Legislature(2003 - 2004)

04/14/2003 04:01 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     SPONSOR SUBSTITUTE FOR SENATE BILL NO. 35                                                                                  
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
     CS FOR SS FOR HOUSE BILL NO. 75(FIN) am(brf sup maj fld)                                                                   
     "An  Act  making appropriations   for the  operating  and  loan                                                            
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; and providing for an effective date."                                                            
                                                                                                                                
                                                                                                                                
     SPONSOR SUBSTITUTE FOR SENATE BILL NO. 36                                                                                  
     "An  Act making appropriations  for the  operating and  capital                                                            
     expenses of the state's  integrated comprehensive mental health                                                            
     program; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
     CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 76(FIN)                                                                       
     "An  Act making appropriations  for the  operating and  capital                                                            
     expenses of the state's  integrated comprehensive mental health                                                            
     program; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
This was the second hearing for these bills in the Senate Finance                                                               
Committee.                                                                                                                      
                                                                                                                                
Department of Military and Veterans Affairs                                                                                   
                                                                                                                                
Senator Robin Taylor, Chair                                                                                                     
Senator Fred Dyson                                                                                                              
Senator Scott Ogan                                                                                                              
Senator Donny Ellis                                                                                                             
                                                                                                                                
Senator Taylor stated that the Finance Committee subcommittee for                                                               
the Department of Military and Veterans Affairs has accepted the                                                                
Governor's proposed budget for the Department.                                                                                  
                                                                                                                                
Co-Chair  Green affirmed  that  the  subcommittee has  accepted  the                                                            
Governor's budget  proposal, and she asked whether  any component of                                                            
the budget would require further explanation or discussion.                                                                     
                                                                                                                                
Senator Taylor  replied no,  as the budget  is self-explanatory.  He                                                            
acknowledged the  cooperation provided by the Department's  Adjutant                                                            
General/Commissioner  Colonel Craig  Campbell in the development  of                                                            
the budget. He  communicated that in order to streamline  the budget                                                            
and reflect personnel  changes and other responsibilities  for which                                                            
the Department  is accountable,  Colonel Campbell  has modified  and                                                            
shifted various components within the Department's budget.                                                                      
                                                                                                                                
JOHN  CRAMER,   Director,  Division   of  Administrative   Services,                                                            
Department   of   Military   and  Veterans   Affairs   stated   that                                                            
accommodating  the  responsibilities   of  the  Office  of  Homeland                                                            
Security created  the major changes  in the Department's  budget. He                                                            
noted that another  change, as directed by the Legislature,  is that                                                            
a general  fund appropriation  would now be  the funding source  for                                                            
the  Department's  Disaster  Relief Fund  that  addresses  emergency                                                            
operation activities.                                                                                                           
                                                                                                                                
Department of Revenue                                                                                                         
                                                                                                                                
Senator Robin Taylor, Chair                                                                                                     
Senator John Cowdery                                                                                                            
Senator Donny Olson                                                                                                             
                                                                                                                                
Senator Taylor communicated  that the Finance Committee subcommittee                                                            
for the  Department of  Revenue has approved  the Governor's  budget                                                            
proposal. He commented  that it is difficult to reduce the budget of                                                            
the Department  that "makes money" for the State.  He informed that,                                                            
while  the   Department's   overall  budget   has  been   relatively                                                            
consistent  from year  to year,  a few  changes would  occur in  the                                                            
Department during the next few years.                                                                                           
                                                                                                                                
Senator Taylor  noted that  the Department's  FY 04 budget  includes                                                            
monetary  reductions   in  travel,  contractual,  commodities,   and                                                            
equipment.                                                                                                                      
                                                                                                                                
Co-Chair  Green asked  for confirmation  that  the subcommittee  has                                                            
adopted the Governor's budget recommendation for the Department.                                                                
                                                                                                                                
SUSAN  TAYLOR,  Director,   Division  of  Administrative   Services,                                                            
Department of Revenue, concurred.                                                                                               
                                                                                                                                
Senator  Taylor   announced  that,  other  than  the  [unspecified]                                                             
reductions that  are recommended in the Governor's  proposed budget,                                                            
the subcommittee  could  not identify  any further  reductions  that                                                            
could  occur without  harming  the  Department.  He noted  that  the                                                            
Department "has  pledged " to conduct further evaluations  during FY                                                            
04 to determine  whether additional savings might  be identified for                                                            
FY 05.                                                                                                                          
                                                                                                                                
At ease 4:08 PM / 4:08 PM                                                                                                       
                                                                                                                                
Department of Administration                                                                                                  
                                                                                                                                
Senator Con Bunde, Chair                                                                                                        
Senator Fred Dyson                                                                                                              
Senator Gene Therriault                                                                                                         
Senator Georgianna Lincoln                                                                                                      
                                                                                                                                
