COMMISSION ON PRIVATIZATION DELIVERY OF GOVERNMENT SERVICES Anchorage, Alaska August 16, 1999 9:20 a.m. COMMISSION MEMBERS PRESENT Representative Cowdery, Co-Chair Senator Ward, Co-Chair Representative Brice - via teleconference Bill Allen, Former Mayor of Fairbanks - via teleconference Tom Fink, Former Mayor of Anchorage Kathryn Thomas, Former Chair of Alaska State Chamber of Commerce George Weurch, Alaska Municipal League Don Valesko, Business Manger of Public Employees Local 71 COMMISSION MEMBERS ABSENT Senator Al Adams William Prosser, Chairman of the Board - Cook Inlet Region, Inc. Helvi Sandvik, President - NANA Development Corporation COMMISSION CALENDAR Privatization of State Government Services PREVIOUS ACTION See Commission on Privatization and Delivery of Government Services minutes dated 7/20/99. ACTION NARRATIVE TAPE 99-3, SIDE A CO-CHAIR WARD called the Commission on Privatization and Delivery of Government Services meeting to order at 9:20 a.m. Members present at the call to order were Co-chairs Ward and Cowdery, Representative Brice (via teleconference), and Commissioners Allen (via teleconference), Fink, Weurch, Thomas, and Valesko. Commissioners Prosser and Sandvik and Senator Adams were not present. Co-Chair Ward thanked everyone present for attending and informed participants that Commissioner Sandvik was absent due to a death in her family. Co-Chair Ward announced the intent of today's meeting is to bring together the subcommittee chairpersons and the corresponding representatives from the Administration to facilitate a dialog about the best way to proceed with the commission's work. The subcommittee chairs of the Commission on Privatization and Delivery of Government Services made the following introductory remarks. DAVID MORRISON, Chairperson of the Subcommittee on the Department of Corrections (DOC), stated he worked in the Canadian Ministry of Justice for 25 years on corrections matters. He is a seven year resident of Alaska and currently works for Cornell Corrections, a private company. CRAIG JOHNSON, Chairperson of the Subcommittee on the Department of Community and Economic Development (DCED), informed participants he is the general manager and publisher of the Alaska Journal of Commerce, as well as other publications. He was previously employed as a legislative assistant. VIRGIL NORTON, a former contractor and an experienced environmental cleanup project manager, stated he is chairing the Subcommittee on the Department of Environmental Conservation (DEC). WAYNE ROSS, an attorney, stated he is chairing the Subcommittee on the Office of the Governor. MEAD TREADWELL, Chairperson of the Subcommittee on the Department of Fish and Game (ADFG), stated he was a deputy commissioner of the Department of Environmental Conservation, and is currently the Vice-Chair of the Prince William Sound Oil Spill Recovery Institute which conducts ecological research related to fisheries management. JOSEPH HENRI, Chairperson of the Subcommittee on the Department of Administration (DOA), stated he is a member of the Alaska Bar Association and has practiced law in Alaska for about 35 years. He was the Commissioner of the Department of Administration during former Governor Bill Egan's third term. KEN PEAVYHOUSE, Chairperson of the Subcommittee on the Alaska Court System, stated he has retired from the insurance business and has been an Alaska resident for 40 years. LEO MARK ANTHONY informed participants he is a retired University of Alaska School of Mines [indisc.] prospector and is the Chair of the Subcommittee on the Department of Natural Resources (DNR). Several subcommittees will review DNR because of the size of its budget. DNR has already given an overview of its missions to the subcommittees however, the subcommittees have requested more information. He maintained that if the subcommittees are unable to get that information, the legislature should request it and every few years review and revise DNR's budget so that, "We know some way where we stand on costs." MARYANN PEASE, Chairperson of the Subcommittee on the Department of Revenue (DOR), stated she was formerly employed by the Municipality of Anchorage as the director of the Office of Management and Budget and, while in that position, she looked into privatization of many of the functions associated with the municipality. She is currently the Vice President of Aurora Power, a natural gas marketing entity. CO-CHAIR WARD asked subcommittee chairpersons to join commission members at the table. He asked representatives from the Administration to provide commission members with department mission statements during their presentations. COMMISSIONER BILL ALLEN interjected and asked for clarification of Mr. Mark Anthony's statement that DNR has been split into subcommittees. MR. MARK ANTHONY explained that DNR has been split along budget lines into ten or eleven parts. Each subcommittee