HOUSE FINANCE COMMITTEE January 10, 2001 1:39 PM TAPE HFC 01 - 1, Side A TAPE HFC 01 - 1, Side B TAPE HFC 01 - 2, Side A TAPE HFC 01 - 2, Side B CALL TO ORDER Co-Chair Mulder called the House Finance Committee meeting to order at 1:39 PM. MEMBERS PRESENT Representative Eldon Mulder, Co-Chair Representative Bill Williams, Co-Chair Representative Con Bunde, Vice-Chair Representative Eric Croft Representative John Davies Representative Carl Moses Representative Richard Foster Representative John Harris Representative Bill Hudson Representative Ken Lancaster Representative Jim Whitaker MEMBERS ABSENT None ALSO PRESENT Representative Gretchen Guess; Ed Flanagan, Commissioner, Department of Labor & Workforce Development; Remond Henderson, Director, Division of Administrative Services, Department of Labor & Workforce Development; Duane French, Director, Division of Vocational Rehabilitation, Department of Labor & Workforce Development; Jim Duncan, Commissioner, Department of Administration; Allison Elgee, Deputy Commissioner, Department of Administration; Robert Poe, Executive Director, Alaska Industrial Development and Export Authority (AIDEA), Department of Community & Economic Development. PRESENT VIA TELECONFERENCE None GENERAL SUBJECT(S): REVIEW OF DEPARTMENTS ACCOMPLISHMENTS: Department of Labor & Workforce Development Department of Administration Alaska Industrial Development & Export Authority (AIDEA) The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 22nd Legislative Session, contact 465- 2156. After the 22nd Legislative Session they will be available through the Legislative Library at 465-3808.   LOG SPEAKER DISCUSSION    TAPE HFC 00 - 1  SIDE A  000 Co-Chair Mulder Introduced members and staff.  132 Co-Chair Williams Voiced appreciation for the expertise of the staff and members. He introduced his staff.  226 Co-Chair Mulder Commented that he believed that the minority and majority could work well together.  264 Co-Chair Mulder Noted that he had passed out the rules of how the Finance Committee works in a handout. [attachment] The handout explains the number of votes that are required to make a majority and quorum for passing a bill and for amendments. He also pointed out the scheduling of the bills and the requirements associated with that. The notice requirement of the uniform rules will be the same as previous years. Included in the handout is a letter from Tamara Cook, Director of Legal Services.  482 There was no objection to using the proposed rules.  518 Co-Chair Mulder Spoke to missions and measures and the history associated with that formula. He did not know if this year, the Committee would be able to fully implement those guidelines. He stated that these are a "living document". Some of the past measures have been refined and will continue to be refined.   635 Co-Chair Mulder Noted that there would be a brief overview made by each department in the next couple of weeks. He asked that each Department reference how last year's money was spent.   Department of Labor & Workforce  Development  736 ED FLANAGAN, Spoke to the mission of the Department. COMMISSIONER, He itemized the seven points that the DEPARTMENT OF LABOR Department is most proud of. The AND WORKFORCE Department's mission is to provide for a DEVELOPMENT safe working environment. Enforcement and regulatory status is of prime concern.  826 Commissioner He noted that the Department's customers Flanagan are all Alaskans. Last year, the Department did very well in attaining their goals. He listed the significant accomplishments, stressing that the Occupational Safety & Health Administration(OSHA) and Workers' Comp program had been saved. The Workers' Comp program is now on a sound fiscal basis. Last year was a win-win for both the State and employers.  935 Commissioner Commented that the Department is still in Flanagan the process of implementing HB 240. He reiterated that it had been a long process. Specific to the rural employment issues, the task was to deal with the terrible impact of the fishing disaster in Western Alaska. The Department developed a youth employment program and that it is up and running in those areas. That program has been extremely effective. He noted that had been a significant impact with federal funding.  1055 Commissioner The Department has increased their Flanagan partnership with local communities who are depending on grants from local agencies and in the process of working with the Dillingham services. The vocational education plan was lead by the Lt. Governor; there was a lot of State involvement.  1177 Commissioner He added that there has been some Flanagan dislocation of employees. The rapid response team has been very effective in dealing with those concerns.  1169 Commissioner Acknowledged that next year that there Flanagan would be continued challenges for sound fiscal footing in the OSHA program.  1210 Commissioner There exists programs that recognize the Flanagan employers and reach to meet established standards that exceed those implemented by the law. The Department hopes to pursue federal funding to help with independent living for the handicapped and seniors, particularly living in rural  Alaska.  