HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE February 3, 1996 1:09 p.m. MEMBERS PRESENT Representative Ivan Ivan, Co-Chair Representative Alan Austerman, Co-Chair Representative Kim Elton Representative Al Vezey Representative Irene Nicholia MEMBERS ABSENT Representative Jerry Mackie Representative Pete Kott COMMITTEE CALENDAR HOUSE BILL NO. 409 "An Act combining parts of the Department of Commerce and Economic Development and parts of the Department of Community and Regional Affairs by transferring some of their duties to a new Department of Community and Economic Development; transferring some of the duties of the Department of Commerce and Economic Development and the Department of Community and Regional Affairs to other existing agencies; eliminating the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; adjusting the membership of certain multi-member bodies to reflect the transfer of duties among departments and the elimination of departments; and providing for an effective date." - HEARD AND HELD PREVIOUS ACTION BILL: HB 409 SHORT TITLE: DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT SPONSOR(S): REPRESENTATIVE(S) KELLY, Therriault, James, Kohring JRN-DATE JRN-DATE ACTION 01/11/96 2409 (H) READ THE FIRST TIME - REFERRAL(S) 01/11/96 2409 (H) CRA, FINANCE 01/16/96 2456 (H) COSPONSOR(S): KOHRING 02/01/96 (H) CRA AT 01:00 PM CAPITOL 124 02/01/96 (H) MINUTES(CRA) 02/03/96 (H) CRA AT 01:00 PM CAPITOL 124 WITNESS REGISTER PETE KELLY, Representative Alaska State Legislature State Capitol Building, Room 513 Juneau, Alaska 99801 Telephone: (907) 465-2327 POSITION STATEMENT: As sponsor, answered questions on HB 409. DIANE DUVALL, Treasurer KIDPAC 8840 Gloralee Street Anchorage, AK 99502 Telephone: (907) 279-5025 POSITION STATEMENT: Opposed HB 409 as written. CARL BERGER, Executive Director Lower Kuskokwim Economic Development Council P.O. Box 2021 Bethel, Alaska 99559 Telephone: (907) 543-2031 POSITION STATEMENT: Supported HB 409, with suggestions. PATTY MERITT Play and Learn Nonprofit Child Care Center 4581 Drake Street Fairbanks, Alaska 99709 Telephone: (907) 474-0841 POSITION STATEMENT: Testified on HB 409. MIKE SCOTT, Manager City of Kotzebue P.O. Box 46 Kotzebue, Alaska 99752 Telephone: (907) 442-3401 POSITION STATEMENT: Testified on HB 409. KARIN McCULLOUGH P.O. Box 707 Petersburg, Alaska 99833 Telephone: (907) 772-9238 POSITION STATEMENT: Opposed HB 409. MARGARET T. BEETUS, Mayor City of Hughes P.O. Box 45010 Hughes, Alaska 99745-0010 Telephone: (907) 889-2206 POSITION STATEMENT: Opposed HB 409. ANDY DURNY, Treasurer City of Nulato P.O. Box 65009 Nulato, Alaska 99765 Telephone: (907) 898-2205 POSITION STATEMENT: Agreed with intent of HB 409 but had concerns. STEVE ANDISON, General Manager Kake Nonprofit Fisheries Corporation City of Kake P.O. Box 500 Kake, Alaska 99830 Telephone: (907) 785-3804 POSITION STATEMENT: Testified on HB 409. BETH EDMANDS, Executive Director Child Care Connection 2218 Alder Drive Anchorage, Alaska 99508 Telephone: (907) 258-1185 POSITION STATEMENT: Opposed to HB 409 as written. ALLEN JOSEPH, Director Tribal and Program Support Services Yukon Kuskokwim Health Corporation P.O. Box 528 Bethel, Alaska 99559 Telephone: (907) 543-3336 POSITION STATEMENT: Opposed to HB 409. CHERYL KEEPERS, Manager Child Care Assistance Program Fairbanks North Star Borough P.O. Box 71267 Fairbanks, Alaska 99707 Telephone: (907) 459-1474 POSITION STATEMENT: Voiced concerns about HB 409. MARGARET HANSEN, Local Government Specialist Kotzebue Regional Office Division of Municipal and Regional Assistance Department of Community and Regional Affairs P.O. Box 350 Kotzebue, Alaska 99752-0350 Telephone: (907) 442-2404 POSITION STATEMENT: Opposed HB 409. TERRY HINDMAN P.O. Box 1431 Petersburg, Alaska 99833 Telephone: (907) 772-4418 POSITION STATEMENT: Voiced concerns about HB 409. CHARLES McKEE P.O. Box 243053 Anchorage, Alaska 99524 (No telephone number provided) POSITION STATEMENT: Opposed HB 409. SCOTT CALDER P.O. Box 75011 Fairbanks, Alaska 99707 Telephone: (907) 474-0174 POSITION STATEMENT: Testified on HB 409. JOHN ANGAIAK P.O. Box 528 Bethel, Alaska 99559 Telephone: (907) 543-6033 POSITION STATEMENT: Testified on HB 409. EILEEN NEWMAN Tanana Chiefs Conference, Inc. 122 First Avenue Fairbanks, Alaska 99701 Telephone: (907) 452-8251 POSITION STATEMENT: Opposed HB 409. KAREN KING Alaska Head Start Directors Association P.O. Box 200986 Anchorage, Alaska 99520 Telephone: (907) 277-9759 POSITION STATEMENT: Testified on HB 409. JODI DELANEY 3200 Kris Kringle Drive North Pole, Alaska 99705 Telephone: (907) 488-0334 POSITION STATEMENT: Testified on HB 409. VIRGINIA WASHINGTON, Administrator City of St. Michael P.O. Box 70 St. Michael, Alaska 99659 Telephone: (907) 923-3222 POSITION STATEMENT: Voiced concerns about HB 409. LINDA HALL, Commercial Insurance Broker Alaska Independent Insurance Agents and Brokers 3111 C Street, Suite 300 Anchorage, Alaska 99503 Telephone: (907) 561-1250 POSITION STATEMENT: Testified on HB 409. LARE 1805 Bunker Anchorage, Alaska 99503 Telephone: (907) 274-7793 POSITION STATEMENT: Testified on HB 409. JOHN