Legislature(2001 - 2002)
05/10/2002 10:19 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 55(STA)
"An Act relating to the Alaska Pioneers' Home and the Alaska
Pioneers' Homes Advisory Board; relating to admissions to,
payment assistance for, and transfers from the home; relating
to housing and services for veterans; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
MAJOR GENERAL PHIL OATES, Adjutant General/Commissioner, Department
of Military and Veterans Affairs stated that the State's current
budget situation requires more efficiency in State government,
particularly in addressing the needs of veterans. He stated that
Alaska, while having the second highest per capital number of
veterans in the Union; is the only state that does not have, or is
not in the process of building, a Veterans' Home. He stressed that
the relationship between the State and the military deserves
attention because the military is a "huge economic engine."
Major General Oates informed the Committee that this bill provides
a method of efficiency in addressing the needs of the State's
veterans by proposing to provide Veterans Home services within the
Pioneers' Homes' structure. He stated this would be "cheaper" than
building and operating a separate facility, and that having six
homes located throughout the State provides an opportunity for
veterans to be cared for closer to home.
COMMISSIONER JIM DUNCAN, Commissioner, Department of
Administration, informed the Committee that the intent of this
legislation is to recognize the service that veterans have provided
to both the State and the country by including veterans within the
Pioneers' Home system. He continued that in addition to changing
the name of the Pioneers' Homes to the Pioneers' and Veterans'
Homes, the Department recommends providing a veteran's preference
for a certain number of the system's 600 beds. He reiterated that
using existing infrastructure in this manner would be an efficient
way to provide care to Alaska's veterans.
Commissioner Duncan stated that as part of this arrangement,
veterans within the system would be entitled to access federal
veterans benefits. He specified that no more than 30 percent of the
beds in any one facility and no more than 21 percent, which equates
to 126 beds, of the total number of the system's beds would be
designated as veterans' preference. He elaborated that there are
currently 95 veterans in the Pioneers' Home System; however,
system-wide, the Pioneers' Home currently has 100 vacant beds.
Commissioner Duncan informed the Committee that this bill does not
address the need to change the name of the Pioneers' Home system;
however, the name change is "critical if we are going to move
forward" as the federal Veterans of Administration (VA) system
requires the facility's name to reflect that the State home
provides benefits to veterans. He stated that the name change is
crucial in allowing veterans in the Pioneers' Home system to
receive the federal benefits they are entitled to, and he urged the
Committee to include the word "veterans" in the facility's title.
Commissioner Duncan stated that negotiations are underway with the
VA to develop a memorandum of understanding that would maintain the
integrity of the Pioneers' Home system while allowing the veterans
to receive their federal benefits. He noted that with the exception
of the name of the facility, the bill is acceptable to the
Department.
Commissioner Duncan explained that the Department's fiscal note,
dated May 1, 2002 includes a study, projected to cost $250,000, to
determine how to meet the needs of those veterans who do not meet
the requirements for admittance to the Pioneers' Home system. He
stated that the fiscal note additionally projects that if the 100
beds currently vacant in the Pioneers' Homes are occupied in FY 03,
the facility would require $2.9 million in general funds as well as
$2.6 million generated from Pioneers' Home resident receipts, in
order to operate. He stressed that when the veterans in the Homes
begin to receive their federal VA benefits, the amount of general
funds required would decrease as the federal VA money is used to
supplement the cost of the veterans' care. He stated that by FY08,
resident receipts would increase sufficiently to allow general fund
requests to decrease to $1.1 million.
Senator Hoffman asked what the $4 million listed in the personal
services category of the fiscal note, includes.
Commissioner Duncan responded that the majority of that expense is
to provide the necessary staffing to properly care for the
residents of the Homes, most of whom, due to age, require a high
level of care.
Senator Hoffman asked for further information regarding the
$250,000 contractual services expense reflected in the fiscal note.
JAMES L.KOHN, Director, Division of Alaska Longevity Programs,
Department of Administration, specified that personal services
include the cost of providing direct patient care; whereas,
contractual services include such things as increased food service
costs, physical therapy, cleaning supplies, and personal items like
adult diapers that the Homes provide.
Senator Hoffman asked the Department to provide a list of the
communities in which eligible veterans reside.
Commissioner Duncan stated that approximately 30 percent of the 180
people on the waiting list for the Pioneers' Home are veterans. He
stated that the Department would provide the names of the
communities where these people reside.
