Legislature(2013 - 2014)HOUSE FINANCE 519

04/12/2014 02:00 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to Call of the Chair --
*+ HB 385 PERS/TRS STATE CONTRIBUTIONS TELECONFERENCED
Heard & Held
+ SB 195 POSTSECONDARY EDUCATION LOANS/GRANTS TELECONFERENCED
Scheduled But Not Heard
+ SB 104 APPROPRIATIONS FROM THE DIVIDEND FUND TELECONFERENCED
Heard & Held
+ SB 194 TOURISM MARKETING BOARD TELECONFERENCED
Scheduled But Not Heard
*+ HB 349 AK RETIREMENT RESERVE FUND TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR SENATE BILL NO. 104(FIN)                                                                                               
                                                                                                                                
     "An Act  relating to  appropriations from  the dividend                                                                    
     fund;   creating  the   criminal   fund;  relating   to                                                                    
     appropriations from the criminal  fund for payments for                                                                    
     crime victims,  operating costs  of the  Violent Crimes                                                                    
     Compensation Board, grants for  the operation of sexual                                                                    
     assault   response   teams    and   domestic   violence                                                                    
     intervention  projects,  and incarceration  costs;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
SENATOR FRED  DYSON explained that  in 1988  the legislature                                                                    
adopted restorative justice measures  and enacted a criminal                                                                    
justice fund with the intention  to restore victims to their                                                                    
pre-offense  condition. He  reported that  the prior  year's                                                                    
court ordered restitution totaled  $600 thousand for victims                                                                    
but only  $85 thousand was  available to the  Violent Crimes                                                                    
Compensation  Board (VCCB)  for distribution.  He discovered                                                                    
that most of criminal's  statutorily withheld Permanent Fund                                                                    
Dividend  (PFD)  was  being  diverted  to  cover  prisoner's                                                                    
medical cost  instead of  funding victim's  compensation. He                                                                    
expounded  that SB  104 was  a clean-up  measure to  clearly                                                                    
prioritize  the distribution  and  use of  the PFD  criminal                                                                    
fund to  ensure adequate  funding for  victims compensation.                                                                    
He  noted that  his  first attempt  to  structure the  funds                                                                    
ensured that  the victims received their  money before court                                                                    
or other costs.                                                                                                                 
                                                                                                                                
Senator  Dyson clarified  that the  bill also  allowed other                                                                    
victims  support   organizations  to  receive   funding.  He                                                                    
offered that the VCCB had  advantages over other groups. The                                                                    
board appropriated  funds to victims  before the  cases were                                                                    
adjudicated,  which  could  take  years.  The  victims  were                                                                    
suffering and  carried all of  the costs. He added  that the                                                                    
Department  of Corrections  (DOC)  did not  oppose the  bill                                                                    
because of  the increased payout  of the dividends  and that                                                                    
under the  Affordable Care Act incarcerated  criminals would                                                                    
be  covered by  Medicare  and Medicaid.  He  added that  the                                                                    
Department of  Law (DOL) maintained  a recovery  section for                                                                    
court ordered  funds that  recently improved  their recovery                                                                    
rates.  Child  support  enforcement and  collection  by  the                                                                    
Department  of Revenue  (DOR) would  not be  affected by  SB                                                                    
104.                                                                                                                            
                                                                                                                                
Senator  Dyson  added  that  the  bill  received  "rigorous"                                                                    
examination in the Senate and  improved during the committee                                                                    
process.                                                                                                                        
                                                                                                                                
Senator  Dyson stated  that the  legislation  would make  an                                                                    
extraordinary difference  for some of the  victims. He added                                                                    
that   the   criminal   fund    did   not   relinquish   the                                                                    
responsibility of  the amount owed  by the  perpetrator. The                                                                    
criminal will reimburse the fund.                                                                                               
                                                                                                                                
Representative Wilson  asked whether the fund  would pay all                                                                    
of  the  child  support  expenses owed  by  a  criminal  and                                                                    
wondered how the state would recover the costs.                                                                                 
                                                                                                                                
JOSHUA  BANKS,  STAFF,  SENATOR  DYSON,  answered  that  the                                                                    
Senate  Finance  version  of  the  bill  removed  the  child                                                                    
support arrears  provision. He pointed  out that on  page 4,                                                                    
line 6  of the  Senate Finance  version the  second priority                                                                    
distributed funds  to the Council  on Domestic  Violence And                                                                    
Sexual Assault (CDVSA).                                                                                                         
                                                                                                                                