Senator Bunde presented an overview of the subcommittee report as                                                               
follows.                                                                                                                        
                                                                                                                                
     The Senate  Finance Subcommittee  has adopted the following  FY                                                            
     04  budget for the  Department of  Administration. The  changes                                                            
     contained  in this  budget reflect  changes  to the  Governor's                                                            
     amended  budget. This  budget contains  $64,913,000 in  General                                                            
     Funds, $1,056,300  in Federal Funds, and $127,065,900  in Other                                                            
     Funds. It  does not contain the funding for the  Anchorage Jail                                                            
     Lease.  The $5,264,500 for that  lease will be taken  up in the                                                            
     Language Section with the full Finance Committee.                                                                          
                                                                                                                                
     There is  a reduction resulting from a request  from the Alaska                                                            
     Mental  Health  Trust  Authority  for  a  reduction  in  MHTAAR                                                            
     receipt  authority. These  reductions appear  in the Office  of                                                            
     Public Advocacy and the Public Defender Agency components.                                                                 
                                                                                                                                
     The subcommittee  concurs with  the administration's  effort to                                                            
     increase   efficiency  throughout  state  government   and  the                                                            
     Executive  Orders introduced  by the Governor are reflected  in                                                            
     this budget.                                                                                                               
                                                                                                                                
     The Subcommittee  adopted the  following Conditional  Language.                                                            
                                                                                                                                
     Information Services Fund                                                                                                  
     Conditional Language                                                                                                     
                                                                                                                                
     This   appropriation   to   the   Information   Services   Fund                                                            
     capitalizes a fund and does not lapse.                                                                                     
                                                                                                                                
     AK Oil & Gas Conservation Commission                                                                                       
     Conditional Language                                                                                                     
                                                                                                                                
     The  amount appropriated  by  this appropriation  includes  the                                                            
     unexpended  and unobligated  balance on  June 30, 2003,  of the                                                            
     receipts of the Department  of Administration, Alaska Oil & Gas                                                            
     Conservation  Commission receipts  account for regulatory  cost                                                            
     charges under AS 31.05.093  and permit fees under AS 31.05.090.                                                            
                                                                                                                                
Senator Bunde  noted that  the full Senate  Finance Committee  would                                                            
further address  the funding  of the Anchorage  Jail Lease.  He also                                                            
stated that  a forthcoming amendment  would address and correct  the                                                            
amount of Alaska  Mental Health Trust Authority authorized  receipts                                                            
(MHTAAR),  with the  intention to  fully fund the  Office of  Public                                                            
Advocacy and Public Defender  Agency components in the Mental Health                                                            
Court.                                                                                                                          
                                                                                                                                
Senator Bunde stated that  the Division of Senior Services, which is                                                            
responsible  for the operation of  the Pioneer Homes, the  Longevity                                                            
Bonus Grant Program, the  Commission on Aging, and the licensing and                                                            
regulating   of  the  Assisted  Living   Homes  Program,   has  been                                                            
transferred  to the  Department of  Health and  Social Services.  He                                                            
communicated that, as the  result of separate legislation concerning                                                            
the  Alaska  Public  Offices  Commission  (APOC),  the Department's                                                             
responsibility for APOC's  disclosure functions would be transferred                                                            
to  the  Division  of  Elections  and  that  associated   violations                                                            
enforcement  would  be transferred  to  the  Department  of Law.  He                                                            
stated  that  this  change  would  save  the  Department   $500,000.                                                            
Furthermore, he  noted that the Department of Administration  rather                                                            
than the Department  of Public Safety  would now be responsible  for                                                            
the Violent  Crimes Compensation Board.  In addition, he  noted that                                                            
the Elected  Public  Officials Retirement  System  (EPORS) has  been                                                            
increased  approximately $400,000  as the result  of an increase  in                                                            
retirees,  and that the  Public Broadcasting's  budget would  remain                                                            
constant at the FY 03 level.  He stated that efficiencies within the                                                            
Division of  Motor Vehicles would  result in an additional  $500,000                                                            
savings.                                                                                                                        
                                                                                                                                
Senator  Hoffman   asked  for  further  information   regarding  the                                                            
subcommittee's recommendation  to reduce the Labor Relations general                                                            
fund budget component by  29-percent as specified on page one of the                                                            
"Component  Summary-FY 04 Operating  Budget-Senate Structure"  [copy                                                            
on file].                                                                                                                       
                                                                                                                                
Senator Bunde responded  that this reduction occurred at the request                                                            
of the Department.                                                                                                              
                                                                                                                                
