COMMISSION ON PRIVATIZATION AND DELIVERY OF GOVERNMENT SERVICES Anchorage, Alaska November 24, 1999 9:10 a.m. COMMISSION MEMBERS PRESENT Representative Cowdery, Co-Chair Senator Ward, Co-Chair Representative Brice (via teleconference) Senator Al Adams (via teleconference) Tom Fink, Former Mayor of Anchorage Emil Notti Mike Harper, President, Kuskokwim Corporation Kathryn Thomas, Former Chair of Alaska State Chamber of Commerce George Wuerch, Alaska Municipal League COMMISSION MEMBERS ABSENT Bill Allen, Former Mayor of Fairbanks Don Valesko, Business Manager of Public Employees Local 71 OTHER LEGISLATORS PRESENT Representative Fred Dyson COMMITTEE CALENDAR Reports from the following Privatization Subcommittees: Department of Education Department of Health, Education & Social Services Department of Public Safety Department of Fish & Game University PREVIOUS ACTION See Commission on Privatization minutes dated 7/20/99, 8/16/99, 9/20/99, 10/28/99, 11/04/99, 11/10/99 and 11/18/99. WITNESS REGISTER MARCO PIGNALBERI, Commission Director and Legislative Assistant to Representative John Cowdery POSITION STATEMENT: Answered questions and presented information on behalf of the commission and various subcommittees. JIM HICKEL, Chairman Subcommittee on the Department of Education POSITION STATEMENT: Presented the Subcommittee on DOE's recommendations. RICH KRONBERG, Member Subcommittee on Department of Education POSITION STATEMENT: Provided additional information regarding the education recommendations. RYNNIEVA MOSS, Member Subcommittee on the Department of Education POSITION STATEMENT: Provided additional information regarding the recommendations from the Subcommittees' on DOE and DHSS. BOB COGHILL, Member Subcommittee on Department of Education POSITION STATEMENT: Provided additional information regarding the education recommendations. KAREN REHFELD, Director Education Support Services Department of Education and Early Development 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-8651 POSITION STATEMENT: Provided additional information regarding the education recommendations. MIKE LAPE (ph) POSITION STATEMENT: Provided additional information regarding the education recommendations. ANNALEE McCONNELL, Director Office of Management & Budget Office of the Governor PO Box 1100200 Juneau, Alaska 99811-0200 Telephone: (907) 465-4660 POSITION STATEMENT: Commented on DOE's budget recommendations. FRED ESPOSITO, Director Alaska Vocational Technical Center Department of Education and Early Development PO Box 889 Seward, Alaska 99664-0889 Telephone: (907) 224-3322 POSITION STATEMENT: Provided clarification with regard to the food services of AVTEC. MIKE TAURIANAN, Co-Chair Subcommittee on the Department of Health & Social Services POSITION STATEMENT: Presented the Subcommittee on Health & Social Services' report. JANET CLARKE, Director Division of Administrative Services Department of Health & Social Services PO Box 110650 Juneau, Alaska 99811-0650 Telephone: (907) 465-3082 POSITION STATEMENT: Provided information with regards to the Subcommittee on the Department of Health & Social Services' recommendations. SARAH SHORT, Member Subcommittee on the Department of Health & Social Services POSITION STATEMENT: Offered additional comments regarding the Subcommittee on the Department of Health & Social Services' recommendations. DEBORAH LUPER, Chairman Subcommittee on the Department of Public Safety (DPS) POSITION STATEMENT: Presented DPS subcommittee report. DEL SMITH, Member Subcommittee on the Department of Public Safety Deputy Commissioner Department of Public Safety P.O. Box 111200 Juneau, Alaska 99811-1200 Telephone: (907) 465-4322 POSITION STATEMENT: Answered questions relating to DPS subcommittee findings. MEAD TREADWELL, Chairman Subcommittee on the Alaska Department of Fish and Game (ADF&G) POSITION STATEMENT: Presented ADF&G subcommittee report. GERON BRUCE, Member Subcommittee on the Alaska Department of Fish and Game Legislative Liaison Office of the Commissioner Alaska Department of Fish and Game P.O. Box 25526 Juneau, Alaska 99802-5526 Telephone: (907) 465-6143 POSITION STATEMENT: Commented on ADF&G's management role for shellfish and groundfish fisheries; addressed time line for department's response to recommendations. CHERYL FRASCA, Chair Subcommittee on the University of Alaska (UA) POSITION STATEMENT: Presented UA subcommittee report. WAYNE JENSEN, Member Subcommittee on the University of Alaska POSITION STATEMENT: Answered question on amortization. ANN RINGSTAD, Legislative Assistant Legislative Affairs POSITION STATEMENT: Provided additional information regard topics related to the University's recommendations. ACTION NARRATIVE TAPE 99-16, SIDE A CO-CHAIR COWDERY called the Commission on Privatization and Delivery of Government Services meeting to order at 9:10 a.m. Members present were Representatives Cowdery and Brice; Senators Ward and Adams; and Commissioners Fink, Thomas, Harper, Notti and Wuerch. Marco Pignalberi, Commission Director, was also present as was Representative Dyson. Commissioner Allen and Valesko were not in attendance. APPROVAL OF PREVIOUS MINUTES CO-CHAIR COWDERY announced that the commission should have a copy of the November 10, 1999, minutes for approval. COMMISSIONER WUERCH moved that the commission approve the minutes from the November 10, 1999, meeting. There being no objection, it was so ordered. OLD BUSINESS MARCO PIGNALBERI, Commission Director and Legislative Assistant to Representative Cowdery, informed the commission that comments from the Department of Environmental Conservation are in the commission's packet. He noted that the Court System's response to computerization efforts was being passed out. NEW BUSINESS - Reports by Subcommittees [Most of the information contained in subcommittee reports will be available at the commission's web site at www.privatizealaska.org.] Subcommittee Report on the Department of Education CO-CHAIR COWDERY announced that the commission would first hear from the Subcommittee on the Department of Education. Co-Chair Cowdery commented that he liked how the subcommittee report on DOE was organized because it was very understandable. He commended the subcommittee for its work. JIM HICKEL, Chairman, Subcommittee on the Department of Education, pointed out that the first page of the report lists the subcommittee members that remained throughout the process. However, there were several others who helped the subcommittee early on. The second page of the report is an introductory letter which reads as follows: Dear Senator Jerry Ward, Representative John Cowdery, Commissioner William Prosser & State Commissioners: On behalf of the subcommittee members on Education, we are honored to have served you and appreciate the opportunity to submit to you our recommendations. The Subcommittee on Education has spent fourteen weeks investigating the budget, policies and procedures of the Alaska Department of Education. We have sought ways to both improve this system and to privatize in those areas which will result in a cost savings to state government. Special recognition should be given to Karen Rehfeld from the Alaska Department of Education for her cooperation, diligence and thoroughness in supplying us with the necessary documentation and personnel to conduct our investigation and to complete our task responsibly and on time. Although there were numerous recommendations discussed, we submit only those that passed the scrutiny of the subcommittee and were ratified by a majority vote. I hope that sufficient time is spent by each of you in reviewing these recommendations. These recommendations take into account those functions of the Department of Education which should be transferred to the private sector or to local government; which agencies should be consolidated or made more efficient; which functions should be performed by the Federal Government; and which functions should be altogether eliminated from State Government. We sincerely hope that legislation is introduced as needed to implement these recommendations. Thank you for your work as Commissioners on the Privatization and Delivery of Government Services Commission and for entrusting us as advisory to you in the matter of education in Alaska. Sincerely, James W. Hickel Chairman of Education Subcommittee MR. HICKEL referred to the first section of the report, which lists the general recommendations made by individual subcommittee members. Following the general recommendations, the report reviews the 12 [agencies] within DOE which were investigated by the subcommittee. The subcommittee felt that it would be easier for the commission to review all the recommendations and the subcommittee's rationale for those recommendations first and then to review the department's response or comment regarding those recommendations. The third section of the report, numbered 1-11, reviews each of the Budget Review Units (BRUs) the subcommittee addressed. Mr. Hickel specified that the subcommittee did not review those departmental areas already privatized. MR. HICKEL turned to General Recommendation 1: "Recognizing that charter schools are public schools that are effective tools in improving educational choice, we recommend that the legislature enact revised charter school laws that provide for educational choice by: (1) doubling the number of charter schools allowed in Alaska; (2) extending the contract period from five to ten years; and (3) require school districts to give a full accounting of monies they receive for each charter school." He informed the commission that currently, the legislature has allowed 30 charter schools. He noted that this recommendation was passed unanimously by the subcommittee. He turned to General Recommendation 2, which says that the legislature should review the unincorporated school districts. The subcommittee felt that such a review would result in savings as well as a better handling of business management. He pointed out that General Recommendations 3-5 were not mentioned because those recommendations failed. General Recommendation 6 suggested that some variation of the voucher system be considered. The subcommittee felt that Alaskan voters should decide how their children are educated. Mr. Hickel turned to General Recommendation 7, that the legislature require evaluation of its paperwork requirements for teachers and school districts. The subcommittee found that the paperwork [for teachers and school districts] is overwhelming; teachers are being distracted from the true purpose of education with all the paperwork. Perhaps, a task force should review that issue alone. MR. HICKEL continued with General Recommendation 8, which suggests that the state explore incentives to private business to provide computer and other interactive technology to school districts. There are several reasons to support such a recommendation. Furthermore, the subcommittee felt that placing more technology in the classroom can be accomplished without spending more state revenue. General Recommendation 9 relates that all students, even those enrolled in private schools, should meet the same performance requirements in reading, writing and arithmetic. MR. HICKEL turned to General Recommendation 10, which says that the legislature should fund schools by having a separate education budget or providing forward funding. This recommendation is paramount because students should be a priority. Furthermore, it is inappropriate to leave administrators and districts to put programs together based on the amount of funding appropriated. He noted that many of the subcommittee members are in the education business. General Recommendations 11-13 failed. Therefore, Mr. Hickel moved on to General Recommendation 14, which proposes that the Teacher Certification Program be moved to the Division of Occupational Licensing. He pointed out that the Division of Occupational Licensing is already in place and there does not need to be another division to do that. He mentioned that the Division of Occupational Licensing would be more efficient. The last general recommendation, General Recommendation 15 proposes that part of the Gun Safety Legislation should be to encourage gun safety education. MR. HICKEL explained that the remainder of the report addresses the 11 BRUs the subcommittee felt most important to target. As chairman, Mr. Hickel appointed subcommittees of the subcommittee to work on the 11 BRUs. Those groups made recommendations to the full subcommittee. The goal was to make things more efficient in this area. COMMISSIONER WUERCH returned to the recommendation regarding the review of the unincorporated school districts. He asked if the subcommittee had spoken with those firms which contract with districts to operate the district. MR. HICKEL answered that he did not recall such discussion. RICH KRONBERG, Member, Subcommittee on Department of Education, informed the commission that one of the other subcommittee members, Don Evans, manages school districts in the state as Commissioner Wuerch described. Therefore, this subcommittee member has detailed knowledge of such. COMMISSIONER WUERCH inquired as to the reaction of the other subcommittee members in regard to Mr. Evans' success. MR. KRONBERG explained that when there was discussion of consolidation it was strictly in terms of consolidating the business terms. There was no discussion regarding who would perform the consolidated functions. COMMISSIONER WUERCH referred to page 3 of the subcommittee's recommendations. In reference to teacher certification, part of the subcommittee's rationale identifies that Alaska is one of the few states without reciprocal provisions for teachers [from other participating states]. He found this point surprising. [MR. HICKEL] stated that Alaska seems to require even more than some of the certification requirements of the more stringent states. Furthermore, some things do not overlap from state to state. COMMISSIONER WUERCH commented that some states must have certification requirements comparable to Alaska. MR. KRONBERG interjected that this situation has changed within the last couple of years. He explained that the State Board of Education has required that all in-state teacher preparation institutions should comply with the standards for the National Council for the Accreditation of Teacher Education (NCATE). Currently, Alaska has reciprocity with those states that have teacher preparation standards which meet NCATE standards. REPRESENTATIVE DYSON turned to the issue of charter schools. He informed everyone that there is legislation in the House Finance Committee which would extend the contract period for charter schools. Representative Dyson then inquired as to why the state should test students educated in private schools when private schools receive no public funding. MR. KRONBERG replied that the subcommittee dealing with this issue felt that there is a public interest in education whether the education is provided by a public or a private school. Therefore, the public has an interest in seeing that students meet certain standards which should apply to all students. Mr. Kronberg specified that the discussion on this matter was not in- depth nor was there lots of data. REPRESENTATIVE DYSON turned to the recommendation of a separate budget process for public education. MR. HICKEL said he did not know how it would be handled. However, schools should be funded first versus receiving funding a month before school is supposed to start. REPRESENTATIVE DYSON understood the recommendation to not only recommend forwarding school funding, but to also have separate school funding. RYNNIEVA MOSS, Member, Subcommittee on the Department of Education, spoke via teleconference from Fairbanks. Ms. Moss explained that currently there is an operating budget, a capital budget, and a mental health trust budget. She indicated that this recommendation would create an additional budget for education, resulting in four budgets. The hope behind this recommendation was that the politics that occur during the end of session would not hold up education funding to the last minute. REPRESENTATIVE DYSON commented that he appreciated