HOUSE FINANCE COMMITTEE March 01, 2004 1:49 PM TAPE HFC 04 - 34, Side A TAPE HFC 04 - 34, Side B TAPE HFC 04 - 35, Side A CALL TO ORDER Co-Chair Harris called the House Finance Committee meeting to order at 1:49 PM. MEMBERS PRESENT Representative John Harris, Co-Chair Representative Bill Williams, Co-Chair Representative Kevin Meyer, Vice-Chair Representative Eric Croft Representative Hugh Fate Representative Richard Foster Representative Mike Hawker Representative Reggie Joule Representative Carl Moses Representative Bill Stoltze MEMBERS ABSENT Representative Mike Chenault ALSO PRESENT Kurt Fredriksson, Deputy Commissioner, Department of Environmental Conservation; Mike Maher, Director, Division of Administrative Services, Department of Revenue; Joel Gilbertson, Commissioner, Department of Health & Social Services; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Ed Fisher, Deputy Commissioner, Department of Labor and Workforce Development; Kevin Brooks, Director, Division of Administrative Services, Department of Fish and Game; Jim Derringer, Staff, Representative Fate. PRESENT VIA TELECONFERENCE GENERAL SUBJECT(S): Department Responses to HFC FY05 Budget Recommendations: Environmental Conservation Fish and Game Health & Social Services Labor The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 23rd Legislative Session, contact 465- 2156. After the 23rd Legislative Session they will be available through the Legislative Library at 465-3808.   LOG SPEAKER DISCUSSION  TAPE HFC 04 - 34 DEPARTMENT OF ENVIRONMENTAL CONSERVATION  SIDE A  051 KURT FREDRIKSSON, Reviewed the impact of subcommittee DEPUTY COMMISSIONER, recommendation to eliminate $539.7 DEPARTMENT OF thousand: $11.4 in general funds and the ENVIRONMENTAL elimination of two positions.  CONSERVATION, 223 Mr. Fredriksson Noted that an increment to strengthen water quality protection for $300 GF was reduced to $200 thousand. This would impact the underground injection program.  311 Mr. Fredriksson Discussed the drinking water section reduction of $45.9 thousand. There are 1,700 Class C systems (smaller water systems that serve 25 or more). The program would be cut in half and phased out.  416 Mr. Fredriksson Reviewed reductions for Class C solid waste management for communities of 1,000 or less, 163 communities would be phased out. An internet-based system would be substituted.  525 Mr. Fredriksson Noted that there was a $56 thousand switch to the Seafood Inspection Fund from GF to receipts.  611 Representative Croft Clarified that the receipts would be from seafood industry fees paid the state to provide inspection services.  635 Co-Chair Harris Noted that the savings would go to the General Fund.  657 Mr. Fredriksson Observed that there was an $18.8 general fund reduction in travel.  737 Mr. Fredriksson Noted that the Subcommittee did not accept the Governor's request for $80.5 GF for homeland security issues. The Commissioner's office would have to provide the support.  843 Mr. Fredriksson Observed that the worst impact would be to the water quality programs. He expressed concern that water protection programs need to be strengthened. The  underground injection program would not go forward.  917 Mr. Fredriksson Clarified, in response to a question by Co-Chair Harris, that the full request was for $300 thousand and three positions: $100 thousand and one position were denied.  1019 Representative Croft Asked for more information on the Raindrops to Ocean Initiative.  1053 Mr. Fredriksson Explained that the initiative looks at how water resources are managed. Water quality, environmental health wastewater, facilities construction and operation (village safe water and sewage loans) would be consolidated in a new water section. He provided further information regarding on the reorganization.  1145 Co-Chair Harris Spoke to the Governor's proposed amendments and asked how many of the amendments were taken care of by the Subcommittee.  1219 Mr. Fredriksson All the Governor's amendments were dealt with in the Subcommittee except the Homeland Security position, which would operate at Fort Rich with the Department of Military and Veterans Affairs for security and response. The position would provide preparedness planning as well as response. The cost includes their entire salary.  1356 Representative Croft Questioned why the Subcommittee decided that the increment for vehicle inspection and maintenance was not appropriate.  1456 Mr. Fredriksson Explained that there was a vote in Fairbanks regarding the continuation of the IMN program, which lead the Department to the conclusion that the program should be reviewed.  