Senator Dyson  interjected that he struggled  with the child                                                                    
support issue.  He worked with the  administration and Child                                                                    
Support Services  Division and a solution  proved difficult.                                                                    
He  delineated that  child support  arrears were  exorbitant                                                                    
and would  make a huge  impact on  the fund. Issues  such as                                                                    
how far back to assess  arrears were problematic. The Senate                                                                    
Finance committee  was unable to determine  an equitable way                                                                    
to address  child support issues.  He acknowledged  the need                                                                    
and thought a solution could be found in the future.                                                                            
Representative Wilson asked how  the order of priorities was                                                                    
established.                                                                                                                    
                                                                                                                                
Senator  Dyson  replied  that  the  concept  of  restorative                                                                    
justice  clearly intended  that the  first priority  for the                                                                    
perpetrators  restitution  would  be  used  to  restore  the                                                                    
victim to  the pre-offense  condition. He then  examined the                                                                    
other  entities   that  were  entitled  for   court  ordered                                                                    
reparations  and  pondered  who  the  most  worthy  was.  He                                                                    
concluded  that  organizations  that  provided  services  to                                                                    
victims were another high priority.                                                                                             
                                                                                                                                
4:43:26 PM                                                                                                                    
                                                                                                                                
Representative  Holmes   noted  that  the   second  priority                                                                    
appropriated funds  to the CDVSA.  She read page 4,  lines 8                                                                    
through 10:                                                                                                                     
                                                                                                                                
     …  for  grants  for  the operation  of  sexual  assault                                                                    
     response  teams  and   domestic  violence  intervention                                                                    
     projects that input data into  the Alaska Public Safety                                                                    
     Information Network…                                                                                                       
                                                                                                                                
Representative   Holmes  reported   that  the   language  in                                                                    
previous  versions was  broader.  She  wondered whether  the                                                                    
change was substantive and if  it would change the way funds                                                                    
were currently distributed to the program.                                                                                      
                                                                                                                                
Mr.  Banks  replied that  the  language  was established  to                                                                    
focus  on  programs  that   were  successful.  The  programs                                                                    
accomplished  a large  reduction in  the rate  of recidivism                                                                    
for   domestic   violence   perpetrators   and   immediately                                                                    
responded to the victim's needs.                                                                                                
                                                                                                                                
Representative Holmes  restated that the  provisions limited                                                                    
the flexibility of the funds  use to two particular programs                                                                    
of CDVSA's broader mission.                                                                                                     
                                                                                                                                
Mr. Banks concurred.                                                                                                            
                                                                                                                                
Senator Dyson  stated that setting priorities  established a                                                                    
new source of funds to help  victims and he advised that the                                                                    
legislature  only  distribute  funds to  organizations  that                                                                    
have a   track record of providing services  in an effective                                                                    
way.                                                                                                                            
                                                                                                                                
Co-Chair Austerman asked what was meant by new funds.                                                                           
                                                                                                                                
Senator Dyson  replied that the prior  year's total criminal                                                                    
fund  administered to  DOC  was $13  million.  He stated  he                                                                    
misspoke. The funds were available for a new purpose.                                                                           
                                                                                                                                
Co-Chair Austerman asked what the cost  of SB 104 was out of                                                                    
the $13 million.                                                                                                                
                                                                                                                                
Mr.  Banks   referred  to  the  chart   regarding  potential                                                                    
scenarios  of   the  fund:   "Historic  PFD   Criminal  Fund                                                                    
Appropriations" (copy  on file).  He stated that  the impact                                                                    
to the department for the next fiscal year was $.5 million.                                                                     
                                                                                                                                
Co-Chair Austerman  wanted clarification regarding  the cost                                                                    
of the  bill to the  department and the $8.4  million figure                                                                    
on the fiscal note FN7 (COR).                                                                                                   
                                                                                                                                
4:48:58 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:50:47 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Mr. Banks pointed to the  first priority established on page                                                                    
4 of  the bill  and noted  that 20  percent of  the criminal                                                                    
fund would  be distributed  to the  VCCB. He  clarified that                                                                    
based on  the current  years criminal fund  of approximately                                                                    
$10 million the  total distributed to the board  would be $2                                                                    
million. Currently  DOC received  $1.5 million  for victim's                                                                    
compensation. He  noted that the projection  for next year's                                                                    
PFD  was   $1,300  to  $1,800.   The  criminal   fund  would                                                                    
significantly  increase. He  did not  anticipate losses  for                                                                    
the department if the later scenario occurred.                                                                                  
                                                                                                                                