DAN  SPENCER,   Director,  Division   of  Administrative   Services,                                                            
Department  of Administration explained  that this reduction  is the                                                            
result  of  a  one-time   funding  allocation  for  labor   contract                                                            
negotiations  that "was split" over  the previous two fiscal  years.                                                            
He stated  that a  request to  conduct on-going  labor negotiations                                                             
would be reflected in the capital budget legislation.                                                                           
                                                                                                                                
Senator  Hoffman  surmised,  therefore,  that  there  would  be  "no                                                            
significant  change" in the Labor  Relations component other  than a                                                            
funding source change to the capital budget.                                                                                    
                                                                                                                                
Mr.  Spencer concurred;  however,  he  communicated  that a  $50,000                                                            
general  fund reduction  would  result in  the elimination  of  "one                                                            
currently vacant Labor Relations analyst position."                                                                             
                                                                                                                                
AT EASE 4:13 PM / 4:20 PM                                                                                                       
                                                                                                                                
University of Alaska                                                                                                          
                                                                                                                                
Senator Ben Stevens, Chair                                                                                                      
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Con Bunde                                                                                                               
Senator Robin Taylor                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
Co-Chair  Green   announced  that   the  Senate  Finance   Committee                                                            
Committee-of-the-Whole  "would  act" on the  University of  Alaska's                                                            
subcommittee's operating budget recommendation.                                                                                 
                                                                                                                                
Senator   B.   Stevens    presented   the   subcommittee's    budget                                                            
recommendation as follows.                                                                                                      
                                                                                                                                
                          University of Alaska                                                                                  
                      Senate Finance Subcommittee                                                                               
                             April 14, 2003                                                                                     
                                                                                                                                
     The Senate Finance Subcommittee for the University of Alaska                                                               
     made the following budget recommendations for FY 04                                                                        
     University budget:                                                                                                         
                                                                                                                                
        o The subcommittee approves a 1.2% general fund increment                                                               
          of $2,315.0, to replace the FY03 one-time Alaska                                                                      
           Science and Technology Endowment fund source.                                                                        
                                                                                                                                
        o The subcommittee approves an increment of $136.8                                                                      
          general fund to replace MHTAAR funding.                                                                               
                                                                                                                                
        o The subcommittee increases University Receipt Authority                                                               
          by $11,244.0 for a total of $249,207.8.                                                                               
                                                                                                                                
     The recommendations for FY04 as compared to the FY03                                                                       
     Management Plan are as follows:                                                                                            
                                                                                                                                
        o Increase Federal Funds by $4,077.4 for a total Federal                                                                
          Fund level of $113,056.4                                                                                              
        o Increase Other Funds by $26,833.6 for a total                                                                         
          $323,800.7                                                                                                            
                                                                                                                                
     The total University of Alaska Funds for FY04 has increased                                                                
     by $33,097.0 for a total budget of $645,123.9.                                                                             
                                                                                                                                
Senator  B.  Stevens  requested  that the  Committee  focus  on  the                                                            
"Agency  Totals" amount  rather than  the "Objects  of Expenditure"                                                             
information  as reflected  in the  spreadsheets  that accompany  the                                                            
report, as he opined, that  information is confusing. He noted that,                                                            
"in reality," the proposed  budget amount would allow the University                                                            
Board of Regents to utilize funds as necessary.                                                                                 
                                                                                                                                
Senator B. Stevens communicated  that, as depicted in the Totals for                                                            
Agencies  and Objects  of  Expenditures  detail on  the spreadsheet                                                             
titled "Agency Totals -  FY 04 Operating Budget - Senate Structure,"                                                            
the subcommittee's  budget  report  exceeds the  Governor's  amended                                                            
budget   proposal   by  $3,391,800   and   exceeds   the  House   of                                                            
Representatives'  budget proposal  by $13.6 million. Continuing,  he                                                            
stated that  the difference  between the  Senate and House's  budget                                                            
proposal is the  Senate's recommendation of a general  fund increase                                                            
of $2,451,000  comprised  of the aforementioned  Alaska Science  and                                                            
Technology  Endowment   (ASTF)  fund  source  and  the  MHTAAR  fund                                                            
combined with an increase of $11,244,000 in University receipts.                                                                
                                                                                                                                
Senator  B.   Stevens  referred  the   Committee  to  the   report's                                                            
accompanying  spreadsheet  titled  "10-year Operating  Budget  lapse                                                            
analysis" that  reflects the Management Plan Final  budget approval,                                                            
Actual  Expenditures, and  the Lapsed  Amounts for  the years  FY 93                                                            
through FY  02. He stated that the  "Major Sources of Lapse"  column                                                            
on the right side of that  page identifies whether the source of the                                                            
lapsed amounts are federal  dollars or University receipts. He noted                                                            
that the  averages  of the Final  budget, Actual  Expenditures,  and                                                            
Lapsed Amounts are included at the bottom of the spreadsheet.                                                                   
                                                                                                                                
