HOUSE FINANCE COMMITTEE April 5, 1994 3:08 p.m. TAPE HFC 94-104, Side 1, #000 - end. TAPE HFC 94-104, Side 2, #000 - end. TAPE HFC 94-105, Side 1, #000 - 483. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 3:08 p.m. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf Representative Navarre was not present for the meeting. ALSO PRESENT Representative Bettye Davis; Representative Tom Brice; Mike Greany, Director, Legislative Finance Division; Nancy Bear- Usera, Commissioner, Department of Administration; Sharon Barton, Director, Department of Administration; Edgar Blatchford Commissioner, Department of Community and Regional Affairs; Remond Henderson, Director, Division of Administrative Service, Department of Community and Regional Affairs; Marilyn Webb, Director, Head Start, Department of Community and Regional Affairs; Karen Rehfeld, Director, Administrative Services, Department of Education; Nancy Slagle, Director, Division of Budget Review, Office of the Management and Budget, Office of the Governor; Bob Baradko, Director, Division of Administrative Services, Department of Revenue. SUMMARY INFORMATION HB 370 "An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date." HOUSE BILL NO. 370 "An Act making appropriations for the operating and loan program expenses of state government and to 1 capitalize funds; and providing for an effective date." Co-Chair Larson reviewed amendments held open by the Committee. DEPARTMENT OF ADMINISTRATION Co-Chair Larson noted that AMENDMENT 1 was held open as amended to reinstate $106,762.0 thousand dollars for a senior petroleum engineer position. He observed that the amendment reinstates $43,238 thousand dollars to reflect the true reduction of deputy commissioners in the Department of Administration. There being NO OBJECTION, AMENDMENT 1 was adopted. Representative Brown MOVED to ADOPT AMENDMENT 16 (copy on file). SHARON, BARTON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES explained that amendment 16 would delete $70.0 thousand dollars in interagency receipts for labor relations, and added $205.2 thousand general fund dollars in that component. She noted that the amendment would fully fund the positions authorized in the Division of Personnel. She maintained that labor relations is a core function that should be funded with general fund dollars. She noted that no new position would be added if the amendment is adopted. Co-Chair Larson noted that amendment 16 would, in addition to the fund source change, restore health premium increases of $27.7 thousand dollars and add $107.5 thousand dollars to reduce the vacancy factor. He spoke against the increment and in favor of the fund source change of $70.0 thousand dollars in interagency receipts to general fund dollars. Co-Chair Larson MOVED to AMEND Amendment 16, delete "$205.2" and insert "70.0" thousand general fund dollars. There being NO OBJECTION, it was so ordered. There being NO OBJECTION, amendment 16 was adopted as amended. Representative Brown MOVED to ADOPT AMENDMENT 17 (copy on file). NANCY BEAR-USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION explained that the amendment would add an increment of $68.5 thousand dollars in order to cover authorized personnel in the Division of Finance. She asserted that the Division of Finance is excepting too high a degree of risk in terms of the ability to maintain systems. She noted that changes in overtime rules have made it harder to meet deadlines. 2 Co-Chair Larson recounted the Subcommittee's action in regards to the increment. Representative Martin OBJECTED to the motion to adopt AMENDMENT 17. A roll call vote was taken on the MOTION. IN FAVOR: Grussendorf, Brown OPPOSED: Hoffman, Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson Representative Navarre was not present for the vote. The MOTION FAILED (2-8). Representative Brown MOVED to ADOPT AMENDMENT 18 (copy on file). Commissioner Usera explained that amendment 18 would restore the Governor's amended request for the General Services component. She emphasized that leases are being paid at a high premium monthly basis due to the lack of resources to renegotiated leases. Representative Brown MOVED to AMEND Amendment 18, to reduce the increment to $69.4 thousand dollars. There being NO OBJECTION, it was so ordered. She spoke in support of the amendment as amended. She maintained that the amendment would result in cheaper leases. A roll call vote was taken on the MOTION to adopt AMENDMENT 18 as amended. IN FAVOR: Brown, Grussendorf, Hoffman OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson Representative Navarre was absent from the vote. The MOTION FAILED (3-7). Co-Chair MacLean MOVED to close the Department of Administration's FY 95 operating budget. There being NO OBJECTION, it was so ordered. DEPARTMENT OF MILITARY AND VETERANS AFFAIRS Co-Chair MacLean MOVED to close the Department of Military and Veterans Affairs's FY 95 operating budget. There being NO OBJECTION, it was so ordered. DEPARTMENT OF LABOR Co-Chair MacLean MOVED to close the Department of Labor's FY 3 95 operating budget. There being NO OBJECTION, it was so ordered. