MINUTES SENATE FINANCE COMMITTEE April 14, 2000 6:22 PM TAPES SFC-00 # 89, Side A and Side B 90, Side A and Side B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 6:22 PM PRESENT Co-Chair John Torgerson, Senator Al Adams, Senator Lyda Green, Senator Loren Leman, Senator Randy Phillips, Senator Gary Wilken Also Attending: REPRESENTATIVE FRED DYSON; REPRESENTATIVE ALAN AUSTERMAN; JIM NORLAND, Director, Division of Public Assistance, Department of Health and Social Services; KRISTEN BOMENGEN, Assistant Attorney General, Human Services Section, Civil Division, Department of Law; KATHY GELLISPY, Legislative Co-Chair, Anchorage School Board; CARL ROSE, Executive Director, Association of Alaska School Boards; PEGGY ROBINSON, President, Anchorage School Board; CHARLIE BOLLY, Vice-President, Governmental Relations, Usibelli Coal Mine, Incorporated; SCOTT MCALLISTER, salmon seining fisherman, Member, United Salmon Association, United Fisherman of Alaska, Southeast Seiners Association; CHRIS NORRIS, Icicle Seafoods; BRET FREID, Economist, Department of Revenue Attending via Teleconference: From Anchorage: BARBARA NICKLOS, Director, Division of Child Support Enforcement, Department of Revenue; JIM POSEY; ANTHONY HUSSY, Chair, Academic Policy Council, Walden Pond Charter School; MARY CARTER, Board Member, Walden Pond Charter School; LORNA REECE; STEPHANIE MADSEN, Vice-President, Pacific Seafood Processors Association; From Fairbanks: DON SHIRCEL, Director, Family Services Division, Tanana Chiefs Conference; GAIL MCCANN; KITTY MATHERS; JOHN TIEMESSEN; MISSY LIEBERMAN; MIKE FISHER, Assistant Superintendent, Fairbanks North Star School District; From Mat-Su: BARBARA GERARD; From Kodiak: TOM WISCHER, Member, United Salmon Association; VIRGINA ADAMS; From Cordova: HERB JENSEN, representing, United Salmon Association, Cordova District Fishermen United, Copper River Salmon Producers SUMMARY INFORMATION HB 98-PUB.ASSISTANCE: PROGRAMS/GRANTS/CONTRACTS The Committee heard from the Department of Health and Social Services, the Department of Law and the Department of Revenue. The bill was held in Committee. HB 191-CHARTER SCHOOLS The Committee heard from the sponsor and members of the public. Four amendments were considered and adopted. The bill moved from Committee. HB 344-HARDROCK LAND EXCHANGE/HEALY RR LEASE The Committee heard from a representative of the mining industry. The bill moved from Committee. HB 363-SALMON PRICE REPORTS/SALE OF FISH The Committee heard from the sponsor, the Department of Revenue and members of the public. One amendment was considered and adopted and the bill moved from Committee. COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 98(HES) am "An Act relating to contracts for the provision of state public assistance to certain recipients in the state; providing for regional public assistance plans and programs in the state; relating to grants for Alaska Native family assistance programs; relating to assignment of child support by Alaska Native family assistance recipients; to paternity determinations and genetic testing involving recipients of This was the first hearing for this bill in the Senate Finance Committee. JIM NORLAND, Director, Division of Public Assistance, Department of Health and Social Services, testified that this bill would help to continue the progress of welfare reform in the State Of Alaska. Mr. Nordland stated the authority to run the federal programs at the state government level is one of the main reasons for welfare reform's success in Alaska and other states. He explained that state governments have been able to use this power to dramatically reduce caseloads, help families return to work and out of poverty. In exchange for the flexibility, he said states are receiving a specific amount of money from the federal government, known as a Cap Block Grant. He attested this arrangement between the federal government and Alaska's government has worked very well to reduce welfare dependency. In addition to granting ownership of welfare programs to the states, Mr. Nordland stated the federal law allows tribes in the Lower 48 and the 13 regional Alaska Native non-profit organizations to run their own welfare programs as well. He shared that funding for the Native-operated programs is taken from the amount allocated to the state. Mr. Nordland noted that while states are required to participate in funding the state-operated welfare programs, there is no requirement in federal law for any entity to contribute to the funding of Native-operated programs. However, he said that the state contributes approximately fifty percent of the funds needed to operate the Native-run programs. Mr. Nordland then explained that this bill allows for the expenditure of state funds for Native-operated welfare programs. He stressed that the only eligible organizations that can receive these funds are the 13 regional non-profit Native organizations. Mr. Nordland added that the intention is to transfer from the state, the amount of money needed to pay for benefits, administration, child care, work services, etc. He said this money is currently being paid by the state to serve the same participants in programs that would now be run by Native organizations. He pointed out this is the reason for the bill's zero fiscal note. Mr. Nordland shared that the Tanana Chiefs Conference (TCC), an Interior Alaska organization operating under the Doyon Native Corporation is currently operating a welfare program. He said that the state could appropriate federal funding to this organization so long as the program it operates is the same as the one operated by the states' Alaska Temporary Assistance Program (ATAP). However, he stated that TCC had planned to run its program differently than the state, and without this legislation, would be unable to receive funding. He deferred to a representative from the TCC to detail the culturally relevant approach of the Native-operated program. Mr. Nordland stressed that the department supports giving flexibility to the Native organizations so that the programs can be run with more local control and with better cultural relevancy. Mr. Nordland qualified there are limits as to how different the Native-operated programs could be from the state- operated program. He stated that Alaska's congressional delegation inserted language into federal law requiring Native programs