Senator B. Stevens  pointed out that the University's  FY 04 request                                                            
includes $18 million in  "various" University receipts as well as an                                                            
increase  of $4 million  in federal  receipts as  identified  on the                                                            
"Transaction  1-Way Comparison  -  FY 04 Budget-  Senate  Structure"                                                            
spreadsheet.                                                                                                                    
                                                                                                                                
Senator  B.  Stevens  pointed   out  that  the  Receipt  and  Lapsed                                                            
Authorities,  that  are comprised  of "a  lot of  different  funding                                                            
programs that  lapse from one year into the next…that  multiple year                                                            
funding  cycle" could  be "tied in"  with the  last sentence  of the                                                            
Governor's language  request as specified on page  37, lines 15 - 17                                                            
of Subsection  (a) of Sec. 17. Federal  and Other Program  Receipts,                                                            
of Sponsor Substitute  for SB 35, Version 23-GS1002\D  that reads as                                                            
follows.                                                                                                                        
                                                                                                                                
     … and that exceed the amounts appropriated by this Act, are                                                                
     appropriated conditioned on compliance with the program review                                                             
     provisions of AS 37.07.080(h).                                                                                             
                                                                                                                                
Senator  B. Stevens  communicated  that the  aforementioned  review,                                                            
which  was   conducted  by  Legislative   Budget  &  Audit   (LB&A),                                                            
"essentially" asks that  additional receipt authority be provided to                                                            
the University,  "in  the instance  where they  may need  additional                                                            
receipt authority."  He specified  that this section was  eliminated                                                            
in the House  of Representatives budget  proposal bill; however,  he                                                            
communicated   that  the  Senate   subcommittee  increased   receipt                                                            
authority;  removed "the need to go  to LB&A;" and continued  the FY                                                            
03 Lapsed Authority level of $29,285,000.                                                                                       
                                                                                                                                
Senator B. Stevens  concluded, therefore, that the  subcommittee did                                                            
three things:  retained prior  cash funding  levels "by backfilling                                                             
the  ASTF and  MTAAR;" excluded  language  that specified  that  the                                                            
request for  additional authority  must be  authorized by LB&A;  and                                                            
included the same  level of last year's Receipt Authority  "in terms                                                            
of  the  amount  of  Lapsed  cushion."  He  acknowledged   that  the                                                            
subcommittee's  funding recommendation,  which  exceeds that  of the                                                            
Governor,  should   not  "be  perceived  as  solving   the  problem"                                                            
regarding  "the amount  of cash"  that  would be  requested, but  he                                                            
continued it  does maintain last year's  receipt authority  level as                                                            
well as last year's "level of actual cash that they've gotten."                                                                 
                                                                                                                                
Co-Chair   Green   clarified   that   the   Report's   accompanying                                                             
spreadsheets are  for information only and should  not be considered                                                            
as part of the subcommittee's document.                                                                                         
                                                                                                                                
Senator B. Stevens  concurred. He stated that the  spreadsheets have                                                            
been provided to provide  further information regarding the increase                                                            
in receipt authority.                                                                                                           
                                                                                                                                
Senator  Taylor asked whether  the receipt  authority would  include                                                            
State general funds.                                                                                                            
                                                                                                                                
Senator B. Stevens  responded, no, it would consist  of other funds.                                                            
He referred the Committee  to the general funds requested amount, as                                                            
specified  in  item 1004,  and  the  University  Receipts  requested                                                            
amount,  as specified  in  item 1048,  under the  "Funding  Sources"                                                            
heading on the  spreadsheet titled "Agency Totals  - FY 04 Operating                                                            
Budget - Senate Structure."                                                                                                     
                                                                                                                                
Senator Taylor  clarified that his question referred  to the Federal                                                            
and  University  lapsed  funding  on  the aforementioned   "10-year"                                                            
chart.                                                                                                                          
                                                                                                                                
Senator B. Stevens responded  that the general fund monies that were                                                            
allocated  to the  University never  lapsed, as  they were  expended                                                            
every year.                                                                                                                     
                                                                                                                                
Senator  Taylor acknowledged,  therefore, that  the only money  that                                                            
lapsed was University and federal receipt money.                                                                                
                                                                                                                                
Senator B. Stevens confirmed.                                                                                                   
                                                                                                                                
