Legislature(1993 - 1994)
02/10/1993 03:00 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 67 - ELIGIBILITY FOR PUBLIC ASSISTANCE CHAIR TOOHEY called a brief at-ease at 3:37 p.m. and reconvened the meeting at 3:43 p.m. She brought HB 67 to the table and announced that the hearings would be teleconferenced, listen-only, to Sitka, Bethel, Ketchikan and Anchorage. She introduced Jan Hansen and Curt Lomas of the Department of Health and Social Services, Division of Public Assistance. Chair Toohey said the committee would hear testimony but would take no action on the bill in the meeting. Number 500 JAN HANSEN, DIRECTOR OF THE DIVISION OF PUBLIC ASSISTANCE, OF THE DEPARTMENT OF HEALTH AND SOCIAL SERVICES, began her presentation on HB 67. She reminded the committee of her previous presentation on the department's public assistance programs (January 25, 1993). She stressed that the fiscal impact of HB 67 is already reflected in the governor's budget, and the fiscal notes accompanying the bill merely break down that impact according to each element of HB 67. MS. HANSEN said HB 67 is the department's response to issues of welfare dependence and the increasing cost of Alaska's public assistance program. She said the intent of the bill is both to achieve immediate savings and to curb the rate of increase in case load. Savings in the Aid to Families with Dependent Children (AFDC) would be achieved through five separate steps. The first is reducing the AFDC program benefit levels to the January 1991 level. The second is suspending the planned cost of living allowance adjustment (COLA) for AFDC scheduled to take effect at the start of FY94. The third is cutting the payment standard for a two parent, one-child household under the AFDC Unemployed Parent (UP) program to match that for a one-parent, two-child household. The fourth is making a cost-neutral adjustment to payments made to households which include an adult who is not responsible for the welfare of a child. An example would be a grandparent who shared a home with a needy family but is not financially responsible for the child, and who is therefore not included in calculations of need and benefit level under the AFDC program. Number 567 CHAIR TOOHEY asked whether a grandparent's small income would, in such a case, be included in the calculation of the child's needs. MS. HANSEN said the division would treat such income in such a way as to provide the best advantage for the child. She said that if the grandparent earned just $200 a month, then the department would consider both the grandparent's income and needs and include the grandparent in the household as an included adult, and calculate the household needs of a three-person household, which is $950, which is $750 less the grandparent's $200 income. But if the grandparent earned $800 a month, he could chose not to be included, and let the department consider just the parent and child in setting the needs. Number 582 REP. BUNDE asked whether a child would still qualify for AFDC if a grandparent earning $50,000 per year shared the child's household. Number 585 CURTIS LOMAS, PROGRAM OFFICER FOR THE DIVISION OF PUBLIC ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, said the division determines a child's eligibility depending on where a child lives. If the child were living with the grandparents and not his parents, and the child had no financial resources, then the grandparents could qualify for AFDC. However, AFDC would require parents in such a case to pay child support, based on their income. Number 602 REP. BUNDE asked a clarifying question, which was answered. MS. HANSEN said such cases are a very small part of the caseload and the bill changes the payment standard for such households so that payments are made only on behalf of the children. The payment standards for such households are out of compliance with federal standards, she said, and need to be adjusted. The federal standards require that the incremental increase in payments for an additional child in such households be the same as the incremental increase for another child in other households. MS. HANSEN resumed her presentation on the division's plans to save money in the AFDC program, and said the fifth step would be suspending the automatic statutory cost of living adjustment upwards in AFDC benefits scheduled to take effect during the federal FY 94, which she estimated would be about 3 percent. She said the federal government's increase in Social Security would, under current statutes, automatically increase the state's AFDC payment standard. She said the state would suspend the amount of COLA the state pays, but would allow the needs standard to increase. That would have the effect of creating a gap between the needs standard and the benefit payment. Creating that gap would help create incentive for welfare recipients to work, by allowing them to keep slightly more of their income, up to the level of the need standard, before that extra income would decrease their benefit level, assuming their income remained below the needs standard. Number 655 CHAIR TOOHEY asked the size of the gap. MS. HANSEN answered it would create a gap of $60 for a parent and two children, and $53 for a parent and one child. Number 662 REP. BRICE asked whether the division proposed suspending the COLA for both AFDC and Adult Public Assistance (APA). MS. HANSEN answered yes, but said she was first addressing changes in the AFDC program and she would later address APA. Number 667 REP. BUNDE asked whether families would receive larger benefits if they were larger than three members. MR. LOMAS answered that they would. MS. HANSEN expanded on that answer, saying that the increase in benefits from a two to a