Senator Leman voiced support for this legislation; however,
questioned whether 128 new positions would be required to service a
fully occupied system. He asked whether alternative methods might
be available to lessen the expense of providing personal care
service without lowering the quality of care the residents deserve.
Commissioner Duncan elaborated that the average age of individuals
on the Homes' waiting list is approximately 83 years, and that
people this age require a high level of direct care on a twenty-
four hour basis. He stated that medical standards such as licensing
must be maintained and that the figures in the fiscal note are not
inflated. He stressed that the Department supports the level of
funding detailed in the fiscal note in order to provide the care
required to operate a fully occupied system; however, he stated the
Department would entertain lowering their occupancy expectations in
order "to get this program moving forward."
Commissioner Duncan shared with the Committee that a "separate
problem" exists in the Pioneers' Home operating budget funding
which is currently being addressed in a House of Representatives
and Senate Budget Conference Committee. He disclosed that the
conference committee is considering a "direct reduction" of
approximately $204,000 in the Pioneers' Homes' operating budget
from FY02 to FY03 and an additional shortage of $126,000 as a
result of an anticipated $300,000 reduction of unallocated
Department of Administration general funds. He stated that the
total anticipated FY03 Pioneers' Home operating budget shortfall of
$330,000 "translates to about ten less beds than we have this
year."
Commissioner Duncan stated that with an operating budget shortfall
of $330,000, it would be "a struggle" to maintain the current
number of beds in the Pioneers' Homes. He stated that if no fiscal
note is attached to this bill, "you would have the commitment to
the veterans, we'd have the preference, we wouldn't have more beds,
we wouldn't be serving more veterans, we'd be serving less because
we have an operating budget that is down." He exampled how many
beds would be available at different levels of funding, and stated
that "there are variations" of the number of beds that the
Department and the Legislature could discuss.
General Oates informed the Committee that the State would be
required to provide land and to spend four to six million dollars
"up-front" before any federal funds could be leveraged to construct
a stand-alone 100-bed Veterans' Home. He stated that instead of
having a Veterans' Home in conjunction with existing Pioneers'
Homes operating in various locations around the State, the
operating costs of a single stand-alone facility would exceed the
fiscal note amounts detailed in this bill. He urged the Committee
to leverage existing the Pioneers' Home infrastructure to more
efficiently and better serve the needs of the State's veterans.
Senator Leman asked for confirmation that "the unit cost" to
support a stand-alone Veterans' Home is higher than combining a
Veterans' Home with the existing Pioneers' Homes system.
General Oates affirmed that operating costs and federal
requirements would "drive the costs higher."
Senator Leman commented that operating the Pioneers' Home system is
"very expensive."
Commissioner Duncan clarified that using existing infrastructure
and staff lessens the expense because the State would not be
required to "build more beds," or "add more central structure" as
facilities are in place. He explained that this legislation
proposes to use existing structure and to provide more staff to
adequately serve the increased number of residents who would "fill
the beds that are sitting vacant." He stated this is why it is less
expensive than building a stand-alone facility.
Senator Wilken commented that, "we always hear that we are the only
state without a Veterans' Home, but we are the only one with a
Pioneers' Home." He stated that on "face-value it makes sense" to
combine the two facilities; however, "while the cost of maintaining
the Pioneers' Homes is expensive," it serves a very important
service to Alaskans and he expressed he does not "want to hurt" the
Pioneers' Home by doing "too much too soon."
Senator Wilken stated, "there is no question that the Pioneers'
Homes over the last two decades" have undergone pressures by the
fact that people are "physically living longer, but mentally we're
not" causing the Homes to adapt to changing needs. He voiced that
this transition would change the Homes' mode of operation
"dramatically in the next ten years."
Senator Wilken reiterated, that, "we are not ready to make this
decision." He referenced a Deputy Chief of Staff, Department of
Veterans Affairs Fact Sheet, faxed date of April 2, 2002 [copy on
file] that specifies that in order to receive federal "grant funds
for either construction or per diem payment for nursing home,
domiciliary, or adult day health care, the State must apply for the
grant and meet VA standards." He asked the testifiers if the State
meets those standards.