1600 Co-Chair Harris Asked how closely the Department works with the Joint Pipeline Office.  1616 Mr. Fredriksson The Department works closely with the Joint Pipeline Office.  1649 Co-Chair Harris Questioned if he knew if Alyeska was paying for any joint positions in the Pipeline Office.  1731 MIKE MAHER, Observed that Alyeska pays the state for DIRECTOR, DIVISION functions, not specific positions.  OF ADMINISTRATIVE SERVICES, DEPARTMENT OF REVENUE 1752 Mr. Fredriksson A number of these positions would be eliminated. The attention is to focus on  permitting and oversight. Coordination would come from senior management. Staff in water and other programs is dedicated to oversight and the pipeline.  1855 Co-Chair Harris Expressed concern that the state of Alaska not become complacent in regards to spill prevention. He observed the quality of Alaska's system and the potential problems associated with oil production.  2033 Representative Croft Questioned if the homeland security position was a new position.  2044 Mr. Fredriksson Noted that the position is currently in the FY 04 budget, it was recommended for elimination but was restored.  DEPARTMENT OF HEALTH AND SOCIAL SERVICES  2128 JOEL GILBERTSON, Noted that the FY05 budget was reduced by COMMISSIONER, $35.6 million, which corresponds to the DEPARTMENT OF HEALTH increment request for Medicaid. There is & SOCIAL SERVICES, a commitment on the part of the Department to reducing costs to the Medicaid budget. He observed that the Department's proposed FY05 budget for Medicaid included $91.3 million in GF savings through cost containment, efficiencies and refinancing.  2403 Representative Clarified that an increment was not fully Hawker funded. The program was not cut from the previous fiscal year.  2469 Mr. Gilbertson Pointed out that the Medicaid budget is driven by caseload. In response to a question by Co-Chair Harris, Mr. Gilbertson stated that the growth is not a result of [coverage] expansion. The caseload has increased. Denali Kid Care is more effective in signing up clients. The eligibility has not changed drastically. Assumptions and changing demographics account for most of the growth, which is a national trend. Seniors and disabled are driving the program's cost, which is a national trend.  2728 Representative Joule Questioned if the client growth applies for Medicaid of services.  2801 Mr. Gilbertson Noted that Medicaid is a separate application, but many are signed up through Native health corporations. The Department signs some individuals through Adult Public Assistance.  2936 Mr. Gilbertson Stressed that the Department is working to contain costs, but that grow is continuing. The reduction would be very  challenging for the Department to implement. Many savings require statutory and regulatory change, and public comment. The Department would be forced to achieve the bulk of the savings in the last 6 months of the year because of the implementation time.  3137 Representative Questioned if it would be helpful to Hawker begin the work in FY04.  3223 Mr. Gilbertson Agreed that it would be helpful to start looking at optional service reductions. Adult dental service would be one of the earlier items to be eliminated, seniors would lose speech, hearing and vision care, and waivers would be eliminated, along with personal care. The Department would also have to look at rates. There would be reductions of physician reimbursement by 10 percent. Municipally supported programs would be affected.  3438 Representative Questioned if legislation was needed to Stoltze pro rate physician rates.  3455 Mr. Gilbertson Explained that reductions would occur by regulations, but they would still require a lengthy process.  3518 Representative Questioned if elimination of entire Hawker programs are necessary.  3719 Mr. Gilbertson Fundamental changes need to occur through statute. Maintained it would be appropriate to have the public discourse: what are the impacts to the individuals?  3857 Mr. Gilbertson Some of the growth has occurred through Fair Share and has grown as a conscious decision.  3937 Representative What is the proportion of optional Hawker services versus mandatory services?  4001 JANET CLARKE, Observed that the Division is: 60 percent DIRECTOR, DIVISION optional and 40 percent mandatory.  OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES 4022 Mr. Gilbertson Emphasized that Medicaid doesn't distinguish between optional and mandatory services the same way the Department does. Under the Medicaid structure prescription drugs are optional, but the state recognizes that they are still part of a core service.  