She also had recommendations for leasing and space utilization to be brought before the deferred maintenance task force. Senator Phillips asked about the Bank of America building and Ms. McConnell said she would get him up-to-date information. She did note the Governor wanted to be sure there was no perception of conflict of interest. Representative Hanley had recommended that since there would be some savings in FY '98 if the building were to be purchased that it should be treated as a fiscal note. Co-chair Pearce referred to the Office of the Public Advocate. She noted the Governor's request for $247.8; the House for $210.5; and the work draft CS put back in $247.8. She said the total level of spending for the Public Advocate for 1997 was $7,616.9 million. Senator Donley said he had a problem with the money that was going to criminal defense. He wanted to know the ratio of criminal to non-criminal defense. Ms. McConnell said she had not been asked to provide that information, but she will get the correct information to the committee. Senator Donley said he will not support these monies for the Office of the Public Advocate. They have abused the funding; assigned multiple defense attorneys to cases, whereas prosecutors have dealt with one attorney; defense offices all over Alaska where there are also multiple defense attorneys and only one prosecutor. The explanations from the Administration implied if not specified that somehow the Legislature told them it was o.k. for them to overspend their budget and come back and ask for more money. No cost saving measures had been taken and this was a corrupt public policy goal to reduce the load on the prisons by better defending the criminals and getting them off. Senator Sharp asked if there was going to be a breakdown provided for the civil and criminal cases. Senator Donley indicated that he had asked several times this year and had not received an answer. Senator Phillips said he would provide the information. Ms. McConnell said the appropriation covered one item; it was not broken down between civil, child abuse, neglect cases, etc. She further noted a constitutional obligation to do conflict cases through OPA. There was also a very heavy responsibility to provide guardian services for children and needy adults. Caseloads expand and they are outside the control of the department. Senator Phillips said it is a very frustrating matter. He realized the constitutional requirements but on the other hand there should be recommendations for cuts. He suggested if statutory or constitutional change were necessary to let the Legislature know. He felt the subject brought up by Senator Donley was very valid. Ms. McConnell said she felt there had been improvements but first of all child abuse must be reduced. The conflict cases were very involved. Senator Sharp also voiced concern of his constituents that state money was being spent on real "animals". Ms. McConnell said the Court assigned cases and they had no control. However, they had looked at the matter with the Court system and initiated better screening and better criteria for review of conditions for referring cases. Senator Phillips suggested the Court system and the Administration meet so a better view could be had of the matter. Senator Donley commented on "everything being driven by case load". He said the prosecutors had no supplemental request. The cases could only occur if the prosecutors were handling them. Both OPA and the PD requests have increased ten times. Dan Spencer was invited to join the committee. He said that in the past the prosecutors had been one of the strongest supports of the public defenders' supplemental request. There are a number of resources available to the prosecutor that are not available to the public defender. For one, the prosecutor had the Department of Public Safety to do investigative work. The prosecutors' office had said they were concerned if the Public Defender were not properly funded it would slow down the process more than it was now. Senator Donley said the prosecutors had been told by the Administration not to ask for or try to get any more money. He said prosecutors do not agree with that but they have been told they have a position they have to honor within the Administration. Co-chair Pearce further referred to the Youth Corps and a memo from Carol Carroll, noting the amount of the request had decreased to the amount of $186,439. which was the number included at the request of the Department of Military and Veterans' Affairs. She noted an inadvertent error in the draft had been corrected to March 1, 1998 on line 2, page 8. Senator Adams moved amendment #1 (page 7 of supplemental he added $838,800) and without objection it was adopted. Senator Torgerson moved amendment #2 (timber sales on the Kenai Peninsula) and without objection it was adopted. Senator Adams moved amendment #3 (keep PCE in general fund). Senator Donley objected. By a vote of 1 - 5 (Pearce, Sharp, Donley, Torgerson, Phillips; Parnell absent) it failed. Senator Donley moved amendment #4 (House amounts on Public Advocacy of $210.5). Senator Phillips asked Department of Administration be invited to join the committee. Sharon Barton, Director, Division of Administrative Services, Department of Administration was invited to join the committee. She advised the committee that any opportunity for containing the cost in OPA obviously had been taken. The OPA request was reduced this year after further review of the numbers. They were diligently trying to manage the budget and keep costs down. They will, however, need their full request this year. The budget is not a science. The costs are projected right up to the end of the fiscal year. They can be greater or lesser. However, they feel they will be for a supplemental to cover the costs in '98. Ms. McConnell clarified that the amount was brought down from the earlier request. It was reduced by $70,000 from what was thought to be required. Senator Donley said it was too bad there had not been a more definitive break down of what goes to criminal defense vs. other functions of OPA. Perhaps the only solution since a good answer has never been received on those questions would be to break the function out from the agency at some point. Ms. Barton apologized if a request for information had gone unanswered. She had received no request nor was she aware of a request coming to the department. She said she would be happy to provide this information to the committee. By a vote of 4 - 2 amendment #4 was adopted. Senator Phillips moved amendment #5 (add $970,000 for a total of $993.7 which would fully fund the governor's request for leasing). Senator Sharp asked for an explanation. Senator Phillips said he wanted the total amount to equal $993.7. Senator Donley asked if the motion was to move the difference in funds to the general funds. Co-chair Pearce said the amendment would add $970.1 thousand in general funds to the leasing line and then deleting the $309.8 in other funds. Senator Phillips said that would fully fund the governor's request on leasing for this fiscal year out of general funds. Senator Sharp asked what the fund source would be. Co-chair Pearce said it would be interagency receipts from other departments. Senator Donley requested an explanation from Senator Phillips regarding the amendment since he was chair of LB&A. Senator Phillips said it was the amount the Department of Administration felt they