MINUTES  SENATE FINANCE COMMITTEE  9 March, 1998  4:45 p.m.    TAPES  SFC 98 # 71, Side A (000-558) CALL TO ORDER  Senator Drue Pearce, Co-Chair, reconvened the meeting at approximately 4:45 p.m. PRESENT  In addition to Co-Chair Pearce, Senators Sharp, Donley, Torgerson, Adams, Parnell and Phillips were present when the meeting was convened. Also Attending: Senator GARY WILKEN; DAN SPENCER, Office of Management and Budget, Office of the Governor; KEVIN BROOKS, Director, Division of Administrative Services, Department of Fish and Game; MARY PETE, Director, Division of Subsistence, DF&G; WAYNE REGELIN, Director, Division of Wildlife Conservation, DF&G; DWIGHT PERKINS, Special Assistant, Office of the Commissioner, Department of Labor; DAN KANOUSE, Budget Analyst, Division of Employment Security, DOL; JAMES COATE, Program Coordinator, DES, DOL; NICO BUS, Administrative Services Manager, Division of Support Services, Department of Natural Resources and Department of Military and Veterans Affairs; Colonel GARY PETERSON, Director, Alaska National Guard Youth Corps, DM&VA; SHARON BURTON, Director, Division of Administrative Services, Department of Administration; KEITH GERKEN, Architect, Facilities Section, Division of General Services, DOA; MIKE GREANY, Director, Division of Legislative Finance; DAVE TONKOVICH and SUSAN TAYLOR, Fiscal Analysts, DLF; and aides to committee members and other members of the Legislature. via Teleconference: from Anchorage: BARBARA MIKLOS, Director, Division of Child Support Enforcement, Department of Revenue.       SUMMARY INFORMATION  SENATE BILL NO. 292 "An Act making supplemental appropriations; making, amending, and repealing capital or other appropriations; making appropriations to capitalize funds; and providing for an effective date." (Companion Legislation:) CS FOR HOUSE BILL NO. 461(FIN) "An Act making supplemental and special appropriations and amending appropriations; and providing for an effective date." The committee continued hearing department presentations from the morning meeting, with the intention of completing the items in Section One of SB 292 and Section J of HB 461. KEVIN BROOKS was invited to the table to speak to the SUBSISTENCE SPECIAL PROJECTS request (Section 1-G.) He told the committee the department was requesting $120.6 in federal receipts that was originally listed as a Legislative Budget and Audit Committee request. That was consistent with Legislative intent that the department work with the subcommittee chair last session to bring those types of requests before the LB&A committee. He said that because LB&A was not meeting during the session, the request was included in the supplemental bill. This request was comprised of five small projects, according to Mr. Brooks. The anticipated completion dates of the projects ranged from as early as this April to June, with all needing to be completed by September. He said three projects would cross the fiscal year cutoff. The department included in this year's budget request, receipts needed to accommodate the portions that would occur in FY99. Because of this, he stressed there was a time-sensitivity for these projects. Co-Chair Sharp said it was his understanding that the money would come, not from federal fish and game funds, but from the National Park Service to do studies for that agency on the traditional use of game in some of the Game Management Units. Mr. Brooks responded that there were a couple sources of funding coming from the NPS, US Forest Service and the US Fish and Wildlife Service, but none of these were the federal aid dollars typically talked about with regard to the Sport Fish and Wildlife Conservation divisions. This concluded discussion on the subsistence projects. At the request of DAN SPENCER, the committee jumped ahead to address SITKA HERRING ROE KELP FISHERY. This item was listed in Section 1-M in the house bill and Section 8-B in the Governor's original bill. Mr. Brooks said the project in question here was $463,800 Test Fish Receipts for a herring fishery in Sitka. The department brought that item before LB&A committee where there was general agreement that the project should go forward. However, the committee decided that they did not have the authority to act on test fish receipts given the limitations in the front section of the Operating Bill for FY98. It was therefore agreed, he said, to bring this item forth in the supplemental bill. Mr. Brooks stated that this project had a time-sensitivity, as well as the other ADF&G request. The department had told the LB&A committee they had test fish receipts on the books for other projects that could be used to get started on this project. However, doing so would jeopardize the other projects since all the money has been allocated. With that knowledge, the department went ahead and started the bidding process since this fishery would occur in April. That was the reason they were asking for consideration of this funding in the fast-track bill. There were no questions and the ADF&G requests were completed. The committee moved ahead to Department of Military and Veterans Affairs request for funding of the ALASKA NATIONAL GUARD YOUTH CORPS CHALLENGE PROGRAM. NICO BUS introduced himself and Colonel GARY PETERSON who were both before the committee to speak to this request. Mr. Bus explained the $608,000 request for the Youth Corps was to basically finish operations