that. However, he expressed concern with the notion that education would not have to compete with other services the government is required to provide. Representative Dyson asked if the subcommittee's recommendation was to take education out of fiscal competition with other public services for public dollars. [MR. HICKEL] replied, "I don't think necessarily, no." REPRESENTATIVE BRICE informed everyone that in the past [a separate education budget] has occurred which allowed [education funding] to occur much earlier. With regard to vouchers, Representative Brice asked if there was any debate in terms of quality control of education or the possible savings to the state under a voucher system. MR. HICKEL answered that there was brief discussion of that. He explained that the discussion revolved more around parental choice in education versus cost savings. MR. KRONBERG recalled the conversation surrounding vouchers as not including any discussion of cost savings. He informed the commission that he and Jeff Walters, another subcommittee member, had prepared a minority report on this specific issue. He noted that Representative Brice should have copies of that report. There are constitutional questions surrounding this issue. Mr. Kronberg stressed that the voucher issue is not about parental choice, but rather who is paying for parental choice. Currently, private schools do not have the same levels of accountability as public schools. He explained that the voucher issue is the issue of the use of public funds without public accountability. CO-CHAIR WARD asked if the subcommittee reviewed the voucher system from the Florida legislation he had requested. MS. MOSS replied no. CO-CHAIR WARD stated that the information from Florida would resolve some of the comments regarding not saving money. He indicated that the system in Florida is fairly new. Therefore, by the time the Alaska Legislature is in session there should be a better understanding as to how the Florida voucher system is working. Co-Chair Ward informed everyone that in Florida all students are tested. COMMISSIONER WUERCH noted that he had visited family in Florida when that [voucher system] passed. He informed everyone that it [the voucher system] is based on income and there has to be a threshold of qualifications. BOB COGHILL, Member, Subcommittee on Department of Education, referred Representative Brice to General Recommendation 9, which speaks to the quality expected of the private and public schools. CO-CHAIR COWDERY inquired as to whether the minority report was discussed with the full subcommittee. [MR. KRONBERG] replied no. CO-CHAIR COWDERY asked if the minority report was generated from the minority within the subcommittee or did the full subcommittee deal with it all. MR. WALTERS explained that this materialized after the final recommendations came through. COMMISSIONER FINK inquired as to the group that Mr. Walters is associated with. MR. WALTERS clarified that he is with the Fairbanks Education Association. COMMISSIONER FINK inquired as to the percentage of correspondence students who are part of the Alyeska Central School. MR. KRONBERG answered that he did not have that information. KAREN REHFELD, Director, Education Support Services, Department of Education and Early Development, deferred to Mike Lape (ph). MIKE LAPE (ph) estimated that 10-15 percent of correspondence students are part of the Alyeska Central School. SENATOR ADAMS commented that he would not debate the voucher system because he did not believe that it would work in rural Alaska. He indicated that there should be some population stipulations. Senator Adams said, "One of the recommendations is that the federal government should get out of K-12 [education]; what about the funds that we [the state] presently receive that has to do with maybe PL8874, special education money for maybe our handicap children no matter where they live or bilingual programs. Why did you guys make this kind of statement here?" AN UNIDENTIFIED SPEAKER explained that the statement was made because federal funds given to the state seem to be mandates on the state, which cost additional funds. Therefore, the federal government should be a 50/50 partner when making demands on the state. Furthermore, such a recommendation would better localize education and provide the states more power. "The federal government ought to put their trust in the state legislatures for funding education as they see fit in their states." He noted that the funding issue was not addressed. Furthermore, "we" would not recommend walking away from federal funds. SENATOR ADAMS expressed concern with that because it would hurt education in the long run. Senator Adams asked if the subcommittee reviewed student transportation costs because he did not believe there is accountability in that area. AN UNIDENTIFIED SPEAKER replied that was not addressed. SENATOR ADAMS informed everyone that presently in his large community [Kotzebue] some school districts bus their own students while others contract that out. He indicated that there is a cost factor [with student transportation] that should be reviewed. MS. MOSS returned to the issue of the federal government being involved in the education business. Personally, she felt that it is a Tenth Amendment issue. No where in the U.S. Constitution does it give the federal government the authority to control education. The Tenth Amendment gives that right to the states. MR. KRONBERG pointed out that the minority report also responds to those issues. REPRESENTATIVE DYSON expressed concern about special education. Those special education teachers with whom he has spoken, have said they are overwhelmed with paperwork. He wondered if there are any national advocacy groups that are attempting to lessen the paperwork. MR. KRONBERG noted that he represented the state [education] association on the national board of directors for four years. He assured the commission that he was a strong advocate for paperwork reduction in the Reauthorization of the Individuals with Disabilities Education Act. Mr. Kronberg believed the stated purpose of the law, to reduce paperwork and create more control, did not happen. Therefore, those in Washington, D.C., need to review what they have done. Clearly, there is a disproportionate impact on the delivery of special education services due to the federal mandate. With the passage of the initial legislation, Congress agreed to provide 50 percent of the funding to implement the mandate. However, the federal government has never provided more than 10 percent of the funding. Usually the federal government has provided less than 10 percent of the funding. Although the minority report does not agree with the conclusions of the subcommittee with regard to the federal role in education, we [the minority] agree that education is an under-funded mandate that has created huge problems for local school districts. REPRESENTATIVE DYSON pointed out that the net result of more accountability is more paperwork. He indicated the need to be wary that an unintended consequence does not result. Representative Dyson encouraged everyone, from school board presidents to administrators, to pursue a reduction in paperwork, especially that paperwork which is overlapping. MR. WALTERS mentioned that during his attendance at last year's conference of the National Education Association this issue was discussed and remains a topic of concern. REPRESENTATIVE BRICE referred to [General] Recommendation 7, which asks that another process of evaluation and accountability be established. MR. HICKEL continued with the Subcommittee on the Department of Education's report. He referred the commission to the second tab, labeled Teaching and Learning Support. This section moves through the specific BRUs as set out by the department. He explained that of the full subcommittee, there was a smaller subcommittee that focused on these issues. That smaller subcommittee made recommendations to the full subcommittee. Mr. Hickel informed the commission that Recommendations 1 and 2 were tabled. Recommendation 3, which suggests the adoption of a process to update the benchmark and exit exam material in a manner consistent with that expectation, was ratified by the subcommittee. The subcommittee believed that the development of benchmarks and exit exams is reasonably expected to be more expensive than the updating of that material. Therefore, it was felt that this was a good way to save time and money. MR. HICKEL turned to Recommendation 4, which expresses the need to further review the administrative cost of each component. "While this recommendation was directed at Teaching & Learning Support, there was a general consensus that administrative costs should be kept at a minimum and that more review of those costs for all departments and divisions of state government should be made. Administrative costs reduce the amount of money delivered directly to the school districts." Mr. Hickel believed that this recommendation would reoccur as it applies to several areas of state government. Such a recommendation could be relevant in Recommendation 5, which recommends that all elements of a single program should be located in the same place in the budget. He expressed frustration with the difficulties of the current budget. CO-CHAIR WARD inquired as to the department's response to Recommendation 5. MS. MOSS said that response was not included in the report, but would be forthcoming. She deferred to Ms. Rehfeld. MS. REHFELD answered that the department has proposed several structural changes that would make the budget easier to follow so that the BRU and division structure is aligned. That is being proposed in the next fiscal year cycle. Ms. Rehfeld pointed out that the confusion stems from the specific programs that relate to child nutrition services which had three different components related to the same program. That is also being consolidated in the next year's budget cycle. She noted that a big portion of the budget is the K-12 support programs which, in past years, have been considered formulas to the school districts. That includes the public school funding program which has always been in a separate BRU. She explained, "That's an area where people talk about if they were going to fund education separately, they would list the K-12 support programs out and put it in a separate appropriation bill. Its been visually presented that way. Certainly, that could change if the governor and the legislature choose to fold those grant funds into the other portions of our operating budget." CO-CHAIR WARD surmised then that the department would be providing further details with regard to how this would be accomplished, besides the three [changes] mentioned. MS. REHFELD stated that the department, in its FY 2001 budget, has proposed structure changes to consolidate those components to make it easier to follow in our [the department's] budget. She agreed that there were more proposed changes than the three already mentioned. COMMISSIONER WUERCH commented, "It kind of sounds like the prerogative isn't yours, that you're looking for someone else to make the decision on organization. Which way is it?" MS. REHFELD pointed out that the department, during its annual budget process, does prepare recommendations which are submitted to the Governor's office. She indicated that the Governor's office is generally supportive of the department's request to change the structure. COMMISSIONER WUERCH asked if Annalee McConnell was still on-line and could respond to the Administration's willingness to accept those changes. There was no reply indicating that Ms. McConnell was not on-line. MR. HICKEL mentioned that the second section of the report refers to department comments. In many cases, the department welcomed the subcommittee's recommendations; still, there were cases in which the department had concerns. MS. REHFELD clarified that the department is not proposing moving the major formula programs into other areas of the budget. However, programmatically within the agency several changes are being recommended. These changes should make the department's budget easier to follow. TAPE 99-16, SIDE B ANNALEE McCONNELL, Director, Office of Management & Budget (OMB), Office of the Governor, commented that she could try to reschedule her other obligations to be available to the commission today. COMMISSIONER WUERCH informed Ms. McConnell that DOE has stated that it will be submitting recommendations changing the organization of the budget. Such a recommendation would seem to need approval from the Administration. He asked if that approval would come from OMB. He also asked if the department's changes would meet with a willing reception. MS. McCONNELL noted that statewide there is a new automated budget system; however all departments were not using that new automated budget system since the system was in the pilot stages. She explained that certain aspects of budget structure, in terms of the units of the budget, would need to come through OMB. Ms. McConnell stated that she would be happy to discuss those. With regard to recommendations that relate to OMB, we [OMB] have made a number of efforts over the last several years to simplify some of the budget's structure. However, there is still a great deal of legislative interest in keeping with some of the old styles. She agreed that there is room for improvement and offered to review the proposals from DOE. CO-CHAIR COWDERY said that it would be helpful to receive some comments from OMB regarding DOE's budget recommendations. MS. McCONNELL commented that some of the suggestions were broached in prior years, such as following the state organizational structure. She expressed willingness to try things that were previously attempted. She pointed out that many of the recommendations relate as much to the legislative process as to the executive branch process. With regard to schedules, there are schedules in statute as well as the internal schedules used by both the legislature and the executive branch. Ms. McConnell did agree that it would be helpful to have more lead time for the review of the material. She also expressed the need to have more lead time in the legislative process. Further public attention would be useful with regards to the different types of funds ... MR. PIGNALBERI understood that Ms. McConnell was interested in discussing some of the issues in the Governor's subcommittee report. He asked if the commission could make an appointment with Ms. McConnell in order to address the budget format issue during the deliberative meetings of the commission. MS. McCONNELL was amenable to that. However, she reminded the commission that the budget, which fills her schedule, is due for release on December 15. Still, she offered to be available for further discussion of the budget process. MR. PIGNALBERI indicated that the commission would schedule Ms. McConnell for December 1, 1999. REPRESENTATIVE DYSON asked if the [subcommittee] considered blurring the lines between secondary education and postsecondary education. He noted that many high schools offer college credits. There was indication that discussion on that matter did not occur. MR. HICKEL continued with Recommendations 6 and 7, which he noted were agreeable to the Department of Education. Therefore, he said he would not discuss those recommendations unless there were questions. He informed the commission that the pages following Recommendations 6 and 7 are backup. MR. HICKEL turned to Tab 3, Executive Administration, which has a few recommendations. The first recommendation in this section is to privatize services provided by Alyeska Central School. Those who support the recommendation said that there are several private sources already available. Also several school districts offer home school curriculum. Therefore, it seems redundant for the state to provide services that are available in the private sector. He informed the commission that there are already as many as 30 providers in both the public and private sector. The second recommendation in this section recommends that all elements of a single program should be in the same