4123 Representative Acknowledged that prescription drugs are Hawker a critical part of the anticipated growth. Referred to the Legislative  Budget and Audit Committee audit on the Medicaid Program. The report felt that there were unnecessary inefficiencies.  4245 Mr. Gilbertson Noted that the audit indicated that there are number of programs that could be improve. The Department has worked to improve program integrity and strengthen their own audit process. Did not know if SB 41 would achieve the reductions.  4514 Representative Referred to the growth in personal care Hawker attendants: from $8 to $56 million in three years.  4641 Mr. Gilbertson Observed that the Personal Care Attendance program has grown due to regulations from the previous administration.  TAPE HFC 04 - 34, Side B  4621 Mr. Gilbertson Pointed out that personal care can keep clients out of long term nursing beds, but acknowledged the need to assure the use. He agreed that there is room for savings. The Department has tried to manage the Medicaid program as one budget. There are grants for behavior health, which will do no good without vibrant Medicaid services, since the clients are the same. There are common clients across programs that need to be considered.  4249 Mr. Gilbertson In response to a question by Representative Croft, Mr. Gilbertson noted that the Department proposed to handle growth within the Department and came forward with a number of savings through efficiencies, refinancing and cost containment, some of which were not accepted. The Department proposed to use the efficiencies to fund the growth of Medicaid. The state of Alaska lost federal financing in FY05.  3987 Representative Croft All but 5.6 of the efficiencies were taken, but they were not applied to the Medicaid growth. Additional $35.6 was reduced in the Medicaid program. Referred to reductions to family planning.  3909 Mr. Gilbertson Observed that federal funding was reduced in the Subcommittee.  3899 Co-Chair Harris Questioned what services were reduced.  3852 Mr. Gilbertson Explained that family planning, not abortion, was reduced. Counseling services and contraceptive services were reduced.  3844 Co-Chair Harris Questioned the need for the permanent fund dividend hold harmless provision.  3823 Mr. Gilbertson There are a number of services that provide assistance on a cash basis such as TANF. The state by statute is required to discount income earned by the permanent fund dividend in the distribution of these services. Money from the Permanent Fund is used to supplement for any loss benefits that result in ineligibility for these services. The cost comes from the Permanent Fund.  3601 Ms. Clark Observed that the benefits are maintained for one month in October.  3538 Representative Asked the Commissioner to discuss items Hawker that were added back by the Subcommittee.  3445 Mr. Gilbertson Discussed transactions made by the Subcommittee. He observed that the Department would further examine reductions for FY05.  3227 Mr. Gilbertson Referred to the reinstatement of $500 thousand in funds for Pioneer Homes. There was a seven-year rate increase to keep up with the cost of the homes. There have been two years without a rate increase. The proposal would continue the effort to keep the rates up. This would general fund return would replace the savings that the Department would have realized from a rate increase of pioneer home residents.  3152 Mr. Gilbertson The second item is a reinstatement of $500 thousand in GFMH; the reduction was taken as part of the governor's budget submission to eliminate the Alaska Youth Initiative (AYI). The Department believes the funds can better serve kids through other programs. The reinstatement of $500 thousand was made at the Subcommittee with language encouraging the Department to use the funds toward support of the Bring the Kids Home Initiative. This would bring the 400 plus kids that are currently out of state placements for psychiatric treatment centers. There was a decrement to the Alcohol Safety Program for adults, with a desire to move toward an offender finance system. The Administration believes individuals must take responsibility for their actions. The Department feels it can work with the Courts to ensure DWI offenders are  accountable. The proposal acknowledges that it will take time for the offender finance system to be implemented and therefore the Subcommittee reinstated 6 months.  2950 Representative Croft Put all back or only $408.0 to the Pioneer Homes. Ms. Clarke replied that the full amount was put back. The rate increase will happen, but there is recognition that the Department may not receive all the funds due to nonpayment.  