MINUTES ALASKA STATE LEGISLATURE BUDGET AND AUDIT COMMITTEE December 12, 1997 9:38 A.M. Legislative Information Office Anchorage, Alaska Tape LBA 97 - 1, Side 1 Tape LBA 97 - 1, Side 2 Tape LBA 97 - 2, Side 1 Tape LBA 97 - 2, Side 2 Tape LBA 97 - 3, Side 1 CALL TO ORDER Senator Randy Phillips convened the December 12, 1997, meeting of the Legislative Budget and Audit Committee at 9:38 a.m. at the Fifth Floor Conference Room, Anchorage LIO, Anchorage. PRESENT SENATORS REPRESENTATIVES Sen. Phillips Rep. Hanley Sen. Adams Rep. Croft Sen. Donley Rep. James Sen. Halford Rep. Therriault Sen. Pearce Representative Martin was not present for the meeting. Members present by teleconference: Sen. Torgerson Rep. Bunde ALSO PRESENT Mike Greany, Director, Division of Legislative Finance; Kevin Brooks, Director, Division of Administrative Services, Department of Fish and Game; Dan Spencer, (Testified via Teleconference), Chief Budget Analyst, Office of Management and Budget, Office of the Governor; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Eric Myers, Exxon Valdez Trustee Council; Jack Cushing, Mayor, City of Homer, Homer; John Bitney, Alaska Housing Finance Corporation, Anchorage; Vicki Williams, Alaska Housing Finance Division, Anchorage; Cecilia LaCara, Deputy Director, Division of Child Support Enforcement, Department of Revenue; Wendy Lyford, Court Administrator, Superior Court, Alaska Court System, Anchorage; Suzanne Goodrich, Executive Director, Catholic Community Services, Eagle River; Margaret Kirkland, Anchorage; Randy Super, (Testified via Teleconference), Department of Health and Social Services, Juneau; Annalee McConnell, (Testified via Teleconference), Director, Office of Management and Budget, Office of the Governor, Juneau; Theresa Tanoury, Special Assistant to Commissioner Perdue, Department of Health and Social Services; SUMMARY Senator Phillips announced that the minutes from previous meetings would be addressed in Juneau at the beginning of the next legislative session. REVISED PROGRAM REQUESTS RPL 11-8-0189 Department of Fish and Game, Habitat BRU, Special Projects Component and Administration and Support BRU, Administrative Services Component $109,724 dollars in statutory designated receipts for review of several industry development projects. MIKE GREANY, DIRECTOR, DIVISION OF LEGISLATIVE FINANCE, recommended approval of the RPL which would use statutory designated receipts. He understood that to be the intent of the Finance Committees when granting the agency authority to seek funding during the interim. Senator Adams MOVED to approve the above listed RPL. There being NO OBJECTION, RPL 11-8-0189 was approved. RPL 11-8-0190 Department of Fish and Game, Division of Subsistence, Special Projects Component $85,000 dollars in federal receipts for travel reimbursement for the Yukon River Panel and Joint Technical Committee meetings. Mr. Greany noted that the Division of Legislative Finance recommended approval of the proposed RPL, which was in line with the Finance Committees legislative intent. Senator Adams MOVED to approve the above listed RPL. There being NO OBJECTION, RPL 11-8-0190 was approved. RPL 11-8-0193 Department of Fish and Game, Commercial Fisheries Management and Development Division, Special Projects Component $463,800 dollars in test fish receipts for an experimental open platform herring fishery in Sitka Sound. Mr. Greany noted that the RPL had not properly come before the Legislative Budget and Audit Committee (LBA). He stated that the Committee did not have the authority to act on it and recommended "no action" be taken. KEVIN BROOKS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF FISH AND GAME, responded that the Department submitted the RPL as an opportunity to inform the LBA Committee of a situation in Sitka regarding test fishery, which must be addressed by mid March in order to contract with the necessary vessels. He continued, the Department should award the bid by the end of January, 1998. He acknowledged that fish receipts had been included in SB 55, although, not the statutory designed program receipts. DAN SPENCER, (TESTIFIED VIA TELECONFERENCE), CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, advised that the Office of Management and Budget (OMB) was attempting to determine a way to educate Committee members of the need. Senator Adams agreed with the recommendation given with the OMB Director, Annalee McConnell. He pointed out that within SB 55, the program receipts authorization language was broad enough, and that the approval of the proposed RPL should be available to the LBA Committee. He reiterated, it was authorized through SB 55. Additionally, the timing issue is important for Sitka. He asked if the Department had further test receipt authorization available at this time. Mr. Brooks replied that the Commercial Fisheries Division budget had $2.5 million dollars authorized for test fish receipts in FY98. To date, the Department has used $1.1 million dollars of that budget. The remaining $1.4 million dollars will be allocated to specific fisheries which will occur during the remainder of the fiscal year. Senator Adams asked which projects could be held until the Legislature meets in Juneau in 1998, so that the remaining $500 thousand dollars could be given authority during the supplemental process. Mr. Brooks explained that December was a slow month for test fisheries and that by spring the Department would be in "full swing". Given the typical supplemental bill approved in May, chances are, the Department would have exceeded its authority by that time. Mr. Spencer emphasized that "timing" is essential because the fishery begins in middle March. Mr. Greany reiterated that the concern was addressed in SB 55 with new fund sources created in that legislation. The test fisheries were created as their own separate funding source and were not enumerated upon in the front section of the appropriation bill. He suggested that the Department could qualify for other authorization for this need that could be replaced through a supplemental appropriation. Representative Therriault questioned if the funds were granted would they be considered general fund expenditures in the supplemental or would it be a creation of a new funding source. Mr. Greany explained that the front section of the general appropriation bill did not give the LBA Committee the authority to deal with that funding source. It would be a non-general fund source. Senator Adams noted that if the request was approved, it could provide for an additional supplemental bill with another program use for those program receipts. Mr. Greany explained that the manner in which the test fishery receipts were appropriated was