three-member household would be an increase to $60 from $53. She emphasized, however, that the incremental increase would be consistent. MS. HANSEN moved on to discuss how HB 67 would attempt to save money in the APA program through changes similar to those in the AFDC program. The first was reducing the APA benefit level back to the January 1990 level, a reduction of about 3.7 percent. The second is suspending the COLA for APA benefits scheduled for January 1, 1994. TAPE 93-13A, SIDE B Number 000 (There was a partial loss of recording at tape changeover.) MS. HANSEN continued with the third change, which deals with the state's treatment of those in the process of applying for federal disabled benefits. Under the current system, while an applicant waits the average four to eight months between application and enrollment into the disabled benefits program, the state will pay him $280 per month. When approved for the federal benefits, he receives a retroactive benefit check. Under HB 67, the state would receive the check, deduct the $280 per month state payments, and forward the remainder to the individual. Further, the person would then receive a retroactive state benefit check for the amount over the monthly $280 supplement and the state needs standard of $374 per month. Under HB 67, the state would be compensated for its interim assistance from the recipient's retroactive federal benefit check. The recipient would then be eligible for federal supplemental social security income benefit and his state APA supplement. Number 058 MS. HANSEN said the fourth change would be in pro-rating the eligibility date for APA assistance from the date of application instead of the first day of the month in which the application was made. She added, however, that this change does not have to be made in statute. MS. HANSEN said the statute reads strangely because it amends the benefit levels set out in an original statute passed in 1982. However, repeated COLAs since 1982 have significantly raised the amount of welfare payments actually made. Therefore, while in one place it might look like HB 67 raises the need standard to $792 from $500, it actually lowers it, she said. Ms. Hansen explained further, that the $500 needs standard established in 1982 has been raised through COLAs to $845. But a ratable reduction in HB 67 would actually lower the benefit payment to $792. Number 108 (Rep. Brice left at 4:03 p.m.) REP. NICHOLIA said that, as electricity and food already cost more in rural areas, and as the cost of living is rising fast in rural areas, she believed HB 67 short-changes rural residents on AFDC, especially as state workers get COLAs. Number 138 REP. BUNDE commented that the $60 gap Ms. Hansen described earlier was not significant motivation to welfare recipients to take jobs. He asked whether federal regulations require more AFDC money for additional children. Number 174 MS. HANSEN answered that federal law requires the same increment of increase for each additional child. She also assented to Chair Bunde's assertion that $60 was not much incentive, but said creating the gap creates the mechanism and leaves the door open to increase the gap later, possibly by increasing the needs standard. She warned, however, that while increasing the needs standard would increase the gap, it would also cost the state by expanding the population of eligible AFDC clients, which was reason enough not to do it. Number 194 CHAIR TOOHEY asked whether there was not a jobs training program associated with the AFDC program. MS. HANSEN answered by mentioning the JOBS program, under which 930 of the 13,000 families on AFDC in Alaska were receiving job training and other assistance to help them find work and get off AFDC. Number 212 REP. G. DAVIS applauded Ms. Hansen's efforts to trim welfare expenses. He asked whether the cuts would dramatically diminish the ability of some welfare recipients to survive. He mentioned that some welfare recipients have other sources of income, such as SSI, Social Security, Food Stamps, Permanent Fund or Native corporation dividends. MS. HANSEN responded, saying it was a difficult question to answer. But she said that HB 67 would reduce the amount of assistance to each family receiving AFDC and APA, and in some cases eliminate scheduled increases. She said the state's limited funds and its desire to reduce welfare costs prompted a strategy of providing benefits to all who qualify, but by reducing the payment for all, instead of eliminating some people from the programs entirely. She added that, while families would see a reduction in benefits, their Food Stamp benefits would increase to compensate for about one-third of the loss. Those in subsidized housing would also see a slight increase in benefit. The division does not include a family's income from the Alaska Permanent Fund dividend program in calculating benefit levels, so as to provide a financial cushion. Number 275 REP. B. DAVIS asked how much money HB 67 would save. MS. HANSEN answered that the changes in the AFDC program would save $12,651,000, and the changes in the APA program would save $5,134,000, for a total savings of approximately $17,800,000 in FY94, assuming the caseload would continue to increase. REP. B. DAVIS asked whether the bill would not really shift welfare costs to other programs such as subsidized housing, which the state pays in part. MS. HANSEN acknowledged that HB 67 would shift some costs to subsidized housing, but said the largest shift would be to the Food Stamp program, which is paid 100 percent by the federal government. Number 320 REP. B. DAVIS said it seemed to her that welfare would be the last place to take budget cuts, as it helped those in the direst economic straits. She