2903 Mr. Gilbertson Explained, in response to a question by Representative Croft, that the Department is not currently operating the AYI program. The funds are being used for other out patient services for troubled youth. The AYI program served an alarmingly small number of kids for the amount of dollars invested. The Department feels it can serve a much larger number of kids through other programs. The Department's objective is to bring kids home from out of state and provide residential services or outpatient and direct kids toward lower cost alternatives.  2744 Ms. Clarke Explained that the Department is trying to change the nature of the funds, not eliminate but refocus.  2719 Representative Croft Questioned what would happen if someone offends but can't pay for alcohol treatment. He questioned if there should be some GF component left to fund those who can't pay. Mr. Gilbertson replied that it is in the Department's interest to assure that whatever reimbursement structure is used is able to finance the system. The courts can hold individuals accountable; they must attend treatment and report back to court. An offender payment structure would represent the true costs. The Department believes in individual accountability and that an offender-financed system can be successful. It is ultimately a transaction between the court system and offender. Treatment would not be paid for; the funds go toward monitoring.  2523 Mr. Gilbertson Discussed alcohol treatment residential beds. The Department has moved toward outpatient services, taken a reduction of $600 thousand GF savings from treatment residential alcohol beds. The Governor's  budget proposed a $300 thousand reduction GF in reducing the least effective alcohol grants. This was restored in Subcommittee.  2348 Representative Clarified this reinstatement of funds; Hawker there was concern by rural members of the subcommittee. There are $65 million of program reductions.  2235 Ms. Clarke Explained that the Department had cut $50 thousand and the Subcommittee restored $150 thousand for psychiatric emergency services due to concern by the Alaska Mental Health Trust Authority.   2207 Mr. Gilbertson Emphasized that the Department doesn't believe the reductions are risky or aggressive. The seventh item, which moves toward utilization of targeting case management, will be more difficult to achieve. Legislation was proposed to allow the Department to engage in targeted case management. This would allow the refinancing of approximately $270 thousand GF. The Subcommittee did not believe that the reduction could be realized and restored the reduction.  2189 Mr. Gilbertson Noted that $220 thousand GF for day treatment program in Kodiak. This was a reduction in FY04.  2102 Representative Explained that there was an effort in the Hawker prior budget to provide services through identifying school districts as Medicaid recipients. School district was not qualified as Medicaid recipient.  2034 Mr. Gilbertson Discussed a GF decrement in the Governor's budget regarding educational costs for youths in out of state placement. The Governor's budget pushed for a $375 thousand cost savings, which was reinstated by the Subcommittee.  1992 Mr. Gilbertson Noted that federal Title 10 grant money for family planning was eliminated: $400 thousand for family services  1924 Representative Observed that a subcommittee member with Hawker concerns brought the item forward. The Subcommittee decided that the item needed to be reassessed.  1857 Representative Croft Questioned what were the concerns. Representative Hawker replied that the concerned was that the money was not being used as represented in Fairbanks.  1839 Mr. Gilbertson Pointed out that the Governor's budget contained authorization for the receipt  of these funds for family planning services.  1832 Mr. Gilbertson Observed that there was an increment of $200 thousand for Youth Court funding, which was the result of a change in federal funding.  1713 Representative Clarified that the item was Subcommittee Hawker initiative. He observed that funding for youth courts has declined and stressed the support for the program. Youth courts were segregated and given an increment of $200, which brings the aggregate to $500 thousand statewide. ($479 GF and $29 matching federal.) He noted that Representative Ogg (who introduced legislation to fund youth courts) is happy with the appropriation. He emphasized that money invested in the front end of an issue saves downstream in social costs.  