generic. They were available to the Department to determine where they should be spent. He advised that the Legislature should be specific in determining how these funds are spent. Mr. Spencer elaborated a major concern is that if the Department uses this existing authority, all the funds could be used prior to the Legislature passing a supplemental funding. Mr. Greany reiterated that the LBA Committee take "no action" on the request, while at the same time, adopt a motion to provide communication to the Finance Committees to consider inclusion of intent in the early supplemental appropriation bill. Senator Adams reiterated his concern that Sitka might loose the opportunity to participate in the herring fishery. Representative James MOVED to adopt the recommendation suggested by Mr. Greany. Senator Adams OBJECTED to the MOTION, noting that it would delay the Sitka herring fishery. Mr. Greany understood that the bid would need to be submitted by early January. Representative Hanley pointed out that the Department has the flexibility to go forward with the proposal and that the Department would go forward if they had the guarantee that the matter would be considered in the Legislative Finance Committees. Mr. Spencer agreed that if the LBA Committee recommended that the matter would be considered in the Legislative Finance Committees, the Department could then address Sitka's situation. Representative Therriault noted that he was not comfortable automatically granting an increase to the test fisheries budget through the Finance Committees. Mr. Spencer recognized that the LBA Committee could not bind the Finance Committees, although, asked that the LBA Committee urge the Finance Committees to favorably recommend the proposal. Senator Halford understood the recommendation was that the Finance Committees would review the proposal for possible inclusion for supplemental funding. Senator Adams believed that format would delay the project. He asked if the current motion would provide the Department, authorization to continue with the bidding process for the test fishery in Sitka. Mr. Spencer replied that the Department was comfortable with the motion. Senator Adams WITHDREW his OBJECTION. There being NO further OBJECTION, the MOTION was PASSED as recommended by Mr. Greany. RPL 01-8-8024 Office of the Governor, Office of Management and Budget, Division of Governmental Coordination $195,000 dollars in federal receipts for the Alaska Coastal Management Program. Mr. Greany stated that the Legislative Finance Division approved of the request for two purposes: To finalize the most recent regulations and to support a consistency review of the Prince William Sound vessel contingency plan. Senator Adams MOVED to approve RPL 01-8-08024. There being NO OBJECTION, it was adopted. RPL 01-8-8025 Office of the Governor, Human Rights Commission $80,466 in federal receipts for investigation and public hearings. Mr. Greany noted that the Division of Legislative Finance recommended approval of the federal funds. The funds would be used for current legal cases and to update the State's word processing standards. Representative Croft MOVED to adopt RPL 01-8-8025. There being NO OBJECTION, it was adopted. RPL 06-8-0152 Department of Health and Social Services, Medical Assistance BRU, Women, Infants, and Children Component $3,750,000 dollars in federal receipts for Medicaid coverage for native clients. Mr. Greany provided Committee members information addressing the policy adopted by the Finance Committee and the LBA Committee leadership to OMB, March, 1997. The handout provides ground rule information on how RPL requests are to be handled during the interim. He described language which stipulates that the LBA action should be used to restore budget reductions from a past session or for program enhancements. Mr. Greany added, this policy was used when reviewing requests submitted by the Department of Health and Social Services. Mr. Greany recommended that RPL 06-8-0152 be deferred to the Legislative Finance Committees. Because of the appropriation allocation structure within the Department of Health and Social Services, a mixture of federal and state funds allows the Department some latitude to transfer money within. He stated that new money affecting the proposed RPL from the State receiving money from services provided through the education services would be subsequently reimbursed through Medicaid. The Department is proposing to take these additional monies to improve different activities. He pointed out that the medical reimbursement funds are claims for short terms and are interchangeable. Mr. Greany recommended that the full Legislature should have the opportunity to review these needs. Senator Adams asked if Mr. Greany's concerns would be satisfied if the federal receipts were used only for the proposed request. Mr. Greany replied that regardless of additional authority requested or approved, the Department does have the ability to move funds around. He concluded that there are policy issues involved in how the money should be used. JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, commented that the Department understood that there would be a lot of discussion with the Medicaid budget because of the federal match changes. The Department's intention in requesting the proposed revised program was to inform Committee members of the situation and initially, lay out the increased need for Indian Health Service funds. She emphasized that the Department's intent was not to circumvent the full legislature. These requests are to a subsequent request to a portion of the sole-based-claims that came into the State with an aggressive matching need. Part of these receipts are unrestricted federal funds which can be used for a number of programs. She continued, $1.3 million dollars of receipts of the $3.7 million dollar request will return to the Department of Education. Part of the money has already been RSA'd to that Department so that school districts can award grants while the schools are still in session to establish programs. Currently, there is $2 million dollars budgeted to the Department for use in the school base claim. Based on agreements with the federal government, that claim should increase to $4.6 million dollars. Ms. Clarke agreed that this was an involved situation. She added that the Indian Health Service was 100% federally funded with Medicaid dollars and has no match requirements from the State. Representative Croft inquired if the LBA Committee had the authority to address this request. Mr. Greany replied that the Committee had the statutory authority to grant the request, but that the Division of Legislative Finance did not support the policy