to be comparable to the state program. He said the department has worked with the Native organizations to design the comparability criterion, which have been approved by the US Secretary of Health and Human Services. Mr. Nordland summarized that if this legislation passes, there would be a Native-operated program comparable to the state program but somewhat different in order to meet local and cultural circumstances. Senator Green then asked if this legislation requires federal "blessing" before the funds could be allocated. Mr. Nordland affirmed the plan does need to get federal approval. Mr. Nordland concluded his presentation saying that the department supports the legislation because it is believed the welfare reform efforts could be more successful if the Native organizations are allowed to operate their own programs. He attested that the organizations know the needs of their region and the people and that the programs could be run more effectively than the state could. Senator Leman asked if federal law allows allocations to other organizations besides Native organizations. He referred to earlier discussion he had with the witness on this matter where he shared his desire to broaden the localization of the welfare reform programs. Mr. Nordland replied there is a specific provision in federal law applying only to tribes in the Lower 48 and Native Alaskan organizations. He advised however, that there is no reason the state cannot contract the programs out to municipalities or other entities. In fact, he said many states have privatized the services to for-profit organizations. Senator Green asked if privatization or shifting the programs to the local level would require federal approval as well. Mr. Nordland answered federal approval would not necessarily be required. Amendment #1: This amendment inserts a new subparagraph on page 11, line 22 to read as follows. (4) establish the same maximum number of months of benefits as is established for the state program under AS 47.27.015 (a)(1); and (5) [This amendment was not offered at this meeting but was discussed.] Senator Adams requested the department comment on the proposed amendment. He described it sets uniform standards for the maximum amount of benefits that could be collected by participants of either the state or Native-operated welfare programs. Mr. Nordland stated that the department supports the amendment, referring to his earlier statement about the comparable criterion between the two programs. He noted that the issue of consistent benefit eligibility was overlooked when the criterion was developed. He told the Committee that federal law allows the Native organizations to negotiate with the federal government on the length of time benefits could be collected by participants. He said the reason for this allowance is to give some Indian reservations an exemption from the 60-month lifetime benefits limit. He stressed that this exemption was outside the bounds of the comparability arrangement between the state and Alaska Native organizations. He said the department supports holding Native-operated programs to the 60-month limit just as the state-operated program is. He commented that this amendment "plugs a loophole in this bill." Mr. Nordland stressed that villages with an unemployment rate of over 50 percent would be exempt from the 60-month limit whether the residents participate in a state-operated or Native-operated program. He expressed that this amendment does not apply to specific communities but rather the operator of the program. This is to prevent participants of a Native-operated program who do not live in a community with more than 50 percent unemployment to receive more than 60 months of benefits, according to Mr. Nordland. In this manner, he said, the exemption would be based on the community itself rather than the operator of the program serving it and possibly other communities as well. Co-Chair Torgerson asked for an explanation of Section 5. Mr. Nordland replied that this section was part of changes made to the bill by the House of Representatives relating to child support payments. He believed the language to be conforming to other child support enforcement statutes. KRISTEN BOMENGEN, Assistant Attorney General, Human Services Section, Civil Division, Department of Law, testified that this section is the result of a comprehensive review of the child support provisions. The purpose, she said is to ensure that child support payments that are collected on behalf of participants who are receiving public assistance under Native-operated programs are distributed to that Native organization. She stated that the intent is to remove any possible barriers to making appropriate distributions. Co-Chair Torgerson asked if the child support payments only included those collected under court order. Ms. Bomengen replied all child support payments are subject to distribution to the program's operator. Co-Chair Torgerson wanted to know if "petitioning the court" in the language relating to enforcement of child support orders could include tribal courts. Ms. Bomengen confidently stated that is not the intent to petition any tribal court. Co-Chair Torgerson wanted assurance. Ms. Bomengen expressed it is not a function of the Division of Child Support Enforcement to operate in tribal court. Instead, she said the agency follows the rulings of state court. She said there is no intention to expand the agency's efforts into tribal courts. Co-Chair Torgerson acquiesced, but asked about the recent Supreme Court ruling in John v. Baker, which authorizes tribal courts to issue child support orders. Ms. Bomengen needed an opportunity to review the court case before giving a specific opinion on the matter. Co-Chair Torgerson stated he wanted an understanding of the impact of the court decision on this legislation. He then referred to Section 21 that allows the department to adopt program standards that vary by region. He wanted to know why standard practices would not be adopted so all Alaskans are treated equally. Mr. Nordland responded that the language in Section 21 conforms to other sections of the bill to allow regional public assistance programs to be established by the department. He shared that the motivation is to prevent the department from having to create a separate program for the few non-Native residents of a Native village, served