WHEATLEY, CEO Willis Corroon Corporation of Anchorage 7740 McLure Anchorage, Alaska 99516 Telephone: (907) 562-2266 POSITION STATEMENT: Testified on HB 409. JEANINE KENNEDY, Executive Director Rural Alaska Community Action Program (RurAL CAP) P.O. Box 200908 Anchorage, Alaska 99520 Telephone: (907) 279-2511 POSITION STATEMENT: Testified on HB 409. PAUL FUHS, Lobbyist Alaska ARDOR Association 10652 Porter Lane Juneau, Alaska 99801 Telephone: (907) 790-3030 POSITION STATEMENT: Supported concept of HB 409. PATRICIA J. STANLEY, Executive Director Council of Athabascan Tribal Governments P.O. Box 33 Fort Yukon, Alaska 99740 Telephone: (907) 662-2587 POSITION STATEMENT: Testified on HB 409. ACTION NARRATIVE TAPE 96-7, SIDE A Number 0001 CO-CHAIR IVAN IVAN called the House Community and Regional Affairs Committee meeting to order at 1:09 p.m. Members present at the call to order were Representatives Ivan, Austerman, Elton and Vezey. Members absent were Representatives Mackie, Kott and Nicholia. HB 409 - DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT Number 0139 CO-CHAIR IVAN reminded people testifying via teleconference that they could fax copies of written testimony to (907) 465-4589 for inclusion in the record. He called upon the sponsor of HB 409, Representative Pete Kelly, to provide a brief recap of the bill. Number 0193 REPRESENTATIVE PETE KELLY explained that HB 409 attempted to combine the economic development functions of the Department of Community and Regional Affairs (DCRA) and the Department of Commerce and Economic Development (DCED). It also attempted to peel off from DCRA and DCED some of the functions and programs that did not match the mission statements of those departments. Those functions and programs would be reassigned to other departments. Number 0254 REPRESENTATIVE KELLY said economic development should be the primary focus of the legislature and the Administration. The previous year, the legislature had been forced to make cuts in both DCRA and DCED, mainly in administrative services. This year, additional cuts were required, again primarily in administrative services. However, there was concern that cutting too deep, even in administrative services, would begin to affect vital services to the people of Alaska. By combining the efforts of economic development, those services could be made more accessible and be carried out in a better fashion. Representative Kelly emphasized that HB 409 would cut no services; it attempted to combine administrative functions to better carry out services and was created to protect them. He added that users of economic development services had expressed frustration in having to go back and forth between agencies. He suggested setting up an 800 number to facilitate one-stop shopping for economic development services. Number 0499 CO-CHAIR IVAN thanked Representative Kelly and recognized that Representative Nicholia had joined the meeting. Number 0557 DIANE DUVALL, Treasurer, KIDPAC, testified via teleconference from Anchorage. She spoke about the importance of coordinating policy and programs for young children in Alaska. She advocated the consolidation of child care, Head Start and other programs relating to special-needs and disadvantaged children. She explained that HB 409 separated preschool children into two groups, Head Start and child care, dividing families' lives. She suggested bringing together representatives from the child care industry and Head Start to consolidate and focus state agencies dealing with children into one division. She expressed enthusiasm for the idea of better aligning the missions and goals of the agencies. But HB 409, she said, was divisive and not what they were looking for. Number 0847 CARL BERGER, Executive Director, Lower Kuskokwim Economic Development Council, testified via teleconference from Bethel. He explained that the council was an Alaska Regional Development Organization (ARDOR). He spoke on behalf of HB 409, particularly with regard to economic development. He noted that 27 villages were part of his council, a grass-roots organization supported by private and some state funding. Mr. Berger wanted to see efforts towards consolidating economic development services and their accessibility, particularly in rural areas. In some cases, he said, there had been a scatter-shot approach from federal, state and private agencies to providing these services. He said HB 409 was a step in the right direction toward creating a single point of contact. Number 0966 MR. BERGER added that an ARDOR program, such as his, already acted as a single point of contact in his region. He noted that the council was interested in contracting for state services. Number 1060 PATTY MERITT, Play and Learn Nonprofit Child Care Center, testified via teleconference from Fairbanks. She referred to the two pages of testimony she was submitting in writing and emphasized that the agencies for Head Start and child care needed to stay together. She felt that neither Head Start nor child care should be placed in the Department of Health and Social Services (DHSS) or the Department of Education (DOE). In particular, she said, child care needed to be viewed as an economic tool. If it were placed in DOE or DHSS, it would be viewed as a social service or welfare program. Admittedly, she said, more revenue needed to be put into child care to ensure adequate care and education for young children, but that revenue needed to come from the private sector. She asserted that parents cannot pay more and the government cannot contribute what is needed; the private sector that should provide it was the employer. For employers to recognize this need, however, it must be seen as an economic tool. And the department that could do that, she said, would either be the proposed Department of Community and Economic Development or perhaps the Department of Labor. Number 1189 MS. MERITT said in terms of matching the mission statement, Representative Kelly would be well served to look at the intent behind child care, which enabled parents to work, getting them off the public rolls and into being contributing citizens. She offered to meet with committee members on Monday, February 4, in Juneau. Number 1270 MIKE SCOTT, Manager, City of Kotzebue, testified via teleconference. He believed DCRA and DCED should be left as is. But if the state wanted to help rural areas with economic development, he said, they should concentrate on coordination and proposals to actually spur economic development, especially in areas where transportation and energy were difficult to provide. He did not believe HB 409 was the way to accomplish it. It would be more productive, he felt, to set up programs to create jobs and industrial development activity. Although he found the effort behind HB 409 commendable, he thought it unwieldy and impractical. CO-CHAIR IVAN recognized that Representative Carl Moses was present and invited him to join the discussion if he wished. Number 1380 KARIN McCULLOUGH testified via teleconference from Petersburg in opposition to HB 409. She expressed concern about children and their families; she recognized the need for long-term strategic planning in state government with input from parents actually using the services. She said the state's approach to child care affected how parents approached their work life. Number 1480 MARGARET T. BEETUS, Mayor, City of Hughes, testified via teleconference. She said she totally opposed HB 409. She was adamant that many families in Hughes would be "hugely affected" by the proposed merger. She did not want to be the one who had to explain to the people of her village why there was yet another change. Number 1664 REPRESENTATIVE KELLY asked if Ms. Beetus was aware HB 409 did not propose to cut services. MS. BEETUS responded that had been said in other instances, yet they had to live with the consequences. "We don't believe what you guys say anymore," she added. Number 1680 REPRESENTATIVE KELLY reiterated that HB 409 did not cut services, but attempted to protect them. He offered to send Ms. Beetus a letter and perhaps give her a telephone call to discuss it. MS. BEETUS again expressed skepticism about the merger. "If you're going to merge two different departments, you guys come up here and explain that to the people," she said. She emphasized she did not want to take the blame. Number 1730 ANDY DURNY, Treasurer, City of Nulato, testified via teleconference. He said he agreed with the intent and goals of HB 409, but he had two concerns. First, he was concerned about elimination of DCRA, which he felt, in his 14 years' experience, to be the most responsible and helpful department with which they dealt. Most other departments, he said, did not even know where Nulato was located or what life was like there. Second, he was concerned that efforts to streamline might create a work overload instead. Number 1808 STEVE ANDISON, General Manager, Kake Nonprofit Fisheries Corporation, City of Kake, testified via teleconference. He explained the City of Kake had been working with DCRA and DCED in an effort to diversify their economy and add fishing back into the economic mix along with logging. Mr. Andison expressed that the two departments were distinctly different. He believed that DCRA was better equipped to help rural communities and felt any attempt to merge DCRA and DCED would weaken both departments. He advocated leaving DCRA intact as a separate entity. Number 2002 BETH EDMANDS, Executive Director, Child Care Connection, testified via teleconference from Anchorage. She explained her own background and that of Child Care Connection. She said she was opposed to HB 409. While it addressed economic development, which she favored, children's issues were merely an "aside" in the bill. She offered to work with legislators to create a long-range plan that did not separate children's services but brought them together. Number 2124 ALLEN JOSEPH, Director, Tribal and Program Support Services, Yukon Kuskokwim Health Corporation, testified via teleconference from Bethel in opposition to HB 409. He commented that he also spoke as a concerned citizen. He said cuts had affected rural Alaska to the point of smothering social and economic