location within the budget. This recommendation relates to the previous recommendation regarding the need for the budget to be easily understood. Mr. Hickel noted that the third recommendation failed. The fourth recommendation, which has already been discussed, in this section recommends that the federal government should "get out" of K-12 education. MR. HICKEL continued with Tab 4, Alyeska Central School, which only recommends the closure of Alyeska Central School. The responsibility for providing correspondence study should transfer to those school districts that already have correspondence programs. Mr. Hickel moved to Tab 5, Commissions and Boards, which houses two recommendations. He noted that Recommendations 1 and 2 under this section were not adopted by the subcommittee, and therefore are not included in the report. Under Tab 4, Recommendation 3 recommends that the state keep alternate  teaching certification available for interested residents of Alaska. He believed that presently there is not alternative accreditation, although there seems to be discussion in that area. MR. KRONBERG agreed with Mr. Hickel's representation of Tab 4, Recommendation 3. MR. HICKEL moved on to Tab 6, Alaska Vocational & Technical Center, which includes several recommendations. On page 44, Recommendation 1 recommends encouraging the legislature to pass HB 142 "An Act relating to the education credit for the fisheries business tax and the fisheries resource landing tax; and providing for an effective date." Such action would make the Alaska Vocational Technical Center (AVTEC) a qualifying recipient of cash contributions provided for in AS 43.77. He explained that last year AVTEC returned $140,000 in cash contributions because of this dilemma. That is a tragedy. SENATOR ADAMS asked if the municipality of that area would lose the money. He pointed out that normally the fish tax money goes to the locality where that tax is taken. MR. HICKEL said, "I believe, Senator, that they would." He recalled that the subcommittee discussion resulted in the feeling that the area where AVTEC is located should take care of that facility, which has been highly neglected. "If that community were to lose those funds, those funds would still stay within the community because they would be within the school." MR. HICKEL returned to Tab 6 and moved on to Recommendation 2 which states, "The Department of Education should hire a grant writer in the Division of Teaching and Learning Services that will focus on locating and obtaining funding sources other than state funds for Mt. Edgecumbe and AVTEC." The subcommittee feels that too much money is being spent in both locations and still, both locations are neglected. There are many grant funds which could be captured to take care of some of these. Recommendation 3 states that AVTEC should be given the flexibility to determine leasing and maintenance provisions for its motor pool fleet. Mr. Hickel explained that AVTEC, a vocational school, is training people in maintenance areas. Therefore, he indicated the need to let those people perform the maintenance or at least be allowed to bid on that maintenance. Recommendation 4 states, "Maintenance for state motor pool vehicles should be contracted out by competitve bid. If a state agency has the capability of providing those services, that agency shall submit a competitive bid for the services to be contracted, but shall do so apart and separate from the agency soliciting the bid." Recommendation 4 was ratified for the purpose of seeing whether there would be a cost savings. MR. HICKEL continued with Tab 6, Recommendation 5, which states, "AVTEC should explore the possibility of obtaining funding from the Alaska Housing Finance Corporation to expand family housing facilities." Mr. Hickel informed the commission that AVTEC has gained a good reputation statewide and has had to turn students away due to inadequate family housing facilities. Recommendation 6 recommends the privatization of the food services of AVTEC. Mr. Hickel explained that AVTEC has been utilizing food services students to provide food services. However, recently the format of the food services training program was changed. Currently, one cook and two food service workers are employed. This change will require AVTEC to hire additional food services employees next year. Therefore, AVTEC is exploring the possibility of privatization of those services. REPRESENTATIVE BRICE commented that he would have hoped that Recommendation 6 regarding food services would have been moving towards students doing the work as suggested with the maintenance services in Recommendation 4. MS. MOSS recalled that Mr. Esposito concurred on these recommendations. However, she requested that he speak to this issue. FRED ESPOSITO, Director, Alaska Vocational Technical Center, Department of Education and Early Development, agreed that we [the department] concurred with the recommendations. The curriculum changes to the food services program have not occurred yet. Furthermore, AVTEC is trying to explore whether it is appropriate to remove teachers and students from the responsibility of the production of foods. The cost to contract out the food services is also being reviewed. MR. HICKEL said, in explanation of the maintenance recommendation, that those students are trained in maintenance, and therefore should be given the opportunity to bid the maintenance in the community. On the other hand, the food service industry is going to have to expand and hire employees. Therefore, it should be put out to bid whether the bid ends up going to an in-house entity or to a third party. REPRESENTATIVE BRICE maintained his view that the focus should remain on student employment and training, especially since one of AVTEC's purposes is to get people involved in these industries. MR. HICKEL turned to Tab 7, Mt. Edgecumbe Boarding School, which only has one recommendation that survived the scrutiny of the subcommittee. That recommendation, Recommendation 3, reads: Because Mt. Edgecumbe High School has significant facilities and maintenance issues due mostly to the age of the campus, and because the potential exists that Mt. Edgecumbe may be asked to expand its enrollment to serve Alaska's immediate and/or future educational needs, this sub-committee recommends that the legislature provide funds to meet the deferred maintenance needs of Mt. Edgecumbe High School. Mr. Hickel commented that this recommendation is not really in the spirit of the subcommittee's focus, as it is supposed to be saving the state money. However, the subcommittee wanted to bring this issue to the commission's attention because this facility is in need of care. MR. HICKEL continued with Tab 8, State Facilities and Maintenance. There are no specific recommendations for this BRU as this was covered in those recommendations for the department, AVTEC and Mt. Edgecumbe. Therefore, he moved on to Tab 9, Alaska Library and Museums, which has one recommendation which reads as follows: "The executive branch libraries should be managed by the State Library and further that no executive branch library should be established or ended without State Library oversight." He explained that investigation into this area revealed that libraries have closed without any oversight. Such almost resulted in tragedies with arts and archives. Therefore, there should be some control at the state level. CO-CHAIR WARD asked if the subcommittee received the information regarding Orange County's privatization of all its libraries. MR. HICKEL said that he did not recall such information. MR. HICKEL continued with Tab 10, Alaska Postsecondary Education, which contains two recommendations. The first recommendation recommends that the student loan program be privatized by being contracted out to a private lending service. The state nor DOE should be in the banking business as appears to be the case in this area. Mr. Hickel explained that there was review of the original amount of money provided for lending, the amount of money available, and the delinquency of loans. Review of those reveals that the program [Alaska Postsecondary Education] has cost the state several million dollars. The program could be better managed by banks. The second recommendation under Tab 10 states: It is recommended that all loan programs of the State be submitted to review with one of two conclusions being sought: (1) consolidation within a single department of state government, such as Revenue, where staffing is trained in accounting and fund management; or (2) provision to management by banks through an RFP process. MR. HICKEL moved on to Tab 11, Division of Early Development, which contains several recommendations. Recommendation 1 recommends the elimination of the Division of Early Development from DOE and the consolidation of it with the Department of Health & Social Services and its existing programs. This function really belongs in the Department of Health & Social Services. Recommendation 2 recommends that the Children's Trust Grant Program be transferred to the Office of the Governor, Board and Commissions. He continued with Recommendation 3 which states: "When federal funding for a federally mandated program established in the State of Alaska falls below the 50 percent funding, the service shall be considered unessential at the state level and passed on to the option of local governments for funding." The subcommittee felt that, in several cases, the state is getting abused by the federal government because it passes legislation that does not work in Alaska. When the federal government passes legislation, the state government is often forced to come up with the funds to make the program happen. Therefore, Recommendation 3 resulted. COMMISSIONER WUERCH expressed concern that some of these federal mandates are in public law and the state has to do them anyway. For example, he assumed that the local government must provide special education programs regardless of the funding provided by the federal government. He asked if that is correct. MR. HICKEL commented, "I don't think that that's the spirit of the recommendation. The spirit of the recommendation is not to always take the carrot from the federal government." COMMISSIONER WUERCH surmised, then, that those discretionary [programs] should be tied to the funding, while those that are not discretionary must be performed. MS. MOSS suggested the need for legislative action in the form of a resolution to Congress. The resolution could state that Alaska does not want these federally mandated programs if the federal government is not going to provide the funding. This is especially true in education. If the legislature adopted a resolution requesting the federal government dissolve DOE, then there would not be these federally mandated programs. Such programs would then be designed at the state level. MR. HICKEL noted that there is no intent to neglect things the federal government felt important, but rather to handle it at the state or local level. Mr. Hickel continued with Recommendation 5, under Tab 11. Recommendation 5 recommends that the Alaska State Legislature treat all state receipts as general fund money, unless the receipts are the result of inter-agency receipts. MS. MOSS explained that through the years to legislature has changed its budget process. At one time, there was the general fund and other funds. A few years ago SB 55 was passed. That legislation transferred more funding from the general fund to what is classified as other funds. She stated that with SB 55, the programs that were moved out of the general fund would amount to about $59 million. Ms. Moss speculated that what is being requested is truth in funding in order to return to the old ways, which would lessen the confusion with the budget process. CO-CHAIR COWDERY reiterated his appreciation to the subcommittee. MR. HICKEL commented that he would like to note a special thanks to Ms. Moss for assembling the report. Subcommittee Report on the Department of Health & Social Services CO-CHAIR COWDERY announced that the commission would next hear the report from the Subcommittee on the Department of Health & Social Services. COMMISSIONER FINK commented that he has read the [reports], and therefore would prefer the subcommittee make an opening statement and only comment on those areas the subcommittee wishes. MIKE TAURIANAN, Co-Chair, Subcommittee on the Department of Health & Social Services (DHSS), informed the commission that Kathy Andress, Co-Chair, Subcommittee on the Department of Health & Social Services, is also on-line. He noted that subcommittee members Ms. Moss, Sarah Short, and Clyde Lorenz are also on-line. JANET CLARKE, Director, Division of Administrative Services, Department of Health & Social Services, announced that she worked with the subcommittee. MR. TAURIANAN commented on the overwhelming nature of the review of this department. He noted that the subcommittee is presenting a draft report, which barely scratches the surface. The subcommittee developed several premises, with which everyone did not agree, that are included in the cover letter. Mr. Taurianan said that as a society, we have various organizations for those needing help. Therefore, the state should probably be the last resource that people in need of help should use. Those private and civic organizations, et cetera are most appropriate to help [such people]. MR. TAURIANAN informed the commission that there are several areas which the subcommittee did not have time to address, but should be addressed. He specified: And that is in the area of delivery of services, how much overhead. What percentage actually going to help individuals who are in need of help and what state services are being provided that otherwise, if the state was not doing it, would not be met. What services are encouraging people to get on their feet and leave the system? ... On the other side of that, what state services are encouraging people to remain in the system, promoting single-parent families, teen pregnancies, substance abuse? What are being used for nonessential purposes or destructive behavior? MR. TAURIANAN explained that the subcommittee created a privatization hierarchy in which things that the state would continue to perform would be given a zero. While those areas which were completely privatized were given a four. The state contracts would fall in between zero and four. He reiterated that the subcommittee did not have the time to apply those to the various tasks that the state is doing. He noted that the department representatives were most helpful, specifically Ms. Clarke and Mr. Lindstrom. Mr. Taurianan offered to answer questions and noted that some of the recommendations, such as 4 and 11, are similar. MS. MOSS pointed out that these recommendations were passed through subcommittees of the main subcommittee. She interpreted that to illustrate a double interest to accomplish them. COMMISSIONER WUERCH commented that the Division of Family & Youth Services (DFYS) has been the center of media reporting for the last year-and-a-half. Did the subcommittee feel that DFYS would overcome some of its problems or is it inherent in the nature of the division's mission that there will be continued strife? MR. TAURIANAN answered that he believed some strife is inevitable, given the nature of this area. SENATOR ADAMS interjected that things cannot be so general with references to the entire division. He expressed the need to be specific. Perhaps, it can be said that the areas of child enforcement and foster care had problems. COMMISSIONER WUERCH said that he could hardly identify a part of the division that has not been the subject of critical media reporting at one time. Commissioner Wuerch clarified that he was interested in whether the subcommittee felt that the division's current structure should continue or was there discussion that it should be restructured. MR. TAURIANAN identified Recommendation 2 which refers to the need for an independent oversight board for DFYS. Several oversight responsibilities are listed there. COMMISSIONER WUERCH surmised that in general, the subcommittee felt that it could