by a Native-operated welfare program. He stated that this provision allows the non-Natives to be served by Native organizations. Co-Chair Torgerson understood the intent but claimed the language instead allows the department to vary program standards by region. He thought this provision was too broad-based. Mr. Nordland responded that the intent is to adopt the program standards of the Native-operated plan, which would be comparable yet different than the state-operated program. In doing this, he said, all residents of a community could be served by the Native-operated plan. Ms. Bomengen addressed a concern raised in other committees regarding a potential equal protection question. She detailed that the bill contains a requirement that in any area in which a Native corporation is operating a welfare program, eligible Alaska Natives must seek their services from that program and not from a state-operated program. She spoke of funding for the participant as well as the Native program in these cases. She suggested the approved Native-operated programs should be identical to one that the state would operate if it were to do so. Ms. Bomengen then explained how the Alaska court applies a "sliding scale test" to any equal protection challenge. This test, she said is used to determine whether a greater or lesser burden is placed on the state to justify a classification of individuals to be served by one plan or another, depending on the importance of the individual rights involved. She detailed how the court determines what kind of weight should be given to the constitutional interest impaired by the legislation, examines the purpose of the legislation, and evaluates the state's interest in the means employed to further the goals of the state. Ms. Bomengen stressed that an equal protection challenge to this legislation would probably claim there to be an impermissible classification based on the race of the individual. She said the state's response would then be based on other equal protection cases that have addressed the same distinction. She explained this distinction was created by a federal act, which is born out of the federal government's trust relationship and responsibilities to American Indians and Alaskan Natives. Therefore, she surmised the distinction would be a quasi-political issue based on the unique political status of indigenous peoples and not considered a racial classification. Ms. Bomengen continued detailing why an equal protection challenge would not succeed saying that, regardless of whether the state or a Native organization operated the program, the participant's benefits would not be affected, services would not be denied and the subsequent impact on the family would be insignificant. She said this is because of the comparability requirements for both programs under state and federal law. Ms. Bomengen relayed a suggested amendment to the bill made to the House of Representatives that would allow an individual who is directed to the Native-operated program to request service under the state-operated program. A successful request, she said would demonstrate a compelling interest to receive services from the state rather than the Native organization. She added that the Department of Health and Social Services would develop standards for this exception in regulation. Senator Phillips asked if there was a legal opinion on this matter from the Division of Legal and Research Services. Co-Chair Torgerson said there was not but noted a request would be submitted. Co-Chair Torgerson acknowledged the fiscal note was zero but wanted information about the federal grant funds and necessary general fund money to implement the new programs. Mr. Nordland first commented that not all of the 13 regional Native corporations are interested in operating welfare programs. He noted that there is already one Native-operated program established and that the Tlingit- Haida Corporation and the Association of Village Council Presidents have expressed interest in establishing their own program. He then explained that the department would transfer not only the benefits portion of the welfare programs to participating Native corporations, but also a portion of the administrative funds as well. He admitted this was not easy for the department to do because of the impact on its administrative abilities. However, he said in the long run the programs would be run more effectively with higher caseload reductions. Mr. Nordland stressed this bill has no impact on the general fund, either positive or negative. Senator Wilken wanted to understand the flow of the funding from the federal level to the beneficiary. Mr. Nordland detailed that the Native-operated program must first have a plan approved by the federal government, which requires some state funding to make the plan comparable to the state-operated plan. Once the Native-operated plan is approved, he said a portion of the federal funds provided to the state go directly to the Native organization. He expressed that the intent of this legislation is to allow the state funds to be allocated to the Native organizations so those programs can be operated at the same level as the state-operated program. Senator Wilken wanted to know how the distribution of federal funds between the state and the Native organizations was calculated. Mr. Nordland responded that the amount of federal money spent on Native clients during the federal fiscal year 1994, in the specified region, is reported to the federal government as the percentage of the state's block grant to be allocated to the Native organization. He qualified that the amount could change in the future when the Temporary Assistance for Needy Families (TANF) law changes, but would not change before then. Mr. Nordland continued that the general funds provided to the organization are separate from the block grant funds. He explained further how the TANF program is funded with a fixed federal block grant, of which the state must expend at least 80 percent of what was spent in 1994 to participate in the TANF program without severe penalty. He shared that the state is currently meeting the required expenditure amount. Senator Wilken asked how many families this legislation would affect. Mr. Nordland listed the TCC program currently serves approximately 500 families, the Tlingit/Haida organization serves about 500 