Legislature(1999 - 2000)
04/08/1999 06:06 PM 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
SENATE BILL NO. 111
"An Act designating certain Pioneers' Home receipts as
program receipts, appropriations of which are not made
from the unrestricted general fund; and providing for
an effective date."
Senator Gary Wilken, sponsor of the bill, testified. He
told the committee he had come to learn that designated
receipts roped off monies that were put into the general
fund and showed intent that the Legislature would spend
those monies in certain areas. From a cost-accountant
standpoint, he liked the theory that the cost-causer was
the cost payer. This legislation, as similar legislation in
the past, would add set up designated receipts for Pioneer
Homes receipts.
If there was one type of receipts that should be designated
for state services was the Pioneer Home receipts, he
stressed. The people who used the pioneer homes essentially
divorced themselves from all other state services other
than the pioneer home itself. When a resident paid for
those services, he or she had the right to expect that
those monies be spent on their care.
He gave a history of the pioneer homes. They were in the
fourth of a seven-year rapid-ramp program to pay for their
own costs. He pointed out to committee members, a schedule
showing that the homes would be self-supported for those
patients who could afford it. He stressed that this was a
steep ramp. He gave an example of his two parents living in
the Fairbanks Pioneer Home. The services were not cheap;
his parents wrote a check for $6125 per month. Starting in
July 1999, the fee will rise to $7480. That will be a 22
percent increase. By the time the program is fully
implemented, his family will have to pay $11,515 per month.
He stressed that the care his parent's receive was
excellent and he did not oppose the high costs. He did
have concerns that any part of his parent's payment could
be used for other state services such as road repairs. He
wanted those funds to only pay for the care of residents in
the pioneer homes.
He noted the requirements for care in the pioneer homes was
changing. The need for an increased number of caregivers
was increasing and therefore the pioneer home dollars were
precious.
He concluded by saying, this was the time to rope off that
money and show the Legislature's intent that the cost
payers were the cost providers and that those in the
pioneers homes deserved 100 percent benefit of their
payments.
Senator Lyda Green asked for explanation of the
Legislature's role with this money as it was done currently
and if the bill were adopted into law. Senator Gary Wilken
compared this to Item #2 of the bill, listing University of
Alaska receipts. Those receipts were from tuition receipts
and were designated as University of Alaska monies unless
the Legislature intervened.
Co-Chair John Torgerson clarified that the money could only
be spent in the category in which it was designated to be
spent. It was still subject to the power of appropriation
by the Legislature, but could not be appropriated for
another category. This bill would designate that the
pioneer home receipts could only be spent for pioneer home
programs. The funds would still have to be appropriated.
If the Legislature appropriated a lesser amount than was
collected, the balance would remain as a designated receipt
for the pioneer homes.
Senator Lyda Green went back to an earlier conversation on
the FY99 supplemental budget request relating to the
additional Certified Nursing Assistants positions that
would be funded with the increased fees. It was said that
would be awkward because previous funding had been from a
different source for other employees. She wanted to know
if this was an attempt to solve that problem, or would this
leave the Legislature out of the loop on decisions to add
new positions.
Co-Chair John Torgerson responded that the Legislature
would still be in the loop. The total budget for the
pioneer homes was $33 million so this amount was just a
portion.
Senator Sean Parnell explained the dispute on the
supplemental budget matter and how this situation was
different. The existing CAN positions were funded with
general funds and the proposed positions would have been
funded with program receipts. This legislation would treat
the program receipts as one category. He stated that this
was a good policy call because $12 million would be moved
from what was considered general fund spending. There were
many revenue or enterprise type activities throughout state
government such as the University of Alaska that were
already treated that way. At this point, he was not ready
to support the bill but felt there should be discussion as
to how these funds should be treated.
Senator Lyda Green was uncomfortable with this bill.
Senator Dave Donley suggested the Division of Insurance
should be included in the designated receipts category
because if was difficult to do their budget. He had that
budget in the past. He detailed the problem where the
companies actually paid for the services provided, but the
receipts were shown as general fund. It didn't make sense
to take cuts to that program because that would just reduce
the service to the companies who had paid for it. He spoke
of the pressure to cut general funds but felt this process
was not successful.
Senator Randy Phillips stated it in more simplistic terms
saying that the constitution prohibited the Legislature
from dedicating funds unless otherwise authorized by the
constitution. Most of the programs listed in the bill were
nothing but a "white picket fence."
Senator Lyda Green asked if Senator Dave Donley's
distinction for the Division of Insurance was for the
program receipts to fully pay for the entire division. She
warned that other departments such as Department of Natural
Resources and the Division of Motor Vehicles would then be
claiming they were entitled to collect all of their
revenues and the state would be unable to fund other
functions.
Co-Chair John Torgerson agreed and stated that was the
purpose of this discussion
Senator Gary Wilken pointed out that three out of four
patients in the pioneer homes paid for their care
themselves. From the time they moved into the home, they
did not go outside the home to use any other state
services. He felt it was easy to distinguish between their
needs and their draw on state services. He also stressed to
Senator Randy Phillips that the constitution spoke to
dedicated funds and the bill was for designated funds as
mentioned. Senator Randy Phillips commented that this was
a public policy technique.