authority for the request. He commented that the issues are intertwined. Representative Croft pointed out that the Committee did have the statutory authority to address issues of an emergency nature. He urged the Committee to contemplate if the situation was an "emergency" or not. Mr. Greany agreed. Representative Croft pointed out that the money addressed in the request is purely contractual funds and that there would be no new state employees hired. Mr. Greany pointed out that there are times when the State does not have the legal obligation to continue a program, although, expectations are created and difficult to change. He concluded that all needs can not be funded. Senator Pearce stated that the request does not fall into the category of "emergency". She voiced frustration with the Department and how confusing it was to determine specific needs with the number of transfers occurring. She MOVED to place RPL 06-8-0152, RPL 06-8-0155 and RPL 06-8- 0171, at the "bottom of the calendar". Representative James added that this was a public policy issue. She voiced hesitation in maximizing the use of federal funding especially for schools. Representative James stressed that the State has done this in the past and it has created an administrative over-load. She urged that the entire Legislature address the concern. There being NO OBJECTION, Senator Pearce's MOTION to move the RPL's to the "bottom of the calendar" was adopted. RPL 06-8-0154 Department of Health and Social Services, State Health Services BRU, Women, Infants, and Children Component $1,000,000 dollars in statutory designated program receipts to cover the anticipated increase in the infant formula rebate contract with private industry. Mr. Greany noted that the Division of Legislative Finance recommended approval of the request. The funds are part of the statutory designated receipt category. Senator Pearce MOVED to approve the above listed RPL. There being NO OBJECTION, RPL 06-8-0154 was APPROVED. RPL 09-8-0039 Department of Military and Veterans Affairs, Division of Emergency Services $25,000 dollars in federal receipts for a grant from the National Earthquake Hazards Reeducation Program to conduct a regional earthquake/tsunami conference. Mr. Greany stated that that the Division of Legislative Finance recommended approval of the request. The source of federal funds is Federal Emergency Management Agency (FEMA). Representative Hanley MOVED to approve the above listed RPL. There being NO OBJECTION, RPL 09-8-0039 was APPROVED. RPL 10-8-4016 Department of Natural Resources, Resources Development, Pipeline Coordinator $296,865 dollars in statutory designated program receipts to process applications for pipeline right-of-way leases for the proposed Liberty Island sales oil pipeline and utility oil pipeline. Mr. Greany recommended that the RPL be approved. Representative James MOVED to approve the above listed RPL. There being NO OBJECTION, RPL 09-8-0039 was APPROVED. RPL 10-8-4018 Department of Natural Resources, Management and Administration, Trustee Council Projects $996,100 dollars in Exxon Valdez oil spill settlement funds for the acquisition of land located within the City of Homer. Mr. Greany noted that the Division of Legislative Finance recommended approval of the request for land acquisition. Senator Pearce asked if the plans were threatened by other usage. (Tape Change 97-1, Side 2). ERIC MYERS, EXXON VALDEZ TRUSTEE COUNCIL, ANCHORAGE, explained that the lands had been proposed to the Trustee Council for consideration resulting from discussions regarding public lands and possible use options. The options will expire the beginning of next year. He added, there is pressure on the Homer Spit and the City of Homer to get this process rolling. The program would provide an opportunity for various landowners to work on a voluntary basis with the City of Homer. Senator Torgerson pointed out that the property was a first parcel purchase by Exxon Valdez to be turned over to a local government. He did not know of a competing interest for development, and recommended approval of the measure. Senator Adams MOVED to approve the above mentioned RPL. Senator Pearce OBJECTED. Senator Halford asked what would happen if the decision was held until the full Legislative session. Mr. Myers replied that the trust for public land established a package of land, involving multiple landowners, with the support of local government. There exists an opportunity resulting from these efforts to purchase the land collectively under the proposal. The options will expire as early as January, 1998. At the point the options expire, there will be no clear opportunity to put the package back together. Representative Therriault asked if currently there were competing buyers or was it feared that the price would increase. Mr. Myers acknowledged there was fear that the price would increase. He added, there are pressures that the shoreline could be developed. If the option does expire, it is assumed that the price will increase. Senator Pearce suggested that since the area was all wetlands, the chances of development were slim. She questioned what the trust would be restoring, enhancing or rehabilitating in that area. Mr. Myers pointed out that since the program's inception, there had been three hundred land nominations in the area of properties. Only a small fraction (10%) of those lands was of interest to the Council. He stressed that these lands had fair market appraisals. JACK CUSHING, MAYOR, CITY OF HOMER, HOMER, commented that these lands are very threatened by purchasers. There has never been a core permit denied on that side of the Spit. This popular program has been in the making for ten years. Zoning has remained the same. Land owners have been encouraged to participate for the "over-all" good of the City of Homer as land is one of the biggest tourist draws in that area and it needs to be preserved for the economic development of that growth industry. Senator Halford asked what would occur if nothing was addressed for sixty days when the entire Legislature could consider it. Mayor Cushing understood that the options would begin to expire, which would then complicate matters. Mr. Myers added that the Spit package involves four contiguous parcels, each of which has one or more owners. Bringing that amount of people to the table at the same time took a tremendous amount of energy. Each arrangement consists of individual options that the trust had to establish which begins to expire in January, 1998. Representative Croft emphasized that this area is threatened and that money had been set-aside for this purpose. He added, the Chamber of Commerce in Homer, their local senator and the municipal body