said she liked the gap which allows welfare recipients to work and keep a few extra dollars without penalty, and she expressed the hope that the gap could be increased. She asked whether anyone was considering how to help welfare recipients who want work to find jobs, and suggested putting any savings into such programs. Number 358 MS. HANSEN answered that much consideration had been directed at such problems. She cited the JOBS program, and the planned increase in participation to 1,340 from 930 families. She also mentioned the direction of more money to allow Public Assistance staffers to help advise clients on how to find work. She said HB 67 was the department's attempt to deal with a full range of socio-economic issues, and that other efforts, such as the governor's efforts to stimulate economic development in the state, could also help address the problems of the unemployed. Number 388 REP. NICHOLIA asked what effect HB 67 would have on children, and whether it would foster dependence in children. Number 389 MS. HANSEN answered that AFDC is a program aimed at helping children by providing assistance to their parents. She said the program must guard against fostering dependence, and that social service workers do believe that there is a connection between the size of welfare benefits and a person's willingness to receive benefits, though she could not quantify the relationship. Number 418 REP. BUNDE said he would like to see the JOBS program expanded to include more than 930 of the 13,000 Alaskan families receiving welfare. He asked how many of those involved in the JOBS program lived in urban areas, compared to rural areas. Number 420 MS. HANSEN responded that the program is available statewide, and that Native organizations get direct, though small, grants to operate the JOBS program. She said the division's offices in urban areas do provide outreach services to rural areas, but admitted that those people living on the road system or in more accessible areas tend to get more benefit from the JOBS program, and that directing funds to the JOBS program in urban areas tends to get the best return on investment. Number 426 REP. BUNDE asked whether Alaska welfare officials had considered copying a New Jersey program to limit the amount of additional benefits paid to families who have additional children while on welfare. MS. HANSEN answered that New Jersey had found that program to have minimum impact, and that it essentially did not work. REP. BUNDE said he had heard that some young girls get pregnant, intending to spend the $50 monthly prenatal nutrition benefit from the state for entertainment. He asked Ms. Hansen to look into the problem. MS. HANSEN answered that there were may programs in the state budget that could do a lot to reduce teen pregnancy, or encourage responsible parenting by teens. While she supports such programs, the need to address high welfare costs remains, she said. Number 500 REP. NICHOLIA asked if there were ways to increase the incentive and ability to work among welfare recipients other than increasing the gap between needs standards and benefit levels. She also asked if the $17 million in savings HB 67 would afford would come fully from state expenditures, or include some federal savings. Number 525 MS. HANSEN responded that there were ways to increase incentive, though many of them were not in state control, and would require changes in federal statutes, such as allowing clients to keep more of their earnings. She said the department was working to change that federal law. While the state has asked to receive waivers from the federal law, the value of such waivers must first be determined through a demonstration project. Such demonstration projects can be costly, and may only cover half of the client population at a time, she said. Ms. Hansen answered Rep. Nicholia's second question, saying that the $17 million in savings from HB 67 included savings in both state and federal expenses. Number 530 CHAIR TOOHEY asked whether the state would have to return the federal savings to the federal government. MS. HANSEN answered that the money would never actually come to the state, as the federal government sends its matching funds based on the amount of AFDC the state pays. Number 538 EILEEN KOZEVNIKOFF, OF THE TANANA CHIEFS CONFERENCE AND THE ANHB, testified against HB 67, saying that welfare programs need more funding not less. She said welfare recipients are already at poverty level and the JOBS program does not work in Bush Alaska; the only employment in some villages is fire-fighting, and a subsistence lifestyle is the only other alternative. She said Native corporation dividends do not often top $100 a year. She said there are not enough caseworkers in Fairbanks and it takes up to six weeks to process welfare applications and the applications are lost. She asked for more funding. Number 562 CHAIR TOOHEY invited Ms. Hansen for an overview of Indian Health Service or federal funding available for jobs training for Natives. MS. HANSEN said that the Native corporations get direct, though small, grants to operate their own JOBS programs for a few Natives. She said Tanana Chiefs Conference is one such contractor. MS. KOZEVNIKOFF protested that such programs may help Natives in Fairbanks, but not in the villages. CHAIR TOOHEY asked how many jobs are available in the villages, and how many of them were not filled by village residents. MS. KOZEVNIKOFF said that the only jobs in most villages were positions in the schools, and a single health aide job. CHAIR TOOHEY, hearing no further questions, and having no further business before the committee, ADJOURNED the meeting at 4:35 p.m.
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