member will review one part of the budget. COMMISSIONER ALLEN asked if anyone else spoke as a Chairperson of the Subcommittee on DNR. CO-CHAIR WARD replied that Dale Urich is a Chairperson of the Forestry Subcommittee. Co-Chair Ward announced it is the prerogative of each subcommittee's chair to break the subcommittee down further. CO-CHAIR WARD took testimony from members of the Administration. PAT POURCHOT, Office of the Governor, informed commission members that he is filling in for Mike Abbott, who has been working with Co-Chair Ward's staff. He noted it was his understanding that the purpose of today's meeting was to hear from subcommittee chairs, not for the departments to make presentations. He stated some of the department representatives have given information to the individual subcommittees, but some have not, depending on the meeting schedules of the subcommittees. He noted that representatives of DOC, the Department of Public Safety (DPS), the Department of Law (DOL), DNR and DEC were present to answer questions. He stated a bill before the legislature contains formalized mission statements that might be of interest to the commission. He noted each department representative will share a mission statement with the commission. CO-CHAIR WARD agreed the purpose of the meeting is not to listen to formal presentations by Administration representatives and noted the purpose of the meeting is to make sure the commission is on the right track. He recalled that the mission statements from each department were introduced in a separate bill in the legislature because those mission statements were removed from the operating budget. He indicated staff will provide a copy of that legislation to the subcommittee chairs. CO-CHAIR COWDERY mentioned that he only has two staff people employed during the interim taking care of all of his work, including that of the commission. He said the large number of subcommittees prevents his staff from doing anything but the most necessary work for each. He asked each department representative to provide subcommittee chairs with mission statements. CO-CHAIR WARD asked the department liaisons to introduce themselves to commission members. The following representatives of the Administration introduced themselves: DEL SMITH, Deputy Commissioner of the Department of Public Safety. MARTY RUTHERFORD, Deputy Commissioner, Department of Natural Resources. BRUCE RICHARDS, Special Assistant, Department of Corrections. DOUG WOOLIVER, Administrative Attorney, Alaska Court System. JOAN KASSON, Special Assistant, Department of Law. DAVID WIGGLESWORTH, Department of Environmental Conservation. GREG WOLF, Director of Trade and Development, Department of Community and Economic Development. MARY MCDOWELL, Commercial Fisheries Entry Commission. KURT PARKAN, Deputy Commissioner, Department of Transportation and Public Facilities. ALISON ELGEE, Deputy Commissioner, Department of Administration. DWIGHT PERKINS, Deputy Commissioner, Department of Labor. MIKE CONWAY, Director of the Division of Statewide Public Services, Department of Environmental Conservation. KAREN REHFELD, Department of Education and Early Development. JANET CLARK and ELMER LINDSTROM, Department of Health and Social Services. GERON BRUCE, Special Assistant, Department of Fish and Game. [PORTION OF TAPE INAUDIBLE DUE TO TELECONFERENCE EQUIPMENT MALFUNCTION.] CO-CHAIR WARD acknowledged that the legislature received overall mission statements from each department but none for agencies such as the Alaska Public Offices Commission. He asked what agency level the mission statements should be requested for. AN UNIDENTIFIED COMMISSIONER replied the commission should have mission statements for all major components of each department so that the subcommittees can do a cost benefit analysis. REPRESENTATIVE BRICE pointed out that the House version of SB 169 contained mission statements for divisions. CO-CHAIR WARD noted that copies of SB 169 would be distributed to participants shortly. MIKE TAURIANAN joined the meeting and informed commission members he is the interim Chair of the Department of Health and Social Services (DHSS) subcommittee. He noted he was promised information which he has not yet received. MARY ANN PEASE asked Co-Chair Ward if a liaison from the Department of Revenue was on line. CO-CHAIR WARD said no representative from the Department of Revenue was on line but that Pat Pourchot would be coordinating contacts. CO-CHAIR WARD asked subcommittee chairs to inform participants of their activities so far. VIRGIL NORTON stated that the Subcommittee on DEC has met twice and has a third meeting scheduled on August 18. Dave Wigglesworth represented DEC at the first meeting, which was primarily an organizational meeting. At the second meeting, the subcommittee was briefed by Larry Dietrick and Jim Hayden on contaminated sites and storage tanks. The subcommittee received