work with the division's current structure. MR. TAURIANAN indicated agreement. COMMISSIONER WUERCH referred to Recommendation 6: "Increase the ability of tribal organizations to contract with DFYS by providing child welfare services and assist in educating caseworkers about cultural differences." He recalled that this issue had been reviewed a few years ago and not much has been accomplished. He asked if any obstacles were uncovered in relation to moving ahead with this recommendation. MR. TAURIANAN deferred to others on the subcommittee. MS. MOSS informed the commission that she voted against Recommendation 6 because of her experience with village councils on this issue. Within villages there are separate groups of people who are a clan. If a person has difficulties with his/her child and that person is not in power, sometimes that person does not receive a fair hearing with the council. Ms. Moss stressed that personalities become involved in decisions which affect children and their families for their entire life. SARAH SHORT, Member, Subcommittee on the Department of Health & Social Services, agreed with Ms. Moss regarding Recommendation 6. "But this is why we have suggested not only that we look at using the Native entities to work with the social workers, but have those Native entities work with other non-Native entities to protect against nonaction and protect those children in those 'clan' settings." She pointed out that the Native entities have many more financial resources than "we" do. Furthermore, the Indian Child Welfare Act (ICWA) laws are not being complied with [in] DFYS. There is also much intervention [from DFYS] that is based on the lack of cultural knowledge of the caseworkers. She informed the commission that 54 percent of the children in custody are Native children. She stressed the urgent need to address this issue. Ms. Short felt that this issue could be addressed by working with [the Native entities], their funding, and their resources in order to reduce state costs and increase community involvement while still working with the state to protect against that other interest. MS. CLARKE informed the commission that DHSS supports Recommendation 6. The department works with many tribal organizations and ICWA workers. The department understands that funding and resources may be a barrier for additional tribal involvement in certain cases. REPRESENTATIVE DYSON informed the commission that Legislative Budget & Audit has performed a few audits, which audited more than the financial side to this issue. In response to Commissioner Wuerch, Representative Dyson explained that Kansas, in its efforts to privatize child protection services, found that the for-profit and nonprofit organizations for this type of work were practically nonexistent. He commented that this would be even more difficult for Alaska. Kansas had to develop its own organizations. Furthermore, the people trained to do such work are difficult to find. REPRESENTATIVE DYSON pointed out that three years ago much of the law in this area was changed. Those changes eliminated some of the barriers to getting children in permanent placement. For instance, a training school for social workers was created for Alaska. That program should create more experienced and culturally sensitive individuals. He informed the commission that last year there was an effort to take 400 children out of state custody and into permanent placement. Removing those children from the state rolls will allow other workers to concentrate on other cases. REPRESENTATIVE DYSON noted that the law says that DFYS has to investigate every reported case of harm, some of which are spurious, duplicative, and involved in custody disputes. TAPE 99-17, SIDE A REPRESENTATIVE DYSON noted that there would be more headlines in the next few days about additional problems. He concluded that there is reason for some optimism, as the department appears to be making a good-faith effort on many fronts. However, there are still some horrendous tragedies out there. He pointed out that the Child Support Enforcement Division (CSED), which collects money from so-called deadbeat parents, is in another department, the Department of Revenue. MS. SHORT explained that she is an adult foster child and an advocate. She has studied this extensively for the last year and considers it her life. Working on this subcommittee took a lot away from what she really does: assisting people, "constituents of all of yours," who need the help of human service agencies. Referring to legislative audits 06-4586-98, 06-4595-99 and -98, she indicated those show how agencies supposedly help families. In particular, she cited the legislative audit dated January 26, 1999, and then stated: I don't understand this; maybe it's because I'm a lay person. But when these people need help and you save money that is specifically supposed to go to helping the families, and you come in ... just over a million dollars under your budget, and you put that into [a] retirement incentive program, I'd like to know how that helps. That is misappropriation of funds. You guys gave it to them for more caseworkers. They left 21 caseworker positions open. And investigating these reports (indisc.), which are statutorily required ..., they're not doing it. MS. SHORT recounted how when her own sister was murdered, and her 18-month-old niece was placed in foster care with a 78-year-old couple for two-and-a-half years, she herself had to fight to bring her niece home. She questioned why the state keeps children who don't need to be kept, rather than offering families in-home services that would be cheaper and more efficient emotionally, mentally and physically. She suggested that can be done by working with churches, community action groups, schools, educators and mentors. There was a mentor system tried about 16- 17 years ago, she noted, which was expensive but effective. Ms. Short advised commissioners, "If you don't solve the initial problems in these families, you are creating and feeding the system." MS. SHORT emphasized the need for change, characterizing the system as a "ladder" that needs to be a "tree" instead. When foster parents report grievances against caseworkers, she noted, they are grieving against the people that they employ. What happens? They get their licenses shut off. That has happened to several people whom she could either name or keep anonymous, and she urged the commission to talk to these people. There is child abuse out there, she cautioned, "but you can't deal with it and solve it if you continuously spend all your resources on investigating faults and reports of harm, and spinning your wheels." MS. SHORT restated that the current system isn't working, not just in Alaska but also nationwide. However, it is more prominent in Alaska because of isolation. Referring to a scandal in Washington, she indicated such events occur in Alaska but are less out in the open. Ms. Short urged the commission to seriously think about the current "ladder" system and about involving more of the community, whether through privatization or some other way. She emphasized the need for some external review of agencies. She also pointed out that no board, commission, department or division in Alaska consists of beneficiaries of these services. She then concluded: These are forced services. They're paid for with my money, and I want them efficient. I want them protecting those children out there, and they're not doing it. And the abuse is not just happening out there in public; it's happening in the agencies all the time. Who is accountable for that child? [AS] 47.10.960 says there's no duty or standard of care created under Title 47. You know what? There's a duty or standard of care created here, and by you guys, for me as a parent to take [care] of that child. Why am I going to let that child go to the state, who's not accountable, who's not responsible, and who I can't protect myself from, as a parent, when they take my child? [AS] 47.10.960 needs to be repealed or needs to be amended, so that's part of the problem right there. Thank you. CO-CHAIR WARD noted the need to make sure all members receive a copy of the three audits brought forth by Representative Dyson. He also requested that Ms. Short provide a suggested outline for organization, and that she work with Co-Chair Cowdery's staff or his own to ensure that the format is understandable. He pointed out that this is all about citizens' committees relaying messages. If information is on a piece of scratch paper, that is fine, Co-Chair Ward added, but it needs to be submitted. MS. SHORT mentioned the citizens foster care review panel, then said the CASA [court-appointed special advocate] program is organized pretty well except for one thing: the program reports to guardians ad litem (GALs), who in 50 percent or more of the cases never meet the children. Ms. Short questioned why the state pays for that. She also asked, "If they don't meet the children, how can they go to court and tell me what's in that child's best interest?" She said it is ridiculous, a waste of money. If CASA workers had to report directly to the courts and could "make their own opinions," she indicated the state would find some good help. Ms. Short noted that CASA workers are educated volunteers who care; they go through a screening service. She recommended having the Office of Public Advocacy (OPA) train them. She concluded by alluding to the CASA system as a tree branch instead of a ladder, which protects the state, social workers and families. MR. PIGNALBERI asked the subcommittee chairman, Mike Taurianan, to clarify Recommendation 13, which read: We recommend that your department looks into finding ways to incorporate some programs that are offered, with the intent of making them into ... loan programs. MR. TAURIANAN deferred to other members, suggesting perhaps Kathy Andress could comment. He indicated that recommendation had been included in his absence. MS. MOSS spoke up, explaining it was an amended recommendation that had originally asked that the medical assistance program be turned into a loan program. It goes back to the philosophy of public assistance: "We don't mind helping people when they're down and out, but should it really be just a giveaway program?" She asked whether there wouldn't be a little more compassion and a little more self-esteem, if it were treated like a disaster loan under the Small Business Administration (SBA). She, then, recounted how after her home was flooded in 1991, she didn't have to ask for a handout but obtained a loan with the SBA on which she makes monthly payments; with that money, she got her house back in order. Ms. Moss restated that it is a philosophical message. MR. PIGNALBERI asked Ms. Moss to review Recommendations 13 and 15, suggesting that they are redundant. AN UNIDENTIFIED SPEAKER pointed out that Recommendation 15, on medical assistance, is similar to Recommendation 19, regarding ATAP [Alaska Temporary Assistance Program]. MS. CLARKE recalled that this was adopted by the subcommittee so that there is a recommendation to look at other programs funded in the department - in addition to medical assistance or ATAP - that could be loan programs. It is more than just medical assistance. AN UNIDENTIFIED SPEAKER explained that Recommendations 13, 15 and 19 are similar, adding, "Basically, we're saying: for those who are physically able to work and provide for themselves but are down-and-out at the time, make it a loan program rather than an outright grant program or welfare program, where they can get back [on their feet]." REPRESENTATIVE BRICE asked: What about people who have a mental illness? MS. MOSS indicated the conversation was that someone who is able to provide for himself or herself would get a loan. She assumed that mental illness is considered a medical disability, and for someone with a medical disability, that is a whole different story and would be treated differently. REPRESENTATIVE BRICE voiced his assumption that they don't want the word "physically" injected there, then. MS. MOSS suggested that is something the commission may want to address. MS. CLARKE pointed out that making these into loan programs will require a change to federal law. For that reason, the department believes these recommendations are not practical. She stated her belief that the subcommittee had wanted to bring the issue up to the full commission. MS. MOSS said that is true. In the subcommittee's discussions, they recognized that federal law would have to be changed. However, they felt they had to start somewhere and possibly plead to the legislature, again, to send a resolution to Congress about reversing the whole welfare program and government system of "enabling people to be failures." MR. PIGNALBERI asked Ms. Clarke to send him an e-mail about what other programs should be included in Recommendation 13. He noted that it is not supposed to apply to medical assistance because there is another recommendation on that, nor is it supposed to apply to ATAP for the same reason. MS. CLARKE affirmed that she could do that, although it would only be speculation on her part. She isn't sure what the subcommittee had in mind, she added, except there are other programs that the department administers. MR. PIGNALBERI suggested that because of the excellent cooperation between the subcommittee and the department, Ms. Clarke's speculation would be fine with everybody. SENATOR ADAMS asked Ms. Clarke to also note in her e-mail which areas need federal law changes and "which area needs to comply with that, state law changes, or one or the other." MS. CLARKE assented, adding that they had attempted to do that in the department's response to the recommendations. MS. MOSS advised commissioners of a couple of changes on recommendations where the wording in the report was not as it was passed. First was Recommendation 14, the summary portion of which read:    Implement a state statute giving medical providers the flexibility to decide whether or not to pursue collection of questionable debts.  