for federal FY98. He said the FY98 Governor's budget included $3 million federal funds. For federal fiscal year 1998, the youth corps funding was $2.1 million. To continue the program and start the next class of 80 students would require $608,000 General Funds to carry through June 30, according to Mr. Bus. For operations after that date, the department and Legislature would have to address funding for the remainder of that class. The classes run from March through September and another class starts in September and ends in February. Mr. Bus reminded the committee that the youth corps program had been a pilot program for three years and was then converted into a regular program. Senator Adams requested the "cost per student" - how much this was costing per student for the at-risk youths. Mr. Bus replied the cost per graduate amount, which he emphasized was calculated in that manner rather than figuring the cost for each enrolled participant, was about $21,750. Senator Phillips wanted a breakdown of that figure including the $2000 stipend. Mr. Bus responded that the basic cost of the program was for the 24-hour residential facility, including salaries of the instructors and staff, the lodging and meals for all the students and at the time of graduation, the award to students of a $2000 stipend. This stipend was paid out over a yearlong period with the student required to prove they still met set criteria on a quarterly basis. Co-Chair Pearce asked when the next class was scheduled to begin. Mr. Bus replied they hoped to start the next class March 18, which was next week. How many students, Co-Chair Pearce also wanted to know. Mr. Bus said that would be contingent upon funding, but they were shooting for 80 graduates. That would mean enrolling more than 80 students, with the hope of having 80 making it to graduation. No other questions were asked on the subject of the youth corps. The committee moved to the next item in the supplemental request, DEPARTMENT OF ADMINISTRATION - LEASES, listed under Section 1-K in the Governor's bill, Section 1-I in the House Bill. SHARON BARTON spoke to this request. She said when the FY98 budget was passed, the department projected the leasing budget would be short approximately $1.7 million. The net effect of activities since that time resulted in a total request somewhat less, of $1.413 million, she explained. This bill included $1.29 million in this section, and $383,600, which was in Section Two. Because there would be a cash flow problem with the normal schedule for the supplemental bill, the department asked that the $1.29 million be included with any fast-track efforts, she summarized. Senator Phillips relayed a question he earlier asked of Dugan Petty, Director of the General Services division. Mr. Petty was unable to attend the meeting but Ms. Burton assured that KEITH GERKEN was present to answer any questions. The senator said he had wanted information regarding air conditioning and heating within the recently purchased Bank of America building in Anchorage. He had concerns that the system would not be adequate to accommodate planned future growth for use of the building. Mr. Gerken responded that he didn't have any information from Mr. Petty on that matter, but he would follow up and get back to the senator. Senator Phillips asked if this issue was part of the request listed in this section of the supplemental. Mr. Gerken told him it was not. Senator Adams wanted to know the reason for the split request for this funding. Ms. Burton told him it was the department's proposal to fund as much of the supplemental needs from the surplus in the Longevity Bonus Grant Program. They projected they had a million dollars surplus in that program. So after they funded the OPA and proposed fund from that $1 million, there was $383,600 left that could go to the leasing supplemental, she explained. When the department requested the fast track, OMB asked if the $383,600 could be left in the regular supplemental. The department decided that would be adequate and not disrupt cash flow. If the $1.3 million could be fast-tracked, the cash-flow problem would be alleviated. Senator Donley said he was still not satisfied that this agency had done all it could to reduce costs. Therefore, he would not support additional money for them at this point. He stressed that he thought the Legislature had sent a very clear message to them last year on this subject. He felt this was making an already badly skewed system even worse. This concluded discussion on the lease payment topic. Mr. Gerken requested the committee take up the supplemental request in Section 1-H. Co-Chair Pearce told him her intent was to first hear from the Department of Revenue on CSED - grants for child support enforcement purposes in Section 12- C-7. However, the teleconference hook-up was lost and the committee was unable to hear testimony from Anchorage on this topic. Co-Chair Pearce decided to then proceed with the Department of Labor, Section 1-H in the Governor's bill that did not appear in the House Bill version. This request was for ALASKA DISASTER ASSISTANCE PROGRAM - BRISTOL BAY ECONOMIC DISASTER. DWIGHT PERKINS introduced himself, DAN KANOUSE and JAMES COATE, who were available to answer any questions. Mr. Perkins spoke to the request for $3 million appropriated from the General Fund for programs to mitigate the impact of the Bristol