1275 Commissioner Spoke about doing a rolling RFP program Flanagan which the Department experimented with in the Denali Program.  1319 Commissioner Addressed the possibilities of a gas Flanagan line. He noted that there is cooperation from labor to do this correctly.  1367 Representative Questioned the role of the Department.  Davies 1384 Commissioner Explained that they would be funded Flanagan through the grant process. He listed the independant agencies.  1417 Representative Asked if the measures had been Davies calculated.  1426 Commissioner Replied that he would address that later Flanagan in his presentation.  1450 Representative Asked if there was shortage of qualified Lancaster labor.  1455 Commissioner Stated that there is a shortage in the Flanagan construction and the seafood trades. It is tight. He added that this is not all bad as there is a tight labor market at this time. He noted that progress is being attempted in that area, however, there is a pressing need for skilled workers. This has created a demographic bulge throughout the nation.  1550 Representative Noted that he would be chairing the Hudson Department's subcommittee. He asked for the breakdown of the 200 youth who were put to work in the Bristol Bay area. Additionally, information on the coalition with the Bristol Bay Natives. He asked what was happening in SE Alaska with timber, etc.  1610 Vice-Chair Bunde Questioned if there had been feedback from employers of how well workers were qualified and literate. Also, he commented on the income tax for the non- resident workers.  1644 Commissioner Stated that there is feedback from Flanagan employers that want employees to have the basic "soft skills" such as basic problem solving. They would be willing to train workers. The average wage of the non- resident workers are generally lower because they are residing in State for shorter periods of time.  1702 Commissioner Employment Security Division mission - to Flanagan ease the effects of unemployment, through Adult Basic Ed; Job Training; Employment Services; Unemployment  Compensation.  1765 Commissioner He spoke to the Unemployment (UI) Flanagan Services and how they have been streamlined making it more efficient through direct deposits and increased phone services.  1850 Commissioner Performance for the UI is to maintain the Flanagan benchmark of 95% timeliness. Last year, the Department hit 97%. The Employment Service has been tweaked to make it more available for self-referral services, allowing people to undertake their own job search. There are ample services available. Services are still located in same locations.  1935 Commissioner He spoke to tracking employers with a tax Flanagan account, which has not yet been done. The Department is pondering whether to propose a measure to increase that service.  1975 Commissioner Job Training - More services available. Flanagan The Department is attempting to increase job training to 65%, while keeping 80% working. He admitted the time lag. He indicated that earnings before and after would be investigated.  2027 Commissioner Adult Basic Education - attempting to Flanagan increase the education goal maintaining a 25% positive outcome.  2055 Co-Chair Mulder Requested that he highlight the remaining divisions.  2066 Representative Croft Asked what Commissioner Flanagan had been referring to.  2081 Commissioner Replied that there is not yet a document.  Flanagan 2091 Representative Pointed out that in some agencies, there Davies only exists a program level and that this Department was one of them.  2106 Commissioner Acknowledged the measures in SB 281.  Flanagan 2123 Representative Thought it would be helpful to list the Davies measures and the numbers for members to follow.  2160 Representative Croft Asked the timeliness of initial payments.  2172 Commissioner Replied that it was at 97%.  Flanagan 2185 Representative Stated that he was having a difficult Hudson time following the previous input, knowing that it was valuable. He requested written documentation for Subcommittee work.  2207 Commissioner Stated that he would provide that info to  Flanagan the subcommittee.  2217 Commissioner Division of Worker's Compensation - Flanagan guarantee fair benefits. Performance measures need hearing requests. The status of that is not good. The Division is having a problem with the scheduled hearing time which is lagging. It was up to 135 days sometimes in FY00. There has been radical employment turnover.  2261 Co-Chair Mulder Stated that if there is a problem, the Department needs to find a solution.  2272 Commissioner Medical Insurance Program for Fisherman. Flanagan He commented that the tag lag appears to have been reduced. There are fewer complaints at present time.  2296 Commissioner Work Place Injuries. That could be the Flanagan number of uninsured work place injuries and would be an OSHA concern. The Department is trying to reduce it by 35%.  2350 Representative Croft Asked the percentage.  2357 PAUL GROSSI, 29 less hurt with no recourse.  2374 Commissioner Noted that the petition for second injury Flanagan and recovery has been reduced to 38 days.  TAPE HFC 01 - 1, Department of Labor & Workforce  Side B Development (continued)  000 Commissioner Continued listing services. He noted Flanagan that no one applied for those services after 12 months. 