Commissioner Duncan responded that the State's discussions with the
VA are "outside the box" in that the discussion involves a new
approach to establishing a Veterans' facility. He referred the
Committee to a Memorandum For the Record, fax dated April 11, 2002
[copy on file] that addresses these concerns by stating that "it is
agreed that the VA and the State will work cooperatively to seek
solutions to the issues that exist including, if needed, federal
legislation which would allow for VA support of veterans in the
Alaska Pioneers' & Veterans' Home while preserving the ownership
and authority of the State to operate and manage this unique long
term care program." He stated that difficulties might arise
regarding VA regulations because of such things as the State's
Pioneers' Home residency requirement; however, he noted that the VA
is committed to working with the State and adjustments to some of
the requirements is a possibility.
Senator Wilken acknowledged that the project is in the negotiation
process; however, asked how the VA requirement of not allowing
"veterans to mingle with other residents of the home" would be
addressed.
Mr. Kohn responded that this segregation is being discussed with
the VA and a waiver might be required to "work around" this issue.
He stated that the VA understands the State's position and has
determined that segregation might not be in the best interest of
the veterans in the Homes. He informed the Committee that the State
and the VA meet to discuss this project on a regular two-week
basis.
Senator Wilken commented, "we are under negotiations on that
issue." He referenced language on the Fact Sheet that states, "In
other words, when Senior Veterans Home (SVH) nursing home care is
provided in only a portion of an existing facility, other types of
care or programs cannot be conducted in areas specifically
designated for the SVH." He asked if this "very restrictive"
language is also under negotiation.
The Department concurred it is under negotiation.
Senator Wilken referenced other Fact Sheet language that reads,
"The State is encouraged to continue to meet with VA to seek
alternatives, even thought the option of dedicating a portion of
the Pioneer Homes for veterans may not yet be available." Senator
Wilken stated that this language implies that the State and VA are
continuing to talk about segregation.
Senator Wilken offered another example that the project is still in
"a state of flux" by referencing the six goals listed on the
State's "Facts & Estimates Regarding VA Participation in Pioneers'
& Veterans' Homes" [copy on file]. He asserted that all six of the
goals "are under negotiation."
Senator Wilken asserted that VA payments may improve revenue, and
the State needs "to grab some federal money" to make this work for
both the veterans and the pioneers.
Commissioner Duncan stated that the revised fiscal note includes
revenues that would be generated once an agreement is reached with
the VA to allow veterans to receive VA benefits toward the expense
of their care. He affirmed that negotiations are underway and once
agreements are reached, the VA benefits should be available.
Major General Oates asserted "that the dilemma" is that the VA
requires the State "to make the first step forward." He encouraged
the Committee to make that first step in order to start the process
so that the various concerns could be addressed.
Senator Wilken asked if the VA has age criteria as part of its
eligibility requirements.
Mr. Kohn verified that there is no age criterion in the VA
eligibility requirements; however, because the State owns and
operates the facility, the State has the right to establish the
admission policy. He continued that regardless of the admission
policy, the VA has the right to approve or deny VA benefits for
individuals.
Senator Wilken asked if this issue is still in a "state of flux."
Mr. Kohn responded it is not.
Senator Wilken clarified that if the State's admission policy
requires an individual to be 65 years of age, the VA would not
object.
Mr. Kohn responded that is correct as that issue has been resolved.
Senator Wilken asked the Committee to familiarize themselves with a
letter from Robert L. Hufman, addressed to Senator Wilken, dated
April 30, 2002, [copy on file] which urges the Committee to "do the
right thing" for both the pioneers and the veterans in the State,
and to base their decision on practically practicality not
politics.
Senator Wilken voiced support for moving ahead with a
Pioneers/Veterans effort, although he questioned whether the stand-
alone facility might be a better alternative. He voiced support for
funding a study to determine the "best way" to proceed; support for
continuing negotiations with the federal government; and support
for furthering discussions regarding the development of a pilot
program.
MIKE RACE identified himself as: Member, Pioneers of Alaska; Second
Vice President, Grand Igloo; Member, Juneau Legislative Committee
and informed the Committee that he is familiar with the Pioneers'
Home system and that his mother is a resident of the Juneau
facility. He voiced support for Senator Wilken's approach to this
legislation.
Mr. Race stated that this is a "divisive situation with two groups
that are of the same thought" as many pioneers are also veterans.
He referenced the section of Mr. Hufman's letter that suggests a
pilot program be considered, and voiced his own preference for a
voucher program that would enable a person to reside in a facility
in or near their hometown instead of being cared for in one of the
six existing Pioneers' Homes. He stressed that this legislation has
the potential to allow the VA system to "rollover" the current
Pioneers' Home system.