supported the proposal. The people in that area want this land to be used for this practice. He reechoed support for the purchase. Senator Pearce questioned why the Trustee Council had not requested an option which would extend time into the next legislative session. She voiced her frustration with the way in which the Council was running this business. She pointed out that the process had been in the making for the last ten years and questioned why the expediential rush given the merits of the program. She recommended that it was time for the full Legislature to look at the overall purchasing of the Trustee Council as she stressed the impact to that land. Mayor Cushing replied that this has been a 10-year comprehensive plan. A land-use and comprehensive plan is not a land ordinance. It was not until the funds became available that there was a qualification. The six votes from the Trustee Council had to be determined. The Trustee Council had concerns regarding the comprehensive package. The City of Homer was not sure that they had the six votes from that entity until it was worked out to a comfortable level for all those involved. Mayor Cushing added that the City of Homer had added sixty acres of land to each side of the Spit parcels. That action required incredible deliberation. He assured the Committee that this was a classic real estate transaction, taking advantage of an opportunity which exists right now. Representative James believed the issue was too big to address in the LBA Committee. Mr. Myers noted that the terms of the options were not negotiated by the Trustee Council or the Restoration Office. They were negotiated by a private entity on behalf of the City of Homer. Those options expire in January, 1998. He feared that if the time limit is exceeded, the compromise will not be reestablished. Representative James MOVED to adopt RPL 10-8-4018. Senator Adams OBJECTED, pointing out that he made the motion before Representative James. Senator Adams MOVED to approve this RPL. He stated that in the past the LBA Committee has approved similar motions and that the requested amount was "peanuts" for the Committee. A roll call vote was taken on the MOTION to adopt RPL 10-8- 4018. IN FAVOR: Adams, Torgerson, Croft, Therriault OPPOSED: Phillips, Halford, Pearce, James, Hanley Senator Donley, Representative Martin, and Representative Bunde were not present for the vote. The MOTION FAILED (4-5). Senator Adams requested that the Trustee Council get back to the LBA Committee and let them know when the options run out. If the options do not run out by January 12, 1998, another LBA Committee meeting is scheduled at that time and it can be readdressed then. RPL 10-8-4022 Department of Natural Resources, Agricultural Development, Agricultural Development $50,000 in federal receipts from the U.S. Department of Agriculture for agricultural marketing. Mr. Greany noted that the Division of Legislative Finance did recommend approval of the request, which is in line with the agricultural marketing efforts. Representative James MOVED to approve the above listed RPL. There being NO OBJECTION, RPL 10-8-4022 was APPROVED. RPL 10-8-4023 Department of Natural Resources, Agricultural Development, Agricultural Development $18,300 dollars in federal receipts from the Conservation Reserve Program for the maintenance of agricultural parcels now owned by the State. Mr. Greany noted that the Legislative Finance Division recommended approval of the request to be directed for the use of agricultural parcels before they are foreclosed. Senator Halford asked what would happen to CRP contracts when the State repossesses a piece of property. He believed that the incomes on the repossessed property could provide a way for agriculture to pay its own way. Mr. Greany understood that the money was the revenue generated on the estimated resale of the properties. He acknowledged that there was value to the CRP contracts. Representative James MOVED to approve the above listed RPL. There being NO OBJECTION, RPL 10-8-4023 was APPROVED. RPL 10-8-4024 Department of Natural Resources, Agricultural Development, Agricultural Development $6,500 dollars in federal receipts from the Agricultural Market Transition Act Program for the maintenance of agricultural parcels now owned by the State. Mr. Greany noted that the Division of Legislative Finance recommended approval of the above mentioned RPL, federal monies to enhance agricultural efforts. Representative James MOVED to approve the above mentioned RPL. There being NO OBJECTION, RPL 10-8-4024 was APPROVED. RPL 10-8-4025 Department of Natural Resources, Agricultural Development, North Latitude Plant Material Center $27,000 dollars in statutory designated program receipts to accomplish additional work on the contract with the Anchorage Water & Wastewater Utility for the revegitation requirements of the Anchorage Loop Water Transmission Main project. Mr. Greany noted that the Division of Legislative Finance supported the proposed RPL. Representative James MOVED to approve RPL 10-8-4025. There being NO OBJECTION, it was so APPROVED. RPL 12-8-0071 Department of Public Safety, Alaska State Troopers, Narcotics Task Force $325,900 dollars in federal receipts for continuation of the Narcotics Task Force Program. Mr. Greany commented that the Division of Legislative Finance would recommend that the request be approved. Much of the money will be used to reimburse claims by the local jurisdictions involved in the narcotic efforts. In order to make the grants available, the full authority must be authorized. Representative Hanley MOVED to approve RPL 12-8-0071. There being NO OBJECTION, it was APPROVED. RPL 4-8-0009 CIP-Department of Revenue, Alaska Housing Finance Corporation, Public Housing CIP $240,000 dollars in AHFC corporate receipts to closeout the Cedar Park reconstruction project. (This RPL falls under the FY95 guidelines for Legislative Budget and Audit Committee review similar to RPL 04-7-0032 for the Department of Revenue which was approved under the FY97 guidelines at the August 21, 1997 meeting). Mr. Greany explained that the request was for the approval of additional corporate receipts. The general appropriation of the bill would not provide the Committee authority to deal with corporate receipts for FY98 appropriations. He pointed out that this is a capital project which was enacted by the 1994 Legislative Session. The authority of the project has not lapsed; it needs authority to increase corporate receipts. He believed that the Committee did have the legal authority to act on the above mentioned RPL. The Legislative Finance Division recommends that if the LBA Committee acknowledges the urgency to act upon the measure, that they