development. The services found in DCRA were all that remained of the state's assistance to rural Alaska. Mr. Joseph spoke against eliminating DCRA. If there could be a compromise, he hoped DCRA would be made a division of DCED. He feared rural and Head Start programs would lose priority under the new scheme. He noted that he was a reviewer for DCRA's Rural Development Assistance Grants; villages competed intensely for $700,000 under that program. Mr. Joseph said the state's efforts to eliminate DCRA was a slap to the villages. He added it was not well thought out and was ignorant to the needs of rural Alaskans. Number 2240 CHERYL KEEPERS, Manager, Child Care Assistance Program, Fairbanks North Star Borough, testified via teleconference about the impacts of HB 409. She emphasized that DCRA's philosophical base was one of community and economic development, which worked well for child care programs. Child care assistance was not a welfare program, she said, and did not belong in the Department of Health and Social Services. She felt that if DCRA ceased to exist, child care programs should be placed in a department where the foundation was economic development. Finally, Ms. Keepers expressed concern about the short notice on the hearing. Number 2350 MARGARET HANSEN, Local Government Specialist, Kotzebue Regional Office, Division of Municipal and Regional Assistance, Department of Community and Regional Affairs, testified via teleconference against HB 409. She felt the transfer of roles would hurt rural communities and suggested combining DCED into DCRA instead, as DCRA already had rural offices and staff who were born and raised in the area. Number 2422 TERRY HINDMAN testified via teleconference from Petersburg. She voiced concerns about child care programs being transferred to the Department of Health and Social Services. Several parents there had expressed similar concerns, she said. She felt the issue needed more time and additional hearings. TAPE 96-7, SIDE B Number 024 CHARLES McKEE testified via teleconference from Anchorage. He referred to page 92 of HB 409 and said that 16 U.S.C. 1456, Section 307, the Coastal Zone Management Act of 1972, was the federal application of what HB 409 was trying to accomplish. He adamantly opposed the Coastal Zone Management Act; he also opposed HB 409 because it was simply trying to bring about the completion of that act, he said. He cited an article written the winter of 1995 and said, "I am economic development." He added he could not provide economic development for himself or his community or anywhere else "if you people do not comply with the law." Number 0185 SCOTT CALDER testified via teleconference from Fairbanks. He expressed interest in children's programs. He suggested the committee listen to the concerns voiced earlier by the mayor of Hughes, Margaret Beetus. He felt that children's programs should conform to the expectations of parents of the particular children involved; no programs should receive higher priority than the community and economic interests of those parents. Mr. Calder added that based on its track record, the Department of Health and Social Services should have as little to do with Alaska's children as possible. Number 0269 MR. CALDER referred to AS 11.76.100(e), regarding persons convicted of providing tobacco to minors, and discussed problems in a foster home caring for his own son. He felt businesses should not be "picked on" for violations, but that liability should be also spread back to the Department of Health and Social Services, who provided the money in the first place for minors to purchase tobacco, for example. He also referred to AS 47.18.10(d), regarding programs and services related to minors and noted that parents were second on the list behind teens. Again, he said, parents should not be on the list, but instead should be right at the top of the process. Programs should be working for the parents of the children, he added. Number 0382 JOHN ANGAIAK testified via teleconference from Bethel, saying he did not know whether HB 409 would be good for the rural areas. He thought DCRA should be left alone. He referred to Rural Development Assistance (RDA) grant applications and said that with RDAs cut from $100,000 to $50,000, they did not provide enough economic incentive to the rural villages, particularly in his area. He foresaw consolidation having further detrimental impacts. Mr. Angaiak gave examples of funding cuts and talked about tribal councils not qualifying for certain grant programs. He reiterated that $50,000 was not enough money for any project. Number 0673 REPRESENTATIVE KELLY referred to Mr. Angaiak's mention of funding level decreases and changing numbers of grant applicants. He asked if Mr. Angaiak was aware that HB 409 did not in any way address those issues as far as the level of funding. Number 0693 MR. ANGAIAK responded that he was aware of that. However, he said, the decrease to $50,000 was a significant change. Number 0714 EILEEN NEWMAN, Tanana Chiefs Conference, Inc., testified via teleconference from Fairbanks in opposition to HB 409. She read from a