Legislature(2011 - 2012)HOUSE FINANCE 519
04/12/2011 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HJR4 | |
| SB102 | |
| HB183 | |
| HB89 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 102 | TELECONFERENCED | |
| + | HB 183 | TELECONFERENCED | |
| += | HB 103 | TELECONFERENCED | |
| + | HJR 4 | TELECONFERENCED | |
| + | HB 89 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 102
"An Act relating to certain payments made under the
Alaska affordable heating program."
8:47:16 AM
JAY LIVEY, STAFF, SENATOR LYMAN HOFFMAN, explained that SB
102 amended the Alaska Affordable Heating Assistance
Program (AHAP). The changes clarified language that allowed
the Department of Health and Social Services (DHSS) to
prorate benefits due to a shortage of funds. He summarized
that in the prior year two of Alaska's heating programs
were combined. The legislature combined the Low Income
Heating and Energy Assistance Program (LIHEAP) and Alaska
Heating Assistance Program to form the Affordable Heating
Assistance Program (AHAP). The legislation [SB 220] that
created the new program contained language that authorized
DHSS to prorate benefits. The department was concerned that
the language did not provide sufficient discretion needed
for benefit pro-rationing. He emphasized that SB 102 was
not a change in policy but a clarification of the proration
language. Mr. Livey elaborated that the Senate Finance
Committee had worked with DHSS on the legislation to
address the concerns. The legislation contained two
provisions to ensure clarification. The first change
established that the department could calculate benefits
differently from the customary calculations contained in
statute if pro rationing was necessary. The second change
added the words "on a pro rata basis" to clarify that pro
rationing was allowed.
Co-Chair Stoltze surmised that the clarification was in
anticipation of reduced federal funds. Mr. Livey believed
that was a fair assessment. He was aware of federal budget
proposals that reduced states shares of federal funds. He
discussed that AHAP was comprised of general funds and
federal money. In the event of a shortage of federal funds
DHSS would prorate the reduction in benefits.
Alternatively, the legislature could choose to appropriate
additional general funds. Pro rationing would act as a stop
gap until the legislature could act. Prorating gave the
department flexibility in either scenario.
Representative Doogan referred to language on Page 2, line
7, of the bill. His interpretation was that the benefit
would increase if there was extra money in the fund. He
wondered whether the bill provided for pro rationing paying
more in times of plenty. Mr. Livey informed that the bill
language covered pro rationing in times of shortfall and
when more federal funds were received than expected. The
upward proration was necessary so no federal funds were
left "on the table." He identified Page 1, lines 11-12, as
the department's ultimate concern; the clear authority for
downward proration.
Representative Doogan asked about the amount that could be
paid out on a pro rata basis. He inferred from the bill's
language that upward proration was allowed with excess
funds from any source. He wondered whether a floor or cap
on benefit disbursement was established. Mr. Livey
elaborated that the cap was reflected in the amount of
federal funds authorized and state general funds
appropriated. The previous bill, SB 220 was not written as
an entitlement that authorized an absolute disbursement
based on eligibility, making downward proration necessary.
He elucidated that upward pro rationing authority enabled
the state to spend less general fund dollars if additional
federal funds became available.
8:55:10 AM
Representative Doogan did not see a limitation on federal
funds in the bill. Mr. Livey replied that he was probably
correct. He discerned that DHSS could continue upward pro
rationing provided the federal government increased funding
and the legislature authorized the expenditure.
Co-Chair Stoltze asked if the scenario was likely.
RON KREHER, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stated the
scenario was fairly unlikely. He added that typically the
federal government funding was not sufficient to keep pace
with the statutorily required payout. He explained that the
AHAP mandated benefit payout was based on the prior year's
value of a barrel of North Slope crude oil per community
heating point. The federal funding did not keep up with
that level of payout.
Representative Wilson provided an example from personal
experience in non-profit work. She remembered an upward
proration benefit paid because less people applied for
heating assistance than expected. The department aspired to
help as many people as possible and held earlier payouts at
anticipated levels of need. The pro rationing occurred
after the April application deadline. Mr. Kreher concurred
with her experience. The department does issue supplemental
payments with excess funds at the end of the program year.
He explained that occasionally, DHSS did receive excess
federal contingency funds and only a fixed percent were
allowed to carry forward.
Representative Edgmon supported the legislation. He pointed
out the program's significant importance for rural
communities faced with exorbitant home fuel oil costs. The
bulk of last year's AHAP benefits ($29 million) went to
Fairbanks, Anchorage, and the Mat-Su area. The program has
positive statewide impacts.