1538 Vice-Chair Meyer Clarified that, under Representative Ogg's legislation, money collected through fines would go into the General Fund.  1444 Mr. Gilbertson Reviewed an effort to align operations and restructure administration, management and some operations of the public health nursing program. The intent is to utilize other resources in communities. The Department looked at urban areas with other federally funded provider services available. He noted that there is an effort to work with health care partners. The section chief is working with communities to identify some services that can be transitioned to other providers and assure that the transition is seamless transition. The Department identified a 4-year savings, which was reduced to a six-month savings. There was reinstatement of $ 535 thousand in GF and $370 in IA.  1234 Mr. Gilbertson Discussed the provision for exceptional relief, which the Commissioner can grant to health care facilities for additional reimbursement. This allows continue operations when there are deficits. The Department believes that they must continue to push on sustainability of the infrastructure and eliminate redundant infrastructure. The Department had notified the State Hospital and Nursing Home Association that they would no  longer grant exceptional relief requests. This has always been discretionary item. There are two or three facilities that utilize the provision: Sitka, Wrangell and Wesley.  1055 Mr. Gilbertson He noted that most of the facilities in question have long-term and acute care. The state has attempted to support infrastructure by overpaying the long- term care side. The State has paid $640 per day for long-term beds.  840 Mr. Gilbertson Observed that there is decreased demand in some communities and that the state is trying to identify what services can be used for underutilized space. Local governments own most facilities. He emphasized that $700 a day (for long-term beds) is not sustainable over the long term.  713 Representative Croft Concluded that the state is overpaying for some long-term care to keep hospitals open.  620 Mr. Gilbertson Stressed that it is not the intention to keep the costs from going out to smaller communities. Cordova asked to be identified as an underserved area. Smaller facilities have more volatility and higher costs. The designation allows them more flexibility for operations.  454 Representative Observed that the intent is to facilitate Hawker on going transitions.  407 Mr. Gilbertson The Department's assumptions were based on historical data.  337 Ms. Clark Noted that the Subcommittee met with the Alaska Mental Health Trust Authority and agreed that general funds should be expended to match their programs. Care coordination and respite services were increased by request of the Alaska Mental Health Trust Authority.  246 Ms. Clark Continued that the cost containment package included an aggressive containment in the Medicaid program for senior & disability. The Alaska Mental Health Trust Authority asked for restorations in this component. The proposal does not match with the overall reduction to Medicaid by the Subcommittee.  144 Ms. Clark Observed that the Subcommittee recognized a need for the capacity to address problems if cost containment in the Medicaid program is not realized.  126 Ms. Clark Pointed out that there was a request by Alaska Mental Health Trust Authority to add back $100 thousand in GFMH to restore a grant for sexual offenders and victims, which was a reduction in FY04.  054 Mr. Gilbertson Discussed the $250 thousand increment and $250 thousand federal match for assessment and planning with in the Department to look at the Medicaid program for long-term cost containment and growth is at a responsible level.   TAPE HFC 04 - 35, Side A  054 Mr. Gilbertson Noted that Medicaid program is optional and stressed the importance of finding ways to make the program sustainable over time. The Governor's proposal included no reduction to the Human Service Community matching grant. The first committee substitute included a reduction to this component. The final amendment would restore the reduction to the FY04 level.  118 Mr. Gilbertson There is a total of $5.6 million in new and restored increments. The Administration feels that these amendments are part of the prudent effort to continue to control costs, refinance and find efficiencies. It would be impossible of achieving these savings on July 1, 2004. The Department will need to be aggressive in containing costs during the second half of the fiscal year.  215 Representative Noted that all the proposed amendments Hawker were incorporated into the Subcommittee report, with the exception of items 61, 62 and 75, which pertain to the Tobacco Cessation program.  