MINUTES SENATE FINANCE COMMITTEE February 24, 1999 9:05 A.M. TAPES SFC-99 # 36, Side A (000 - 593) Side B (593 - 000) CALL TO ORDER Co-chair Sean Parnell convened the meeting at approximately 9:05 A.M. PRESENT In addition to Co-chair Parnell, Senators John Torgerson, Randy Phillips, Dave Donley, Loren Leman, Gary Wilken, Al Adams, Pete Kelly and Lyda Green were present when the meeting was convened. Also Attending: ANNALEE MCCONNELL, Director, Office of Management and Budget; BOB POE, Commissioner, Department of Administration; MARGARET PUGH, Commissioner, Department of Corrections; DWAYNE PEOPLES, Director, Division of Administrative Services, Department of Corrections; BARBARA J. RITCHIE, Deputy Attorney General, Civil Division, Department of Law; NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities; DAVID TEAL, Director, Division of Legislative Finance; aides to committee members and other members of the Legislature. Attending via Teleconference: MARY LOU BURTON, University of Alaska and STEVE SMITH, Director of Information Technology, University of Alaska from Anchorage. SUMMARY INFORMATION Co-chair Parnell convened the meeting at approximately 9:05 a.m. and outlined the schedule for the morning meeting. He said he would continue SB 83, judgments. SENATE BILL NO. 83 "An Act making and amending capital, supplemental, and other appropriations, and appropriations to capitalize funds; ratifying certain expenditures; and providing for an effective date." ANNALEE MCCONNELL, Director, Office of Management and Budget was invited to join the committee. She introduced Margaret Pugh. MARGARET PUGH, Commissioner, Department of Correction was invited to join the committee. She explained the overcrowding situation of the prisons. They will never be able to have complete control over what happens in the prison settings due to this situation. She said the amount requested was needed to complete this fiscal year. It was explained that prisoners were often in need of medical care because they were coming from outlying areas, especially at the Cook Inlet Pretrial facility. Because of the volatility of a pretrial institution the situation is less stable. It is necessary to hold staff at these institutions at a specific level and to not reduce them. Inmate health care was requesting $500,000 in the supplemental. DWAYNE PEOPLES, Director, Division of Administrative Services, Department of Corrections was invited to join the committee. He explained that the medical needs have doubled since last year. The cost for providing medical services are continuing to escalate. Co-chair Parnell asked about pharmaceutical costs. These were also continuing to rise. Commissioner Pugh advised the committee that they had done a mental health inmate assessment. It was found there were special mental health cases in the probation and parole program. Senator Phillips asked about the bed count and what it was at presently. Commissioner Pugh said that the bed count was approximately four thousand two hundred sixty beds. There have been some interesting trends in prisoner population this year. At the peak difference from last year, 1997 - 1998, there were about four hundred twenty inmates. Then it leveled off towards the end of the year. Senator Phillips asked about the inmates outside Alaska in Arizona. Commissioner Pugh advised the out-of-state count, including Federal facilities and alcohol treatment related institutions. Senator Phillips asked about the health care request. "If the population hasn't increased what is happening?" Commissioner Pugh said there were approximately 400 more prisoners at the peak time. "We are seeing older inmates and also an incoming population of younger prisoners." They were taking in more young people. At last week's count there were about four hundred inmates, age twenty-one and younger. For the record she noted two sixteen-year olds and two seventeen-year olds. This younger population is growing and presenting special needs. They were also seeing an increasing number of patients with heart ailments and other gastro ailments. Senator Leman said he was concerned in the meteoric rise in mental health costs for the inmates. "Are we becoming smarter about what our mental health needs are or are we somehow getting billed for services? What can we do to manage this?" Commissioner Pugh said they were concerned about the same things. The department was working on how to contain and control these costs. They were also exploring either how to reduce them or at least keep them at the same level. It had been ascertained that medical care services seem to be delivered at the lowest level in the outlying communities. She explained that they were tending to revolving door inmates. This involved trying to help these individuals get stabilized, however then they are released and go back to the outlying areas where no services are provided to help them continue in their rehabilitation and/or medical care. Judge Rhodes in Anchorage handles the mental health cases so that these individuals do not become nameless. Senator Leman outlined an experience he personally had with an inmate from the Cook Inlet Pretrial facility. The medical condition suffered by the inmate was not uncommon, however, medication was expensive. Commissioner Pugh responded, noting that this problem was nation-wide. The medication was expensive and therefore drives up their costs. Senator Leman said perhaps it should be considered whether or not these individuals should be institutionalized. Commissioner Pugh explained what services could be provided at the level they were presently budgeted at. At this point Ms. McConnell spoke specifically to the budget for beds. They were trying to transfer inmates in several large trips to Arizona as contracted with the Federal marshals. She felt this