two-page prepared statement that was then provided to the committee. She was apprehensive of future cuts to rural Alaska and felt it crucial that DCRA be kept intact. She expressed that transferring the Revenue Sharing and Municipal Assistance Program to the Department of Revenue, separating it from the Municipal and Regional Assistance Program, would definitely mean a cut to services to the villages. She opposed placing the Head Start Program in the Department of Education and felt it required a more holistic approach. She described the link that DCRA provided between the villages and state government. She asked whether eliminating whole departments was necessary to achieve efficiency and whether other options had been evaluated. Number 1007 KAREN KING, Alaska Head Start Directors Association, testified via teleconference from Anchorage. She stated it was clear from testimony that DCRA has a voice to rural Alaska. There appeared to be an unacceptable chasm between rural and urban communities. She asserted that HB 409 appeared to be an effort to widen that gap. She asked if this was another attempt to make rural Alaskans leave their native homeland and move to cities. She objected to placing Head Start services under the Department of Education (DOE). Participants in the Head Start community had not been solicited or polled about the issue. She felt the changes were being done to them rather than with them, and maybe in spite of them. She noted that DCRA had been wonderfully supportive and responsive to the Head Start community. Under HB 409, it seemed the bridge to rural Alaska was being eliminated for doing a good job. Furthermore, the fundamental philosophies of the Department of Education and Head Start differed. Head Start saw parents as the prime educators, as other testifiers had noted, as well as the shared decision-makers. Rather than the "three Rs," socialization and self-concept skill development were critical to Head Start. Number 1168 MS. KING concluded by saying a transition to DOE would be expensive in terms of time, energy and resources. Despite Representative Kelly's assertions to the contrary, she saw HB 409 as a move to reduce services in terms of administering programs that had already been successful. She suggested an amendment disbanding DOE and placing it in DCRA. Number 1262 REPRESENTATIVE KELLY asked Ms. King if she was aware he had been the chairman of the subcommittee providing funding to Head Start the previous year. He noted that preservation of the Head Start budget the previous year had mostly been due to his own efforts to fund it at full levels. It was his desire, he said, to protect Head Start. Number 1370 JODI DELANEY testified via teleconference from Fairbanks. She said she had not yet reviewed the whole of HB 409. She referred to pages 2 and 6; she related her own problems with child support enforcement and suggested those areas needed to be cleaned up before they were combined. She referred to AS 11.35.005, defining a relative, and spoke about a case involving the "best interests of two twin babies that were wrongfully taken." She discussed her interests relating to the bill and asked Representative Kelly to contact her about HB 409. She said she would hate to see the good parts die or get lost because it was too big to comprehend. Number 1593 REPRESENTATIVE KELLY advised Ms. Delaney that in HB 409, she only needed to pay attention to the bracketed and underlined language. Most of Ms. Delaney's comments, as well as most of Mr. Calder's before her, were directed to existing statute not affected by HB 409. Representative Kelly explained HB 409 was really a technical bill renaming some departments because of the merger of DCRA and DCED. Number 1645 MS. DELANEY responded that from her corporate work experience, change brought havoc, new ways of doing things and things being left undone. Already, things were not being done or were being done incorrectly. She said she understood how to read the bill. But there were already serious problems that needed fixed first. Number 1711 VIRGINIA WASHINGTON, Administrator, City of St. Michael, testified via teleconference. She expressed concern about HB 409 and said DCRA provided essential services and workshops to villages, linking them to the region and the state. She wondered how much it would cost to make the changes and how communities would be affected. REPRESENTATIVE IRENE NICHOLIA pointed out that Ms. Washington had asked a question. Number 1934 REPRESENTATIVE KELLY said he had thought it was rhetorical and asked Ms. Washington to repeat her question. MS. WASHINGTON clarified that she wanted to know how a nonprofit government would link to a profit-making system and how much it would cost, for small villages like St. Michael, to turn over the system. Number 1934 REPRESENTATIVE KELLY replied it should not cost the villages anything to turn over the system. As HB 409 was written, the field people would remain in place and the functions of DCRA would continue. He said that eliminating DCRA was a misnaming; they were doing the same thing with DCED and creating a new department. All