Senator Olson asked Mr. Race if he is in favor of bill as it is
presented.
Mr. Race responded he is not as it would be a "disservice" to both
veterans and pioneers. Mr. Race commented that his mother, who is
"head of the Juneau Pioneers' Home Resident Council," is not in
favor of this legislation, either.
Senator Austerman voiced agreement with Senator Wilken that "we are
moving too fast" and should first conduct a study on the options
available to the State in accommodating the needs of veterans and
pioneers. He asserted that this issue denotes the need for a policy
discussion regarding whether the State supports a Pioneers' Home
system, and if so, then the system should be funded at the
appropriate level. He stated that if the State decides to pursue a
veterans' home, discussions should ensue to determine if the two
systems should be separate or combined as determined by
efficiencies and economics.
Senator Austerman opined that if the Legislature's "only goal is to
cut the budget" then these issues should receive no further
consideration; however, he reminded the Committee that the care of
Alaska's aging population should be addressed, and the first step
should be to conduct a study on how to proceed.
Senator Wilken commented that if a study is conducted and the
findings reveal that combining the veterans and pioneers facilities
is the "best way to treat our veterans and the best way to treat
our pioneers, you'll have a bill that will have 61 people on it as
sponsors."
Co-Chair Kelly informed the Committee that a Veterans Home study
was fully funded in the FY 03 Capital Budget.
SFC 02 # 93, Side B 11:06 AM
Senator Wilken proposed that the State should: conduct a study
regarding the options for the pioneers and veterans homes; continue
negotiations with the VA; and consider establishing a pilot
program. He stated that these three things should be in place
before this legislation is passed.
Senator Wilken stated that if those three things were in place, he
could support this bill.
Commissioner Duncan reminded the Committee that 1992 legislation
allowed for the establishment of a stand-alone veterans home in the
State; however, since that time, only one study has been completed
regarding the cost of establishing and operating a stand-alone
veterans' home. He opined it is incorrectly assumed that the
federal government would pay for the construction of a veterans
home; however, federal statute requires that land for the facility
and 35 percent of the construction cost be provided by the State
with the federal government paying the remaining 65 percent of
construction expenses. He continued that the operating costs for
the facility would be the responsibility of the State. He stated,
"the operating costs would be offset somewhat by the payments that
the veterans receive for their per diem/veterans benefits." He
qualified that an eighty-bed home would generate operating costs of
approximately $8 million a year.
Commissioner Duncan clarified that the study referenced in this
legislation is to determine the needs of veterans in the State who
would not be served by a veterans home facility; therefore, he
stated the nature of the study defined in this legislation differs
from the study proposed by Senator Wilken.
Commissioner Duncan voiced support for continuing negotiations with
the federal government regarding this "demonstration project" that
differs from the standard VA approach to veterans' homes in the
nation.
Commissioner Duncan concurred that this is an "expensive
proposition;" however, reiterated that the Department is willing to
discuss a lower level of funding in order to demonstrate the
viability of this proposal.
Commissioner Duncan qualified that the Department of Administration
would prefer that the study funded in the capital budget, "be a
responsibility of the Executive branch," with assistance from the
Department of Administration and the Department of Military and
Veterans Affairs and other veterans and pioneers groups to ensure
that the study would be conducted correctly. He noted that the
Department of Administration "is charged by law to operate a
veterans' home." He asked that the money for the study be properly
appropriated to the Department of Administration instead of to the
Legislative Budget and Audit Committee.
Senator Ward agreed that this is an important issue for every
legislator. He asked whether the 90 veterans currently residing in
the Pioneers' Homes could be part of a pilot project.
Commissioner Duncan responded this is possible; however, in order
to proceed, the State must demonstrate a commitment to the VA by
such measures as changing the name of the facility and the
establishment of a veterans' preference for a percentage of the
beds. He contended that if these things were in place, the VA
benefits would be forthcoming.
Senator Ward asserted that a pilot program would be a first of its
kind in the nation.
Commissioner Duncan clarified that to begin the process, a
commitment must be made which would entail a name change and a
veterans' preference "for a certain number of beds.
Senator Ward concurred, stating the process could be established in
increments.
Co-Chair Kelly ordered the bill HELD in Committee.
RECESS to Call of Chair 11:12 AM / 5:38 PM
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