families and ABCP would serve approximately 900 families if it takes over the welfare program in their area. He said this represents about 20 percent of the entire caseload in the state. Senator Wilken asked why the transfer of these 1900 families would not make the department's operating costs smaller. Mr. Nordland responded that the department still administers Medicare, Food Stamps, Adult Public Assistance and other programs. It was difficult for him to say exactly how the department would manage the reduction in administrative funds and still operate these other programs. He used Bethel as an example where over 95 percent of welfare clients are Native and the department would therefore reduce department staff. Senator Wilken thought the fiscal note should show a reduction in state bureaucracy. Mr. Nordland responded that there is a reduction in the state bureaucracy but not a reduction in the budget. He stated that the general funds would be paid to employees of the Native corporations to operate the program rather than to state workers. He stressed that the amount of spending stays the same. Senator Wilken then asked the purpose of the legislation. Mr. Nordland answered the reason for transferring welfare programs to Native organizations is for many of the same reasons for having local school districts across the state. That, he expressed is to have some local control with the programs "closer to home." Senator Wilken asked if there would ever be an instance of a non-Native family not provided with services that a Native family is provided or visa-versa. Mr. Nordland assured that one entity or another would serve everyone who is eligible for public assistance. BARBARA NICKLOS, Director, Division of Child Support Enforcement, Department of Revenue, testified via teleconference from Anchorage that she was available to answer questions regarding the disbursement of child support payments to the Native organizations who operate a public assistance program. She assured that the language pertaining to this allowance does not relate in any way to tribal court. DON SHIRCEL, Director, Family Services Division, Tanana Chiefs Conference testified via teleconference from Fairbanks listing his education and experience qualifications. As a social service professional, he strongly supported both SB 80 and HB 98. Mr. Shircel spoke in great detail of the early success of the TCC operated public assistance program and the satisfaction it has given Native leaders. Tape: SFC - 00 #89, Side B 7:09 PM Mr. Shircel read a letter to TCC from a former client as follows. [Copy not provided.] Hello, I'm writing this letter to everyone to let you know that I have a new permanent job and I'm going to be O.K. from here on out. I'm also writing to thank each person for all they have done for my family and I. I know that there's a lot of work that's put into each individual case and I really want to thank you for all that you've done to help me become more self sufficient. This letter is not only a letter to thank you for all your hard work, but it's also a letter to request that I have my case closed. I do realize that all my benefits will stop and I feel I'm prepared for this. Once again, thank you and may Lord Jesus bless you for what you do to help others. Mr. Shircel expressed that he could not think of a better way to convey to the Committee what the legislation is trying to accomplish than this letter could. He believed that with the passage of the bill, his organization could have an even greater impact and get more "bang out of each welfare buck." Senator Adams asked what does TCC do for a Caucasian individual living in a rural community in the region, who otherwise qualifies for the TANF-based program. Mr. Shircel responded that currently the individual must apply for services through the state because TCC does not have the authority to serve him or her. Senator Adams asked if that qualified Caucasian has a choice between the Native-operated or the state-operated public assistance program. Mr. Shircel answered that without this legislation, that person does not have a choice but must be served through the state-operated program. Senator Green commented that four years ago during deliberations of SB 98, relating to welfare reform, suggestions were made to address alcohol, drug abuse, parent's involvement with children, and possible domestic violence issues conditional on receiving benefits. She recalled that on every count it was deemed this was a violation of individual freedom. She stressed that if allowances for these issues to be combined in the public assistance for the Native-operated programs, then the same allowances should be made for every public assistance program in the state. Co-Chair Torgerson requested an improved sectional analysis from the department and a legal opinion on the equal protection clause from the Division of Legal and Research Services. Senator Green also requested a side-by-side comparison of the current role of the Division of Child Support Enforcement and the proposed interaction with the Native- operated programs, as it relates to TANF and how the funds circulate. She wanted to know if any funds would be lost if the legislation passed. Co-Chair Torgerson ordered the bill HELD in Committee. SENATE COMMITTEE SUBSTITUTE FOR COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 191(HES) "An Act relating to charter schools." REPRESENTATIVE FRED DYSON recounted legislation passed in 1995 that established Alaska's first charter school statutes. He told of a wide movement across the country to allow parents to participate in creating a school that fits their needs. Representative Dyson relayed conversations he had with Representative Bettye Davis shortly after he was first elected in which he was told he needed to revisit the charter school statutes. Representative Davis asserted to him that the existing statutes would not work. He added that national experts on the subject have stated that Alaska's laws are amongst the weakest in the nation. Representative Dyson stressed that the charter schools in the state are struggling and that his office along with the Anchorage School District have been working with charter schools to craft legislation to allow charter schools to survive an possibly to prosper. Representative Dyson highlighted some minor points of the bill that he said everyone