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Representative Therriault WITHDREW AMENDMENT 7. Co-Chair MacLean MOVED to RESCIND the Committee's action in having adopted AMENDMENT 5. Representative Martin OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Hoffman, Therriault, Foster, Grussendorf, MacLe a n , Larso n OPPOSED: Hanley, Martin, Parnell, Brown Representative Navarre was absent from the vote. The MOTION PASSED (6-4). Co-Chair Larson noted that AMENDMENTS 3 and 4 were previously adopted by the Committee. Co-Chair MacLean provided members with an amendment to AMENDMENT 5 (copy on file). She explained that amendment 5 would restore designated grants to: BBNA Health Corporation, NSB Bowhead Census, Maniilaq Association, Association of Stranded Rural Alaskans, and Fairbanks Native Association Employment program. Representative Hanley pointed out that the original amendment 5 would delete all designated grants. He felt it was inappropriate to amend amendment 5 to add the identified designated grants. Co-Chair MacLean WITHDREW her AMENDMENT to AMENDMENT 5. Co- Chair Larson MOVED to ADOPT AMENDMENT 5. There being NO OBJECTION, it was so ordered. Representative Therriault WITHDREW AMENDMENTS 7 and 8. Representative Brown MOVED to ADOPT AMENDMENT 9 (copy on file). She noted that amendment 9 would add legislative intent language directing the Department of Community and Regional Affairs to revise the income levels and sliding fee scales of parent income eligibility for the Day Care Assistance Program. Co-Chair MacLean MOVED to AMEND Amendment 9, to proportionally share costs by all participants. She maintained that amendment 9 would exclude 80 percent of the 4 participants in the program. Representative Brown spoke in opposition to the motion to amend amendment 9. She stressed that those at the lowest income level will be more likely to lose employment if their participation requirement is raised. REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATION, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS observed that a statute change is required in order to effect those in the 97 percentile subsidy level. He noted that 80 percent of the participants receive 97 percent of the subsidy. He clarified that the program manager intends to take reductions in all categories and adjust the sliding fee scale. (Tape Change, HFC 94-104, Side 2) Representative Brown questioned the need for a statute change. Mr. Henderson pointed out that regulations could not be adopted soon enough to take reductions from the 97 percentile level in FY 95. Discussion pursued in regards to the amendment's affect on low income participants in the Day Care Assistance Program. Mr. Henderson noted that there are 117 children at the 25 percentile level, costing $420.0 thousand dollars annually. The 50 percentile level has an annual cost of $840.0 thousand dollars. The seventy-five percentile level has an annual cost of $1.25 million dollars. Representative Brown WITHDREW AMENDMENT 9. Co-Chair MacLean WITHDREW the AMENDMENT to AMENDMENT 9. Representative Brown MOVED to ADOPT AMENDMENT 10 (copy on file). Amendment 10 would restore $100.0 thousand dollars to the Day Care Assistance component to cover registration fees of low-income parents. REPRESENTATIVE TOM BRICE spoke in support of amendment 10. He maintained that lower income families will drop-out of the program if they cannot pay their registration fee. Representative Brown urged adoption of amendment 10. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Foster, Grussendorf, Hoffman OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean, Larson Representative Navarre was absent from the vote. 5 The MOTION FAILED (4-6). Representative Brown MOVED to ADOPT AMENDMENT 11 (copy on file). Amendment 11 would restore $300.0 thousand dollars to the Day Care Assistance Program to allow for payment during holidays. Representative Brice spoke in support of amendment 11. He pointed out that day care providers are not paid high salaries. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Foster, Grussendorf, Hoffman OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean, Larson Representative Navarre was absent from the vote. The MOTION FAILED (4-6). Representative Brown MOVED to ADOPT AMENDMENT 12 (copy on file). Amendment 12 would add $886.0 thousand dollars for child care subsidies. She noted that program demand has increased. She asserted that fewer people will be able to work if amendment 12 is not adopted. She emphasized the need to empower low-income parents. Representative Therriault OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Foster, Grussendorf, Hoffman OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean, Larson Representative Navarre was absent from the vote. The MOTION FAILED (4-6). Representative Therriault MOVED to ADOPT AMENDMENT 13 (copy on file). Amendment 13 would add legislative intent to clarify that once the 20 percent federal match requirements are met that remaining state funds be distributed to Head Start programs through a competitive process. He maintained that some programs receive more state funds than are needed to leverage federal matches. MARILYN WEB, DIRECTOR, HEAD START PROGRAM, DEPARTMENT OF HEALTH AND SOCIAL SERVICES assured members that all the current Head Start programs received sufficient funding to capture federal money. Discussion pursued regarding the required state/federal match and the department's process 6 for distribution of Head Start funding. Representative Brown emphasized that existing programs are not sufficient to cover the needs of all the eligible children. Mr. Henderson noted that 12 head start grantees receive all available state/federal funds. He summarize that the intent language would attempt to spread funding to more programs. Ms. Web stated that the amendment would result in a reduction in services for some of the programs. Mr. Henderson noted that the amount of children served would not change. However, more areas of the state could be served if the number of programs were expanded. Ms. Web stressed that there is no guarantee that the redistribution of state money would capture more federal funds. She observed that there was one non-profit that indicated that they would apply, but were unable to organize the administration of a program. She was unaware of other potential programs. A