would need. He said he would have to go along with it as an obligation. Ms. McConnell noted that leasing was handled by the Department of Administration. Nothing was built into other departments. The amount was needed to fulfill contractual obligations the department had as referred to in the letter sent by Commissioner Boyer to Representative Mark Hanley in March. Senator Donley asked if the monies could be gotten elsewhere to fulfill the contractual obligations. Senator Phillips indicated that it was the intent of the chair to keep pressure on the department to negotiate lower prices on new leases coming up. He felt the department had done what they could in good faith in negotiating lower prices and the number presently before the committee was one that was obligated for this year. Next year they would recommend a half million dollar reduction from their request. He wanted the department to continue to go out and get "good deals". Without objection amendment #5 was adopted. Senator Donley moved amendment #6 (fixed amount of $100,000 for the Public Defender Agency). He said each year the Legislature tried to have the agency reduce their costs. He doesn't feel the right effort had been made. They have had a tremendous increase over the past decade and it is appropriate to send a strong message, finally, in some supplemental. Just once the line has to be drawn. Reduction to a fixed sum amount will send a message to the agency that they need to change the way they do business. By a vote of 4 - 3 (Phillips, Parnell, Adams) it was adopted. Senator Adams requested an explanation regarding section 27, Aid to Families with Dependent Children. He said $800,000 was needed and asked for an explanation. Co-chair Pearce indicated that was a delete/add as shown on line 28. Senator Parnell explained it was a lapse in funds that was being transferred to Adult Public Assistance. Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services was invited to join the committee. In response to the question by Senator Adams she said there was a fifty percent chance that the department could actually do that, but there would be lapsing funds in AFDC that could move into Adult Public Assistance. In earlier testimony before the House, they wanted to see what the March caseload would be like because these were both entitlement programs and they have to pay based on the individuals that use the program. Their projections were a little high for March and they told the House there was perhaps a thirty percent chance and now they have moved it to a fifty percent chance, however, it was a risk to count on $800,000 in lapsing funds from AFDC. She said there was still three months to go in both of these programs and they will have to see how they come out. Senator Donley asked if the line item this would be going into could be pro-rated. Ms. Clarke indicated they could not. The payment standards were set by statute. Senator Parnell said that based on the estimation by Legislative Finance of approximately $1 million from AFDC that would lapse, they chose the more conservative figure of $800,000. That was the basis for that recommendation. Senator Donley moved amendment #7 (extend lapse date of item 65, section 16 of the bill). This was lapse in the Department of Public Safety, Public Safety Officer contracts. He said he was concerned it would artificially inflate the coming fiscal year VPSO expenditures that would build in a very large escalation for next year's operating budget and therefore would be difficult to control. The money had not been used this year and would lapse. Senator Adams objected saying more VPSO's were needed in the villages to fill the vacancies. Approximately fifteen VPSO's were still needed but the funding was only for twelve. The money would help fund unfilled positions badly needed in the villages. He noted the total lapse amount was about $40,000. Senator Donley asked if the exact amount of the lapse was. Ms. McConnell indicated that at present she did not know but would try to secure an update projection as soon as possible. She did concur with Senator Adams noting that the State was very short on the number of village public safety officers throughout the State. There were approximately ninety villages currently without a VPSO. Senator Donley said he was concerned about next year's impact on Public Safety's budget. He said everyone would love to have enough village public safety officers, state troopers, prosecutors and jails. Senator Adams noted that only one VPSO was being requested. Most areas have State Troopers. Senator Donley said there were three State Troopers in Anchorage and they were mainly to patrol the highways. Co-chair Pearce inquired of Senator Donley if he had closed the Public Safety subcommittee and he indicated no. She asked him to withdraw his amendment pending receipt of his figures and what they would show for fiscal year '98. An amendment could be made later. Senator Donley advised that the subcommittee recommendation was to add at least two new VPSO's and two new State Troopers for next year. Senator Pearce said there could possibly be federal funding available in October for use in the village public safety officer program. If the lapse would be allowed to pick them up then the funding could be continued with federal funds. Senator Donley withdrew amendment #7. He would be allowed to put in necessary amendment at second reading on the floor. He continued to note that it was a potential budgetary problem for next year. It is a one time source of money that disappears next year. He further stated that the supplemental presented an opportunity to deal with some of the Corrections problems. There is a serious problem with Corrections and the funding of a solution must be found. There was a proposal from Administration to deal with partial funding towards providing a womens' facility and that was a high priority for them. Overcrowding needs to be addressed. The McLaughlin issue as well as other youth facilities and centers needed to be addressed equally. These were all legitimate crisis situations. Senator Adams referred to section #2, aerospace. He said $18 million was federal money and $5 million from the Alaska Science and Technology Institute and wanted to know where the other $5 million was going to come from. Co-chair Pearce indicated that it was also federal funds, noting that it was a separate $5 million from the Department of Defense for a specific tracking facility. It will build one of the buildings of the entire launch facility. Ms. McConnell stated that she concurred with Senator Donley's evaluation of the Department of Corrections. Dan Spencer further referred to line 52 of the spread sheet. Co-chair Pearce said they did not know if the entire amount represented would be needed. It was just the outside expectation. Senator Sharp moved CSSB 83(FIN) with individual recommendations. Without objection it was reported out. Co-chair Pearce reviewed the schedule for tomorrow morning, noting time change to 10:00 a.m. She said budget closeouts would begin Tuesday morning at 8:00 a.m. There would be additional closeouts scheduled for Tuesday, Wednesday and Thursday evening. Next Saturday morning they would begin at 10:00 a.m. with the front section and appropriate amendments. This coming Saturday morning there would be statewide teleconference held regarding the budget. ADJOURNMENT Co-chair Sharp recessed the meeting at 11:45 a.m.