a lot of information on those topics and will be briefed on the Village Safe Water Program on Wednesday. LEO MARK ANTHONY indicated that the Subcommittee on DNR has met once and subdivided itself along budget lines. They have heard from DNR regarding its mission, and the subcommittee has requested more information. The subcommittee will meet again this evening. COMMISSIONER KATHERINE THOMAS said she sat in on the DNR subcommittee meeting. She asked if DNR has transmitted the requested information to the subcommittee. MR. MARK ANTHONY replied it has, and that copies will be made available to subcommittee members at the evening meeting. JOE HENRI informed participants that the Subcommittee on DOA has met once. DOA now has 1,300 employees and is one of the largest departments; its mission is endless. Subcommittee members have 2+ months in which to recommend to the legislature ways to save money. He plans to zero in on a few services that DOA provides, rather than to canvas everything DOA does. CO-CHAIR WARD said he is in total agreement with that approach and, in his opinion, the direction the subcommittees take should be up to the chairpersons. COMMISSIONER THOMAS stated that because privatization has been a priority with the Alaska State Chamber of Commerce for so many years, she feels an awesome responsibility to this commission. When in Anchorage, she sat in on several subcommittee meetings. Some of the subcommittees have focussed on the directives in the Senate bill (SB 33), others have not. She felt the subcommittees should review and formulate their work around Section 5 of SB 33. TAPE 99-3, SIDE B MARYANN PEASE informed participants that within the last year Commonwealth North did a return on assets study. Each division of the state was studied in detail and interviews with department staff were conducted. Part of that study pertained to the appropriateness of services being performed by specific departments. She suggested that copies of that report be made available to the subcommittee chairs. CO-CHAIR WARD noted that study has been distributed to the commissioners and he will make sure it is distributed to all members of the subcommittees. COMMISSIONER VALESKO expressed serious concern, as a member of the commission, that subcommittee chairs have been given the authority to pick and choose which areas to look into. His concern reaches back to the method of selecting the chairs which required no consensus among commission members. He noted that he asked, at the last meeting, how the chairs were selected for the various subcommittees and was told that the first person who volunteered to be a chairperson was selected to do so. After that meeting, he returned to his office and asked a staff person to volunteer to be on a subcommittee on the Department of Military and Veterans Affairs (DMVA). She called and offered to act as the chairperson but was told that DMVA was not under review for privatization. He repeated his concern that the Commissioners have not decided, as a group, on a selection method. He expressed further concern that the Chair of the Subcommittee on the Department of Corrections is affiliated with Cornell Corrections which may constitute a very serious conflict of interest because Cornell has already entered into a privatization agreement with the Delta prison. He said he feels his integrity is on the line because the lack of a selection process for subcommittee chairs by commission members jades the whole process. CO-CHAIR WARD explained that he and Co-Chair Cowdery met and decided to begin a massive volunteer effort to get the public involved. They instructed staff to appoint the first people who volunteered to be chairs of subcommittees as such, and, if no one volunteered, to call subcommittee members and ask for a volunteer. He asked Commissioner Valesko for further information about the woman who volunteered to act as the chair of the DMVA Subcommittee. MARCO PIGNALBERI, Legislative Assistant to Co-Chair Cowdery, Alaska State Legislature, explained that he made the decision to not review every department because of the commission's limited time and resources and he then arbitrarily selected which departments would be reviewed. After speaking about the issue with the Co- Chairs, they decided every department should be reviewed. He said he appointed the woman who called to volunteer (Valerie Bafone) to chair the Subcommittee on the Department of Labor, one of three available subcommittees. CO-CHAIR WARD maintained that every participant has a conflict of interest because all participants are touched by state government. He said, as a real estate agent, he cares about the Alaska Housing Finance Corporation. He noted the possibility of keeping certain professionals off of certain subcommittees was discussed, however, it was decided all participants needed to be considered as Alaskans first. He added that is why positions