COMMISSIONER SCHMIDT,  DEPARTMENT OF  CORRECTIONS, explained                                                                    
that SB  104 re-prioritized  the department's needs  to meet                                                                    
the prisoners'  medical needs. He exemplified  the situation                                                                    
where  a  prisoner  needed  a   lung  transplant  that  cost                                                                    
$800,000. The prisoner was medically  paroled and treated at                                                                    
the Alaska Native  Medical Center. If the  prisoner had been                                                                    
denied  treatment at  the medical  center, the  law required                                                                    
that the  department would have  had to pay for  the medical                                                                    
costs  of the  transplant.  He relayed  that  the PFD  funds                                                                    
distributed  to the  department  fluctuated  each year.  The                                                                    
department  requested general  fund  money  to backfill  the                                                                    
anticipated  need  based  on   projections.  If  funds  were                                                                    
lacking due to the  legislation the department would request                                                                    
general  fund  money  or make  a  supplemental  request.  He                                                                    
qualified that the department worked  hard to control rising                                                                    
medical  costs  and made  careful  projections  in order  to                                                                    
avoid requesting supplemental funds.                                                                                            
                                                                                                                                
Co-Chair Austerman  asked what the prisoners'  total medical                                                                    
budget was.                                                                                                                     
                                                                                                                                
LESLIE   HOUSTON,   DEPUTY   COMMISSIONER,   DEPARTMENT   OF                                                                    
CORRECTIONS, replied  that the current year's  total was $41                                                                    
.268 million.                                                                                                                   
                                                                                                                                
Commissioner  Schmidt reiterated  that  DOC  worked hard  to                                                                    
achieve medical  cost containment. He stated  his neutrality                                                                    
about the  bill but stressed  that if the  money fluctuated,                                                                    
the department would have no  other choice except to request                                                                    
additional funding.                                                                                                             
                                                                                                                                
Co-Chair  Stoltze addressed  the $8.4  million appropriation                                                                    
in  DOC's fiscal  note. He  asked whether  that was  a worst                                                                    
case  scenario  projection   in  anticipation  of  decreased                                                                    
funding due to passage of the legislation.                                                                                      
                                                                                                                                
Ms. Houston affirmed his assumptions.                                                                                           
                                                                                                                                
Representative  Holmes recalled  much  discussion about  the                                                                    
spiraling   cost  of   prisoner's   medical   care  in   DOC                                                                    
subcommittee.  She   remembered  that  prisoners   were  not                                                                    
eligible for  any type of government  assistance for medical                                                                    
care. She wondered how the  Affordable Care Act would impact                                                                    
the department when prisoners qualified for medical care.                                                                       
                                                                                                                                
Commissioner Schmidt  replied that coverage was  limited. He                                                                    
continued  that  inmates'  eligibility was  complicated  and                                                                    
that the  department worked  diligently with  the Department                                                                    
of  Health  and Social  Services  (DHSS)  to understand  the                                                                    
process.                                                                                                                        
                                                                                                                                
Ms. Houston reported that inmates  that were 65 years of age                                                                    
and older, pregnant women, and  unsentenced inmates would be                                                                    
covered  under  the  Affordable Care  Act.  The  unsentenced                                                                    
inmates  were  only  covered  outside  of  the  correctional                                                                    
facility  for a  period of  24  hours in  the hospital.  She                                                                    
expounded  that  Medicaid  coverage  was  split  50  percent                                                                    
between the state and Federal  government but that currently                                                                    
the split was  60 percent federal and 40  percent state when                                                                    
paying for hospital  costs. The department did  not yet know                                                                    
how much the department could  leverage or recover under the                                                                    
Affordable Care Act coverage.                                                                                                   
                                                                                                                                
Representative Holmes asked whether  someone who was covered                                                                    
under  Medicaid or  Medicare before  they were  incarcerated                                                                    
was still eligible when in  prison under the Affordable Care                                                                    
Act.                                                                                                                            
                                                                                                                                
Ms. Houston  answered that once  the person  was adjudicated                                                                    
and sentenced they would not be eligible.                                                                                       
                                                                                                                                
Representative Gara asked  whether the felony classification                                                                    
disqualified the prisoner  or just the fact  that the person                                                                    
was incarcerated.                                                                                                               
                                                                                                                                
Ms.  Houston read  the four  factors  that disqualified  the                                                                    
inmate:  1)  convicted of  a  felony  during the  qualifying                                                                    
year;  2) incarcerated  for a  felony during  the qualifying                                                                    
year; 3)  convicted of or  incarcerated for a  felony during                                                                    
the qualifying  year with two prior  misdemeanor convictions                                                                    
that occurred  after December 13,  1996; 4) convicted  of or                                                                    
incarcerated for  a misdemeanor  during the  qualifying year                                                                    
with a prior felony conviction.                                                                                                 
                                                                                                                                
Representative   Munoz  asked   about  the   possibility  of                                                                    
enrolling higher  costs prisoners in the  program and paying                                                                    
the premiums.                                                                                                                   
                                                                                                                                