31 persons were given post services.  105 DUANE FRENCH, The Division of Vocational Services DIRECTOR, STATEWIDE currently has a mechanism in place, which PROGRAMS, DIVISION will help the Division to reach those OF VOCATIONAL people.  REHABILITATION, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT 178 Co-Chair Mulder Suggested that they continue to work with the subcommittee chair to further clarify that program.  206 Commissioner Listed the percentage of eligible Flanagan Alaskans that received services and noted that all had been served. He suggested that measure be eliminated.  352 Commissioner Monitoring safe and legal. It helps to Flanagan level the playing field and helps to provide workers safety. The measures previously listed were the numbers of work related industry. The number by industry is not listed. He clarified that there is a different way of doing business with OSHA.  511 Commissioner He spoke to the decrease in the number of Flanagan logging jobs. Construction 5.7% in '97; 4.9% in '99. Employers and insurers are involved in these numbers.  580 Commissioner Discussed the third mission. Concluded Flanagan that the department is on track.  669 Commissioner Discussed the fourth measure. He noted Flanagan that there have been difficulties in accomplishing the 4th mission.  790 Commissioner He noted that elevators are inspected Flanagan every two years at no additional fee for the employer.  828 Representative Pointed out that 7 schools have burnt Foster down in Northern Alaska. He stressed the importance of boiler inspectors.  878 Commissioner Discussed the mission for the Division of Flanagan Administrative Services. He noted that the general mission is unwieldy. He offered to work with the subcommittee.  936 Commissioner Discussed the second mission under the Flanagan Division of Administrative Services.  991 Commissioner Noted that there is a mission to assure Flanagan data adequacy. He concluded that the department's estimate was close to number by the census.  1079 Commissioner Discussed missions of the Commissioner's Flanagan office. He noted that the Alaska Resource Council is under the Commissioner's Office.  1169 Commissioner Noted that audit exceptions were solved.  Flanagan 1200 Co-Chair Mulder Discussed subcommittee assignments   Department of Administration  1260 JIM DUNCAN, Discussed highlights of the department. COMMISSIONER, He referred to the mission statement, DEPARTMENT OF customers served by the department and ADMINISTRATION issues before the department.  1399 Commissioner Duncan Discussed the first mission of the department to provide centralized management and technology services to state government. He reviewed the mission of the department's individual divisions.  1469 Commissioner Duncan Stated that responses to each measure would be provided in written form.  1537 Commissioner Duncan Noted that the department serves a wide variety of individuals, businesses and state agencies.  1562 Commissioner Duncan Reviewed accomplishments of the department.  1603 Commissioner Duncan The department has assumed responsibility for maintenance and oversight of public buildings in Juneau.  1629 Commissioner Duncan Noted Y2K success and other information technology advances.  1673 Commissioner Duncan Discussed performance measures for the Division of General Services. He noted the successful use of master contracts.  1724 Commissioner Duncan Performance measure of the Division of Personnel was the number of successful grievance contracts. He observed that during the first half of the year the State won 6 of 9 cases, lost 2 and split 1. Early intervention has been successful.  1790 Co-Chair Mulder Questioned how the Department's arbitration history compares to previous years.  1834 Commissioner Duncan Did not know.  1841 Commissioner Duncan In response to a question by Representative Lancaster, Commissioner Duncan discussed arbitrators.  1880 Co-Chair Mulder Noted that many of the arbitrators do not reside in Alaska. He questioned why state arbitrators are not used and emphasized the uniqueness of Alaskan issues.  1911 Commissioner Duncan Noted that arbitrators are selected from a list provided by the national board.  1925 Representative Noted that the majority of arbitrators Hudson come from the Pacific Northwest.  1947 Commissioner Duncan Discussed the performance measures for the Division of Finance. He concluded that they were successful in reducing penalties paid by the State.  1991 ALISON ELGEE, DEPUTY Discussed the Public Building Fund. She COMMISSIONER, noted that the goal was to leverage funds DEPARTMENT OF for use to address deferred maintenance.  ADMINISTRATION 2037 Co-Chair Mulder Noted that without the Public Building Fund. the State could not charge rent in some cases. He added that the goal was to highlight maintenance needs.  2063 Representative Questioned how many of the funds have Davies holes in them.  2079 Commissioner Duncan Acknowledged that some funds were appropriated from.  2091 Ms. Elgee Reviewed the use of the fund.  2141 Representative Concluded that the State would need to Davies add money back into that fund.  2152 Ms. Elgee Observed that the Governor's budget proposes additional funds.  