She explained that there should be a comma after "debts" after which the following phrase should be inserted: "but Medicaid would still pay the reduced amount". Next was Recommendation 12, the summary portion of which read:   Consider efficiency that could be gained by eliminating duplicated services through possible privatization. MS. MOSS indicated Recommendation 12, as worded in the draft report, was not voted on by the subcommittee. Rather, it is a consolidated recommendation from the subcommittee on public health that in no way corresponds with this one. That recommendation failed, she said. REPRESENTATIVE BRICE asked whether Ms. Moss was saying Recommendation 12 had failed. MS. MOSS affirmed that. She restated that the recommendation voted on wasn't this recommendation. She offered to read [the language of the recommendation that the subcommittee voted on]. MR. PIGNALBERI reminded listeners that the commission would update its website (www.privatizealaska.org) with the final version of the subcommittee report. He offered to ensure that everybody's notebook was updated as well. MS. MOSS emphasized that there was no Recommendation 12. AN UNIDENTIFIED SPEAKER indicated the subcommittee would fine- tune this, resolve some questions and clarify some language for the commission. [The final subcommittee report reflects the necessary revisions and renumbering.] MR. PIGNALBERI pointed out that the Department of Education and the Department of Health and Social Services are the biggest components of the state budget, and these subcommittees had worked numerous hours. He expressed gratitude that these citizens had come forward and put in the work they did. He also thanked the representatives from those two departments for the wonderful amount of work they had done. Subcommittee Report on the Department of Public Safety CO-CHAIR COWDERY invited Deborah Luper to present the Subcommittee Report on the Department of Public Safety (DPS). DEBORAH LUPER, Chair, Subcommittee on the Department of Public Safety, first thanked the subcommittee members, who she said were outstanding. She pointed out that their decisions regarding recommendations were reached by consensus. There was no dissent on any recommendation and all members thought those recommendations probably need to go forward. MS. LUPER explained that the subcommittee considered each BRU separately and made preliminary recommendations following each one, which is the format for the report. They found that approximately 32 percent of DPS's budget is already privatized, which members believe is outstanding given that law enforcement is traditionally a government function. However, in reviewing the different BRUs, the subcommittee made several small recommendations. For example, on page 10 they recommended further efforts to privatize repair, maintenance and annual inspections of aircraft, where feasible. That area was reviewed rather extensively. Although most of that work is already privatized, members felt a little more probably could be done. MS. LUPER next referred to page 13, noting that recommendations here relate to making the department more effective. For the report, the subcommittee looked at the Criminal Investigations Bureau and then, more specifically, at the crime lab. They felt state-of-the-art technology such as DNA testing is vital to successfully pursuing criminal investigations although it would affect a different department as it would save on judicial costs. Legal cases with solid evidence tend to be pled out or to end in less expensive court trials, which subcommittee members believe to be in the best interest of the state overall. CO-CHAIR COWDERY confirmed that Del Smith was on teleconference, then requested that he add any comments he might have. MS. LUPER continued, reporting that the subcommittee encourages the legislature to consider these recommendations when contemplating the budget. For example, the state crime lab has a DNA specialist position right now, a scientist funded by the federal government. The future of that funding is uncertain. However, the state crime lab already has the equipment necessary to do DNA testing, which the subcommittee found valuable to DPS in pursuit of criminal investigations. Ms. Luper provided a case in which DNA testing was helpful. MS. LUPER moved on to page 15, noting a small recommendation regarding the Narcotics Task Force. As a member of the Civil Air Patrol, she told commissioners she had learned - for at least last year - that nearly one-half million dollars went back to the federal coffers. She explained that there is a counter-narcotics fund through which pilots such as herself are trained to assist law enforcement personnel in counter-narcotics efforts. Ms. Luper believes it is a shame the funds were sent back rather than being utilized as much as possible. It is something worth looking into, although she understands that the state already utilizes other funds. MR. PIGNALBERI asked whether that is something over which DPS has control. MS. LUPER explained that the Civil Air Patrol is an auxiliary of the United States Air Force. Although its primary function is search and rescue, funds are set aside specifically for counter- narcotics operations. In order to use those funds, DPS must make a request to the Civil Air Patrol. In talking with the gentleman who oversees much of that fund, Ms. Luper found them anxious to utilize it and to see more activity from law enforcement regarding that. MR. PIGNALBERI suggested the department needs to ask the Civil Air Patrol for more help so that the Civil Air Patrol can tap into its funds to provide that help. MS. LUPER agreed and then drew attention to the major recommendations section. Of the three major recommendations, probably the most significant cost savings would be in the vehicle acquisition and maintenance section, which the subcommittee found exceedingly expensive for DPS. Ms. Luper noted that the Fairbanks Police Department has arranged a leasing program though Seekins Ford Lincoln Mercury whereby they have no overhead in terms of acquiring vehicles, they don't have to put down a huge sum of money, they have monthly payment arrangements and they have first priority for repairs and maintenance. She understood from the Fairbanks Police Department that the program has resulted in significant savings. MS. LUPER reported that DPS pays a large monthly fee that covers normal repair and maintenance; however, "dings," dents and major work are extra. When the program began, most costs including fuel were covered by the Department of Transportation and Public Facilities (DOT/PF). As time went on, however, DPS has been asked to assume more and more expenses. The subcommittee found the costs exorbitant. For example, Ms. Luper discovered that a simple tire changeover requires two DOT/PF personnel and costs hundreds of dollars; in contrast, she can have her truck's tires changed for about $40 in Anchorage. Subcommittee members believe the state would be better served by acquiring vehicles through a lease program. Ms. Luper expressed certainty that any number of current private vendors in Alaska would be available to do that. MS. LUPER pointed out that the one exception, in terms of maintenance, is in rural areas that lack private maintenance facilities. The DOT/PF already has maintenance facilities out there and thus she encouraged the legislature to continue to utilize DOT/PF in those areas. MS. LUPER next addressed Appendix C, the fleet assignment and usage section. She explained that while sitting there, she had made notations. Page 9 indicates that B Detachment of the Alaska State Troopers has 31 police interceptor units, of which 20 have 60,000 miles or more on them; many have well over 100,000 miles. Noting that the report was printed October 22, she explained that she had included units with 50,000 to 59,000 miles, which already have or will soon have 60,000 miles. Looking at different detachments' of police interceptor units, she found over 50 percent had more than 60,000 miles on them. Although maintained well, these vehicles are in constant and sometimes very aggressive use. Therefore, they will need to be replaced in the very near future. Now is a good time to consider moving to the private arena in vehicle acquisition, she concluded. MS. LUPER returned attention to the recommendations section of the report. The subcommittee had considered DPS's work regarding patrol and enforcement in federal waters; they found it very interesting in light of the federal government's subsistence- related takeover of fisheries management. The department provides virtually all of the patrol and enforcement outside the three-mile limit on behalf of the federal government, at no reimbursement. This covers shellfish, including king crab, Ms. Luper noted, and represents a large portion of the state's economy; it is an extremely valuable area for enforcement. The subcommittee recommends that the legislature request reimbursement, from the federal government to the State of Alaska, for costs associated with that patrol and enforcement. Referring to Appendix B, Ms. Luper explained that she had asked the department to provide a rundown of last year's costs from which it was discovered that for fiscal year 1999, it [the costs associated with the patrol and enforcement outside the three-mile limit] was nearly one-half million dollars. CO-CHAIR WARD said he hadn't realized that. He had been under the impression that the United States Coast Guard did a lot of the policing outside of the three-mile limit. He asked whether that is the Coast Guard's responsibility. MS. LUPER replied that [the Coast Guard] patrols and enforces for other things; they don't concentrate on fisheries, most specifically, the shellfish fisheries. That responsibility has been placed in the State of Alaska's lap, but it is unfunded. Specifically, the subcommittee recommends that the department be reimbursed through something such as a reimbursable services agreement so DPS can be reimbursed directly for those costs. [Subcommittee] members fear that the federal government might reimburse the state, but those funds would be sent somewhere other than DPS. AN UNIDENTIFIED SPEAKER, noting that the Subcommittee on the Alaska Department of Fish and Game would report next, suggested it might be beneficial to see whether the Subcommittee on ADF&G had reviewed this since many of its members are involved in fisheries beyond the three-mile limit. MS. LUPER agreed to try to remain until that report. She then discussed the final recommendation, regarding computer systems and information delivery. It was determined that DPS and the state would be best served by consolidating and improving computer systems to provide additional information that could assist in making DPS more efficient. That issue arose in the last days that the subcommittee met, she noted, and therefore she is not as familiar with that issue. However, subcommittee members who worked on this extensively have assured her such a change would be advantageous for everyone. Ms. Luper acknowledged that this recommendation moves towards making the department more efficient rather than privatizing [a function]. MS. LUPER turned to the appendices. She explained that she had asked the department to provide a list of contracts that are already going to the private sector, [which is found in] Appendix A. Since that list was provided just a few days ago, she couldn't explain what each contract is for and thus she suggested that Deputy Commissioner Smith could do so. DEL SMITH, Member, Subcommittee on the Department of Public Safety, spoke via teleconference and noted that he didn't have the document before him. He explained that the contracts requested specifically by Ms. Luper are ones DPS has with any number of people, including instructional contractors; these are formal, signed contracts that have somebody perform a particular function. Above and beyond that, however, DPS obviously spends a substantial amount of money with the private sector. For example, many items are just billed to the department, including utilities, rent for space and so forth. Information provided by Ken Bischoff (Director, Division of Administrative Services, DPS) earlier that year indicated the department had spent about $30 million in the private sector. MS. LUPER turned attention to Appendix D, the memorandum from Mr. Bischoff dated September 20, 1999, just noted by Deputy Commissioner Smith; she suggested the information may be helpful. The memorandum states that approximately 32 percent of the department's budget is currently expended in the private sector. Not specifying what the documents are, Ms. Luper noted that "number 3 and number 4" are also attached. She explained that the October 1996 report mentioned under "number 2" in the memorandum is a comparative study of owning, chartering and leasing aircraft by DPS; it is the most current report the department could provide. Since then, Ms. Luper believes DPS has acquired a second King Air aircraft. In reading the report, she noted, it is obvious that those are extremely valuable for patrol-and-enforcement activities; transporting SWAT [Special Weapons and Tactics Team] and SERC [State Emergency Response Commission] teams; prisoner transport; and other duties. Ms. Luper believes the second King Air aircraft was acquired by DPS since the 1996 study; a major portion of its use is allocated to the Office of the Governor at a reimbursable rate. CO-CHAIR COWDERY asked whether the navigational maintenance and repair is done in-house or by the private sector. MS. LUPER deferred to Deputy Commissioner Smith. MR. SMITH explained that DPS has aircraft mechanics on the payroll. However, the [maintenance and repair of the] electronics is done for DPS by private sector people. Those are highly specialized, technical kinds of repairs and the department wants to make sure they get the best assistance. An exception is minor electronics work. CO-CHAIR WARD noted that this report says the operational costs for Bell Helicopter (ph) are $300 an hour, compared to some $600 in the private sector. He asked if that includes prorated capital costs. Co-Chair Ward indicated that when he had called local helicopter companies, that cost wasn't $600 an hour. MR. SMITH explained that when DPS wants to rent a helicopter, it is on a so-called wet lease, ready to go anytime they want it, which obviously escalates cost to some degree. Although he himself couldn't address the specifics, the department did hire a person to go out and touch base with everybody and to come up with that 1996 report. There probably are places where, at any given time, one could pay less. However, when Alaska State Troopers must respond, the need is immediate. For a wet lease, ready to go 24 hours a day, he believes those figures were accurate, at least in 1996. CO-CHAIR WARD acknowledged that a verbal conversation over the phone is a lot different from a contract. MR. SMITH agreed, then pointed out that DPS charters helicopters on an as-needed basis, such as in search-and-rescue situations where there are no assets. An example was the incident [the previous summer, near Juneau] where several helicopters crashed on a glacier; in that case, the department had to charter helicopters because it ran out. COMMISSIONER WUERCH thanked Co-Chair Ward for his question, saying it is germane to any of these cost comparisons. He directed attention to page 32 of the 1996 report; at the bottom, it clarifies that the state estimates its costs per hour without including the capital costs of the aircraft and some other issues, he said, including travel, contractual service, supplies and equipment. He suggested they are comparing apples and oranges because the government estimates its cost strictly as the operating budget cost, without amortizing capital investments. He cautioned that the numbers should be looked at critically. MS. LUPER replied that to be fair to the department, a large portion of its aircraft fleet was acquired through seizure. Game guides and hunters using Super Cubs to engage in illegal activity are a great source; about half of the department's Super Cubs were acquired that way, and the other half were purchased. However, she believes all of the department's helicopters were purchased. The first King Air aircraft was purchased for about $1.2 million, to her belief. The second was acquired from a federal source, paying $700,000 or $800,000 to bring it up to speed. COMMISSIONER WUERCH agreed the state benefits in large measure. However, if the aircraft or item weren't kept for in-department use, it could be sold to create a revenue stream for other services. He emphasized the need to look at the market value and amortize that cost as a true cost of doing the service. He then thanked the subcommittee for its thorough report. MR. PIGNALBERI recalled that early in the process the commission had requested - from the Office of Management and Budget (OMB), he believes - a report on the number of aircraft used statewide by all the agencies. The commission had provided that to one subcommittee, which he believes was the DPS subcommittee. As it wasn't included in the subcommittee's materials, however, he suggested finding out where that report was. AN UNIDENTIFIED SPEAKER indicated his belief that the Subcommittee on the Alaska Department of Fish and Game (ADF&G) had it. MR. PIGNALBERI said he didn't believe the ADF&G Subcommittee had it, because ADF&G has its own air force, as does DPS. Therefore, the notion of cross-utilization between departments arises so that with efficient management fewer aircraft would be necessary. He clarified that he was bringing that to the commission's attention for later deliberation. SENATOR ADAMS asked Deputy Commissioner Smith whether the state is over-policing areas where the responsibilities belong to municipalities. He cited the Matanuska-Susitna area as an example, noting that in some parts of rural Alaska there is no DPS activity. MR. SMITH suggested he'd have to dance on the head of a razor blade here. He then answered that he doesn't know that the Alaska State Troopers are over-policing anywhere in the state. Instead, he would argue that there aren't nearly enough troopers and they are stretched