was a successful undertaking. Mr. Peoples' also commented and said there had been one consolidated supplemental request from the Department of Public Safety and the Department of Corrections for the transport of prisoners. Senator Leman asked if there was any contract with the airlines for prisoner transportation. He wanted to know if top dollar was being paid for these transports? Mr. Peoples said he did not feel there was any special rates. For security reasons these transports are kept secret. They try to do them in small batches and if airlines are used these are done at full fare. Commissioner Pugh said they are still looking for the most inexpensive way to transport the prisoners out of state and felt that contracting with the Federal marshals was the best. For instate flights they try to make sure they have several inmates at once so they can use charter. Senator Phillips asked about the airline tickets. "Do we pay full fare?" Mr. Peoples said they did not have a fare arrangement with the airlines. Senator Phillips asked if it was possible to negotiate a possible book fare for the transportation of the prisoners. Commissioner Pugh said she would check into this matter. Ms. McConnell said that Commissioner Boyer had looked extensively into this last year but Alaska Airlines was unwilling to provide any negotiated rates for State employees or for State use. Senator Phillips said that Alaska Airlines should provide better fares for such a big user as the State, or else find someone else. Senator Green asked for a breakdown regarding the health and medical requests of the inmates. Commissioner Pugh said it was all out of state requests in this supplemental portion. (Out of state inmates) She said they did try to screen the inmates regarding their health and medical problems and special needs. In addition, probation and parole officers also monitor these. Senator Adams asked about the balance. Mr. Peoples did not know but said he would provide it. Vendors concerned about furniture contacted Senator Leman. Furniture was being purchased at a premium rather than on a competitive market. Therefore, there were no benefits. Commissioner Pugh said that a commission had been appointed to oversee this matter. They had to insure there was a minimum impact regarding this. The commission had contact with various office supply companies in the State who meet quarterly and then advertise their needs. She will provide a breakdown to the committee. Mr. Peoples noted three reductions included in the supplemental. They were a reduction of beds in CRC, known culture reductions and delays in obtaining a bid in Nome. There was also delay in obtaining permits through the City and the Courts. In response to a question from Senator Leman, Mr. Peoples said there had been difficulty in obtaining the beds in Fairbanks. This resulted in the whole procurement of beds being delayed. Senator Adams asked about the beds for the Bethel facility? Commissioner Pugh said they were working on this matter. Co-chair Parnell directed the Commissioner's attention to the memo from Senator Ward. He asked her to please address these questions. With respect to the committee she said she had not had time to look the memo over but will respond in writing to the committee as soon as possible. Co-chair Parnell then turned to section four of SB 83, judgments and claims. BARBARA RITCHIE, Deputy Attorney General, Civil Section, Department of Law was invited to join the committee. She gave a short overview of judgments and claims in general. (Tape #36 switched to Side B at log 593.) Senator Donley briefly commented and said he would like a little more detail regarding these. He referred to item these matters in writing. Senator Donley referred to Trustees for Alaska, Kachemak Bay Conservation Society vs. State of Alaska. He said the committee should be examining a modification of this case. Ms. Ritchie said it was now pending before the Supreme Court. She explained the central issues of this case. The case was remanded to the agency. Senator Donley said the rules had evolved over time. She explained the Supreme Court's interpretation of the case. Senator Donley interrupted saying perhaps a statutory change was needed here. Senator Leman concurred. Senator Torgerson asked if the State assumed they were going to win the appeal? Ms. Ritchie said they hoped they would win it. She went on to explain that in the event the State loses, it may be at a lesser attorney fees amount. Senator Phillips asked what happened if the Legislature refused to fund any of these cases? "Isn't there a separation of powers? What would the Courts do?" Ms. Ritchie said there would be a "separation of powers" issue. Senator Phillips said in that case, then, the Legislature would win because they were the ones appropriating the money for payment of the judgments. Ms. Ritchie felt the matter would end up being litigated, however, if the Legislature refused to fund the judgments. Senator Donley referred to the apportionment of fees regarding item #5. Perhaps the statute should be tightened up. He strongly stated that someone should be held accountable. There was no accountability by the individuals involved and further, no one was being held accountable for the payment of these huge judgments. He did not want to see this situation continuing in the future. Co-chair Parnell asked if there were any more questions on Kachemak Bay as he wanted to continue on to the Y2K section. There followed a brief at ease approximately 10:05 a.m. until 10:15 a.m. Co-chair Parnell called HB 64. HOUSE BILL NO. 64 "An Act making appropriations for year 2000 assessment, compliance, and remediation projects; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska; and providing for an effective date." CS FOR HOUSE BILL NO. 64(FIN) "An Act making and