Ms. Houston  stated that inmates  were not eligible  for the                                                                    
general Affordable Health Care coverage.                                                                                        
                                                                                                                                
Representative Costello  mentioned the  $42 million  cost of                                                                    
inmates'  health care  and asked  what the  amount spent  on                                                                    
prescription drugs was.                                                                                                         
                                                                                                                                
Ms. Houston  answered that she  would supply the  data after                                                                    
the meeting.                                                                                                                    
                                                                                                                                
Representative Wilson  asked whether the  four disqualifiers                                                                    
for Affordable  Care Act coverage  were prohibited  by state                                                                    
or  federal  law. She  wondered  whether  inmates that  were                                                                    
covered  by private  insurance were  prohibited coverage  by                                                                    
state or federal law.                                                                                                           
                                                                                                                                
Ms.  Houston answered  that the  prohibitions were  from the                                                                    
code of federal regulations.                                                                                                    
                                                                                                                                
Co-Chair Stoltze requested clarification  on how the role of                                                                    
the PFD Division  interacted with the criminal  fund and how                                                                    
the legislation affected the division.                                                                                          
                                                                                                                                
5:04:25 PM                                                                                                                    
                                                                                                                                
DAN  DEBARTOLO,   DIRECTOR,  PFD  DIVISION,   DEPARTMENT  OF                                                                    
REVENUE,  replied   that  the   bill  did  not   change  the                                                                    
calculation  of the  criminal fund  and was  the reason  the                                                                    
division submitted  a zero fiscal  note. He pointed  to page                                                                    
2,  line 12  of CS  SB 104  FIN which  delineated the  three                                                                    
categories of  individuals who were counted  in the criminal                                                                    
calculation. He read:                                                                                                           
                                                                                                                                
     (A)  during the  qualifying  year,  the individual  was                                                                    
     convicted of  a felony;(B)  during all  or part  of the                                                                    
     qualifying year,  the individual was incarcerated  as a                                                                    
     result  of  the  conviction   of  a(i)  felony;  or(ii)                                                                    
     misdemeanor if  the individual has been  convicted of a                                                                    
     prior felony or two or more prior misdemeanors.                                                                            
                                                                                                                                
Mr.  Debartolo   furthered  that  each  year   DOC  and  the                                                                    
Department  of Public  Safety (DPS)  sent  the division  the                                                                    
list of the  individuals who met the  criteria. The division                                                                    
matched  them  against  individuals   who  applied  for  the                                                                    
dividend.  The  amount of  applicants  who  applied for  the                                                                    
dividend  was  smaller  since many  categorized  individuals                                                                    
realized they were  ineligible for a PFD.  The division then                                                                    
ascertained who would be otherwise  eligible if they did not                                                                    
fall into  the three categories which  typically amounted to                                                                    
95 percent. The applicants  and non-applicant offenders were                                                                    
added together to yield a  count which was multiplied by the                                                                    
dividend amount. The total amount  was the criminal fund and                                                                    
sent  to  the Office  of  Management  and Budget  (OMB)  for                                                                    
distribution.   He added that the  amount fluctuated greatly                                                                    
since  2008  and  for  the  current  fiscal  year  was  $9.6                                                                    
million.  He informed  the committee  that the  division did                                                                    
not  decide   how  the  fund  was   distributed  but  merely                                                                    
calculated the amount.                                                                                                          
                                                                                                                                
Co-Chair Austerman  asked how much  of the $9.6  million was                                                                    
distributed to DOC.                                                                                                             
                                                                                                                                
Mr. Houston reported that the department received                                                                               
$10,000,474 in FY14 in criminal receipts.                                                                                       
                                                                                                                                
Mr. DeBartolo replied that he attributed the $9.6 million                                                                       
calculation was to FY 15.                                                                                                       
                                                                                                                                
Ms. Houston replied that the department anticipated                                                                             
$8,445,900 in criminal receipts as requested in the fiscal                                                                      
note.                                                                                                                           
                                                                                                                                
CSSB 104(FIN) was HEARD and HELD in committee for further                                                                       
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
Alaska_Fiscal Note_HB 385_Governor's Proposal 041114.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 Legislative Pres V6.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 Nineteen municipal resolutions of support for Governor's PERS-TRS plan, 12 April 2014.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 - Chenault Transmittal Letter - PERS-TRS.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 - Sectional Analysis.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 Somers Letter.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 Teal LFD 4-11-14 Fiscal Outlook Model-4.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 Teal LFD 4-11-14 Fiscal Outlook Model-3.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HB 385 Teal LFD 4 11 14 Comparing TRS Options.pdf HFIN 4/12/2014 2:00:00 PM
HB 385
HFIN Testimony RPEA HB 385.doc HFIN 4/12/2014 2:00:00 PM
HB 385