2168 Representative Asked if the fund would be made whole  Davies 2185 Commissioner Duncan Clarified that funding removed from the previous year had not been replaced.  2216 Commissioner Duncan RFP bids were due in December. Currently, in the process of evaluating the bids for telecommunication services. Also on that fund, the Department has assumed management of that budget. Will shift those positions for Department of Transportation & Public Facilities to Department of Administration.  2275 Commissioner Duncan Spoke to workforce planning which needs to be addressed in the future. There is an agency wide committee who is looking at those issues which is a major priority.  2312 Vice-Chair Bunde Asked if was a statutory requirement for the emergency networks within the State.  2332 Commissioner Duncan Did not know and he offered to check that concern out.  TAPE HFC 01 - 2, Department of Administration (continued)  Side A    000 Commissioner Duncan Continued testimony regarding services for indigent Alaskans, etc. Customers served by the Divisions were addressed. He addressed accomplishments achieved by the Department.  100 Commissioner Duncan Spoke to the performance measures for each of the Divisions for the Office of Public Advocacy (OPA) and the Public Defender.  172 Co-Chair Mulder Stated that Representative Lancaster should note that information. The Department needs to provide a better outcome in these two areas.  224 Representative Suggested focusing on national Davies benchmarks.  243 Commissioner Duncan Spoke to the federal guidelines for the Children in Need of Aid cases.  284 Co-Chair Mulder Expected that the Committee would hear from Department of Health and Social Services and Department of Law regarding these concerns.  312 Commissioner Duncan Programs for Alaska Seniors. Senior Services, which provides oversight for Senior Grant programs. The Alaskan Longevity Programs which administers that program. The Division has been expanding that program for long term care programs. Today, 1400 Alaskans receive care from Medicaid waivers. Waiver services can be used for 1/4 of the costs.  470 Commissioner Duncan Two quality performance measures for the Pioneer Homes. Medication and Health Care Finance division. The State is  Care Finance division. The State is under the 5% goal set nationally.  523 Representative Croft Referenced the benchmark 1 & 2, and asked if that was the intention noting that the vacancy could be filled with higher interest rates. He asked if there currently were vacancies.  582 Commissioner Duncan There are 100 vacant beds and the beds are vacant because there is not adequate staffing to fill them.  628 Representative Asked if the vacancy referred to beds or Davies staff.  642 Commissioner Duncan Replied beds.  654 Vice-Chair Bunde Asked how big is the waiting list.  666 Commissioner Duncan Replied that the waiting list far exceeds the number of beds. He believed that there were 800 on the wait list.  695 Vice-Chair Bunde Spoke to the recommendations of the task force. He asked if there would be an initiative to cover costs.  734 Ms. Elgee Stated that the option to expand to active employees is being considered for long term care. There is an option to expand that to long-term employees. The Department has done some educational work to explain long term care.  811 Vice-Chair Bunde Recommended that the State needs to strongly encourage the younger employees to buy into that options.  836 Representative Asked if it had been adequately funded to Hudson cover the vacant beds. He noted that the Governor had introduced legislation.  908 Commissioner Duncan Acknowledged that the Governor had introduced legislation that would change the name of the division and give adequate funding for the beds. He spoke about the women veterans in the State.  965 Co-Chair Mulder Asked how the number applied from the past.  980 Ms. Elgee Replied that it has been increasing. Last year, in Anchorage, there were 20 beds vacant. Now there are 36.  1011 Co-Chair Mulder Questioned the breakdown of funding.  1025 Ms. Elgee Replied that 40% is collected from the actual residents.  1042 Ms. Elgee In response to Co-Chair Mulder, Ms. Elgee advised that the Department had maximized the revenue available from the residents. Each year the incremental amount gets smaller and smaller.  1133 Representative Acknowledged that employees to administer Lancaster these services are difficult to come by.  1155 Representative Expanded, noting that there is a serious Hudson shortage of nurses in the State of Alaska, noting that this is a critical area.  1184 Representative Croft Noted that there is concern that the rates are increasing. Not much more money can come out from the fee raising, which is an area of concern.  1232 Co-Chair Mulder Mentioned the barrier to the veteran's angle.  1267 Commissioner Duncan The # of incidents in Pioneer Homes resulting in injuries is lower than the national percentage. He noted that the State's rate is only 1.8%.  1311 Commissioner Duncan Division of Motor Vehicles has accomplished a new voter registration program this past year. Improved customer service.  1380 Commissioner Duncan Mentioned that the average waiting time for a customer to receive service has been reduced to less than 15 minutes; only sometimes up to 45 minutes. 