could agree on. These, he said include provisions to double the number of charter schools allowed to operate and the elimination of the geographical distribution of the school's locations. He added the bill also extends the sunset provision of the exiting statute and allows occupation of public buildings by charter schools. Representative Dyson then shared that the most substantial portion of the legislation addresses funding. Most charter schools elsewhere in the country, he said are provided start-up funds, which he said Alaska does not provide. He did note that the Fairbanks school district has made attempts to secure funding for a charter school located in that community. Representative Dyson next talked about changes made to the bill in the committee process in attempt to meet criticisms of the Anchorage and Fairbanks school districts. He stated that the Senate Health, Education and Social Services Committee deleted two paragraphs of the original bill addressing financial requirements plus another provision stipulating that charter schools receive a share of the local contribution as well as state funding. Representative Dyson allowed that the resulting committee substitute addresses the necessary technical changes but does not provide additional funding for charter schools. Representative Dyson spoke of the accounting procedures necessary to show how the charter school's funding is expended. Representative Dyson cautioned that Alaska's charter schools would not survive without much more help. He expressed, "I think it's cruel to string them along." He stated that the current version of the bill gives the schools no hope since it no longer contains the funding provisions. GAIL MCCANN testified via teleconference from Fairbanks asking the sponsor to not give up on charter schools. She wanted all public schools to secure more funding as the University of Alaska has in recent years. KITTY MATHERS testified via teleconference from Fairbanks to request the Committee vote in favor of the original version of the bill. She stressed that the current committee substitute allows the charter schools to exist, but not to survive. JOHN TIEMESSEN, attorney and father of charter school student, testified via teleconference from Fairbanks about the need for work on the charter school structure and to fully fund schools. MISSY LIEBERMAN, parent of a child in Chinook Charter School testified via teleconference from Fairbanks in support of the bill and the idea behind it to help charter schools get equal funding and not have to compete with other schools. BARBARA GERARD testified via teleconference from Mat-Su about a recent evaluation showing the positive impacts of charter schools. She stated that this bill strengthens the charter school process. JIM POSEY testified via teleconference from Anchorage about the growth of the local charter school. He expressed the reduced assistance provided in the committee substitute "puts an dagger into the hearts" of those who work for public education. ANTHONY HUSSY, Chair, Academic Policy Council, Walden Pond Charter School testified via teleconference from Anchorage about the school and some of the special needs of their students. MARY CARTER, mother and board member of Walden Pond Charter School, testified via teleconference from Anchorage about the growth she has seen in her daughter since attending this school. LORNA REECE, parent of student of Walden Pond Charter School, testified via teleconference from Anchorage. She spoke of her experiences in Anchorage schools and why she chose to send her son to a charter school. MIKE FISHER, Assistant Superintendent, Fairbanks North Star School District, testified via teleconference from Fairbanks about his concerns with Section 2 of the bill in subparagraph 5, requiring itemization of administrative costs, and subparagraph 14, stipulating that the charter school budget must be increased to reflect operating cost savings. KATHY GELLISPY, Legislative Co-Chair, Anchorage School Board testified in Juneau that the district could not support the bill. She suggested changing the provision dictating accounting methods for charter school related expenditures. Ms. Gellispy also requested deletion of subparagraph 14 from page 2, lines 27-31 of the committee substitute. She argued that no school receives funding for services that are not provided. Ms. Gellispy went into great detail of the various expenditures incurred by both charter schools and regular schools and the hardship the district would incur if the accounting and funding requirements of this legislation were imposed. Tape: SFC - 00 #90, Side A 7:56 PM Ms. Gellispy offered that the Anchorage School District wants to work with the legislature to make the charter school statutes stronger than they currently are. Ms. Gellispy detailed the handout accompanying the district's April 14, 2000 memo to the Senate Finance Committee. [Copy on file] She explained how this list shows the budgeted cost per student for each of the district's schools. She pointed out that the average spent per charter school student is $4,264 compared to the average of $3,732 spent for all other elementary students. She attested that the district is funding its charter schools in a fair and equitable manner. CARL ROSE, Executive Director, Association of Alaska School Boards, testified in Juneau saying the organization is on record in support of charter schools. He said the difficulty with this legislation is the inability to come to agreement on the appropriation. He surmised that by attaching charter schools to an already struggling system is not the way to ensure success for charter schools. He cautioned of the potential for charter schools to operate without any oversight of the local school boards, and thus being funded without requiring any accountability. He thought the possibility existed that some new charter schools would not get approval because of these funding issues. He suggested the legislature adequately fund all schools. Amendment #1: This amendment adds a new bill section on page 3, following line 7 of the committee substitute to read as follows. "Sec. 4. AS 14.03.260 is amended by adding a new subsection to read: (e) In addition to the amount provided to an approved charter school in the annual program budget under (a) of this section, a charter school budget must include an allocation