the functions and services, he said, would remain. In an environment of cutting budgets, he explained, the legislature was faced with either cutting services or administration, or else making administration more efficient. He said HB 409 attempted to make the administration more efficient. Whereas HB 409 would have up-front costs for the state, Representative Kelly did not envision any costs or change of services at the field level in the villages. Number 2037 LINDA HALL, Commercial Insurance Broker, Alaska Independent Insurance Agents and Brokers, testified via teleconference from Anchorage. She said there were several hundred members of her organization statewide who were independent insurance agents. They supported efforts to make government agencies more efficient and to cut costs. However, she was concerned about moving the Division of Insurance to the Department of Revenue. One of that division's primary purposes, she said, was regulatory oversite of insurance companies and agents. Equally important was consumer advocacy. She felt encouraging a competitive marketplace was one of the best ways to facilitate these. Moving the Division of Insurance to the Department of Revenue would change its focus much to the detriment of the current insurance environment. Number 2240 LARE testified via teleconference from Anchorage. She said DCRA had been a "small voice" and effective. She said Head Start did not belong in the Department of Education. She discussed child care as both an assistance for parents and as a business; it was tied to family and community economics. She added that services would in fact be cut if programs focusing on families and children were moved to agencies where that was not their primary function. TAPE 96-8, SIDE A Number 0001 MS. LARE concluded by saying the notice on HB 409 had been extremely short. Number 0055 JOHN WHEATLEY, CEO, Willis Corroon Corporation of Anchorage, testified via teleconference. He spoke in support of efforts towards consolidation, but voiced concern about placing the Division of Insurance, a regulatory agency responsible for consumer protection, under the Department of Revenue. Number 0142 JEANINE KENNEDY, Executive Director, Rural Alaska Community Action Program (RurAL CAP), discussed what she thought impacts would be to rural Alaska if DCRA were obliterated. She explained there were 200 villages in rural Alaska, which were isolated, remote and small in population, inhabited by a unique population with cultures and values different from western cultures and values. These villages lacked infrastructure. The approach to get into business in Anchorage, Fairbanks or Juneau would be different from that required in a village. Trying to make everyone be the same would not work. She said DCRA was one of the most efficient and well- organized agencies in state government; she asked why one would get rid of something that worked so well. She explained that what worked about DCRA was their holistic approach. Rural Alaska, she noted, had finally figured out DCRA, which would now be scrambled up and put into something new. Ms. Kennedy thought this was inefficient and would be costly. She asked how much it would cost to move all the people and departments. Number 0510 REPRESENTATIVE KELLY replied there was a current fiscal note of $1.6 million for a one-time cost. There were indications of a minimum $1 million per year savings from the merger. Number 0545 MS. KENNEDY said she thought $1.6 million would be a good one-time cost to put into infrastructure and economic development in rural Alaska. She added that Head Start was not education; it was a community program based on the parent as the primary educator. She thought Head Start would be better left in DCRA because of its community development approach and its promotion of local control. Ms. Kennedy concluded by saying 200 people from rural Alaska would be in Juneau March 18 - 22; she recommended they have an opportunity for input on HB 409. Number 0749 PAUL FUHS, Lobbyist, Alaska ARDOR Association, explained that ARDOR associations were included within HB 409. Mr. Fuhs said his association, which represented both urban and rural areas of the state, saw no urban/rural split. Alaska was economically interdependent, with most of the production being in rural Alaska. His organization supported efforts to bring economic development together in one place, including the concept of HB 409 in pulling all the economic development programs into one. The bottom line for ARDORs, he said, was private jobs. Number 0890 MR. FUHS supported the idea of an 800 number providing a single point of contact for economic development services; he felt it would be well received throughout Alaska. He emphasized the importance of training, which he recommended keeping in DCRA with its economic development focus, rather than moving it to the Department of Labor. Number 1020 MR. FUHS discussed the impending cap on welfare. He said his organization had no position on Head Start or child care, but he noted that those would be included in economic development as parents moved off of