Bay Economic Disaster for the fiscal year ending June 30, 1998. He informed the committee of enabling legislation in SB 333 to implement these programs. Currently, the department did not have statutory authority to disperse this money to the recipients, he explained. Senator Phillips relayed questions he had received from constituents. During 1986, 1988 and 1989, there was an economic disaster in the Anchorage area, where his constituents did not receive any relief. Why is this current request so special versus the crash in oil prices, which resulted in the decrease in home valuations, loss of jobs and tens of thousands of people leaving Anchorage, he asked? He wanted to know how this was different from that economic disaster. Mr. Perkins responded saying he did not have a good answer for what he was asking. He conceded that things were certainly tough during the times the senator was referring. This current request would have an impact on people who are in serious financial woes. This money would not give large sums to individuals, but would help those in need. He could not tell the committee why there was no relief in 1985 for the Anchorage constituents. Senator Phillips clarified his question, asking why there was a departure from previous Administration's policies to not grant the relief. He spoke of the deep economic recession during the late 1980's and wondered how this situation was different from then. Mr. Perkins said he appreciated that observation, but countered that Governor Knowles was currently in office and he felt there was a need and wanted to try to help those individuals. With the Legislature's help it could be done, Mr. Perkins stressed. Senator Donley shared Senator Phillips concerns and felt that was an important question the Governor should address. He compared this proposal to others the Governor offered and stated that usually the Governor dropped those proposals on the table and failed to do any of the necessary follow-up work needed to garner support. He wanted to hear an answer to that question. He went on, referring to the morning's meeting where, in his opinion, some of this relief was miss- characterized as unemployment insurance. As someone who had worked with the DOL, Mr. Perkins should recognize that these programs were not unemployment insurance payments, but disaster relief payments. The senator felt it was doing a disservice to the Unemployment Insurance Program. He asked how the department was characterizing the relief payments that were to be made to individuals. Mr. Perkins responded, pointing out that SB 333 talked about the Alaska Disaster Assistance Program. The legislation would provide a cash benefit to individuals who had suffered a loss to primary income due to the economic disaster in the fishing industry. Senator Donley wanted to know which organization would decide who got how much money and why. Mr. Perkins said it was all spelled out in SB 333 and that Mr. Coat could give more detail, if the committee wanted. Senator Donley observed that the money was clearly linked to that program and that he would have to know a lot more about that program before he could support handing out the cash. He stressed that he would need to know what safeguards were in place and how it would be administered and protected from abuses. Mr. Perkins replied that he would be happy to make an appointment with him to go into the details of SB 333. Senator Torgerson surmised that this supplemental request was not properly before the committee if there was no authorization to spend the money to begin with. Therefore, there was no need to discuss the issue. Senator Adams stated that the Legislature has the power to appropriate and that was what they were doing with this piece of legislation. He added that he thought this program was a worthy cause. He suggested that if current committee members were in the Legislature in 1985, they could have offered similar assistance during the oil prices crisis. Also, if the current Governor had been in office, he could have done the same. Senator Adams counseled against bringing the issue up now just because the lawmakers at that time didn't take action. He assigned part of the blame to the Legislators for not putting the funds into the supplemental. This concluded discussion on the disaster relief matter. Co-Chair Pearce directed the committee's attention to Section 1-J, which was Section 12-C-7 in the Governor's bill, GRANTS FOR CHILD SUPPORT ENFORCEMENT PURPOSES. BARBARA MIKLOS was linked to the meeting via teleconference from Anchorage. She explained the reason this request was added to the supplemental because there were three federal grants the division was awarded last October. One of those grants was 100% federally funded. The division sent the request to the Legislative Budget and Audit Committee where it was approved. However, the other two grants required five-percent state match and were added to the fast-track supplemental because of the federal requirement to begin implementing the programs, she said. Ms. Miklos told the committee how one of those grants was to fund childcare agencies and Headstart programs to work with non-custodial parents and coordinate activities. The intent was to work with the parents as much as possible to enable them to make the child support payments as opposed to maintaining an adversarial relationship. The larger of the two grants