60% of the customers waited less than 15 minutes. Last year, there were only 2 written complaints.  1455 Commissioner Duncan Mentioned that the Department is considering a review of communities exempt from vehicle insurance and mandatory insurance. Those are basically rural locations.  ALASKA INDUSTRIAL DEVELOPMENT & EXPORT  AUTHORITY (AIDEA)  1524 ROBERT POE, Spoke to the measures for AIDEA. He EXECUTIVE DIRECTOR, spoke to the earnings of the authority ALASKA INDUSTRIAL available to the State as a dividend. DEVELOPMENT & EXPORT AIDEA pays for all its activities. He AUTHORITY (AIDEA), emphasized that it is a very real return.  DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT 1611 Co-Chair Mulder Asked the total amount that the State has invested in AIDEA.  1622 Mr. Poe Believed that it was approximately $102 billion dollars.  1649 Mr. Poe Continues to aggressively pursue all possible deals. He spoke to the Seafood Center and the target associated with that program.  1675 Mr. Poe The second measure is the loan delinquency rate. He added that number of permanent jobs created by that measure.  1713 Representative Noted that he would be the subcommittee Lancaster chair. He asked the number of people employed by AIDEA.  1733 Mr. Poe Replied including the number of Alaska Energy employees there are now 60 total employees.  1756 Representative Asked if AIDEA does there own investing.  Hudson 1765 Mr. Poe Stated some is done by AIDEA and some by cash managers. He pointed out that Schudder is one of the investors. AIDEA is on par with their targets. There is no common stock and the returns are relatively low.  1800 Representative Asked if the money needed to be Davies available.  1826 Mr. Poe The money is there to make investments happen.  1840 Mr. Poe The Alaska Energy Authority mission is to tap Alaska's natural resources and new technology to achieve the lowest reasonable consumer power costs. Observed that there was $64 million more in expenses than revenues for the AEA last year.  1957 Mr. Poe Reviewed repairs and upgrades. He discussed some of the repairs to the Four Dam Pool project.  2056 Mr. Poe Reviewed projects for the next year. The largest is to complete the sale of the Four Dam Pool. Land transfer and ownership is the largest remaining issue before the sale.  2130 Co-Chair Williams Questioned when the sale would be completed. Mr. Poe responded that their intent is to complete the sale in the current year.  2147 Representative Noted that the Power Cost Equalization Hudson (PCE) endowment created in the past year is dependent on the sale.  2176 Mr. Poe Assured Representative Hudson that the schedule will accommodate the plan.  2202 Representative Questioned if AIDEA would work with the Hudson Denali Commission. Mr. Poe assured him that they work with the Commission every day.  2227 Mr. Poe Stressed the importance of reducing the cost of power in rural Alaska. He noted that diesel is more cost effective than gas. He stressed the opportunities in increasing diesel efficiency. He observed that wind power is an alternative power  source.    TAPE HFC 01 - 2,  Side B  20 Representative Referred to the land issue.  Harris 085 Representative Healy Clean Coal Project  Whitaker 123 Mr. Poe Noted that AIDEA reached an agreement for a full or partial retrofit. He noted that resolving the Healy Clean Coal Project issue is a priority.  318 Co-Chair Mulder Noted that measurements are directed toward hydropower and emphasized that there is more.  365 Mr. Poe Discussed rural measurements. There are 20 projects on their slate for next year. He emphasized the need to keep control of project accounting.  480 Mr. Poe Completed 6 utility upgrades and 5 line extensions.  486 Mr. Poe Discussed Circuit Rider.  532 Representative Clarified that most of the rural Hudson communities are not able to utilize the internet.  560 Mr. Poe Observed that a good internet connection can be like a good transportation system.  594 Mr. Poe Discussed the Alaska Seafood Institute. AIDEA owns the plant located in Anchorage. Debt was converted to equity and that a fourth investor had been sought.  888 Mr. Poe AIDEA has $55 million dollars in the ASI deal. He stressed that AIDEA is in the best investor position. He reviewed the other investments. He stressed that the plant will add value to Alaska. The facility can accommodate five fisheries around the State.  1062 Co-Chair Mulder Questioned if ASI would open without the fourth investor.  1079 Mr. Poe Noted that there would be a new board. They could open without a 4th investor.  1125 Co-Chair Mulder Questioned if products are being marketed.  1135 Mr. Poe Responded that marketing is occurring.  1154 Representative Noted the significance of ASI to the Hudson seafood industry. He stressed the need for the Legislature to be informed regarding the project's needs. Marketing and management should be strong in order to build confidence.  1241 Mr. Poe Observed that the State spent $50 million  to build the facility.  1272 Co-Chair Mulder Asked if Cominco and Red Dog were still good projects.  1289 Mr. Poe Yes. He noted that AIDEA was looking at different scenarios.  1322 The meeting was adjourned at 4:35 p.m.  ADJOUNMENT