were left open and as many volunteers as possible have been recruited. COMMISSIONER THOMAS commented that confirmation of subcommittee chairs was an agenda item at the last meeting, however official action was not taken and she believes that they were accepted by an unspoken consensus. She noted that at that time she suggested that the subcommittee members choose their own chairpersons for two reasons: the members would tend to find the strongest among themselves, and the subcommittees are operating without staff or financial help and might need a chair who has staff available to help do the work. COMMISSIONER FINK remarked that because time is of the essence, the commission needs to move forward, and if the commission is not satisfied with the work of a subcommittee, it does not need to support its report. He offered to make a motion to support the subcommittee chairpersons who have been appointed. Regarding Mr. Henri's request to limit the areas that his subcommittee reviews, Commissioner Fink said he thinks all subcommittees need to take that approach. He noted many subcommittee members have ideas about ways to privatize which should be discussed first because the subcommittees will not have time to review every budget item. He indicated that the final report should zero in on about six areas and then list others for future review. COMMISSIONER ALLEN seconded Commissioner Fink's motion and said he agrees with Commissioner Fink's comment, and that there is no way that a conflict of interest can be avoided if Alaskans are asked to come forward and volunteer in their areas of expertise. Second, he believes problems within the subcommittees will surface and the Commissioners can take appropriate action at that time. He asked participants to not get bogged down on this issue because so much work needs to be done. COMMISSIONER WUERCH spoke in favor of the motion because Section 2 of SB 33 provides that the commission appoint people to assist and advise it. CO-CHAIR WARD stated that the motion is to approve the subcommittee chairperson and membership appointments that exist as of today. He noted two other participants wanted to speak to the motion. AN UNIDENTIFIED COMMISSIONER asserted that he understood the motion to allow the Chair of the commission the authority to appoint the subcommittee chairpersons. COMMISSIONER FINK clarified that he moved that the commission approve the actions the Co-Chairs have taken. AN UNIDENTIFIED SPEAKER asked how future appointments should be handled. COMMISSIONER FINK said he would make another motion at a later date, after other people have been appointed. AN UNIDENTIFIED COMMISSIONER spoke against the motion because what precipitated it was the discussion about giving the subcommittee chairpersons the authority to pick and choose what parts of each department budget the subcommittee will look into. He expressed concern that the commission is deciding to do a partial, rather than a thorough, job of looking at state government. CO-CHAIR WARD replied that he does not believe that the Chairperson of the Subcommittee on the Department of Administration was saying that his subcommittee would not do a thorough job. MR. NORTON stated his support of Commissioner Fink's motion. AN UNIDENTIFIED COMMISSIONER called for a point of order and noted that only the Commissioners should speak to the motion. CO-CHAIR WARD called for the question and clarified the motion as: the commission's acceptance of the Chairpersons and members of all subcommittees and committees in existence at this time and that appointment of future vacancies be dealt with in the same manner. COMMISSIONER BRICE asked if the motion is to establish the current Chairpersons of Subcommittees as those who have been appointed to date. CO-CHAIR WARD said that is correct. COMMISSIONER BRICE asked if he can be involved in any committee he is interested in as a Commissioner. CO-CHAIR WARD said that is correct and that all Commissioners are encouraged to sit in on all meetings. CO-CHAIR WARD asked if there was any objection to the motion. COMMISSIONER VALESKO objected. CO-CHAIR WARD asked Commissioner Valesko if he wanted the motion rescinded so that a roll call vote could be taken. COMMISSIONER VALESKO said he did not. CO-CHAIR WARD remarked that Commissioner Valesko's concern is well noted and valid. MR. NORTON asked Commissioner Valesko whether he objects to the subcommittee chairpersons or the members. CO-CHAIR WARD explained that Commissioner Valesko's concern is with the selection process and that Chairman Henri plans to focus on a few areas of the Department of Administration's budget because that budget is so massive. COMMISSIONER VALESKO expressed concern that all division budgets be reviewed so that subcommittee members get a total picture. CO- CHAIR WARD said although that concern is valid, the commission's task is very large. MR. NORTON remarked the work of