welfare. The ARDORs, he said, wanted to help in these efforts and in providing private-sector jobs. They did not view HB 409 as the elimination of DCRA, nor see it as a slap in the face to rural Alaska. Number 1090 MR. FUHS said he was "switching hats" and concluded by speaking not as an ARDOR representative but as a private citizen and the former commissioner of DCED. He referred to HB 409 sending the Division of Banking, Securities and Corporations to another agency. Often the first point of contact for people coming to Alaska, that division, Mr. Fuhs felt, served an important economic development function. Number 1164 REPRESENTATIVE ELTON asked Mr. Fuhs whether he was concerned about the proposed transfer of the Division of Insurance to the Department of Revenue, speaking from his experience as a private citizen and former commissioner of DCED. Number 1189 MR. FUHS replied that there were some economic development parts of the Division of Insurance; lack of a good insurance program was a definite cost to business. He said the argument could be made that the Division of Insurance was more regulatory than economic development oriented. However, it was not as clear an argument as for the Division of Banking, Securities and Corporations. Number 1209 REPRESENTATIVE ELTON referred to the large number of boards a commissioner was required to sit on; he asked Mr. Fuhs how he would feel and whether he would have time for other things if he were commissioner of the new combined department. Number 1237 MR. FUHS explained that one of the main jobs of a commissioner was sitting on those boards and commissions; he himself had sat on 18 of them. The nice thing about it, he said, was after the legislators went home, a commissioner really got to put a stamp on things through those boards and commissions. It was part of the job. Number 1263 REPRESENTATIVE ELTON asked whether Mr. Fuhs envisioned that one commissioner could handle those duties from both DCED and DCRA. MR. FUHS responded that his deputy commissioner had been able to handle most of the regulatory functions. Mr. Fuhs suggested that having those regulatory functions out of the department would free more of a commissioner's time to look at economic development. CO-CHAIR IVAN asked if there were any other people on teleconference wishing to testify. He thanked the participants for testifying and submitting documents for the record. Number 1365 PATRICIA J. STANLEY, Executive Director, Council of Athabascan Tribal Governments (CATG), gave a brief background of CATG, explaining it began in 1985 as a way of taking responsibility for growth and development in the Yukon Flats, a 55,000 square mile area. The CATG had discovered there was no way to address only economic development without having an infrastructure in place. The past 11 years had seen a slow process of strengthening village governments to prepare for taking on responsibilities for service delivery, which CATG considered part of economic development, as well as creating a base for private jobs to develop. Ms. Stanley said her area depended on DCRA as one place that provided everything from child care to planning, training for administrators, setting up financial management systems and straightening out bookkeeping. Number 1500 MS. STANLEY added that her concern was in being able to go one place where people knew each other, where there was a comfort level and an expectation of receiving services. She asked where the $1 million savings would come from and what it would mean in terms of services. REPRESENTATIVE KELLY responded that the $1 million in savings would come from eliminating administrative positions. Number 1559 MS. STANLEY indicated she would prefer to see DCRA beefed up, rather than taken apart. If consolidation were necessary, she would rather see DCED go into DCRA than the other way around. REPRESENTATIVE KELLY replied that he thought Ms. Stanley had mistaken the purpose of HB 409. It was not necessarily eliminating DCRA, but rather merging DCRA with DCED and changing the name. He added there were not many testifiers opposing eliminating DCED and said he was not sure why, but that would be just as big a mistake. Representative Kelly emphasized that the economic development functions of the two departments were being merged. He suggested that was the engine that was going to drive the state, as well as the engine most capable of pulling both urban and rural Alaska into the 21st century so that Alaska could depend more on jobs and less on government. He likened it to the old adage about teaching people to fish rather than giving them fish. Number 1659 MS. STANLEY proposed that when the Village Participation Conference (VPC) met in Juneau, there should be another chance for testimony and to get to know the bill better. She agreed with prior testifiers who had suggested it was too much of a fast track to digest. It was too important of an issue for every family in rural Alaska; they needed additional time to consider. Number 1698 CO-CHAIR IVAN expressed appreciation for Ms. Stanley's concerns. However, he said, the committee had done all they