equal to the amount determined by dividing the amount of local revenues contributed under AS 14.17.410(c) by the average daily membership of the district and multiplying that number by the average daily membership of the charter school." Co-Chair Parnell moved for adoption. Senator Wilken objected. Co-Chair Parnell explained this amendment requires the local school districts to share excess local contributions with the charter schools. He asserted that parents of charter school students pay property taxes that are used to fund all public schools except their child's. He said that this is an issue of equity. Representative Dyson agreed with Co-Chair Parnell's statements. Co-Chair Parnell stated that all public schools should be funded. Senator Phillips referred to the Anchorage School District's list of budgeted funds spent per student of various schools in the district. He noted how more funds are spent for charter school students. Co-Chair Parnell responded that three of the listed charter schools included special needs students. Secondly, he said the issue was not about the amount of money spent per student, which is a red herring. Instead he asserted the issue is about getting equitable funding at the on-set with the ability for the school board to make adjustments later. Senator Phillips thought all of the schools include the special needs expenditures in their budgets. [Ms. Gellispy affirmed, but out of range of the recording system.] Senator Green noted there may well be a comparability in the amount allotted to the per student calculation. She wanted to know if there is a difference in the expenditure allotted to the charter schools. Representative Dyson replied that several of those schools have to pay the costs to occupy a facility, whereas other schools don't have to pay rent. Senator Wilken stated that in 1995, the funding for charter schools was clearly set forth. He quoted, "the amount generated by students enrolled in charter schools to be determined in the same manner as would be for a student enrolled in another public school in that school district." He stressed this agreement was reached with the intent that it would be adhered to for ten years. Senator Wilken noted the amount of money the Anchorage School District spends for charter school students. He thought the matter of paying leasing costs for charter schools is already addressed the organization and operation of a charter school chapter of state statute. Senator Wilken understood that the charter school laws were to allow parents to organize to provide an educational opportunity that they could not receive in a normal public school in that district. He stressed that these parents can negotiate a contract to define their school, which includes the facility the school will occupy. He added that while the charter school may have to address disabilities, there is no library, no band, no athletic program, transportation requirements, and are not required to have open enrollment, as a public school must. Senator Wilken attested that although charter schools have approached the Fairbanks and Anchorage school districts with complaints that they don't receive enough money, they are getting more money than required in the 1995 legislation. Senator Wilken stressed that this amendment, along with other proposed changes, "cements in place a 'must do' and a confrontation between the charter school proponents and the school board every budget season." He stated that the message this legislation sends to the school districts is that they don't know what they are doing and regardless of the needs of most students, the district must spend a specific amount on charter school students. Senator Phillips asked about the location of the Walden Pond Charter School in the Diamond Mall and other charter schools' lease agreements. PEGGY ROBINSON, President, Anchorage School Board, talked about the charter school's five year lease. It was established that Walden Pond is the only charter school that pays rent. The others pay some combination of utilities. A roll call was taken on the motion. IN FAVOR: Senator Donley, Senator Leman, Senator Green, Co- Chair Parnell and Co-Chair Torgerson OPPOSED: Senator Adams, Senator Wilken and Senator Phillips ABSENT: Senator P. Kelly The motion PASSED (5-3-1) The amendment was ADOPTED. Amendment #2: This amendment makes the following changes to page 2, lines 10 through 13 of the committee substitute as follows. Delete "(5) a statement of the charter school's funding allocation from the local school board, including the itemized costs of administrative or other services to be provided [AND COSTS ASSIGNABLE] to the charter school [PROGRAM BUDGET];" Insert "(5) a statement of the charter school's funding allocation from the local school board and costs assignable to the charter school program budget." New text underlined [DELETED TEXT BRACKETED] Senator Wilken moved for adoption. Senator Green objected. Senator Wilken noted this amendment is connected to Amendment #3. He expressed that it would be difficult and expensive for school districts to account for these expenditures as required in the legislation. He thought that to require a separate accounting system for under 200 students to keep track of itemized costs was unreasonable. He pointed out, for example, that the charter schools in Fairbanks uses the district's discipline system but the district does not charge the charter school for that service. He suspected there would be great difficulty in trying to establish an accounting method to itemize that particular service in addition to the multiple other similar services that are interrelated between the district and the charter schools. Representative Dyson had no objection to the amendment since he thought the premise of the language would not change. He stated that the belief that the bill would require establishment of a separate accounting system was "either grossly misunderstood or a red herring." He noted that the district would still be responsible for showing an accounting of all expenditures. Co-Chair Torgerson thought the word "itemize" was the difficulty. The amendment was ADOPTED without objection. Amendment #3: This amendment deletes subparagraph (14) on page 2, line 27, through page 3, line 1 of the committee substitute. "a clause providing that the charter school's budget shall be increased