8:59:43 AM
Mr. Kreher confirmed that 60 percent of the recipients
lived in urban areas. He added that the payout per
household was higher in rural areas because of the high
heating cost.
Representative Edgmon revealed that in the Bristol Bay area
the program served 440 households in FY 09 and increased to
653 in FY 10. The cost of heating fuel was $6 per gallon in
Dillingham. He believed the program was critical.
Representative Joule felt that the people who were eligible
for the program were appreciative of the help. He received
complaints that some recipients attempted to sell their
benefits. He asked whether there was a mechanism to
determine if a person was bootlegging from the program and
if there was a way to deal with the problem. Mr. Kreher
recalled that DHSS can prosecute fraud related to
misrepresentation of need. He was uncertain if a statute
related to the resale of benefited heating oil existed. He
felt the problem was difficult to prove.
Representative Joule restated that his constituents and
other rural citizens voiced concern about the re-sale
problem. He noted that most recipients really appreciated
the program. The problem was when people misused the
benefit. He perceived that two issues needed definition to
craft a solution: what constituted a report and violation
and assigning consequences. He emphasized the importance of
the issue. Mr. Kreher assured that DHSS will draft an
appropriate regulation as part of the emergency regulations
that were required for the legislation. Representative
Joule requested a copy of the drafted language upon
completion.
Vice-chair Fairclough wondered whether a legislative audit
of the program was performed.
9:05:15 AM
Mr. Kreher affirmed that an audit was part of the annual
review process. Vice-chair Fairclough wondered whether DHSS
established annual heating fuel consumption per household
data. She thought that the data could alert the department
of suspicious use.
Mr. Kreher disagreed that suspicious use was easy to
detect. He argued that AHAP was designed to meet only a
portion of home heating costs. He opined that it would be
extremely difficult to accurately monitor and maintain that
information. He was uncertain how the department would know
that the fuel was being redistributed.
Vice-chair Fairclough believed that it was a fairly simple
calculation. She thought that the data was collected in the
application process. She wondered whether DHSS monitored
the average cost of energy per household in different
regions of the state. Mr. Kreher answered in the negative.
Vice-chair Fairclough explained that a possible benefit
ceiling might be established by figuring the average cost
of energy and the percentage of household income spent to
heat a home. She suggested a benefit approximate to the
percentage of income spent to pay for the heating costs.
9:08:53 AM
Vice-chair Fairclough asked whether there was a statutory
mechanism that automatically re-funded the program each
year. Mr. Kreher replied that the statute originally
intended that the Department of Revenue (DOR) establish the
fund and a mechanism to refill the fund based on the prior
year's price per barrel of crude oil. The structure was not
established. The program received fixed general fund
appropriations in past years.
Vice-chair Fairclough wondered whether Power Cost
Equalization (PCE) was capitalized. Mr. Kreher responded
that PCE was not operated by the department.
Mr. Livey interjected that the PCE program was endowed. The
proceeds from the endowment contributed some of the annual
costs of the program. A general fund appropriation made-up
the difference.
Vice-chair Fairclough offered that she was attempting to
understand the revenue path into the AHAP program. She
recapped that the PCE revenue structure had two streams of
revenue. Mr. Livey agreed. He elaborated that the AHAP
program consisted of two streams of federal funds: funds
from LIHEAP and Affordable Heating Assistance Program
combined embody the total amount of federal funding.
Vice-chair Fairclough wondered whether there was any
overlap in who could qualify for each program and if DHSS
monitored qualification. Mr. Kreher replied that the
federal guidelines served households up to 150 percent of
the poverty level and AHAP up to 225 percent. The state
funds were used solely for the benefactors above 150
percent of the poverty level. He emphasized there was no
overlap.
9:12:54 AM
AT EASE
9:13:12 AM
RECONVENED
Mr. Kreher continued to explain that general funds were
used to augment the payment to the federally funded
households. He reminded the committee that often the
federal funding levels were insufficient to pay the same
dollar value that was required under statute. Vice-chair
Fairclough explained that she appreciated the program. She
was endeavoring to understand how the program operated.
Representative Joule spoke to Vice-chair Fairclough's
question regarding overlap. He shared that in Kotzebue a
consumer would qualify for Power Cost Equalization but
because of income not qualify for the heating assistance
program. Some people qualify for both. He reminded the
committee that PCE only covered up to 500 kilowatts per
month.