roll call vote was taken on the MOTION to adopt AMENDMENT 13. IN FAVOR: Hanley, Martin, Parnell, Therriault, Larson OPPOSED: Brown, Foster, Grussendorf, Hoffman, MacLean Representative Navarre was absent from the vote. The MOTION FAILED (5-5). REPRESENTATIVE BETTYE DAVIS observed that amendments to restore child care funding failed. She suggested that funding saved through elimination of designated grants be redirected to restore child care grants. Co-Chair MacLean MOVED to close the Department of Community and Regional Affairs's FY 95 operating budget. Representative Hoffman OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson OPPOSED: Hoffman, Grussendorf Representative Navarre was absent from the vote. The MOTION PASSED (8-2). DEPARTMENT OF EDUCATION Ms. Slagle discussed funding for the Libraries, Archives and 7 Museums component. She requested that $138.0 thousand dollars in interagency receipts be replaced with general fund dollars. (Tape Change, HFC 94-105, Side 1) Representative Grussendorf MOVED to ADOPT a fund source change for the archives and records management service, Department of Education. KAREN REHFELD, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF EDUCATION explained that the amendment would allow the Department of Education to continue the archives and records management service without assessing a charge back to the agencies. She stressed that the Administration believes that this is a core function. Representative Hanley OBJECTED to the motion for a fund source change for the archives and records management service, Department of Education. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Hoffman OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean, Larson Representatives Foster and Navarre was absent from the vote. The MOTION FAILED (3-6). Representative Therriault referred to amendment 2. He observed that the reduction to the Alaska State Council on the Arts will result in a loss of funding from the National Endowment of the Arts. Representative Therriault MOVED to RESCIND the Committee's action in adopting AMENDMENT 2. Representative Martin OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Foster, Hoffman, Therriault, Brown OPPOSED: Grussendorf, Hanley, Martin, Parnell, MacLean, Larson The MOTION FAILED (4-6). Representative Hanley MOVED to ADOPT AMENDMENT 7 (copy on file). He explained that amendment 7 would add intent language directing the Department of Education to work with school districts to establish the maximum amount needed for eligibility under the Medicaid program for special education. There being NO OBJECTION, it was so ordered. 8 Representative Martin MOVED to ADOPT AMENDMENT 8 (copy on file). He explained that amendment 8 would reduce Personal Services by $50.0 thousand dollars and take an unallocated miscellaneous reduction of $50.0 thousand dollars; and add $100.0 thousand dollars for Independent Living Rehabilitation grants. Ms. Rehfeld noted that Administration Services is a small component. She observed that the component has basic core functions to provide, such as payroll, data processing, accounting and supply. Representative Foster MOVED to AMEND Amendment 8 to delete "Department of Education" and insert "University of Alaska". Representative Martin spoke against the amendment to the amendment. A roll call vote was taken on the MOTION to AMEND AMENDMENT 8. IN FAVOR: Brown, Grussendorf, Hoffman, Parnell, Therriault, Foster, MacLean OPPOSED: Hanley, Hoffman, Martin, Larson Representative Navarre was absent from the vote. The MOTION PASSED (6-4). Representative Martin MOVED to WITHDRAW AMENDMENT 8. Representative Brown OBJECTED. A roll call vote was taken on the MOTION. IN FAVOR: Hanley, Martin, Parnell, Therriault, MacLean, Larson OPPOSED: Grussendorf, Foster, Brown Representative Navarre was absent from the vote. The MOTION PASSED (7-3). Co-Chair MacLean MOVED to close the Department of Education's FY 95 operating budget. There being NO OBJECTION, it was so ordered. DEPARTMENT OF REVENUE Co-Chair Larson noted that the adoption of the previous motion by Representative Parnell to delete $54.8 thousand dollars for the Alaska Blue Book resulted in a negative $200.0 hundred dollar reduction. Co-Chair Larson MOVED to amend the Committee's action by deleting "$54.8" and 9 inserting "$54.6" thousand dollars. There being NO OBJECTION, it was so ordered. Representative Grussendorf MOVED to RESCIND the Committee's action in failing to adopt amendment 3 (copy on file). He explained that the amendment would result in a normal 4 percent vacancy factor for the Division of Oil and Gas Audit. Representative Martin OBJECTED to the motion to rescind the Committee's action regarding amendment 3. Representative Brown spoke in support of the motion to rescind. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Hoffman, Parnell, Foster, Hanley, Larson, MacLean OPPOSED: Martin, Therriault, Hanley Representative Navarre was absent from the vote. The MOTION PASSED (7-3). Representative Grussendorf MOVED to ADOPT AMENDMENT 3. He noted that each audit position saves the state approximately $10.0 million dollars in taxes. BOB BARADKO, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF REVENUE reiterated that reductions in auditors will result in a loss of $10.0 million state dollars. Representative Martin OBJECTED to the motion to adopt AMENDMENT 3. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Hoffman, Foster, MacLean, Larson OPPOSED: Hanley, Martin, Parnell, Therriault Representative Navarre was absent from the vote. The MOTION PASSED (6-4). Co-Chair MacLean MOVED to close the Department of Revenue's FY 95 operating budget. There being NO OBJECTION, it was so ordered. ADJOURNMENT The meeting adjourned at 5:36 p.m. 10