amending appropriations; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska; and providing for an effective date." CS FOR HOUSE BILL NO. 64(FIN)(title am) "An Act making and amending appropriations for year 2000 assessment, compliance, and remediation projects and modification of the Offender Base State Corrections Information System and the Offender Financial Accounting System in the Department of Corrections; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska; and providing for an effective date." Senator Donley explained that SCS CSHB 64, version "M", dated 2/23/99, had been distributed by him on behalf of Senator Jerry Ward. BOB POE, Commissioner, Department of Administration was invited to join the committee. He explained the requests for Y2K. They will not know all the numbers until they really get in. He felt that once all the appropriate investigations were completed that the numbers would drop considerably. He briefly outlined changes under the Alaska Marine Highway, Kennicott assessment and said the assessment had always been included. Senator Donley asked if they were still paying for the Kennicott? NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities was invited to join the committee. In response to Senator Donley's query, she said they were working closely with the Department of Law regarding the issue that they were still paying for the Kennicott even out of this year's budget. Senator Donley said he was not going to vote for this Y2K non-compliance matter if it was not going to be repaired under warranty. Ms. Slagle indicated that at present the system does work but the question remains would it work in the year 2000? Commissioner Poe advised that they were not allowed to talk about this matter right now. They just have to make sure there is not a Y2K problem, which is the overall challenge. Senator Donley asked to see any correspondence relating to this matter. He stated that if the vessel was brand new it should be working correctly. Commissioner Poe said he did not have any good answers at this time. Senator Donley wondered if perhaps the manufacturer should be looking into this matter and not the State. The Commissioner said he could not guarantee this suggestion. He can only pursue the matter himself now, and then ask for legal remedy later. Barbara Ritchie said Douglas Gardner, Assistant Attorney General, Department of Law was handling this matter. Co- chair Parnell asked that Mr. Gardner contact Senator Donley and any paperwork be provided his office. Senator Donley will see that the committee gets the information. Senator Torgerson said there were millions of dollars in back claims to the original building of the Kennicott. The reverse is that the vessel be tied up until it is proven Y2K compliant. Perhaps the Marine Highway director and the Department of Law should come before the committee and advise them the status of this matter. Commissioner Poe said he would try to answer Senator Donley's questions as closely as possible. MARY LOU BURTON, University of Alaska testified before the committee via teleconference from Anchorage. She explained the University request. Most costs could be covered under the deferred maintenance they requested last year. Senator Green referred to their subcommittee presentation. Ms. Burton responded. She said they were doing a post audit program. They had established certain criteria some months ago. Senator green asked about a similar process in place regarding pre and post audits. Commissioner Poe said he goes through each budget with the budget manager and asks for status reports so he can keep up-dated. He would like to visit the University to see what they are doing. The departments have tried to share their suggestions and comments as to their budgets. Senator Green said perhaps all this should be included in the letter of intent. Senator Adams MOVED SCS CSHB 64, version "W" be adopted as the working draft before the committee. Co-chair Parnell OBJECTED. Senator Wilken said there was a technical amendment for items #4 and #15. He explained that a general fund column for these two items needed to be added. Senator Green asked about page 2, line 16, Y2K Alaska Public Utilities Commission. Senator Wilken said he appreciated the agencies' work on this matter. With reference to the spread sheet entitled, "Appropriations for Y2K Fix" he identified the following items: Item #3, Department of Administration, Mainframe Test Environment. Item #7, Department of Corrections, Review of Jails. He said it was the responsibility of those we contracted with to make sure that they were Y2K compliant. Item #8, Department of Corrections, Replace Hardware. Item #9, Department of Corrections, Cook Inlet Pre-Trial Control System. Item #10, Department of Corrections, OBSCIS & HOFA Systems. This item was not Y2K compliant and would require some general fund monies. Item #11, Department of Environmental Conservation, Data Software. He noted a fund change in their request. Item #20, Department of Transportation, Statewide Facilities. Senator Wilken applauded the department's efforts to become compliant. Most Y2K problems had been identified to date. He said he was comfortable with the $2.5 million request. Item #24, University of Alaska, Assessment & Remediation. This was a request for prioritization. He referred to the University spread sheet, entitled "Y2K Budget Projection - Revised January 1999". At this time, Co-chair Parnell excused any members of the audience who may have remained to testify in SB 83. Senator Wilken continued his explanation. Co-chair Parnell asked for an explanation between "A" and "B" priority as listed on the University's spreadsheet. Senator Wilken suggested the question be posed directly to Ms. Burton. Ms. Burton explained those classified in the "A" column would