to reflect operating cost savings achieved by the charter school; in this paragraph, "operating cost savings" means the estimated value of educational or related services provided by the district to all schools in the district that are not provided to the charter school; (15)" Senator Wilken moved for adoption. Co-Chair Torgerson objected for an explanation. Senator Wilken stressed that this language was a troubling inclusion in the bill. He predicted this would foster tensions each year between the charter schools and the school board. He suggested that this is giving credit for not doing something, which he remarked, is backward thinking. Co-Chair Torgerson removed his objection. Representative Dyson emphasized that this language is also misunderstood. He stressed that there would be no negotiations involved in this process. The school board is an advisory seat and the charter school can make no threats but must do what the board instructs. He shared that if a charter school can ease expenditures for the other schools, for example, by removing students from an over-crowded high school, the district can share a portion of the net savings with the charter school. He restated that if a district identifies savings as a result of the existence of a charter school, the savings could be passed along to the charter school. Senator Leman said Representative Dyson's comments make sense if the intent is interpreted to pass along some, but not all of the net savings. Representative Dyson responded that "the school district is in the driver's seat" and could pass along all, none, or a portion, of the savings to the charter school. Co-Chair Torgerson noted the language "shall be increased" is not optional. Senator Leman countered that the language does not stipulate what factor of the savings. He thought the language was poorly worded but that some of the money should be passed along to encourage further savings. He stressed that the legislature needs to provide a better incentive to quell the formula funding cost increases. Representative Dyson offered to change "shall" to "may". Senator Wilken commented that Amendment #1 set the baseline and this subparagraph increases that base by considering whether the charter school has a band, library and/or a transportation system. Senator Green noted Representative Dyson's example did happen in the Mat-Su school district. She shared that the district's charter school does have a band and has a variety of students, but has also eased overcrowding in the other schools. She noted that most charter schools are filling a need, have a big waiting list and should be supported. Senator Green supported extending the sunset date of the existing charter school statute at the very least. Senator Wilken moved to withdraw his motion to adopt Amendment #3. The amendment was WITHDRAWN without objection. Amendment #4: This amendment deletes "shall" and inserts "may" on page 2, line 27, of the committee substitute. The amended language reads as follows. (14) a clause providing that the charter school's budget may be increased to reflect operating cost savings achieved by the charter school; in this paragraph, "operating cost savings" means the estimated value of educational or related services provided by the district to all schools in the district that are not provided to the charter school; Co-Chair Parnell moved for adoption. There was no objection and the amendment was ADOPTED. Senator Wilken commented that this is an important issue and that while he supports charter schools, he does not want their interest to be championed at the expense of the other 129,000 students in the public K-12 education system. He stressed that the original legislation was an experiment but that the agreement was to wait ten years to review its success before making changes. Co-Chair Torgerson asked if the sponsor had reviewed the fiscal note. Representative Dyson had. Co-Chair Torgerson asked if the sponsor believed it takes one to two people to run the program. He thought the estimated cost of the legislation was too high. Co-Chair Parnell offered a motion to move CS HB 191 (FIN) as amended from Committee with accompanying $161,300 fiscal note from the Department of Education and Early Development. The bill was MOVED from Committee. COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 344(FIN) "An Act authorizing a land exchange between the Department of Natural Resources and Alaska Hardrock, Inc.; approving a long-term lease of certain Alaska Railroad Corporation land at Healy; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. CHARLIE BOLLY, Vice-President, Governmental Relations, Usibelli Coal Mine, Incorporated, testified to Section 3 of the bill, regarding the Alaska Railroad Corporation land currently under contract with his company. He gave a detailed history of how the company has developed and used that land. Co-Chair Torgerson interjected to ask if the witness supports the bill. Mr. Bolly affirmed he does. Co-Chair Parnell offered a motion to report CS HB 344 (FIN) from Committee with accompanying Department of Natural Resources zero fiscal note. Without objection the bill MOVED from Committee. AT EASE to 8:41 PM SENATE COMMITTEE SUBSTITUTE FOR COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 363(L&C) "An Act relating to salmon product reports and to the sale of fish; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. REPRESENTATIVE ALAN AUSTERMAN told the Committee the bill was introduced on behalf of salmon harvesters initially as an update of current statutes regarding canned and thermal salmon. He stated that the legislation also adds several other products currently handled by the salmon industry. He said the canned salmon reports addressed in the bill have existed since before statehood. Representative Austerman continued that the bill adds fresh and frozen headed and gutted salmon products, fresh and frozen fillets and salmon roe to the reporting requirements. It also adds a requirement for salmon processor to report production areas. Representative Austerman shared that the bill has been revised a number of times since its introduction. He pointed out that original statute requires any processor producing more than 1000 pounds of canned or thermal product to submit this report. An amendment to the bill, he said raises that amount to one million pounds. Senator