could through the notification process to reach rural communities in the state. He assured Ms. Stanley that the committee was not trying to fast-track a bill, but rather was trying to conduct some good public discussion. Number 1720 REPRESENTATIVE NICHOLIA noted that while HB 409 merged departments, it also moved Head Start and child care into the Department of Education. Number 1738 REPRESENTATIVE ELTON asked Representative Kelly about his estimate of $1 million in savings and noted that at the previous Thursday's hearing, he had understood the savings in the fiscal note to be $340,000. He further understood that at this point in time, at least, no new fiscal note was forthcoming until there were further amendments to the bill. Number 1763 REPRESENTATIVE KELLY explained the $300,000 savings was the departments' own estimate. He was not relying on the departments to provide estimates of savings, which was his purview as the chairman of the subcommittee budgets. However, he was relying more on the departments for estimates of moving and other costs. Representative Kelly added that, in reference to notification and opportunity to look HB 409 over, the financial aspect of HB 409 would be discussed at length in the House Finance Committee and its subcommittee meetings, where they would consider the $1 million savings, fiscal notes and other issues; at that time, there would be even more information. Representative Kelly indicated willingness to amend the bill, using suggestions he considered valuable, in order to have HB 409 make as much sense as possible. Number 1822 REPRESENTATIVE ELTON added he thought it especially important to note, during the course of the public hearing while many people were on-line, that DCRA and DCED and their directors of administration had come up with a fiscal note indicating savings of approximately $300,000 to $350,000 per year. Representative Elton said he looked forward to seeing the spreadsheets and work done by the sponsor of the bill. However, he said, there were two different estimates of savings. Number 1845 REPRESENTATIVE KELLY noted that as cooperative as the departments had been, they were not the legislature. The legislature would determine through the power of appropriation the spending and savings levels coming out of the merger, or from anything else they did. CO-CHAIR IVAN thanked Ms. Stanley for her testimony and asked if anyone else present wanted to testify. He thanked the testifiers across the state and present in person. Number 1887 MR. ANDISON added a comment via teleconference. He referred to the $1 million-per-year savings and said changing the name of the two departments and putting it under a new title would not save the money; there would actually be cuts of positions or programs, or reduction in some way. He said in his experience, both DCED and DCRA had their hands full. Mr. Andison said he saw little duplication of services or job duties. Where efforts were duplicated, he thought elimination of a job or program should occur; however, drastic down-sizing would leave someone's work undone or services poorly provided. He added that the Department of Revenue would probably be pretty overworked. Communities utilizing the services of both DCED and DCRA would somehow ultimately suffer, he believed. Number 1942 MR. ANDISON expressed to Representative Kelly that he himself, and other people in the rural areas, would feel better if they understood exactly where the jobs would be cut and where the duties would be absorbed. Perhaps with clarification, he said, brought to them in a concise way, and if they saw it was not going to negatively affect them, they might be more supportive of some kind of down-sizing. As it was, they worried about elimination of something they depended upon to build their infrastructure. Number 1995 CO-CHAIR AUSTERMAN asked Representative Kelly to take to heart the concerns raised at the meeting, especially with regard to the difficulty the 200 rural communities would have in going to a variety of agencies to cover their needs. He noted that the concept of a one-stop shop in DCRA was valued. Issues that particularly stood out involved Head Start and child care and how dependent they were. Co-Chair Austerman suggested that might tie back to economic development. He thought Head Start and child care might be reevaluated and put back into HB 409. Number 2040 CO-CHAIR AUSTERMAN further suggested considering the interaction between economic development and the Division of Banking, Securities and Corporations, which was the first stop for new companies coming to Alaska. He asked if those issues could all be addressed or at least looked at before the next hearing. CO-CHAIR IVAN noted that HB 409 would be heard again on Tuesday, February 6, 1996. He asked the departments and the bill sponsor to continue their dialogue and coordination on fiscal note questions. He then thanked the committee for attending the Saturday meeting. Number 2075 ADJOURNMENT There being no further business to conduct, CO-CHAIR IVAN adjourned the House Community and Regional Affairs Committee meeting at 3:20 p.m.