bring the University to a screeching halt. The "B" column items were a priority matter. Senator Wilken continued with item #4, Department of Administration, Public Guardian and item #15, Department of Health and Social Services, Public Health Lab Server. With this he concluded his brief explanation of the spreadsheet. Co-chair Parnell REMOVED his objection to version "W" being adopted as a working draft. WITHOUT OBJECTION SCS CSHB 64 ( ), "W" was ADOPTED. Senator Wilken MOVED the technical amendment to item #4 and item #15. WITHOUT OBJECTION the technical amendment was ADOPTED and incorporated into the working draft. Commissioner Poe said Statewide Facilities under Department of Transportation had cause for some concerns. He was afraid they would run out of money and not be able to fix the matter. He was more comfortable with the House number as this would give some leeway. (Tape change from #36, Side B to #37, Side A (000).) In continuation, Senator Torgerson asked if there was an on-going effort to get the proper numbers and when would they be available? Commissioner Poe said he was working on the matter and they would have solid numbers soon. He also felt that with further investigation the numbers would go down. Village Safe Water was a good example of a request having gone down. However, he is concerned about having enough monies to fix whatever might be wrong. Co-chair Parnell asked if there was anyone in the public who wished to testify on this bill. There was none. Senator Donley MOVED amendment #1, page 3, line 22. He said the sum of "$3,718,600" should be deleted and the sum of "$2,740,900" be inserted. Senator Adams OBJECTED. Co-chair Parnell asked Ms. Burton to comment. She said they had visited the outlying campuses and had gotten feedback on remedies of Y2K problem. They had reduced the amount at the Anchorage campus by $1 million towards computers on desk (CPD). There had been no attempt to replace everyone's PC. The $2 million proposition by the amendment causes great concern that they will not be able to meet even the basic needs. Senator Wilken referred to page 3 and offered an amendment to amendment #1 to include funding on page 3, desktop systems, column B, in addition to page 5. Senator Phillips OBJECTED. By a roll call vote of 3 yeas (Parnell, Wilken, Adams) and 5 nays (Torgerson, Donley, Leman, L. Green, Phillips)(P. Kelly absent) amendment to amendment #1 FAILED. STEVE SMITH, Director of Information Technology, University of Alaska testified via teleconference from Anchorage. He explained the class "A" and "B" columns and their priority. Class "A" would have a serious impact if not funded. This involved specifically research. There were eight thousand network connections on the Fairbanks campus. It was difficult trying to maintain both infrastructure and exchange. Senator Green asked if there would be any prohibition for the University to use the monies under column "B"? Senator Donley indicated it would just change the net sum. Senator Donley restated his amendment on page 3, line 22. Senator Adams objected. By a roll call vote of 6 yeas (Torgerson, Parnell, Donley, Leman, L. Green Phillips) and 3 nays (Wilken, Adams, P. Kelly) this amendment was ADOPTED. Senator Wilken MOVED the letter of intent to accompany the bill. Senator Green MOVED the appropriation in line two of the letter of intent be changed to $13 million. Senator Torgerson OBJECTED and then WITHDREW his objection. Therefore, WITHOUT OBJECTION the letter of intent was amended to the amount of $13 million. NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities was invited to join the committee. Senator Green and Senator Torgerson briefly discussed the direction to take regarding the assessment of whether or not the M.V. Kennicott was Y2K compliant. As Senator Torgerson explained, perhaps it should be stated that any charges be referred back to the contractor. However, he said the State is ultimately responsible. Co-chair Parnell asked for Senator Wilken's comments. Senator Wilken said stronger language was needed in item #2 of the letter of intent. Senator Torgerson suggested an amendment to the letter of intent, paragraph 2, after "compliant", delete "will" and insert "shall be claimed against the contractor and shall not be the responsibility of the State of Alaska." That would clearly mean that if there was a problem between all others, a claim could be filed against builder. WITHOUT OBJECTION the amendment was ADOPTED. There being NO OBJECTION to the letter of intent it was ADOPTED. Senator Leman referred to line five of the spreadsheet for the Department of Administration. He indicated he would like to hear from the department. Commissioner Poe reiterated his earlier testimony saying that he expected the amount would be much lower. Senator Kelly said every state is trying to get Y2K compliant. It would be very expensive to attract this kind of help. Senator Donley referred to section 4 of the bill. There are problems with this section but perhaps they should be resolved on the Senate floor. The funding source was also an issue concurred in by Co-chair Parnell. Senator Leman also voiced his concern about the bill. His biggest concern being our lack of specificity and knowledge, including Commissioner Poe, even though he has more knowledge than everyone. The appropriation was now over $12 million, and they were not sure what it was going to be used for. Senator Wilken MOVED SCS CSHB 64 (FIN) including the letter of intent. Senator Adams OBJECTED. By a roll call vote of 8 yeas (Torgerson, Parnell, Donley, Leman, Wilken, P. Kelly, L. Green, Phillips) and 1 nay (Adams) SCS CSHB 64(FIN) with the letter of intent was REPORTED OUT with individual recommendations. ADJOURNMENT Co-chair Parnell adjourned the meeting at approximately 11:20 a.m. SFC-99 (1) 2/24/99