would have the legal authority to do that. Senator Adams MOVED to approve RPL 4-8-0009. He noted that Cedar Park has been worked on for years and believed that it would be to the State's advantage to have it approved and finished. Representative Hanley questioned the emergency need time line. JOHN BITNEY, CONSTRUCTION PROJECT DIRECTOR, ALASKA HOUSING FINANCE CORPORATION, ANCHORAGE, explained that the project was being closed-out and that the contractor needed to be paid off. Unpaid claims accrue interest at 10.5% interest. The final amount settled with the contractor is $32,000 dollars higher than the initial request. Senator Adams questioned recovering a portion of the money from the architect. Mr. Bitney responded that the architect acknowledged that a mistake had been made which lead to a claim; AHFC is in the process of going forward with the claims. At this point, the architect has made an offer of $150,000 dollars, AHFC rejected that offer. The total amount that AHFC will seek from that claim should be closer to $500,000 dollars. VICKI WILLIAMS, ALASKA HOUSING FINANCE DIVISION, ANCHORAGE, noted that AHFC has a good chance of recovering that money. Each claim cost will be analyzed. There is substantial evidence indicating problems. Senator Adams questioned how the additional $32,000 dollars would be recovered for the contractor and the interest resulting from lack of payment. Mr. Bitney stated that AHFC would pay the claim rather than let it accrue interest. He added that AHFC is requesting the authority to do that at this time so that the claim does not accrue interest. Representative Therriault asked if there existed any other authority from which to pay the claim. Mr. Bitney replied that AHFC could take money from an appropriation to pay the accounts, however, claims are sought against the architectural firm which made the mistakes leading to the additional costs on the projects. AHFC is requesting authority on part of those claims to pay off the contractor. If payment was delayed, another project would be interrupted and then there would be a need to seek a supplemental down the road to capture the needed funds. Mr. Greany noted that this was a specific capital project being addressed. Unless the agency had capital projects encompassing a broader title to allow the use of these funds, then this is the only one being addressed at this time. He pointed out that the revised request would bring the amount to $272,099 dollars. There being NO OBJECTION to the motion to approve, RPL 4-8- 0009 was ADOPTED. RPL 04-8-0010 Department of Revenue, Child Support Enforcement $50,000 dollars in federal receipts for programs to facilitate non-custodial parents' access to and visitation of their children. Mr. Greany explained that the funds would be used by the Child Support Enforcement Division (CSED) and will go to the Alaska Court System to reimburse a service agreement. Those funds will be spent on mediation services for child support effort. Senator Adams MOVED to approve RPL 04-8-0010. Representative Therriault asked if the mediation would be used at the time custody was decided. CECILIA LACARA, DEPUTY DIRECTOR, DIVISION OF CHILD SUPPORT ENFORCEMENT, DEPARTMENT OF REVENUE, suggested that the Court System could better answer that question. WENDY LYFORD, AREA COURT ADMINISTRATOR, SUPERIOR COURT, ALASKA COURT SYSTEM, ANCHORAGE, explained that the Court System would envision having the mediator available in any court decision involving minor children where custody was an issue. There being NO OBJECTION, RPL 04-8-0010 was APPROVED. RPL 25-8-1058 Department of Transportation and Public Facilities, Division of Weights and Measures $30,000 dollars in federal receipts for development of strategic, intelligent transportation system/commercial vehicle operations, business plan and for participation in State and multi-State forms. Mr. Greany explained that the Division of Legislative Finance would recommend approval of the requested RPL. Representative James MOVED approval of RPL 25-8-1058. There being NO OBJECTION, it was APPROVED. RPL 41-8-0031 Alaska Court System $41,700 dollars in federal receipts for a project to reduce barriers faced by Native Americans who must have contact with the Court System. Mr. Greany noted that the Division of Legislative Finance supported approval of the above mentioned RPL. Representative James MOVED to approve RPL 41-8-0031. There being NO OBJECTION, it was APPROVED. RPL 06-8-0152 Department of Health and Social Services, Medical Assistance BRU, Indian Health Service Component $3,750,000 dollars in federal receipts for Medicaid coverage for native clients. RPL 06-8-0155 Department of Health and Social Services, Public Assistance Administration BRU, Child Care Benefits Component $875,000 in federal receipts for welfare to work transitional child care assistance. RPL 06-8-0171 Department of Health and Social Services, Medicaid State Programs $1,300,000 dollars in federal receipts available through the Medicaid school-based claim program to be used to address the backlog of children waiting for adoption. Representative Hanley commented that all requests from the Department should be addressed as a package. He requested more information regarding the appropriation. He pointed out that the request would provide an appropriation beyond the current year. He questioned the extended levels of funding which would move out of the request and increase Medicaid applications. (Tape Change LBA 97-2, Side 1). Representative Hanley spoke to the magnitude of the proposal noting the multiple changes proposed to the Medicaid program. Senator Adams voiced concern with all the programs which would be discontinued without passage of the proposed package. He recommended that each program be analyzed on an individual basis. SUZANNE GOODRICH, EXECUTIVE DIRECTOR, CATHOLIC SOCIAL SERVICES (CSS), EAGLE RIVER, spoke to RPL 06-8-0171. She explained that Catholic Social Services, which is part of a national program, shares the cost of finding adoptive homes for children. This service is a strong advocate for the Adoption Reform Bill at the congressional level. CSS has been in close contact with the Department of Health and Human Services requesting response for the urgent need of children for adoptive families. In consideration of the children, she urged Committee members to consider and support of this RPL. Ms. Goodrich stressed that this is an urgent matter. MARGARET KIRKLAND, ANCHORAGE, spoke to Committee members of her own trauma of being a foster child for many of years, and the power of the Committee to help alleviate that fate for the children today. RANDY SUPER, (TESTIFIED VIA TELECONFRENCE), DEPARTMENT OF HEALTH AND SOCIAL