Co-Chair Wilken, referring  to the spreadsheet titled "Agency Totals                                                            
-  FY 04  Operating  Budget -  Senate Structure,"  stated  that  the                                                            
Senate's   proposed  budget   exceeds  that   of  the  Governor   by                                                            
$3,391,800. He  stated that this difference appears  to be comprised                                                            
of a reduction  of $7,852,200  in general  funds and an increase  of                                                            
$11,244,000  in University  receipts.  He asked  Senator B.  Stevens                                                            
whether this funding proposal  aligns with the FY 03 management plan                                                            
for the University.                                                                                                             
                                                                                                                                
Senator  B.  Stevens responded  that  the  General  Purpose  Funding                                                            
Summary located on page  two of the spreadsheet, denotes that the FY                                                            
03 Management Plan total  was $206,080,800 and that the FY 04 Senate                                                            
subcommittee total  for General Purpose Funding is  $208,266,800. He                                                            
continued that  the $2.1 million increase  in general funds  results                                                            
from  the $2,451,000  total  of ASTF  and  MHTAAR funding  less  the                                                            
$136,800 MHTAAR funding.                                                                                                        
                                                                                                                                
Co-Chair Wilken  stated, therefore, that were $7,852,000  in general                                                            
funds added  to this amount, it would  equal the Governor's  general                                                            
funds component recommendation.                                                                                                 
                                                                                                                                
Senator B. Stevens affirmed.  He stated that the $7,852,000 combined                                                            
with the  $208,266,800 would  equal the  Governor's proposed  budget                                                            
general funds recommendation of $216,119,000.                                                                                   
                                                                                                                                
Co-Chair  Wilken  asked  for  further  information   regarding  what                                                            
comprises University receipts.                                                                                                  
                                                                                                                                
WENDY REDMAN,  Vice President for  University Relations,  University                                                            
of Alaska explained  that University receipts are  recognized as all                                                            
the revenue  the University receives  in addition to general  funds.                                                            
She noted that  although it is not required, the University  chooses                                                            
to identify federal  funds as a separate entity. She  continued that                                                            
in the FY 04 budget, "for  the first time," all University receipts,                                                            
with the exception  of general funds  and federal funding,  would be                                                            
identified  as University receipts  as opposed to previous  years in                                                            
which some  receipts, such as tuition,  were identified as  separate                                                            
budget line items. Therefore,  she summarized that, except for state                                                            
appropriations  and  federal  funding,  everything   else  including                                                            
auxiliary   funding,  tuition,  and   private  donations   would  be                                                            
accounted for as University receipts.                                                                                           
                                                                                                                                
Co-Chair Wilken  stated, therefore,  that under the Funding  Summary                                                            
totals on page two of the  "Agency Totals - FY 04 Operating Budget -                                                            
Senate  Structure,"  there  are three  categories:  General  Purpose                                                            
which  is   general  funds;  Federal   Restricted;  and   University                                                            
Receipts.  He  understood  that  although  they are  depicted  as  a                                                            
separate budgetary item,  the federal funding could be identified as                                                            
University receipts.                                                                                                            
                                                                                                                                
Ms.  Redman  conferred  with  David  Teal,  the  Legislative  Fiscal                                                            
Analyst  in the Legislative  Finance  Division,  and responded  that                                                            
according  to  State   law,  federal  receipts  are  recognized   as                                                            
University  receipts. However,  she stated  that, at the request  of                                                            
the Legislature, federal receipts are recognized separately.                                                                    
                                                                                                                                
Co-Chair  Wilken clarified  that tuition is  included in  University                                                            
receipts. He asked  whether a tuition increase would  be expected in                                                            
FY 04, in addition to the tuition increase experienced in FY 03.                                                                
                                                                                                                                
Ms. Redman  responded that a ten percent  tuition increase  would be                                                            
implemented  in FY 04. Furthermore,  she stated that the  University                                                            
would be requesting that  an additional ten percent tuition increase                                                            
be approved for FY 05.                                                                                                          
                                                                                                                                
Co-Chair  Wilken asked how  much revenue would  be generated  by the                                                            
tuition increase.                                                                                                               
                                                                                                                                
Ms.  Redman estimated  that,  dependent  on student  enrollment,  an                                                            
increase  of between  two and three  million  dollars in  additional                                                            
revenue would be generated in FY 04.                                                                                            
                                                                                                                                
Senator Hoffman  pointed out that  the total agency-funding  amount,                                                            
as  depicted  in the  spreadsheet  titled  "Agency  Totals  - FY  04                                                            
Operating  Budget  - Senate  Structure,"  is $13,695,800,  which  he                                                            
noted, is the total of  the three bulleted items on the Subcommittee                                                            
report.  He  asked for  further  information  regarding  the  Senate                                                            
subcommittee's  recommendation  to  exceed  the  Governor's  Amended                                                            
Budget Proposal by $3.5 million.                                                                                                
                                                                                                                                