thin in most places. He acknowledged that they do police fairly heavily outside of Wasilla and Palmer as well as the City of Fairbanks; they run almost a municipal police department in those areas because of the population growth and the call load. Clearly, if municipalities expanded their boundaries and took those in, then DPS could reassign troopers. He reiterated that they aren't over-policing, although they are policing areas that arguably could be part of municipal jurisdictions, but currently are not. MS. LUPER expressed appreciation to DPS, saying the subcommittee had enjoyed excellent cooperation. MS. SHORT spoke up. Not a member of the DPS subcommittee, she recalled that her own subcommittee was asked to look at interagency receipts along with the Department of Health, Education and Social Services; she said it seems many privatization subcommittees are doing the same thing. She cautioned that interagency transfer costs money because of required personnel, and it opens up more possibilities for misappropriation of funds. Direct payment, a much better idea, probably ensures that money goes where it is supposed to, Ms. Short concluded, and it cuts back on staff. TAPE 99-17, SIDE B Subcommittee Report on the Alaska Department of Fish and Game MEAD TREADWELL, Chairman, Subcommittee on the Alaska Department of Fish and Game (ADF&G), advised commissioners that the subcommittee had met virtually every Tuesday since its formation. They had excellent cooperation from the department, and Mr. Treadwell believes there was a representative membership from the community. The subcommittee includes commercial and sport fishermen as well as various private sector people such as Pat Simpson, head of Scientific Fisheries Systems (ph), which does software and other research for the fishing industry. Mr. Treadwell himself is vice-chairman of the Prince William Sound Oil Spill Recovery Institute in Cordova, at the Prince William Sound Science Center, which conducts privately and publicly supported research. Members of privatized hatcheries are also on the subcommittee. MR. TREADWELL highlighted important findings in the written report. Of the total $111 million budget that the legislature appropriates for ADF&G, direct general funds are $30 million "plus a few of these program receipts." Close to $71 million comes to the state from various forms of revenue collected in the commercial fishing industry, and about $49 million comes from hunting and sport fishing. Therefore, there is already a major private revenue source, of sorts, coming into the state from activities managed by ADF&G. MR. TREADWELL pointed out a conclusion reached fairly early on: although perhaps pencil sharpeners, airplanes and boats can be rented rather than purchased, the state really can't delegate the management responsibility for the fish and game that it received under the statehood compact. While the subcommittee had looked at ways to improve the science which supports that decision- making process and so forth, they felt it would have been very difficult to actually put authority into a contractor's hands for management of any particular fishery. MR. TREADWELL next addressed existing privatization practices. With the legislature's support, a tremendous number of privatization initiatives had been adopted by the department over the past decade, probably the most notable being privatization of state-owned hatcheries. There have been retail sales of fishing and hunting licenses for many, many years; a revenue source for people in that business, it is something with which ADF&G works well. He noted that there is new legislation to contract with private boat owners and processors for test fisheries; the subcommittee would discuss a recommendation regarding that. In addition, for a long time there has been contracting with private and institutional boat owners for research platforms. Furthermore, there has been contracting with local Native and fishing organizations to conduct salmon stock assessment programs. With the impending subsistence regime, Mr. Treadwell suggested there will be federal contracting to some of those same organizations for management efforts. There is also contracting for aircraft. MR. TREADWELL noted that the subcommittee had made nine basic recommendations after looking at a number of different initiatives; for almost all, they had some recommendation. He expressed gratitude for Pat Simpson's work, including contacting others and reviewing "privatization experiences" in New Zealand, the Great Lakes region and New England. Mr. Simpson works nationally and internationally in supporting fisheries management around the world, he noted. Initially, Mr. Simpson's hypothesis was that some research management could be privatized. However, that often produces very different results, bringing into question the scientific method at one end or another. Sometimes just changing the kind of boat used for stock assessments can dramatically change the way a fishery is managed, for example. Consistent results lead to consistent management. Therefore, there was a concern. Mr. Treadwell suggested perhaps Mr. Simpson may want to speak to this. MR. TREADWELL reported that the subcommittee did recommend that ADF&G do something like what the federal government does: issue so-called task order agreements to a private contractor to help assist agency activities in a certain area of the department. These task order agreements would allow more and more small things - which otherwise would have to go through a request for proposals (RFP) process - to be contracted out. This might help the cause of privatization with which the commission is concerned, Mr. Treadwell suggested. However, the subcommittee wasn't sure whether legislation would be needed to do this. SENATOR WARD requested an example of a federal task order agreement with a private contractor. MR. TREADWELL replied that in Antarctica, NANA [Regional Corporation] had just won a contract to help provide support services for the research activity there. The contract is broad enough so that if in the middle of the contract the federal government decides a building is needed, for example, NANA can be directed to build it. By having a master contract that allows task ordering, a contractor may "invest in ownership" in a certain area, which can smooth out the privatization process. MR. TREADWELL returned to the report, pointing out a second recommendation that the subcommittee had discussed fairly thoroughly: research plans and partnerships. There is something major happening in the marine research area, he said. Although the legislature has not been directly involved in most cases, the commission should be aware of the whole picture. Washington has finally appropriated a perpetual endowment of about $160 million from the Dinkum Sands settlement to support North Pacific and Bering Sea research in the marine environment; that is to be run by about an 18-member board for the North Pacific research board, which includes federal and state agencies and some private institutions like the Sea Life Center in Seward. MR. TREADWELL continued. The Exxon Valdez trust, the result of the billion-dollar settlement, has come down to a research fund of about $115 million; Mr. Treadwell indicated there was a report in last week's newspaper about that. Very quietly in Washington, he added, there was a measure that allows them to invest at much higher rates than previously. As for the Prince William Sound Oil Spill Recovery Institute, with which he is involved, it has a $23-million endowment established by Congress. That endowment has been supporting marine research and oil spill technology research in Prince William Sound and the Arctic. In addition, two major emergency appropriations measures, for Norton Sound and the Bering Sea, have brought close to $14 or $15 million, which can be used for basic research efforts. MR. TREADWELL expressed the subcommittee's concern that ADF&G probably doesn't have the money necessary to perform the scientific work needed to track all of the fisheries. However, they would not recommend that the legislature direct ADF&G to take money from the endowments to pay for that. They do recommend, however, that the legislature encourage - and that ADF&G go through - a sustained planning process to have a research plan for several different geographic areas of the state and to get those other funding sources onboard. Scientific research on Steller sea lions, for instance, may require a number of transects over the next five years, and the department might use that for fisheries management. Close to $300 million is available to support marine science; however, Mr. Treadwell indicated, the subcommittee can't say that it would lower the amount which the legislature needs to appropriate to maintain Alaska's resources. Scientists and managers from all Alaska's regions need to get together to figure out what programs are best and what sources will pay for those. MR. TREADWELL noted that he had gone over this with Molly McCammon, Executive Director, Exxon Valdez Oil Spill Trustee Council, who had said, in essence, "I'm not going to make up department budgets, but we are willing to help fill in the gaps that the department isn't able to do." Likewise, the Spill Recovery Institute had met the previous Monday in Cordova, with similar results, Mr. Treadwell indicated. He added that the North Pacific board hasn't met yet. MR. TREADWELL emphasized that this is a major opportunity. Day in and day out, ADF&G collects data and advises the Board of Fisheries and the Board of Game on what kinds of catch limits to set; it also has an enforcement function regarding those rules. The subcommittee found, in some divisions, that sometimes as much as 70 percent of the budget is devoted to applied research, as opposed to the more theoretical research that universities may do to prove the biology. At the same time, the subcommittee found there may be ways to break down some barriers that exist, institutionally or otherwise; that could result in sharing and, hopefully, much better management. MR. TREADWELL pointed out that the foregoing had resulted in the subcommittee's second recommendation. They leave it to the commission to decide whether legislation or oversight is needed. Mr. Treadwell passed along a point he had made to Senator Torgerson at a meeting recently in Palmer. That point is in regard to his belief that the legislature has never had together, at one hearing, leaders of all these major funding institutions for marine research in Alaska, of which the state is a party. State input basically comes from the executive branch, not the legislative branch, he added. MR. TREADWELL drew attention to the third recommendation. Funding for new fishery development opportunities was contained in HB 198, enacted recently. This is a self-taxing mechanism to fund development of dive fisheries, based on the value of the product harvested. The legislature will have to decide in the next year to earmark those funds to go to their intended purpose. He suggested someone from ADF&G can explain that further. He referred to this an attempt that the legislature made for privatization in the last couple of years, noting that it will have its first major test this year. He indicated the subcommittee supports that going forward. MR. TREADWELL turned attention to the fourth area discussed: electronic data collection and reporting. Noting that he was a member of the Alaska Science and Technology Foundation (ASTF) for five years, Mr. Treadwell recalled the great frustration there because ASTF had helped to pay for an electronic fish ticket system that the department hadn't used. It turned out that several other entities - supported either by private funds, Community Development Quota (CDQ) user groups, or ASTF - have developed ways to automate fish ticket information. It would be much easier to collect that information electronically in some cases, and it would help to result in better fisheries management in other cases. When fishing against a quota, for example, knowing how much has been caught may make a difference. Right now, that process is done by hand, with data entry. The subcommittee recommended that ADF&G move quickly to resolve legal issues because a fish ticket is a legal document. Mr. Treadwell concluded, "We have the technology. We're suggesting that this privatization commission help put a head of steam behind making that happen." He cautioned that the subcommittee couldn't provide a specific estimate; if five people were doing data entry in Western Alaska today, for instance, they didn't know whether five would be needed tomorrow. He suggested those are the kinds of questions that the commission may want to ask as they move forward with this kind of recommendation. MR. TREADWELL next discussed privatization of fishing license sales. The department now offers license sales online using a credit card, with licenses then mailed to the purchasers. However, a person can go to the post office online and buy stamps to be printed at home. The subcommittee suggested there may be a similar way to provide a more automatic online system for fishing licenses. MR. TREADWELL reported that the subcommittee also had examined revenues raised by ADF&G from "collector duck stamps." Although the department's own chart shows wild fluctuations, there has been a big market nationwide. The subcommittee suggested possible expansion of this program. The legislature has authorized the department to issue collector stamps for both ducks and fish, Mr. Treadwell noted. It would both promote Alaskan wildlife and earn revenue for the department. MR. TREADWELL turned attention to so-called stream watch programs and citizen assistance and enforcement, noting that the subcommittee had a lot of discussion about those. Currently, the stream watch program is "kind of a privatized program" run by a private nonprofit group with the department. There is a 1-800 number for use by people who see fish and game violations. Much of the sport fishing in Alaska occurs in areas where people can carry cellular telephones, Mr. Treadwell pointed out. It may be desirable to generate a new set of trained "stream watch volunteers" who can notify the department of their whereabouts when out fishing, for example, to help stretch ADF&G's enforcement dollars and supplement, in advance, an enforcement effort by the department. MR. TREADWELL also reported that the subcommittee saw many opportunities for cooperation in chartering out boats. Basically, many entities don't share their plans ahead of time. Again, the idea is for geographical plans. For example, what are the University of Alaska, the Sea Life Center, the National Oceanic and Atmospheric Administration (NOAA) and the National Marine Fisheries Service (NMFS) doing? People need to know what kind of platform requirements exist in an area, whether it is Prince William Sound or the Bering Sea. The subcommittee encouraged sharing and doing research planning ahead of time, as well as more chartering out of private vessels. MR. TREADWELL next discussed the recommendation to improve enforcement by use of retired officers and better fine settlement policies. He mentioned union agreements and that enforcement is a public safety issue. Several subcommittee members had looked at how to use retired officers to supplement existing officers in enforcement. In trying that previously, the state had apparently met roadblocks with the union or with safety requirements, for example. A cadre of dedicated people, who have spent their careers in this business in Alaska are interested in being involved. If there is a way to sort through the problems, the subcommittee believes budget dollars may be stretched further, whether in ADF&G, through an interagency appropriation to DPS, or directly to DPS. MR. TREADWELL referred to an earlier discussion and noted that seizures are a major source of capital for the Department of Public Safety in certain areas. Noting the subcommittee's recommendation of legislative review of the policy regarding fines, he said this basically comes down to the attorney general and the department