Representative Gara requested a comprehensive answer
related to Representative Joule's earlier concern about
bootlegging. He offered DHSS existing statutes it could
employ as a deterrent effect. He cited the "crime of
unsworn falsification." He defined that it was crime to
sign for a benefit that was gained from a lie. He was
uncertain the statute was applicable. He also suggested
that a benefactor could sign a statement declaring the
household of use; if the benefit was not used at the
specified household that would constitute fraud. He
qualified that DHSS should consult with the Department of
Law (DOL). Mr. Kreher replied that the prosecution of
unsworn falsification was standard in the Division of
Public Assistance.
Representative Joule was uncertain the problem was rampant.
He received complaints and wanted to shed light on the
issue. He believed a mechanism was necessary to prevent
fraud and abuse.
9:18:49 AM
Vice-chair Fairclough added that she was more supportive of
the entire program when there was a monitoring process in
place to ensure those entitled received the assistance. She
appreciated Representative Joule's concern.
Representative Neuman asked what type of fuel sources were
covered under the program. Mr. Kreher responded that all
forms of heating fuels were included under the program. The
department focused on the primary heat source and repaid
the vendor.
Representative Neuman asked if a local firewood provider
was considered a vendor. Mr. Kreher responded that the
department made a direct payment to the homeowner if
firewood was the main heating source.
Representative Neuman asked if the department ensured that
the payments were spent appropriately. Mr. Kreher restated
that the department made payments to the vendor whenever
possible. Payments were made to households as a last
resort. The Division of Public Assistance maintained lists
of vendors.
Representative Neuman wanted to ensure that people who
switched to alternative heating sources had access to the
program. Mr. Kreher assured that was the case. He added
that proof of heating costs were compulsory.
Representative Edgmon underscored that in the vast majority
of cases the program provided money directly to the vendor.
Mr. Kreher agreed. He noted the rare exceptions. Homeowner
payment occurred typically with wood heat.
9:26:07 AM
Representative Doogan clarified that his earlier concerns
related to the amount that the legislature wanted to fund
the program. He determined that the language in the bill
mandated an upward pro rationing of excess funds. He
thought that prohibited the legislature from establishing
the level of funding. He requested that DHSS provide a
history of payouts from the program that included pro
rationing. He felt that the law provided the program very
broad authority.
Vice-chair Fairclough wondered whether supplemental
payments were provided to the vendor and if the
supplemental benefit were passed on to the participant. Mr.
Kreher indicated that supplemental payments were paid to
the vendor for the participants account.
Vice-chair Fairclough OPENED and CLOSED public testimony.
SB 102 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB103-FERC Public Processes.pdf |
HFIN 4/12/2011 8:30:00 AM |
HB 103 |
| SB 102 Eplanation of Benefits.docx |
HFIN 4/12/2011 8:30:00 AM |
SB 102 |
| SB 102 Sponsor Statement.docx |
HFIN 4/12/2011 8:30:00 AM |
SB 102 |
| HJR 4 Legal opinion aviation fuel tax.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR 4 ltr support businesses.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR 4 Ltr support Sorenson.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR 4 supporters.docx |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR4 - Sponsor Stmt Ver D.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR4 ATIF Payout 6.0.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR 4 ltr support Harbormasters.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR4 support ltr Mobility coalition.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| HJR4 Support Miners 1-2011.pdf |
HFIN 4/12/2011 8:30:00 AM |
HJR 4 |
| CSHB 183 (CRA) Sponsor Statement.pdf |
HFIN 4/12/2011 8:30:00 AM |
HB 183 |
| ANCSA Reference.pdf |
HFIN 4/12/2011 8:30:00 AM SFIN 4/17/2011 10:00:00 AM |
HB 183 |
| HB 183 CS WORK DRAFT 041111.pdf |
HFIN 4/12/2011 8:30:00 AM |
HB 183 |
| Impact of Proposed CSHB 183 ( ).pdf |
HFIN 4/12/2011 8:30:00 AM SFIN 4/17/2011 10:00:00 AM |
HB 183 |
| Nenana Letter.pdf |
HFIN 4/12/2011 8:30:00 AM |
HB 183 |
| CS HB 183 ( ) Changes for FIN.pdf |
HFIN 4/12/2011 8:30:00 AM SFIN 4/17/2011 10:00:00 AM |
HB 183 |
| HB 183 Legal Memo.pdf |
HFIN 4/12/2011 8:30:00 AM SFIN 4/17/2011 10:00:00 AM |
HB 183 |
| HB 106CS(RES)-NEW DEC-WQ-04-12-11.pdf |
HFIN 4/12/2011 8:30:00 AM |
HB 106 |