the commission will not end in October because the legislature will continue to look at ways to privatize beyond the commission's report. CO-CHAIR WARD agreed, but said the commission's final report will carry a lot of weight. AN UNIDENTIFIED SPEAKER thought a simple amendment to the report, saying that further work is needed and that commission members will follow up to see if their recommendations were followed, would solve the problem. COMMISSIONER ALLEN asked Mr. Norton if his subcommittee would be looking at the maintenance expense and the function of the systems when it reviews the Village Safe Water Program. MR. NORTON said they would and that he has already spoken with Greg Capito of DEC. He also plans to speak with Marla Berg of Senator Adams' office and anyone else involved with Village Safe Water contracts, and with Public Health Service officials. The subcommittee is trying to determine where the program stands today, after spending millions of dollars, and what the maintenance costs will be once all systems have been established. COMMISSIONER ALLEN asked Mr. Norton to add his name to the subcommittee list as he is very interested in that topic. He asked that the subcommittee explore all sources of revenue available to maintain those systems. MR. NORTON said he plans to do so, and that he plans to explore staff training to prevent systems from failing. CO-CHAIR WARD asked Mr. Pignalberi why minutes are not available from the last meeting. MR. PIGNALBERI explained that the tapes of the meeting were sent to Juneau for transcription and that they would be completed by the next meeting. CO-CHAIR WARD said he has been assured that minutes will be completed in a timely manner in the future. COMMISSIONER THOMAS expressed concern that some subcommittees have not scheduled meetings yet. MR. PIGNALBERI informed commission members that its website contains a schedule of all meetings and that some subcommittees have not yet met because the chairpersons have been unable to schedule time to meet with him for a preliminary briefing and because subcommittee members have had schedule conflicts. He noted that Mr. Taurianan came on board just last week and has been unable to arrange a meeting yet. COMMISSIONER THOMAS asked whether all subcommittees have scheduled a first meeting. MR. PIGNALBERI replied about four or five subcommittees have not yet scheduled a first meeting. CO-CHAIR WARD noted that he has talked to most of the chairpersons who were confused about what to do, therefore, today's meeting was scheduled to inform them of how to proceed. He anticipated that those subcommittees who have not met would be doing so within the next week and that schedules will be posted on the internet immediately when available. MR. PIGNALBERI informed commission members that the commission's website address is: "www.privatizealaska.org". CO-CHAIR WARD offered the Co-Chairs' office staff as another source of information for those without access to the website. CO-CHAIR WARD announced that the next agenda item is the consideration of state employee air travel mileage. MR. PIGNALBERI explained that several commission members have noted an interest in reviewing the possibility of creating one mileage account to collect mileage points for state employee travel; an issue that transcends any one department. He suggested that such issues be forwarded to the full commission for direction. He recommended that the airline mileage issue be taken up by the Subcommittee on the Office of the Governor. COMMISSIONER THOMAS suggested that the Subcommittee on the Office of the Governor comment on that issue but that it then be taken up by the full commission. AN UNIDENTIFIED COMMISSIONER said this issue has come before the legislature and is outside of the bounds of the commission. CO-CHAIR WARD said former Representative Terry Martin's bill on that subject included a provision to charter flights out of Anchorage which would have saved a lot of money. He recommended that the issue be taken up by the Subcommittee on the Office of the Governor who can advise the full commission. DEPUTY COMMISSIONER ALISON ELGEE, Department of Administration, informed commission members that DOA has studied the airline mileage issue at length. She suggested that the Subcommittee on DOA review it. COMMISSIONER THOMAS remarked that she was unsure whether the issue of airline mileage is within the purview of SB 33 and that it will be a time consuming issue to review. CO-CHAIR WARD contended that the Chair of the Subcommittee on DOA can decide whether to take it up. COMMISSIONER ALLEN agreed with Co-Chair Ward. COMMISSIONER FINK asked that any participant or member of the public who believes a particular government service should be privatized to talk to him about it. CO-CHAIR WARD asked that any suggestions be submitted to staff as well for distribution to all Commissioners. AN UNIDENTIFIED COMMISSIONER