389 Mr. Gilbertson Observed that the Governor's budget, in error, did not include the restoration of funding from the Tobacco Cessation program. The amendment would realign the FY05 budget proposal with FY04, which would include the commitment of 20 percent of the funds from the settlement to cessation efforts. In FY04, legislative action redirected $1 million of the tobacco funds toward the Medicaid match. The FY05 budget, mistakenly included the FY04 budget as passed, not as requested by the Governor. The amendment would direct the full amount to tobacco control efforts, not toward the Medicaid match.  527 Representative Clarified that there were three  Hawker adjustments. There is an increase and decrease in tobacco cessation funds and other funds of $1.61 million, which nets out to general fund increase of $1.61 million.  643 Co-Chair Harris With the transactions the full 20 percent is included.  703 Mr. Gilbertson Explained that the new general fund amount would be required to replace the $1 million of tobacco settlement funds that were used for the Medicaid match. The transactions restores the full 20 percent, but requires general funds for funds used for Medicaid. The original FY04 budget substitution occurred in the Senate. The amendment fully restores the commitment of 20 percent, which is supported by the Administration.  DEPARTMENT OF LABOR AND WORKFORCE  DEVELOPMENT  952 ED FISHER, DEPUTY Provided a quick introduction to the COMMISSIONER, Department of Labor and Workforce DEPARTMENT OF LABOR Development. He noted that their general AND WORKFORCE fund budget is 11 million, which is one DEVELOPMENT half of one percent of the entire Governor's budget. The majority of their funding comes from federal and other state funds. General funds are concentrated in four programs, three that require a state match. Observed that the Subcommittee eliminated two positions: one in the Alaska Labor Relations Agency and one in Labor Standards and Safety. The Subcommittee also reduced client services in the Division of Occupational Rehabilitation.  1129 Mr. Fisher The Alaska Labor Relations Agency is facing a reduction of $42.6 thousand of $362 thousand total budget. This would require the layoff of a clerical person (1 out of 4) in the Alaska Labor Relations Agency. He stressed the importance of the position.  1227 Mr. Fisher Observed that one of the two requested positions in Wage & Hour technician would be reduced. He noted that auditing and the effort of Alaska hire would be would be reduced by half. He observed that a reduction by one position would result in no auditing in either Anchorage or Juneau. Each position audits 20 - 25 percent of certified payrolls. The reduction would result in a waiting list.  1446 Mr. Fisher Noted that the Senior community services employment program would be funded with interagency receipts from the state employment and training program. The Department is proposing a reduction of $100 thousand in GF, which would be replaced with technical vocational and educational program funds.  1547 Mr. Fisher Clarified that the Department does not support the staffing reductions.  1622 Vice-Chair Meyer Referred to the Alaska hire program. He noted that one-person was transferred to the Governor's Office to market Alaska hire. He felt that auditing could be done on an as needed basis, as opposed to auditing all of the payrolls.  1717 Co-Chair Harris Questioned how audits for out of state hires are completed.  1734 Mr. Fisher Explained that the Department attempts to match payrolls against permanent fund dividend applications. If a person does not apply for a permanent fund dividend they would not be credited as an Alaska resident. The permanent fund application and dividend are evidence of a one-year Alaska residence. The intent is to enforce the Alaska hire provision.  1837 Mr. Fisher Noted that many commissioners have declared the entire state to be underemployed. If employers are not meeting 90 percent Alaska hire, under statute, there are enforcement penalties. This only applies to state funded jobs.  2003 Vice-Chair Meyer Noted that the Independent Living component was fully funded. The target reduction was reached in the Department.  2042 Mr. Fisher Noted that there are two small amendments that were not dealt with in the Subcommittee: lease funds for Worker's compensation and the Fish Fund (79, 81 and 83 in the Governor's operating amendments).  2226 Co-Chair Harris Clarified that the leases are for facilities. He maintained that the function should be with the Department of Administration.  2256 Vice-Chair Meyer Noted that the Department of Health and Social Services also has an independent living program.  