Senator  B.  Stevens  responded  that  the  difference  between  the                                                            
Governor's  budget general  funds  component of  $7,852,000 and  the                                                            
Senate's  proposed  general funds  component  of $11,244,000  is  in                                                            
University  receipts. He clarified  that the Senate amount  resulted                                                            
"by  backing   out"  the   lapsed  University   receipt  number   of                                                            
"$29,285,000 minus their request of $18,410,000."                                                                               
                                                                                                                                
Senator Hoffman surmised  therefore that when comparing the Senate's                                                            
$249  million budget  component  to  the Governor's  amended  budget                                                            
$237.9  million  component,  the  general  fund  component  must  be                                                            
included when determining the overall $3 million net difference.                                                                
                                                                                                                                
Senator B. Stevens concurred.                                                                                                   
                                                                                                                                
Senator  Hoffman   observed  that  the  Governor's  Amended   Budget                                                            
Proposal, when  compared to the FY 03 Management Plan,  calls for an                                                            
FY 04 increase of 95 full-time  and 23 part-time positions. He noted                                                            
that this recommendation  is mirrored in the subcommittee's request.                                                            
                                                                                                                                
Senator B. Stevens confirmed.                                                                                                   
                                                                                                                                
Co-Chair  Wilken  communicated  that the  House  of Representatives                                                             
budget  proposal  includes  labor  contract   intent  language  that                                                            
essentially would  require the University to honor  those contracts.                                                            
                                                                                                                                
Senator B. Stevens  expressed that the subcommittee  did not address                                                            
this issue as it was expected  that the full Committee would discuss                                                            
it. He noted that  the House amended the bill to add  that language.                                                            
                                                                                                                                
Co-Chair Wilken  stated, therefore, that the intent  is for the full                                                            
Committee to address the issue.                                                                                                 
                                                                                                                                
Senator B. Stevens concurred.                                                                                                   
                                                                                                                                
Ms. Redman  pointed  out that,  "University receipts  are  generated                                                            
with the  support  of the general  fund." Continuing,  she  stressed                                                            
that were  the level  of general  funds proposed  in the  Governor's                                                            
budget not forthcoming,  there would be "absolutely  no possibility"                                                            
to  generate  the  specified  level  of  University   receipts.  She                                                            
continued that  of the $22 million requested by the  University, $20                                                            
million was attached  to general funds that are not  included in the                                                            
current budget proposal.                                                                                                        
                                                                                                                                
Senator  Hoffman  asked  for  confirmation  that  as the  budget  is                                                            
proposed, the  specified level of  University receipts would  not be                                                            
obtainable  due to the  fact the  supporting general  funds are  not                                                            
included.                                                                                                                       
                                                                                                                                
Ms. Redman replied, "that is absolutely correct."                                                                               
                                                                                                                                
Senator  B.  Stevens reiterated  his  earlier  statement  that  this                                                            
budget  proposal  "is  not to  be  construed  as  replacing  general                                                            
funds." He questioned Ms.  Redman's comment regarding how University                                                            
receipts  are tied  to  general funds.  In  addition,  he asked  for                                                            
further information regarding  the $22 million general funds request                                                            
by the University.                                                                                                              
                                                                                                                                
Ms. Redman  responded that the University  requested $22  million in                                                            
receipt authority for FY 04.                                                                                                    
                                                                                                                                
Senator B. Stevens understood  that the $22 million was comprised of                                                            
$4 million from  the federal government and an $18  million increase                                                            
over  the "almost  zero" FY  03 lapsed  receipt  authority from  the                                                            
State.                                                                                                                          
                                                                                                                                
Ms. Redman  concurred.  However, she  stated that  the lapsed  FY 03                                                            
receipt authority data  is, as of yet, unavailable. She stated that,                                                            
in reality, the  University was approximately $3 million  under what                                                            
had been approved in FY 02 "'Actuals' verses the comparison."                                                                   
                                                                                                                                
Senator B.  Stevens stated  that in FY 02,  the University's  lapsed                                                            
receipt amount,  as denoted on the  "10-year Operating Budget  lapse                                                            
analysis"  spreadsheet  was at  $29 million.  He  stressed that  the                                                            
basis for the subcommittee's  receipt authority increase was derived                                                            
from the  level of  lapsed money.  He asked how  it could be  stated                                                            
that  the   receipt  authority  money   is  tied  to  general   fund                                                            
appropriations when, historically,  the University has had up to $40                                                            
million  in  lapsed funds  when  general  funds  expenditure  budget                                                            
levels have been met.                                                                                                           
                                                                                                                                