Wilken wanted to know if the reports records the wholesale number of cans produced after the business tax is incurred. He asked what purpose the reports serve. Representative Austerman surmised that the original intent was to provide wholesale price information to the state and any other interested parties. Co-Chair Torgerson asked if these reports are confidential. Representative Austerman affirmed and explained that more than three processors must be operating in a particular area before the reports on that area could be released to the public. TOM WISCHER, Kodiak area fisherman and Member, United Salmon Association, testified via teleconference from Kodiak that the bill fills a gap, eases mistrust between fishermen and processors, and would give good business information to fisherman across the state. VIRGINA ADAMS, Commercial Salmon Fisherman out of Kodiak, testified via teleconference from Kodiak. Tape: SFC - 00 #90, Side B 8:50 PM Ms. Adams continued recounting the efforts to obtain accurate accounting information on the status of the salmon industry. She approved on the one million-pound requirement saying it protects smaller processors. HERB JENSEN, representing, United Salmon Association, Cordova District Fishermen United, Copper River Salmon Producers, testified via teleconference from Cordova in favor of the bill and what it would provide to the state. STEPHANIE MADSEN, Vice-President, Pacific Seafood Processors Association, testified via teleconference from Anchorage that the association opposed the bill saying it was not just revision of the report but a significant expansion of the report. She detailed the additional pages required. She requested the frequency of the reports be reduced from three times annually to two, if the bill passes. SCOTT MCALLISTER, salmon seining fisherman, Member, United Salmon Association, United Fisherman of Alaska, Southeast Seiners Association testified in Juneau about the efforts behind this bill to improve reporting procedures. He answered Senator Wilken's question regarding the relationship between harvesters and processors, saying there is a relationship that shares the risks and results. Senator Phillips asked where was the sunset provision in the bill. CHRIS NORRIS, Icicle Seafoods in Ketchikan and Norton Sound, testified in Juneau that she believed the bill is an intrusion and serves no purpose to private business. Senator Wilken understood that this bill would increase reporting requirements by a factor of five to give better information, after the product has been sold and delivered, in order to return some of that revenue to the fishermen according to a pre-agreed upon arrangement. Ms. Norris gave her understanding of the reason for the report was to foster the idea that if fishermen have a better idea of the salmon market and prices paid, they would have a better leverage to negotiate prices. She noted that her company and fleet were not involved in the 1997 strike. She believed the reporting system originated out of frustration of fishermen. She stressed it is unfair to paint the whole processing industry negatively. BRET FREID, Economist, Department of Revenue testified about the sunset clause currently in the statute. He explained that a previous version of the bill repealed the sunset, but that the repeal has been removed in the current committee substitute. Mr. Freid stated that the department does not have a position on the collection of data because there is no direct link with taxation. He shared that the salmon is taxed at the price paid to the fisherman not the wholesale value or the profits. Mr. Freid qualified that the department could do a good job preparing the reports and meeting the requirements of the bill. He spoke to the fiscal note that shows the need for three-quarters of one position to operate the program at a total operating cost of $38,000 for the first year with an additional $20,000 in capital funds to set up a database. Co-Chair Torgerson asked that if the Department of Revenue does not oversee this program, what other agency could hold confidential information. Mr. Freid suggested the Department of Fish and Game. Co-Chair Torgerson commented that this is a good report and that if the legislation passes, the matter of which department has oversight could be revisited. Amendment #1: This amendment makes the following change to page 5, lines 23 and 24 of the committee substitute. Delete "September 30, 2000, must cover the period of May 1, 2000, through August 21, 2000" Insert "January 31, 2001, must cover the period of September 1, 2000, through December 31, 2000" The amended language reads as follows. TRANSITION. The first report required by AS 43.80.050, as amended by secs. 3 - 5 of this act, is due January 31, 2001, must cover the period of September 1, 2000, through December 31, 2000, and must be filed by a fish processor whose business sold more than 1,000,000 pounds of salmon products at first wholesale during the 12-month period ending August 31, 2000. Senator Leman moved for adoption and explained that the implementation of the program would be delayed by one reporting period so the department would have an opportunity to set up a database. He spoke with interested parties and found concurrence from all sides of the issue. Representative Austerman approved of the amendment saying the delay is better for both the processors and the department. There was no objection and the amendment was ADOPTED. Senator Wilken asked if the portion of the report protected as confidential is the final average wholesale price report recipient. Mr. Freid corrected that the identification of a specific processor, the wholesale price and the total pounds of salmon should not be identifiable. He stated that only the summary of all information is published. Senator Leman relayed a suggestion he made when the bill was heard in the Senate Labor and Commerce Committee that electronic filing would be more efficient and cost- effective. He noted that while the initial set-up cost would be higher, the long-term costs would be lower for both the department and the processors. Senator Leman offered a motion to report from Committee, SCS CS HB 363 (L&C) as amended with $38,400 fiscal note from the Department of Revenue. The bill was MOVED from Committee. ADJOURNED Senator Torgerson adjourned the meeting at 9:15 PM. SFC-00 (1) 04/14/00