to ensure that fines and settlements for fish and game violations go back into helping to support management. MR. TREADWELL addressed the final area: contracting out protected areas where economic savings would be achieved. This is a chicken-and-egg problem, he said. Currently, the state manages places where tourists go under certain permit processes; examples are Pack Creek and McNeil River for bears, and Round Island for walrus. Theoretically, this could be chartered out to private or nonprofit corporations, which might actually help to develop these areas a little better for tourism. In discussions with the department, members heard the opinion that there isn't enough money to support private entities there. Mr. Treadwell countered by saying, "If no one owns it, no one cares." If they were to find a concession arrangement that works, he suggested, a concessionaire may be interested in helping to develop an area so that it does support itself. Although an Alaskan, he himself has never been able to get to McNeil River because he hasn't won the permit lottery; that is a general concern about privatizing a public resource. CO-CHAIR WARD asked Mr. Treadwell to comment about enforcement relating to the three-mile limit. He requested clarification as to whether ASTF gave a grant for ticketless fish for the commercial harvest. MR. TREADWELL explained that a few years ago an entrepreneur, an inventor in Homer, developed an electronic fish ticket system; a condition of the ASTF grant was that there be discussion with ADF&G. That particular grantee was rather frustrated because he was never able to get his system adopted. Mr. Treadwell further stated: They also supported another software company. They were supported by a CDQ group .... As you know, the CDQ groups, they've got quotas from the feds, and they've got to know what their contracting boats are catching, because if they go over their quota, they get clobbered. So, they needed a much better system of information than the government had, to find out how much fish had been caught. So they developed another piece of software. And I think what we're saying is that we know of at least those two pieces of software, plus one other government effort that did it; and the department has yet to get around the legal impediments that they see to adopting any one of these things. We recommend an open system, so that any entrepreneur that comes up with this -- you know, the government says, "Give us the information," rather than saying exactly, you know, it has to be on paper, because if they do that, any of these entrepreneurs may be able to make it go. CO-CHAIR WARD expressed curiosity about the legal impediments. MR. TREADWELL answered that ultimately, to his belief, there is a requirement for a hard copy or signature by the person who caught the fish, as well as the signature of the buyer. It is the legal document on which the fish tax is based. CO-CHAIR WARD asked whether the subcommittee had looked at the three-mile limit and enforcement relating to ADF&G. MR. TREADWELL replied no. He mentioned a "large kind-of-mind- share component" of the department where they work on federal fisheries issues or offshore fisheries issues, which don't tend to take a huge amount of money out of the budget. The state definitely puts in some general fund money to help things happen outside the three-mile limit, Mr. Treadwell pointed out. He personally would advise, by all means, going for a reimbursement. However, one must remember that one real gain that the state got from the so-called Magnuson Act [Magnuson-Stevens Fishery Conservation and Management Act] was that Alaska's governor gets to appoint seats on the North Pacific Fishery Management Council (NPFMC), which extends the state's jurisdiction. Mr. Treadwell emphasized that the state definitely should play a role. Although it could take the position that those are federal waters and the federal government should pay for everything, the state has really been given a chance to speak up regarding management. That [ability] has made a big difference in inshore, offshore, allocation and quota decisions. "We shouldn't shirk that responsibility just because it goes outside of three miles, is my other reaction," he concluded. STEPHANIE MADSEN, Member, Subcommittee on the Alaska Department of Fish and Game, announced her presence via teleconference from Juneau, adding that she is with the Pacific Seafood Processors Association. She also noted the presence of subcommittee member Amy Daugherty, as well as Tom Gimmell (ph) of the United Fishermen of Alaska (UFA). GERON BRUCE, Member, Subcommittee on the Alaska Department of Fish and Game, speaking via teleconference, noted that he is the ADF&G contact for the subcommittee. He concurred with Mr. Treadwell that the state plays a major role, particularly regarding the shellfish fishery for which the actual management has been delegated by NPFMC to the state. The state already receives some federal funds for shellfish and groundfish fisheries in that area. Although it doesn't manage the latter, the state has a very active role in influencing policy. CO-CHAIR COWDERY asked when ADF&G plans to submit its response to the subcommittee's recommendations. MR. BRUCE said he thinks it will be fairly soon. He offered to provide oral comments on a couple of recommendations. CO-CHAIR COWDERY responded in the negative. MR. PIGNALBERI pointed out that this report is somewhat unusual. He called attention to extra work done by subcommittee members, who had submitted their own treatises and papers as appendices. Eight papers were written independently, some including specific recommendations at the end. Furthermore, in the preface to the report, the chairman had taken pains to say these individual recommendations were not voted on by the full subcommittee but were additional contributions by members. Mr. Pignalberi suggested the commission owes these people, for their work, at least some review. He requested that Mr. Bruce also distribute those recommendations to appropriate ADF&G personnel for a timely response. REPRESENTATIVE BRICE asked when the department was made aware that the commission needed a response. MR. BRUCE answered that, to his recollection, he first became aware yesterday when he e-mailed the draft report to the commission staff, who then requested written comments for this session. He had offered to provide some oral comments this day and to get something more formal in writing as soon as possible. CO-CHAIR COWDERY emphasized the desire for comments in writing by the next week, if possible. MR. TREADWELL offered to accept some responsibility, explaining that he had been traveling extensively. He suggested the department had been focused on helping the subcommittee come up with fact-based recommendations. CO-CHAIR WARD echoed the request to have ADF&G personnel respond to recommendations in both the total report and all eight individual papers. CO-CHAIR COWDERY thanked Mr. Treadwell, then announced a short lunch break. Subcommittee Report on the University of Alaska CO-CHAIR COWDERY reconvened the meeting at an unspecified time. He invited Ms. Frasca to present the report on the University of Alaska, whose three main campuses are the University of Alaska Fairbanks (UAF); the University of Alaska Anchorage (UAA); and the University of Alaska Southeast (UAS), in Juneau. CHERYL FRASCA, Chair, Subcommittee on the University of Alaska (UA), came forward, introducing Wayne Jensen, who had participated in the subcommittee's efforts. She referred commissioners to the cover page of the report, which lists UA subcommittee members as herself, Jan Fredricks, Wayne Jensen, K. Wayne Price, Tom Wilson and Nancy Usera. She pointed out that although there were additional subcommittee members, those listed were participants in developing and finalizing the recommendations. Appendix G, a memorandum from Wendy Redman to Mr. Pignalberi, provides information on what the three primary campuses have done over time; however, the rest of the report focuses on possible future changes in the delivery of services. CO-CHAIR COWDERY confirmed with Ann Ringstad that she was still online in Fairbanks. MS. FRASCA commented on the great cooperation from the university in terms of talking about what could be done differently, and she noted that UA is open to any opportunity to save money. The subcommittee had talked with Dr. Bird (ph) from Charter College regarding opportunities for private-sector delivery of academic instruction. As a result, all of the subcommittee's recommendations deal with support activities that allow the delivery of instruction, rather than instruction itself. Ms. Frasca drew attention to Appendix A and a matrix prepared by the university; "IH" stands for "in-house" and "OS" stands for "outsourcing." The matrix provides a snapshot of potential opportunities to outsource activities currently done in-house. Recommendations on page 2 of the report follow the matrix. MS. FRASCA addressed the first area of potential outsourcing, the selling of books. As a pilot program, the Juneau campus sold about 50 percent of its books over the Internet this last year. Previously, UAA performed an evaluation regarding privatizing management of its bookstore, especially the Internet and e- commerce aspect. Although UAA decided it wasn't cost-effective at that time to outsource management of the bookstore, they scheduled a review for 2001. The subcommittee concluded, given technology and the rate of change, that it is appropriate to do that review sooner rather than later. This is a primary area where students might be able to get quicker service in obtaining books, hopefully at less cost. MS. FRASCA emphasized that what is done by UAA won't necessarily be followed by UAF or UAS. The campuses are independent in these evaluations. Therefore, it is important that the statewide administration encourage each campus to undergo these kinds of evaluations. MS. FRASCA turned attention to utilities, noting that UAF owns and operates its own heating and water systems. The subcommittee felt that a full evaluation would be appropriate regarding possible private-sector delivery of service, especially since utilities have become deregulated. Although there hadn't been a consensus as to whether it is a good idea, people in Fairbanks brought this to the attention of [subcommittee] members. The UAF plant staff has been very helpful in bringing information forward, and Wayne Jensen, who is involved with Energy Masters (ph), was also helpful in discussing utility-related options. CO-CHAIR COWDERY asked about amortization on UAF's existing facilities. Could it be transferred, for example? MS. FRASCA said the subcommittee didn't get into that part of it, then requested confirmation. WAYNE JENSEN, Member, Subcommittee on the University of Alaska, specified, "Not from a standpoint of amortization of the asset. But they do own the asset. It could be sold." REPRESENTATIVE BRICE pointed out the associated concern of liability, given the research at the university and the fact that it acts as the "parent" of thousands of students, being responsible when the lights go out, for example. Another issue is that they are developing experimental technology using the power plant. When injecting those considerations into the debate, he suggested the private sector may start to believe it is getting too complicated. He stated that the university has some weird utilities, with strange responsibilities. MS. FRASCA returned to the report, noting that UAF owns its telephone system, which is another area for potential outsourcing. As for grounds maintenance, all campuses do that in-house, although UAF uses student labor for much of that work. The university's response, when the subcommittee suggested possibly contracting with the private sector, was to emphasize the large amount of land that needs to be maintained. Still, the subcommittee felt that shouldn't prohibit inquiry into levels of interest in private-sector maintenance of the grass, parking lots and so forth. MS. FRASCA discussed housing. Although UAA had tried to solicit private management of its new student housing, through a "request for interest" process, they hadn't received satisfactory responses from private management companies. Therefore, they have farmed out portions. For example, food service is under a private-sector contract, although Ms. Frasca couldn't recall whether janitorial service and maintenance are. The Juneau campus (UAS) actively rents out housing during the summer, generating about 50 percent of the full year's revenue from nonstudent activity, thereby keeping down costs during the rest of the year for the students. The subcommittee suggested that the university explore more fully the potential to also do that at UAS and UAF. MS. FRASCA next addressed garbage collection and removal. As UAF currently does that in-house, the subcommittee suggested that they explore outsourcing that. Although UAF has not seen a lot of interest from their informal inquiries, they have not gone through a formal process. MS. FRASCA turned attention to printing, pointing out an interesting discussion under Appendix B regarding so-called managed competition. In-house personnel do some but not all of the printing, trying to compete with the jobs that can be done through outsourcing in terms of quality and costs. Ms. Frasca said they seem to be doing a pretty good job on the printing side with their current mix of in-house production and outsourcing. MS. FRASCA indicated the final item of the matrix is janitorial service. Because UAS does janitorial service in-house, she suggested that might be an opportunity for private-sector services. She noted that the matrix has been a good tool for both the subcommittee and the university. MS. FRASCA pointed out that temporary labor is another potential area. Along with the university, the subcommittee had discussed using private employment services for temporary nonstudent labor. Although they have done that a little in the past, the university will evaluate whether they can do more in the future. MS. FRASCA turned attention to leased vehicles, noting that this subject has arisen with other subcommittees as well. Appendix C compares UAF-purchased vehicles and those leased from automobile dealerships. Through attrition, UAF has moved to a vehicle pool, she indicated, whereas formerly departments had their own cars; they believe their arrangement is less costly than privately leased vehicles would be. Although there is a question of whether the comparison is apple-to-apple or apple-to-orange, the subcommittee did explore it. MS. FRASCA next discussed campus security. The subcommittee recommended going to an outsource; Appendix E is a memorandum which speaks to that issue. Ms. Frasca noted that the legislature gave the university authority a couple of years ago to commission officers so they could have full power on campuses. MS. FRASCA pointed out that Appendix F includes collective bargaining agreement language. TAPE 99-18, SIDE A SENATOR ADAMS asked if there is a dollar amount of savings in any one of these. MS. FRASCA replied no. She explained that was not done because an evaluation of the potential private sector capability to deliver the service would have to be performed. Some of the smaller campuses may not even have a private sector available to deliver the service. She noted the short time frame. SENATOR ADAMS asked if any of the university campuses have performed a savings analysis on any of these. MS. FRASCA answered that she was not aware of such, but deferred to Ms. Ringstad. ANN RINGSTAD, Legislative Assistant, Legislative Affairs, said that has not been done statewide for the purposes of this exercise. However, each one of the campuses have went through cost comparisons. For example, the book store at the Anchorage campus went through a comparison of the cost of performing its services in-house versus [in the private sector]. The option of e-commerce was also reviewed. She noted that [the Anchorage campus] is evaluating that on a periodic basis. MS. FRASCA mentioned that she did have a copy of the Anchorage campus