Ms. Redman responded  that the University has been  able to leverage                                                            
the general  funds  that it  has received  during  the past  several                                                            
years to  generate "a considerable  amount  of money." She  exampled                                                            
that in FY 04, there is  a request to use $1.5 million in University                                                            
receipts  as match  money to a  State Hospital  Association  nursing                                                            
program. She expressed,  however, that the corresponding $500,000 in                                                            
general fund  match money to that  $1.5 University receipt  money is                                                            
not currently included in the budget.                                                                                           
                                                                                                                                
Senator  B.  Stevens  asked  whether  the  general  funds  that  are                                                            
appropriated  to the University's  Board of  Regents "are  itemized,                                                            
line item by line item."                                                                                                        
                                                                                                                                
Ms. Redman responded  they are not; however, she clarified  that the                                                            
University treats them as if they were.                                                                                         
                                                                                                                                
Senator B. Stevens concluded  that the University's Board of Regents                                                            
could designate "at their discretion."                                                                                          
                                                                                                                                
Ms. Redman agreed.                                                                                                              
                                                                                                                                
Senator  Taylor understood  therefore, that  because the  University                                                            
has received "additional"  levels of general funds each year, it has                                                            
not  been required  to expend  University  receipt  funds which,  in                                                            
turn, he stated, allowed the receipt money to lapse.                                                                            
                                                                                                                                
Ms. Redman  responded that this comment  would be "too general,"  as                                                            
she  explained  that  each new  funding  request  submitted  by  the                                                            
University  specifically  denotes  the  level  of "general  fund  or                                                            
receipt authority that  would be spent." Continuing, she noted that,                                                            
for  the past  four  years,  while the  Board  of Regents  "has  the                                                            
authority  to juggle  those  around if  they choose,"  the  specific                                                            
amounts, as defined in each request, have been spent.                                                                           
                                                                                                                                
Ms. Redman exampled  that, were the University to  be flat-funded in                                                            
FY  04, $500,000  in  general  funds  might be  taken  from  another                                                            
program to provide the  match for the aforementioned nursing program                                                            
as it "is a high priority in the State."                                                                                        
                                                                                                                                
Senator   Taylor  asked   whether   the  University   must   receive                                                            
Legislative authority to expend receipts.                                                                                       
                                                                                                                                
Ms. Redman  responded no,  as the general  funds are allocated  as a                                                            
single appropriation to the University.                                                                                         
                                                                                                                                
Senator   Taylor   concluded   therefore,   that   the  information                                                             
accompanying each  receipt authority request "is merely"  to provide                                                            
the Committee  with information regarding the funding  that would be                                                            
available.                                                                                                                      
                                                                                                                                
Ms. Redman  clarified that,  in order to  acquire that funding,  the                                                            
University  must receive  the "right  authority  level." She  stated                                                            
that were  the University  to receive a lower  authority level  than                                                            
requested,  it would  be required  to return to  the Legislature  to                                                            
request the authority to receive it.                                                                                            
                                                                                                                                
Senator  Taylor   stated  therefore,   that  by  appropriating   the                                                            
requested funding  levels; the University  would be able  to receive                                                            
the projected  funding  without being  required  to request  further                                                            
receipt authority.                                                                                                              
                                                                                                                                
Ms. Redman responded,  yes, as it would provide the  University with                                                            
"a cushion" with which  the University could investigate new ways to                                                            
generate additional monies.                                                                                                     
                                                                                                                                
Senator  Taylor stated,  therefore, that  the subcommittee's  budget                                                            
recommendation  would provide the University with  the authority and                                                            
the "flexibility" to accomplish that goal.                                                                                      
                                                                                                                                
Ms. Redman concurred.                                                                                                           
                                                                                                                                
Senator  Hoffman  understood  the  testimony  to  be  that,  in  the                                                            
Governor's amended budget,  $113.1 million of general funds would be                                                            
required to leverage University  receipts in order to receive $237.9                                                            
million. Continuing,  he stated that to accomplish  the University's                                                            
goal, the Senate's  recommended general  fund allocation  "is short"                                                            
that requested  by  the University  by $7.8  million. Therefore,  he                                                            
asked  which University  receipt level  would  be requested:  $249.2                                                            
million or the original request of $237.9 million.                                                                              
                                                                                                                                
Ms. Redman  responded that, while  the University would support  the                                                            
Senate  subcommittee  report's  request  for  additional  University                                                            
receipts,  it  must be  understood  that  these receipts  would  not                                                            
replace general funds.                                                                                                          
                                                                                                                                
Senator Hoffman asked how  confident the University would be that it                                                            
could achieve  the $249.7 million in receipts, were  the Legislature                                                            
to approve a $213.1 million general fund level.                                                                                 
                                                                                                                                