would enable the division to modify more quickly the child support orders, according to Ms. Miklos. One of the major concerns she heard when she talked to people, whether Legislators or the public, was the length of time it took the agency to modify child support orders when income had changed. This often meant that the income of the obligor had gone down, sometimes it meant that the income had gone up, she explained. This federal grant would enable the division to be more efficient and try innovative ways to make that process faster. She summarized what the CSCD was asking for was the authority to receive the federal money for these two grants and provide the five-percent state-funded match. Mr. Spencer joined the discussion telling the committee of two changes to the language in the original bill to how it appeared in HB 461. He explained the first change was to correct a drafting error. The original bill stated the appropriation was for a grant, when in fact the grants had been received, so the request was for regular program purposes as Ms. Miklos just explained. The second reflected a change to the original language that showed a lapse date of June 30, 1998, instead of the correct four-year state fiscal years the grants cover. The lapse date was then extended in the house bill version to June 30, 2001, he said. Senator Torgerson referred to the Review and Adjustment System Demonstration Project and said he had been trying for years to get the CSCD to automatically modify support orders. The problem he always ran into the situation where it was required to go back before the judge who issued the original order. How is this going to affect court orders that the division was under and allow them to be changed, he asked. Ms. Miklos responded that they were under two kinds of orders, one being administrative orders which didn't require them to go back before the judge and could be done automatically. This is what the system was designed to do, she said. In the case of court orders, the CSCD still determined the amount, gathering income information and they make the adjustments. The faster the division could get that information and submit it to the courts, the quicker the court order could be modified, Ms. Miklos explained. She said they still play a part in the court orders and this program would help expedite that piece. Senator Torgerson didn't see how that would help. He wanted to know if the division was hiring new people, buying a new computer or what they were doing to help the situation. Ms. Miklos replied that the grant included additional staff and also some resources to help them program the computer and to change the way they operated through the computer system. They would be able to match with data from various agencies so it could be done automatically, she added. Senator Torgerson asked if Ms. Miklos anticipated this being an on-going appropriation after the grant ran out. She said no, unless the department received another federal grant. By the time the current grant ended, she expected the system would be implemented. Senator Torgerson requested a copy of the actual grant. Ms. Miklos said she had a copy of the award pages. Senator Torgerson also had that, but said it didn't tell him anything. She agreed. He found some words in the award pages pretty scary because it said. "...by spending any money under this grant constitutes the acceptance of following the contents of this grant." He didn't know what that was. He felt this might be well and good, but didn't see how it would operate and save any time or make things faster. Ms. Miklos responded, surmising that the language said two things. One, if the state started spending under the grant, it meant that they accepted it, which they hadn't begun yet since they were still waiting for approval from the Legislature. Secondly, the whole purpose of the grant was to make things faster so they would be more automated allowing the division to match the data with the data that comes in. Co-Chair Pearce recalled a federal requirement that said the division had to have a system. Was this part of that system, she wondered. No, replied Ms. Miklos, the federal law included some options in terms of how they modified. This would help CSCD explore the best option for Alaska, but was not part of the computer requirements. Co-Chair Pearce requested further information about the actual grant. Ms. Miklos said she could provide the grant application from which the award was made. Co-Chair Pearce asked Senator Torgerson if that would be sufficient to answer his questions. He said he hoped so. His point was that the Legislature had been constantly asking for automatic or modified orders and hadn't got there. Now they were being told that if they appropriate $1.3 million all the problems would be fixed. He didn't see that, there was nothing there to substantiate that, he felt. He realized it was mostly federal money, but said he wouldn't be in favor of approving the request until he knew what they were doing. Ms. Miklos said she would be glad to get the committee the materials she had and if there were any additional things they needed, she would get them also. Co-Chair Pearce said she would like that as soon as possible. It was her understanding that the house bill would be on the floor of the House of Representatives soon and when it came to the Senate Finance Committee; they would