analysis which she offered to provide to Mr. Pignalberi. MR. PIGNALBERI wondered if Mr. Jensen (ph) would want to offer additional comments. Mr. Pignalberi pointed out that the subcommittee spent most of its meeting addressing the power plant issue, which is the large item. He explained that when the university was being built up, the local utilities of Fairbanks were not large enough to handle the load from the university. Now there are two electric utilities in Fairbanks which can handle the university's load and those companies are interested in seeing the plant privatized. Although that analysis is more complex than what the subcommittee could handle, it is a topic that needs discussion. SENATOR ADAMS commented that perhaps, the university should not outsource or privatize any of these services if there is a lot of student employment. He asked if that information is available for any of the items listed. MS. RINGSTAD responded that she did not have that information. She felt that Senator Adams' had a good point because many of the programs are tied to student employment and student classes. Such ties make it difficult to disseminate the information. CO-CHAIR COWDERY surmised that if the students are utilized by the university wouldn't those students also be used by the private sector. AN UNIDENTIFIED SPEAKER said that was discussed. It was felt that the university could put into the Request for Proposals that students continue to be employed in the delivery of these services. Furthermore, the students are a reduced cost, which would potentially help the private sector come in at a reduced cost. She explained, "For the most part, what we went through, they weren't necessarily instructional-related activities. So in terms of students being in a teaching capacity ... it didn't seem to be an issue with the kinds of functional areas we were looking at." CO-CHAIR WARD asked if UAF is producing enough power so that it could sell its excess power. AN UNIDENTIFIED SPEAKER said that he believed that the UAF does have some excess power. However, regulations do not allow the university to sell that excess power on the open market. In response to Co-Chair Cowdery, he clarified that the university is on the statewide grid. He pointed out that regulations do not require someone to purchase that excess power. He noted the potential for an "arm's length" negotiation between two entities to exchange power. CO-CHAIR COWDERY stated his assumption that if the Copper Valley area went down, the grid system would utilize the university's surplus power. AN UNIDENTIFIED SPEAKER indicated that the university power system would probably have difficulty meeting the requirements physically. Therefore, a narrow area would have to be isolated. If the university went down, Golden Valley could and does back up the university. COMMISSIONER WUERCH commented that the framework of this discussion is troubling. He explained that functions such as the book store, food service, and utilities are being viewed in the cost sense versus the profit sense. He inquired as to why the university is not working from the economic model which emphasizes the need to make a profit. He asked if this is merely a terminology issue or is there a difference in thinking. MS. FRASCA informed the commission that the university's grid does not include food services at the University of Alaska - Anchorage (UAA), which does make a profit. She noted that those are managed by the private sector. Such privatization or outsourcing is discussed in the last memorandum attached [to the report]. COMMISSIONER WUERCH reiterated the need to adjust the framework of thinking to view these as revenue/profit centers. If [the state] cannot perform these services without making a profit, then [the state] should not be performing these services. COMMISSIONER FINK noted that he had attended some of the subcommittee's meetings during which the subcommittee attempted to "zero in" on the number of campuses. He did not believe there would be any substantial reduction in costs if the large number of campuses are maintained with the small populations. He recalled requesting a comparison of the budget as different campuses came on-line. Commissioner Fink said that he was convinced that there is a correlation between the additional campuses and the increase in costs. Furthermore, he indicated that such a disbursement of campuses will not allow the creation of a top-quality university. He inquired as to how many campuses there are in the University of Alaska system. MS. RINGSTAD informed the commission that there are three main campuses in Anchorage, Fairbanks, and Juneau. She estimated the total, in addition to the extended campuses, to number 23. COMMISSIONER FINK commented, "I think we broke the bank when we first opened the Bethel Community College." He noted that he was in the legislature at that time. He recalled that during that time the University Board of Regents fought the opening of that extension of the university. All the extension campuses eventually became colleges with buildings and full-time instructors. Commissioner Fink likened the current university system to a community college. He suggested that reducing the number of campuses would change that. CO-CHAIR WARD requested that Ms. Ringstad provide the commission with the information requested by Commissioner Fink, a cost comparison of the budget as different campuses came on-line. MS. RINGSTAD agreed to provide that information as well as a copy of the budget. Only a very small portion of the university's budget goes to the extended campuses, which give back so much. She felt that it was a question of money as well as policy. CO-CHAIR WARD commented that he did not disagree. Although matching dollars with students is not a fair analysis, it does provide a starting point. SENATOR ADAMS indicated agreement with Commissioner Fink's comments, with the caveat of closing the Anchorage campus as well as the extended campuses. Therefore, there would be one central university in Fairbanks. He further suggested that Alaskans living in Anchorage and the areas of the extended campuses could be given free scholarships to education in Fairbanks. REPRESENTATIVE BRICE pointed out that the idea behind the university is to provide education, not to turn a profit. He explained that there may not be as much of a profit in book stores and food services because that is generally the only access to those services that students have. He commented that students do not make a tremendous amount of money. REPRESENTATIVE BRICE turned to the issue of having a university system which is parallel to a community college. When the community colleges were merged with the university, the university's mission then included providing those services of the community college. Representative Brice stressed that one would be pressed to find better education on the West Coast than that provided in some of the areas of the Alaska system. He provided the following examples of stand-outs in Alaska's University system: the teaching program at the University of Alaska - Anchorage, the engineering program at the University of Alaska - Fairbanks and the Arctic sciences and research performed at the university. Representative Brice said, "So, I think what we need to do is stop looking at the university as some kind of 'Golden Calf' to go slaughter. What we need to be doing is looking at it [the university] as a ... investment that's going to ensure the safety and the surety of this state's future." COMMISSIONER FINK thanked Senator Adams' for his support. Many in the Anchorage area would like to see the Anchorage campus disconnected from the University of Alaska, and allow the Anchorage campus to become the state university. COMMISSIONER NOTTI stated that first there must be a decision with regard to what the university is. Is it a school of higher learning or is it a trade school? He eluded to the need to concentrate on one area. CO-CHAIR WARD asked if the subcommittee reviewed the utilization of the land held by the university. For instance, was there review of placing that land in the private sector. He mentioned that the Governor vetoed additional land going in. MS. FRASCA informed the commission that the subcommittee did meet with the land folks and there was discussion with regard to having more land and the result of that in terms of increased revenues to the university. [The university] cautioned that it would be approximately a 20-year horizon before significant amounts of money are realized. With regard to the issue of selling individual lots to individual Alaskans, the report briefly addresses the university's current practices with their land and timber sales. MR. PIGNALBERI explained that the report includes information from the University Land Office which specified that the university land sales have a 70 percent successful conversion rate as compared to the state's 30 percent successful conversion rate. The reason for that is the university's preparation and marketing. Therefore, other state agencies could learn from the university on this issue. CO-CHAIR WARD interjected that the university could also be given more land. MS. FRASCA, in closing, commented that the university was cooperative. The university was eager to find ways to save money. Ms. Frasca encouraged dialogue to continue at the top level in order to encourage the campuses to do it [review how to save money]. COMMISSIONER COMMENTS CO-CHAIR COWDERY asked if any commissioner had any comments. COMMISSIONER WUERCH informed the commission that the meetings scheduled for December 7, 1999, and December 17, 1999, are days which the assembly will be meeting. Therefore, he said he has to give priority to the assembly meeting on those days. Commissioner Wuerch stated that he would attend the commission's meetings if the assembly work session does not lapse into the morning. SENATOR ADAMS inquired as to the dates the commission would take up the recommendations from each agency. He suggested that each commissioner should have the ability to bring forth recommendations that are different than the subcommittee. However, he requested that knowledge of such recommendations be provided so that appropriate time could be allowed to debate that issue. CO-CHAIR COWDERY pointed out his understanding that the subcommittees' reports may be adopted, may be partially adopted, or receive additions or changes from the full commission. AN UNIDENTIFIED COMMISSIONER announced that he had planned on making recommendations that he had not yet heard. SENATOR ADAMS explained that he hoped the process could be expedited. "I'm going to use an example of DEC which has 24 recommendations. And I'm going to say that I object to Recommendations 7, 8, and 13. If nobody else has any objections, everything else except those three. And I can ... at least debate those three that I say my reasons why we shouldn't accept them as a commission." MR. PIGNALBERI said that he needed to know what approach would be taken. He noted the need to have a departmental representative available during discussion of the corresponding recommendations. The departments have indicated that they want to be present during their corresponding recommendations. MR. PIGNALBERI informed the commission that he would provide the commission with a master list of recommendations by department. He pointed out that earlier the commission had discussed following the method of only acting on recommendations that commissioners make a motion to adopt and those recommendations that do not receive a motion would not be acted upon. He reiterated the importance of knowing the procedure because the departments want to be involved. Therefore, he suggested determining the process today. COMMISSIONER WUERCH stated that he shared Senator Adams' concerns. He identified the following goals of the commission: to establish the top issues, to preserve the body of knowledge in a form that is useful in the future, and to impart judgement on that body of knowledge. Furthermore, there should be the ability for the commission to introduce initiatives. He believed those endpoints could aid the staff in guiding the commission. CO-CHAIR COWDERY agreed that there would be some additions and deletions during this process. CO-CHAIR WARD commented that it is a good direction. He expressed the need to have the full commission analyze each recommendation. He stressed that, in his opinion, each commissioner will have the ability to submit any recommendation for the full commission to consider. COMMISSIONER WUERCH explained that he was outlining a management by section. He did not believe that each recommendation needs to be reviewed again. The commission should be able to identify recommendations which it feels are really good. Those recommendations in the middle could be passed on in the body of knowledge. CO-CHAIR WARD surmised then that Senator Adams wanted to identify those recommendations that are extremely bad, while Commissioner Wuerch wanted to identify those that the commission wants to highlight. COMMISSIONER WUERCH agreed. REPRESENTATIVE BRICE said that he believed Commissioner Wuerch had a good idea. Once the commission receives the list of 400 or so recommendations, the commission can vote for or against specific recommendations that each commissioner has from the 400. Those can then be brought back before the commission. He liked that process because it would allow those recommendations without any interest to fall aside. Furthermore, the debate could then be directed to the recommendations being voted on. COMMISSIONER WUERCH interjected that if the commission went through the recommendations and determined those that it wanted to consider, then the recommendations would be pared down considerably. The other recommendations would not be voted down, but would just merely not be taken up. MR. PIGNALBERI surmised then that there would be however many recommendations with the option of a "yes" vote, a "no" vote or no action. SENATOR ADAMS explained, then, that the commission would submit the whole [report] with the commission's report on top. Therefore, what was left out would remain in the reports. Senator Adams pointed out that on this 11-member commission it will require six votes to pass a recommendation. MR. PIGNALBERI clarified that there are still four reports that he does not have. Therefore, those will not be available by Monday. He requested that the commission inform him of the sequence of departments. SENATOR ADAMS suggested waiting until all the recommendations are complete before compiling the recommendation list. [COMMISSIONER FINK] understood then that the most important recommendations could be brought forward by the commissioners. Therefore, he assumed that Co-Chair Ward would be bringing forward some recommendations. CO-CHAIR WARD informed the commission that he had two things he wanted highlighted. He stressed that the commissioners' recommendations should take at least an equal footing with those recommendations from the citizens. COMMISSIONER WUERCH turned to the aforementioned desire to have the departments present during the debate of the corresponding recommendations. He proposed having the commissioners provide a list of their top recommendations to Mr. Pignalberi. Therefore, that list could be provided to the departments in order to have the appropriate departmental person available during that discussion. MR. PIGNALBERI suggested that the commission determine which departments it wanted to take up first. He suggested only taking up three of the departments. COMMISSIONER FINK recommended that the larger ones, such as DHSS and DOE, should be before the commission earlier. COMMISSIONER WUERCH commented that perhaps some of those minor recommendations will not be nominated for discussion. CO-CHAIR WARD pointed out that a commissioner could make a recommendation that creates a lot of debate. COMMISSIONER FINK said that he did not believe there were many recommendations today that saved money. There being no further business before the commission, the Commission on Privatization and Delivery of Government Services was adjourned at 1:00 p.m.