Ms. Redman  stated that the University's  confidence level  would be                                                            
"very high."                                                                                                                    
                                                                                                                                
In response  to  a question  from  Co-Chair Green,  Senator  Hoffman                                                            
clarified that the Governor's  amended budget general fund level and                                                            
the  Senate  subcommittee's  University   receipt  number  would  be                                                            
preferred.                                                                                                                      
                                                                                                                                
Ms.  Redman   asked  Senator   B.  Stevens   to  clarify  that   the                                                            
recommendation  to  remove  the  University  from  the  LB&A  review                                                            
language in Sec. 37 of  the Governor's bill, Version "D" was because                                                            
of the subcommittee's recommendation  to increase receipt authority.                                                            
                                                                                                                                
Senator B.  Stevens confirmed.  He stated  that this language  would                                                            
have  provided the  University  the  ability to  request  additional                                                            
receipts through LB&A.  He noted that this language was removed from                                                            
the  House  of  Representatives  budget  proposal.   Continuing,  he                                                            
clarified that while the  subcommittee also omitted the language, it                                                            
increased receipt authority.                                                                                                    
                                                                                                                                
Co-Chair Wilken  echoed an earlier comment spoken  by Senator Taylor                                                            
during his  Department of Revenue  budget presentation, in  which he                                                            
expressed  that, "you  don't cut the  programs that  are making  you                                                            
money." He  avowed that the University  is a program that  is making                                                            
money. He  stated that "from  simply a dollar  standard," more  than                                                            
$40  million  in  general  fund  money  has  been  provided  to  the                                                            
University   during  the   previous   five  years,   and  that   the                                                            
University's  budget  has  increased   from  $400  million  to  $600                                                            
million. Therefore,  he contended  that the general fund  allocation                                                            
has  returned   $200  million  in   new  money  to  the   State.  He                                                            
characterized this to being better than building an oil well.                                                                   
                                                                                                                                
Co-Chair Wilken  stated that the response  to the Governor's  budget                                                            
proposal  was one  of "wow,  the University  got  treated well."  He                                                            
expressed that the Governor's  election campaign focused on economic                                                            
development  in the State,  and he contended  that this is  economic                                                            
development  as five new dollars have  been introduced to  the State                                                            
for every one-dollar the  State has invested. He urged the Committee                                                            
to remember  both  this "vision"  and the  people's  desire to  have                                                            
education supported  in the State, as the budget process  continues,                                                            
as he  asserted,  this budget  is $7.852  million short  of what  is                                                            
required to fund the University.                                                                                                
                                                                                                                                
Senator Bunde  asked how much of that  $200 million monetary  return                                                            
was deposited into the general fund.                                                                                            
                                                                                                                                
Ms. Redman  responded  that, according  to surveys,  the  University                                                            
generates  hundreds of millions  of dollars  and, she asserted  that                                                            
several thousand  jobs are directly  attributable to the  additional                                                            
money that  is brought in from such  things as research and  student                                                            
spending.                                                                                                                       
                                                                                                                                
Senator Bunde  reiterated that his  question is how has the  State's                                                            
general fund benefited.                                                                                                         
                                                                                                                                
Ms. Redman  responded that  this is money  that is flowing  into the                                                            
economy of the State.                                                                                                           
                                                                                                                                
Senator  Bunde agreed  that this  benefits the  economy; however  he                                                            
declared that  because the University  does not return money  to the                                                            
general   fund,  it   could  be   recognized  as   "a  subsidy   for                                                            
individuals."                                                                                                                   
                                                                                                                                
Senator   B.  Stevens  concluded   that   the  subcommittee   report                                                            
"backfills" the  funding voids of ASTF and MATAAR  and addresses the                                                            
issue of receipt authority.                                                                                                     
                                                                                                                                
Senator Taylor moved to  adopt the University Budget recommendation.                                                            
                                                                                                                                
There being no objection, the budget report was adopted.                                                                        
                                                                                                                                
Co-Chair Green  stated that this concludes  the subcommittee  budget                                                            
reports.                                                                                                                        
                                                                                                                                
Co-Chair Wilken moved to adopt the balance of the subcommittee                                                                  
reports with the intent to incorporate them into a committee                                                                    
substitute.                                                                                                                     
                                                                                                                                
There being no objection, the subcommittee reports were adopted.                                                                
                                                                                                                                
Co-Chair Green announced that a committee substitute would be                                                                   
developed and presented to the Committee at the next operating                                                                  
budget legislation hearing.                                                                                                     
                                                                                                                                
AT EASE 4:56 PM / 4:56 PM                                                                                                       
                                                                                                                                
                                                                                                                                
SFC 03 # 48, Side B 04:56 PM                                                                                                    

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