2316 Mr. Fisher Observed that the programs are different. The Department of Labor and Workforce Development component is a federal requirement. The focus is to help those  that are about to be institutionalized or are institutionalized to remain in their home. There is a savings in the long run.  2437 Representative Croft Doesn't support the elimination of the wage and hour position, but did not propose an amendment at that time.  DEPARTMENT OF FISH AND GAME  2612 KEVIN BROOKS, Discussed impacts of the Subcommittee's DIRECTOR, DIVISION work on the Department's budget. Observed OF ADMINISTRATIVE that the departments overall budget SERVICES, DEPARTMENT proposed by the Governor were just over OF FISH AND GAME $138 million. The GF portion is 20 percent or $26 million. Discussions on GF reductions centered on the Commercial Fisheries Revolving Loan Fund (CFRLF). There was an attempt to restore items in the Governor's budget and move Commercial Fisheries Revolving Loan Fund monies into other areas. There was a transfer of CFRLF funds to Commercial Fisheries.  2955 Mr. Brooks Observed that an additional $1.377.9 million was transferred into the Commercial Fisheries Revolving Loan Funds (CFRLF) component. A transfer was made from subsistence and replaced with general funds. There was a reduction for test fish receipt authority of $350 thousand.  3006 Co-Chair Harris Asked for an explanation how the CFRLF has been developed.  3030 Mr. Brooks Explained that the Division of Investments in the Department of Community and Economic Development manages the CFRLF program. The earnings are being used; the Fund is stable. Testimony of fishers indicates that they support the use of the funds in the Division of Commercial Fisheries.  3133 Representative Croft Questioned if the viability of the loan Fund would be affected.  3148 Representative Fate Noted that there are surplus funds.  3197 Mr. Brooks Observed that the use of $2.2 million would not jeopardize the corpus of fund.  3228 JIM DERRINGER, Explained that the CFRLF has a cash STAFF, balance of $20 million. The Funds REPRESENTATIVE FATE receives $13 - $14 million in payback. Each year $3 million is used to fund the Division of Investments. Any excess earnings are available for other budgets. He observed that $184 thousand was going to Department of Community and Economic Development and $180 thousand was going to Department of Environmental  Conservation. The intent was to consolidate these funds. The amount that can be used without affecting the Fund is $2.5 million. The Subcommittee decided that $2.2 million could be used.  3402 Co-Chair Harris Referred to the Agricultural Revolving Loan Fund, which is being depleted. He expressed concern that the uses of funds for Commercial Fisheries not adversely affect the CFRLF.  3443 Mr. Derringer Noted that the Agricultural Revolving Loan Fund does not earn as much in interest. Only earnings are being used from the CFRLF.  3520 Mr. Brooks Noted that the interagency receipts of $200 thousand were added in each of the Commercial Fisheries and Sport Fish components. The feeling was that there are projects that would benefit both recreation and commercial fisherman.  3622 Co-Chair Harris Asked what occurred in the Subsistence component.  3630 Representative Fate Explained that the revolving fund was moved to commercial fisheries and asserted back general funds. There was discussion regarding the need for subsistence funding at that level. The Department stated that without state funding and co-management that the state would not have input in regulation development. The state would lose its voice in co-management with out the funding. Observed that the Division of Subsistence was funded with general funds.  3756 Mr. Brooks Explained that three years ago the Division of Subsistence general fund support was zeroed ($1 million) and replaced with Alaska Industrial Development and Export Authority dividend receipts. Last year $800 thousand of the million was replaced by the CFRLF, which had the effect of a 20 percent reduction. Now that money is being switched for general funds and the CFRLF dollars are being placed into the Division of Commercial Fisheries. The result is an increase of $1.4 million.  3928 Mr. Brooks Observed that there were a number of technical amendments. Funding is based on an assessment of interagency receipts from all departments. The mail clerk position had to be created before it  could be transferred, since it was deleted in their original submission.  4119 Mr. Brooks Continued to review technical amendments. He observed that there was a million dollar transfer for leasing to assess reductions.  4214 ADJOURNMENT The meeting was adjourned at 4:10 PM