SERVCIES, offered to answer questions of Committee members regarding the technicalities of the school administrative training. He pointed out that the Legislature has discussed the policy level of identification of use of the funds. Mr. Super noted that the initial request to the federal government was $2 million dollars. Through subsequent negotiations, it was increased. He listed the priorities the Department has for the use of funds in the adoption program. The funds would additionally be used as grants to the school districts. If the proposal is delayed for legislative consideration, the availability of the funds not being released until May, would make it difficult to effectively spend for specific purposes. Mr. Super stressed that the costs could be used to accommodate clients this year, as funds are available. The Department is attempting to manage the program, while meeting the needs as the dynamic health care environment changes. Ms. Clarke stressed that there are three separate RPL's being proposed by the Department. She stressed that each one is individual and distinct within itself. She advised that the Department would not be able to complete the work in addressing the backlog of 400 children in a six-month period. Consequently, the Department has requested the LBA Committee to extend the lapse date for those special identified children. Senator Phillips pointed out that the RPL was not received by his office until one-week prior and was concerned with the way in which it was presented. He added that the Legislative Finance Division had recommended that the consideration be deferred until the upcoming legislative session. ANNALEE MCCONNELL, (TESTIFIED VIA TELECONFERENCE), DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, JUNEAU, apologized to Senator Phillips that the RPL had not been faxed earlier. She reiterated that the Department is trying to use this one-time federal money to deal with the backlog. The Department believes that the opportunity is present for the LBA Committee to make it possible for private agencies to move children through the system in order that they can be placed into permanent homes. Senator Pearce commented that she had seen the backlog list and noted her sympathy for those children, although, she was not willing to support an RPL which would create a "vacuum". She asked if there was any money in the current budget for home study. She did not understand how RSA'd funds could fix the problem. Senator Pearce questioned if this funding would be a guarantee that the 400 children would receive the funds rather than they being distributed to "other" needs within the Administration. Ms. Clarke explained that the Department currently spends funds on adoption through subsidization. She added, little money is spent on home studies. At this point, the Commissioner of the Department has identified that spending money on the proposed issue is the highest priority and best used of those funds. Ms. Clarke continued, the Court System intends to bring a retired judge back to service to deal with these kind of cases. If the Court System should need more money, the Department would try to reallocate within other agencies. Representative James voiced her opposition to the proposition RPL 06-8-0152 and RPL 06-8-06-8-0171. She noted that to place money into an existing policy would be difficult. This condition arises because the State has not had a policy which moves easily through the system. She feared placing additional funds into the pot without making some policy or statutory changes and that the extra funds would not solve the overall problems. Representative Croft voiced his support for the funding. He commented that this was an innovative response to an emergency situation as requested by the Legislature. The Department came through as requested, and now response is being delayed. He stressed that this was an appropriate response to an emergency situation which does not use general funds and does not hire additional state employees. He warned that by re-studying the situation, 400 children would be placed at risk once again. Senator Adams noted that federal funds are always accompanied with policies and guidelines for qualification. He supported giving the Administration as many tools as possible to help get children out of foster care and into loving homes. Senator Phillips asked Senator Pearce's opinion regarding the best way to address the concerns of the three RPL's. Senator Pearce recommended that a motion be made to address each concern separately. She voiced discomfort making large decisions and transfers of programs within departments without the Finance Committees participating in that decision. She added, she was comfortable with transfers to the childcare component which she understood would help address the waiting list. Senator Adams MOVED to approve RPL 06-8-0152. Senator Pearce OBJECTED. Representative Therriault asked for clarification of the request. Ms. Clarke replied that RPL 0152 would address the portion of the school-based claims which would go back to the Department of Education. Representative James questioned the administrative burden that this would place on the school districts. Ms. Clarke clarified that the funds would not direct the schools to do more work. The schools have agreed to do a time study based on an administrative check sheet. To continue that administrative burden, the Department has agreed to contribute half the amount back to the school district. Representative James was not convinced that the school system would want this responsibility placed on their backs. Representative Croft pointed out that the State is now serving Medicaid students and deserves to receive that money, suggesting that every avenue be pursued for reimbursement. In response to Representative James' concern, Ms. McConnell noted that the State was not mandating that every school provides a time study. It would be provided on a voluntary basis. The districts are then reimbursed for their time and energy. Ms. McConnell concluded that this would not be an unfounded mandate. A roll call vote was taken on the motion. IN FAVOR: Adams, Croft, Therriault OPPOSED: Phillips, Donley, Pearce, Torgerson, Bunde Senator Halford, Representative Martin, Representative James and Representative Hanley were not present for the vote. The MOTION FAILED (3-5). Senator Adams MOVED to approve RPL 06-8-0155. There being NO OBJECTION, it was so ordered. Senator Adams MOVED to approve RPL 06-8-0171. Senator Pearce OBJECTED. She asked if the Department planned to offer a supplemental request in any budget area. Ms. Clarke replied that the Department is attempting to avoid supplemental requesting, particularly in the Medicaid