Senator Dave Donley said the Division of Insurance used to
participate in the designated receipts but was removed
because the programs generated more money then they spent.
He felt it was unfair that the programs that made money
were penalized while the programs that under-generated were
given the designated receipts. He didn't have a solution
but wanted to see one that treated the groups that over-
generated fairer and give them the same degree of
protection as those that under-generated.
Co-Chair John Torgerson said the matter had been debated at
one time as seen in the changes to the statutes. He noted
that group insurance programs were included but that other
insurance programs were not. He didn't know of any of the
programs designated that were 100 percent funded with
program receipts.
Senator Al Adams moved for adoption of Amendment #1. Co-
Chair John Torgerson objected for discussion. Senator Al
Adams spoke to his motion saying it was not a new idea.
This amendment would designate housing receipts as well. It
would consolidate all housing programs including the
pioneer homes care and support. He provided a table that
showed the other housing receipts. He noted other programs
participating in the designated receipts method as
Department of Fish and Game, Department of Transportation
and Public Utilities and Department of Public Safety and
the amounts that would change funding categories.
The state could use the funding for maintenance and upkeep
and other operations of all those facilities.
Senator Randy Phillips asked if there would be a general
discussion on the white picket fences first. If so, he had
an amendment to offer. He did not have one prepared, but
would draft one.
Co-Chair John Torgerson said the bill would not be reported
from committee this meeting. If there were other
amendments, they could be submitted later.
Senator Al Adams did not mind if the amendment was voted
down. He did feel the legislation was important and should
not be jeopardized.
Co-Chair John Torgerson thanked Senator Al Adams. He felt
the matter was a policy call and needed to be addressed.
He would also have some amendments to offer.
Senator Al Adams withdrew his motion to adopt Amendment #1.
There was no objection and it was so ordered.
Senator Dave Donley thought the amendment had merit. He
wanted to broaden the discussion to add other programs. He
also wanted to hear how the sponsor felt about broadening
the scope of the bill.
Senator Gary Wilken had considered other options when
drafting the bill, but felt the pioneers home issue was
most important. He had concerns with adding other items
that could potentially cloud the issue. It was his desire
to keep the bill clean.
Alison Elgee, Deputy Commissioner, Department of
Administration, testified in support of the bill.
She added to the history of the pioneer home funding
program. When the Pioneer Home Advisory Board made the
decision to approach a seven-year ramp up to full cost of
care in 1995, they were looking at three primary
motivations. At that time there was consideration of
legislation that would have privatized the homes. The
board also felt that there was considerable inequity in the
long-term care market. The people who were not fortunate
enough to get into a pioneer home were being asked to bear
the full cost of care in whatever facility that they did
find while those who did get into a pioneer home were
getting a tremendous deal. The third reason, and probably
the most important to the board, was the fact that with the
changing mission, they recognized that they was going to be
a need to increase the dollars available to the pioneer
home program to provide additional staffing.
At the time the first rate increase went into effect in
July 1, the pioneer homes were generating approximately $5
million in program receipts. In the current year, they
generated almost $10 million in program receipts. That $5
million increase was used to offset former general fund
appropriations. In point of fact, it reflected a $5
million general fund cost that was previously part of the
pioneer home budget that was now being supported by the
users of the pioneer home system.
The fiscal note did not show the proposal before the
Legislature to increase the program by $2.367 million. The
department estimated that additional money to be the amount
generated by the increased fees between FY 99 and FY00. The
money would still have to be appropriated by the
Legislature. It would be the Legislature's decision whether
it came in as an increased allotment for spending or
continued to supplant general funds that support the
program.
The change to pioneer home revenues to designated program
receipts would allow the Legislature to recognize those
revenues as new revenues that were not taking away from
other general fund program opportunities. It would also
demonstrate the increased support by the residents of the
pioneer homes programs.
She added that it was tough emotionally for the board to
implement their plan of continuing to raise the rates.
Both the Administration and the board believed it was
necessary that the pioneer homes move to a full cost of
care. However, to address the residents who were concerned
about their own financial ability to pay the higher rates
and not be able to demonstrate improvements in the pioneer
home services as a result of those increases had been
difficult.
She concluded saying the department supported the bill
because they believed it accurately reflected the efforts
in the program to increase the revenues available other
than basic general fund resources.
Lester Westling testified via teleconference from
Fairbanks. He wanted to bring to the attention of the
committee that the pioneers homes were also assisted living
facilities. He was unfamiliar with the bill. He heard the
same concerns stressed that there was a need to compensate
those who provided assisted living to seniors.
Senator Randy Phillips explained the bill to the witness as
a potential Christmas Tree. He had another agency he
wished to add to the list of designated program receipts.
He wanted the witness to understand that.
Co-Chair John Torgerson ordered the bill held in committee.
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