moved to add the Alaska Industrial Development and Export Authority (AIDEA) as one of the areas the subcommittees look into. CO-CHAIR WARD seconded the motion but said it is already with the Department of Community and Economic Development's budget. THE UNIDENTIFIED COMMISSIONER said he would also like to see the commission review the Alaska Science and Technology Fund, the Alaska Housing Finance Corporation, and the Alaska Permanent Fund Dividend Corporation. CO-CHAIR WARD pointed out those three agencies are housed within departments. He added that it is important that Commissioners be informed of subcommittee schedules so that those who want to can attend. Co-Chair Ward said that he and Co-Chair Cowdery decided to review all departments for that reason. AN UNIDENTIFIED COMMISSIONER commented that he attended the Subcommittee on DOT/PF meeting and was concerned that the Chairperson decided against reviewing the largest dollar parts of that budget: design and construction, planning, and rights-of way. He moved that the commission direct the DOT/PF Subcommittee to look into all facets of DOTPF's budget. COMMISSIONER BRICE seconded that motion. There being no objection, the motion carried. COMMISSIONER THOMAS requested that commission members receive the agenda prior to the meetings. She informed Co-Chair Ward that the State Chamber of Commerce will set up a fax network for all commission and subcommittee members by the end of the week. COMMISSIONER BRICE remarked the commission needs to look into how the teleconferencing system is set up because Fairbanks participants have been disconnected several times. CO-CHAIR WARD agreed to do so and notified participants that he was informed by the teleconference operators that today's problem have been caused by sun spots. COMMISSIONER WUERCH said he supports the approach to allow each subcommittee to choose which areas of the budget it will address but cautioned that the fact that a subcommittee opts not to address a topic should not mean that the topic should drop forever from the radar screen as a possibility for privatization. He believes it should be made clear to the legislature that the fact that an area was not included in the report does not mean it is not worth review. COMMISSIONER ALLEN brought up two items. Regarding Commissioner Fink's suggestion that ideas for privatization be directed to commission members, he thought the commission should publicize a "need to know." Second, he asked where the University of Alaska fits into privatization review. CO-CHAIR WARD replied the University of Alaska is a complete component. MR. PIGNALBERI added the University is doing an in-house study as a result of the passage of SB 33. The University will provide its study results to the commission after which subcommittee hearings will be held. CO-CHAIR WARD asked if every state government entity is under review by a subcommittee except for the University of Alaska. MR. PIGNALBERI said a University subcommittee is planned however its membership has not been appointed and no meetings have been scheduled as of yet. That subcommittee will meet after the University completes its report. CO-CHAIR WARD asked Commissioner Allen if he would like to serve on that subcommittee. COMMISSIONER ALLEN said not as the chairperson but that he is certainly interested in it. CO-CHAIR WARD asked Mr. Pignalberi to write a memo to all Commissioners informing them of the procedure established for review of the University of Alaska. MR. TAURIANAN asked Mr. Pignalberi to call him to discuss the Subcommittee on the Department of Health and Social Services. AN UNIDENTIFIED SPEAKER asked if the subcommittees are subject to the open meeting laws and whether subcommittees can conduct business without a quorum. MR. PIGNALBERI replied that, according to the Division of Legal Services, the subcommittees are comprised of volunteer citizens and therefore are not subject to the Open Meetings Act. Regarding a quorum, he stated that is a matter the commission could determine. CO-CHAIR WARD asked subcommittee chairs to come back to the commission with recommendations if they want the commission to make such decisions. MR. NORTON asked how elaborate the reports should be. He said he assumes they should contain brief recommendations with a short summary of how to facilitate the transfer of a service to the private sector. TAPE 99-4, SIDE A CO-CHAIR WARD stated that the documents will have to be created at the subcommittee level, however the commission could make changes to it. Co-Chair Ward said one advantage is that citizens do not have to jump through the same hoops as bureaucrats and politicians. He added the commission will have to filter the information out and then legislators will have to meet with the Department of Law to figure out how to implement the recommendations. There being no further discussion, CO-CHAIR WARD adjourned the meeting.