area. Although, there are intricacies in the Legislature front section contingency language which will require supplemental language. Ms. McConnell agreed that there are some technical issues which need to be addressed for the federal Medicaid rate change. Federal matching had not been under consideration by Congress when the budget was being passed. She noted that the Department would want to handle this consideration in a spring supplemental. She emphasized that the backlog of children must be addressed. Senator Pearce understood that these funds could be used for anything. She pointed out that they were unrestricted general funds, given the highest priority of the Department. She recommended that if there is going to be a supplemental, the $1.3 million dollars should be used toward those concerns with a new program brought before the full Legislator in January. She reiterated her concern regarding the 400 foster children. Representative Therriault questioned the Court System's involvement and probability of hiring retired judges to address these concerns. Representative Croft acknowledged the frustration of those involved in government to do what everyone knows need to be accomplished. (Tape Change, LBA 97-2, Side 2). Representative Croft urged members to consider if this is an appropriate proposal and problem. He believed that retired judges would be willing to consider such a position. Mr. Greany listed options to approve the concerns. The obvious option would be to approve the request as presented. Another option would be to defer the request in order that the Finance Committees could consider it. The Committees could determine if it was a worthwhile idea and then address it by giving LBA an indication to approve the RPL expeditiously. Senator Pearce inquired the amount of money which could reasonably be spent in a ninety-day period on the concern. Ms. Clarke replied that cash flow analysis had not yet been performed and that problems arise when the State partners with a non-profit agency. She believed that the Department of Law and the Alaska Court System would require a quick RSA for the amount obligated. She agreed that all the funds could not be spent in six months and that probably eighteen months would be needed to adequately address the concern. Ms. McConnell added, the approach was determined by referencing the entire list of children to decide what would be needed for the "total" home study as opposed to caring for only some of the children. Representative Therriualt questioned the idea of an eighteen-month proposal. He questioned why the LBA Committee should make a decision to amend the current year fiscal plan and the following year's plan. Ms. Clarke recognized that it would take the full Legislature to extend the program to the entire eighteen months. Ms. McConnell acknowledged that the Administration recognized that LBA does have the authority to make decisions in the interim particularly when there are unanticipated federal funds available. She reiterated that these are one-time funds and only the FY98 portion was being addressed in the request. Representative Therriault indicated that most often a grant is used for a specific purpose. Representative Croft requested more information on the categories listed. THERESA TANOURY, SPECIAL ASSISTANT TO COMMISSIONER PERDUE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, spoke to the code for special needs as listed on number #4 (direct recognized risk with physical or mental needs) and #9 (court delay). The departmental adoption specialists determined that any additional money would go to the courts to speed up the hearing process for each child and to more experientially match a home with a child. Ms. Goodrich reiterated that at Catholic Social Services, there are ten families ready to adopt children. Representative Therriault noted the frustration in the Fairbanks area with the Foster Care Review Panel and it's funding make-up. He recommended that funding be given to these types groups. Representative Therriault believed that to obligate the entire funds to the Division of Family and Youth Services (DFYS) would not be beneficial. Senator Donley voiced concern that the LBA Committee was being requested to obligate the entire funding for the eighteen-month period. He asked to see the money used for its best use and not just what the Executive Branch assumed necessary. Ms. Goodrich replied that all the groups involved understand that there are fiscal considerations to be addressed. The quicker the children are moved through the system, the less the cost to the State and the less emotional cost to the child. She pointed out, it is important to understand that foster homes are only one part of the entire system. The sooner the child is moved from foster care to adoptive homes, more space is freed up for new children entering into the program. She urged member's favorable consideration of the requested RPL. Senator Halford questioned the effect of approving only one third of the request. Mr. Greany replied that the Committee had the authority to make such a move. He warned that the membership must consider the "severability" concern. Mr. Greany pointed out that are 400 children who would be at stake. Providing only one-third would make it be difficult to identify the effectiveness of dealing with the list and the program. Ms. Clarke added that the Department is currently undertaking on-going planning addressing the adoption aspect of the program. The money is not to go to planning. The list identifies over 100 children who are legally free to go to adoption. Some of the technicalities of getting them placed have to do with home studies. She stressed that for this RPL, the Department has done a tremendous amount of research in identifying the individual circumstances of the children through working with tribal organizations. She emphasized that the Department has worked diligently to come up with an innovative proposal to address certain needs. Ms. Clarke repeated that this is an urgent situation. Senator Adams asked if one third of the funding was granted how long would the Department be able to draw upon those funds before requiring the additional monies. Ms. McConnell replied that obviously, the Administration would prefer to help some children rather than no children, but would prefer to move immediately to help as many children as possible. She believed that this Committee would want to see that each child be placed. The question is when they can be placed. Senator Halford stated that it was unconscionable for the Administration to come to the LBA Committee with an eighteen-month program, thirty days before the Legislature was to commence. He noted that he