be taking action very quickly. Senator Donley wanted to know if this proposed computer equipment might help deal with a problem he had identified in some of his legislation. This concerned fixing the court system to help parents who were not receiving their due child support by helping them with their income tax deductions that were being used to support themselves or the children. Ms. Miklos responded that these grants didn't speak to that issue so she didn't know if it would be able to help with that need. She thought there were other ways they could help. Senator Donley requested information showing the perimeters which this money would be used. Ms. Miklos said she would be glad to get that to him. This concluded discussion on the grants for CSCD. Co-Chair Pearce requested additional information from Mr. Spencer on a different item, Section 1-D of the Governor's bill. This was Section 1-C of the house bill, MATERNAL CHILD AND FAMILY HEALTH CARE SPECIALTY CLINICS that requested $100,000. She voiced confusion as to why it was included in the supplemental request and particularly in the fast-track supplemental request, because she understood the Legislature had funded a set number of clinics and this request added additional clinics. The budget request for FY99 went back to the original 50 clinics. She said she wanted to know why and also how many children would benefit from the additional $100,000. The committee took up an item in Section 8-C of SB 292 at the request of Senator Sharp. This was a request for a change of funding source from federal fish and game funds, to state fish and game funds. Senator Sharp thought the department was close to going to bid on this project and that was why it was included in the supplemental. WAYNE REGELIN was invited to come to the committee to speak to this item. He explained that when this projects was originally funded for $2 million the department set up the funding to be split 50/50 between ADF&G funds and federal aid receipts. Since doing that, he had learned of restrictions in the federal aid account on how much money could be spend on hunter education activities. Mr. Regelin said there were plenty of funds in the federal aid account, but only a small amount of those could be used for hunter education like building rifle ranges. ADF&G had adequate state fish and game funds to make this switch, so they asked the Legislature to change the match from 50/50 to 75% ADF&G funds and 25% federal aid dollars. Then they could move forward with the project, which was ready to go to bid now. Co-Chair Pearce asked for clarification that the fish and game account had sufficient funds for this project. Mr. Regelin assured her that they had adequate reserves in that fund. Senator Sharp said he had no questions or comments, but wanted to make sure to get the department's testimony on the record so the committee could try to accommodate the request later. In deciding which item to next address, Co-Chair Pearce noted Senator Adams' interest in the TCA funds. She pointed out that was surrounded by some even larger policy issues since the fund was going to be depleted soon. There was a hazardous waste cleanup included in Section 4, but the area of particular interest to Senator Adams was the KASILOF HATCHERY included in Section 8-A in the Governor's supplemental funding bill. Co-Chair Pearce said the committee was quite aware of the TCA problem. Senator Adams explained this request. He told the committee how ADF&G leased a portion of Native allotment land from a resident called Theodore Booth. For the last two years the Legislature had not funded the hatchery so the hatchery portion was disposed from the request. All that was left in the request was for the hazardous waste clean up of $56,800. Mr. Spencer added that to his understanding, the state would continue to lease the land until it was finished cleaning it up. Senator Adams pointed out that the cleanup was done. Co-Chair Pearce asked for clarification that this request was to cover the cost of the lease payments even though the funds had already been allocated for the cleanup. This request was to recover the lease payments for the owner. Senator Adams said he had the funding listed as waste cleanup. Mr. Spencer said that while the state was working on the cleanup, the landowner was losing lease income. This was to make up for the landowner's loss. Co-Chair Pearce asked if there was any sort of legal opinion saying if the state was liable for these costs. Both Mr. Spencer and Senator Adams said they did not know it there were any. Co-Chair Pearce directed Mr. Spencer to look into that. Co-Chair Pearce asked committee members if they had any other areas they would like to address at this meeting. There were none and the co-chair ORDERED SB 292 HELD until HB 461 was received in committee. The house bill would be the vehicle for the Governor's budget supplemental. She anticipated this would happen soon. Mr. Spencer added a preview of what was to come. He told the committee the supplemental would be updated to reflect judgements and any miscellaneous claims that may come in after today. He noted that OMB had already received three or four RPL-type items, which would also be submitted to the committee. He expected his office would have an amendment would be out this week. The committee took a five-minute at ease at 5:30pm and came back to address SB36.