supported the intent and added that he would like to see a partial component which could get it started before the Legislature begins, although, he was not willing to use the LBA Committee to circumvent the entire Legislative process. Senator Pearce commented that it was "not good" that the Legislature had not been previously informed about the number of children waiting and available for placement. She questioned if money should be used to establish an entire new program one-month before session begins. Senator Pearce asked if it was common in other states that the state be responsible to pick up the cost for the home study or should the adoptive parents be responsible for those services rendered. Ms. Clarke explained that the program was based on a model used in the State of Oregon for those children in state custody. Ms. Tanoury added, situations vary because many times a multiple of home studies must be done to match the child to right family. Sometimes families come prepared to pay, although, often times they are not able to. The funding would allow our State to move quickly on the home study aspect. Senator Halford MOVED TO AMEND the original motion to one third (1/3) the amount requested. A roll call vote was taken on the motion. IN FAVOR: Phillips, Adams, Donley, Halford, Torgerson, Bunde, Croft, Therriault OPPOSED: 0 Senator Pearce, Representative Martin, Representative James and Representative Hanley were not present for the vote. The MOTION PASSED (8-0). Senator Donley recommended that particular interest be placed to the RSA's to the Department of Law billing purposes. He emphasized that the money be used for the appropriate services for specific purposes. Representative Croft asked how the Department of Law would be allocated the funds or if they would be granted on a contractual basis. Ms. Clarke replied that the Department of Law has indicated that they would use contract attorneys to do the work. Senator Phillips asked if there were objections to the amended RPL 06-8-0171. There being NO OBJECTIONS, the amended to one-third the full amount RPL was APPROVED. 45 DAY RULE DISCUSSION Mr. Greany stated that this was entire list of RPL's to come before the Committee for action. He spoke to the 45-day rule which stipulates that if the Committee turns down a RPL, the Governor can legally proceed with it 45 days later as that money would have been appropriated in the front section of the general appropriations bill. Mr. Greany understood that the LBA Committee was looking for ways in which to address this concern. Mr. Greany explained, following discussion with Tamara Cook, Director, Alaska Legal Services, it was concluded that, Option #2, extending the waiting period from 45 days to a time placing it into a specified time of the next session, would hold the most merit. That option would give the Legislature the opportunity to "dis" appropriate the funding approval. All options would require legislation which could result in litigation. He recommended Option #2, which the Legislature could address statutorily and could stand a good chance in a legal challenge. Senator Donley MOVED that the Chair of the Committee request legislation which adopts Option #2. Senator Adams OBJECTED. He questioned who controls the agenda as put before the LBA Committee. Mr. Greany understood that the Office of Management and Budget (OMB) controls the agenda of the LBA Committee. Representative Croft stated that Option #2 was unconstitutional under the statutory code. Mr. Greany pointed out that there was an attached legal analysis provided by Legal Services discussing possible legal challenges and separation of powers. He suggested that this issue be reviewed during the session. Senator Halford asked for clarification, suggesting that if the front section were not included in the budget, if the Legislature would be on sound ground assuming that the Governor could not spend those monies. Mr. Greany agreed, pointing out that would correspond with Option #3. Senator Halford commented that in every other option, the Governor could veto. He reiterated that the only choice "of strength" for the Legislature would be to change the appropriation in the front section. Mr. Greany added that Option #3 would put the LBA Committee "out of business" as far as the ability to be involved in additional expenditure authority. Senator Halford noted that unless the Legislature is willing to implement that, the Governor would never go along with a change to his authority. (Tape Change LBA 97-3, Side 1). Senator Halford and Mr. Greany continued discussion on options to the 45-day rule. Representative Therriault suggested that the Committee "hold-off" on action regarding a decision. Senator Pearce applauded the LBA Committee for encouraging the Finance Committees to look at the questions of additional spending through the bigger picture. Senator Phillips advised that given the Committee reviewal of the list, when the following Legislative Session commences in January, the Committee meet to discuss these options. Senator Donley WITHDREW the MOTION to adopt Option #2. There being NO OBJECTION, it was APPROVED. EXECUTIVE SESSION Senator Pearce MOVED that the Committee meet in EXECUTIVE SESSION for the purpose of consideration of audits and other items related to the Committee's finances. There being NO OBJECTION, the Committee met in EXECUTIVE SESSION. REGULAR SESSION The Committee reconvened in REGULAR SESSION. Senator Pearce MOVED to move the Department of Fish and Game's audit to that Department for response. There being NO OBJECTION, it was APPROVED. Senator Pearce MOVED to direct audit staff to depose university personnel. There being NO OBJECTION, it was APPROVED. SPECIAL AUDIT REQUESTS Senator Donley MOVED to approve all the audit requests except those of Senator Taylor and Representative Hanley. There being NO OBJECTION, it was APPROVED. Senator Phillips noted that both he and Representative Hanley would request that priority be given on the audit for work to be completed by March, 1998. Senator Donley asked that LBA stress that Representative Hanley's request be moved to the top priority of the auditor's work. Senator Pearce requested a copy of the list of backlogged projects. Senator Phillips commented that the McDowell report would be available on January 30, 1998. Senator Phillips asked to create a committee for the selection of Director for the Legislator Audit Division. Committee volunteers were: Senator Halford, Senator Pearce, Senator Adams, Representative Therriault, Representative Hanley, and with Senator Phillips as Chair of the Committee. He asked that resumes be sent to all members of the LBA Committee. ADJOURNMENT The meeting adjourned. LBA 1 12/12/97