Legislature(1993 - 1994)

02/11/1994 03:00 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 409 - AFDC DEMO PROJECT AND DECREASE                                      
  CHAIR BUNDE turned the gavel over to Rep. Toohey to chair                    
  the remainder of the meeting.                                                
  Number 421                                                                   
  CHAIR TOOHEY stated that Rep. Mark Hanley would be                           
  testifying as prime sponsor of HB 409, and that sites in                     
  Fairbanks and Anchorage would be participating by                            
  teleconference and indicated there were no witnesses in                      
  Number 447                                                                   
  REP. MARK HANLEY, Prime Sponsor of HB 409, stated that he                    
  introduced the bill and was willing to look to all                           
  suggestions pertaining to areas of demonstration and                         
  implementation.  He said the intent of the proposal was to                   
  "look at ways to reform our welfare system."  He felt the                    
  best way to reduce welfare costs was to reduce the amount of                 
  people receiving assistance as opposed to reducing payments                  
  made to recipients.  He stressed the need for a systematic                   
  change that would decrease the number of recipients.                         
  REP. HANLEY explained that a program would be created to                     
  allow people to work or perform community service to                         
  continue to receive benefits.  He felt that people who are                   
  working are more likely to obtain a full time job.  He cited                 
  benefits for the recipient as being an increase in income                    
  disregards and an increase in the amount of assets allowed.                  
  Also as incentive to continue working, the recipient would                   
  be allowed to keep one-third of earnings for two years as                    
  opposed to current law which allows the recipient to retain                  
  one-third for four months and then after that period no more                 
  than $30.  He also mentioned that state payments would be                    
  REP. HANLEY asserted that HB 409 is a demonstration project.                 
  A control group and a comparison group would be created and                  
  the state would do the research for the federal government.                  
  He mentioned that the Clinton Administration was in the                      
  process of researching the demonstration projects throughout                 
  the U.S. and there were several states that have implemented                 
  such projects.  He expressed interest in the results of                      
  their demonstration projects.                                                
  Number 586                                                                   
  CHAIR TOOHEY recommended that there be open communication to                 
  keep people aware of the workgroup times.  She then stated                   
  there would be a subcommittee meeting the following day,                     
  February 12, at 1:00 p.m. to further discuss HB 409.                         
  Number 512                                                                   
  REP. G. DAVIS asked if there were specific geographic sites                  
  chosen to participate in the control group, citing the Kenai                 
  Peninsula as one that had been mentioned previously.                         
  Number 628                                                                   
  REP. HANLEY replied that the areas suggested by the                          
  Department of Health and Social Services (DHSS) were                         
  Anchorage, Mat-Su, and a rural community.  He said it was                    
  not his intent to force the project on a rural community.                    
  He did mention that the areas could be changed.                              
  Number 560                                                                   
  REP. BUNDE asked if there was a general time frame for the                   
  implementation of the concepts contained in HB 409.                          
  Number 578                                                                   
  REP. HANLEY asserted that he wanted legislation passed this                  
  year.  He also said he wanted to incorporate any feasible                    
  amendments and also some new ideas he had just been made                     
  aware of.                                                                    
  Number 594                                                                   
  REP. VEZEY asked Rep. Hanley for an overview of the fiscal                   
  Number 700                                                                   
  REP. HANLEY said that contained in HB 409 was a ratable                      
  reduction.  He said there was an initial cost to the program                 
  because of administrative costs and the requirements for                     
  providing transportation for childcare.  He further stated                   
  that there were costs for monitoring the control and test                    
  groups.  He said his intent was not to introduce legislation                 
  that would cost money, and he wanted to provide a way to pay                 
  for it.                                                                      
  REP. HANLEY referred to the net expenditures in the general                  
  fund displayed in the fiscal note.  In comparison to the                     
  fiscal years 1996 and 1997, he indicated a decrease in                       
  expenditures for the last year due to the projected                          
  reduction of recipients of Aid to Families with Dependent                    
  Children (AFDC) payments.                                                    
  Number 751                                                                   
  REP. VEZEY asked if there would be no impact on AFDC                         
  payments in fiscal year (FY) 95.  He stated that there were                  
  one dollar differences in several categories and wondered if                 
  the decrease was due to inflationary growth of the program.                  
  Number 772                                                                   
  REP. HANLEY asked Jan Hansen if the rate of reduction was                    
  included in the fiscal note.                                                 
  Number 773                                                                   
  JAN HANSEN, Director, Division of Public Assistance,                         
  Department of Health and Social Services, replied that the                   
  rate of reduction was included in the fiscal note.  She said                 
  the cost of the project was on the top of the chart,                         
  indicating $451,200, and the bottom of the chart displayed                   
  the net savings from the ratable reduction.  She indicated                   
  that, in fact, there was a net savings to the state in                       
  general funds for the first year.  She said the savings was                  
  the result of the ratable reduction generating a reduction                   
  of $829,500 and the cost for the first year would be                         
  $451,200, indicating a net gain in the general fund.                         
  MS. HANSEN stated there are no savings for the project in                    
  the first year because of the time it would take for a                       
  waiver to be developed, for its approval, and for the                        
  computer programming involved for a project of such                          
  Number 814                                                                   
  REP. VEZEY said that he misunderstood and said, "I thought                   
  we were changing 47.25.320 to where the maximum that a                       
  person could receive for a dependent child, living with a                    
  non-needy relative, was $451 as opposed to $452."                            
  Number 822                                                                   
  MS. HANSEN agreed with those figures and said that was why                   
  the savings in the first year was actually the total savings                 
  from the ratable reduction, indicated as $829,500.  She said                 
  the administrative cost of the project was $451,200 and she                  
  estimated the savings to the state at approximately                          
  Number 838                                                                   
  REP. VEZEY asked if the reduction of federal receipts would                  
  in reality cause a positive fiscal note.                                     
  Number 841                                                                   
  MS. HANSEN stated that "because AFDC is both a federal and a                 
  state program, the $829,500 represents the state's share of                  
  the AFDC.  In a ratable reduction, when we reduce it, we                     
  would save state GF (general fund) and we wouldn't be                        
  spending federal.  And so, the savings here is by ratable                    
  reduction, if we don't even consider the project... there                    
  would be a savings of state general fund from both AFDC and                  
  adult public assistance combined."  She said that the                        
  figures were derived from fiscal notes #7 and #8.                            
  MS. HANSEN stated that in fiscal note #7, under the FY 95                    
  column, the ratable reduction would reduce AFDC expenditures                 
  by $1,160,000.  He said the reduction represents $526,600                    
  federal, $526,700 general fund, and $106,700 in permanent                    
  fund dividend.  She further stated that anytime the payments                 
  to AFDC are reduced, the federal receipts, general fund and                  
  permanent fund are reduced also.                                             
  Number 860                                                                   
  MS. HANSEN said the remaining figure of $829,500 is derived                  
  from fiscal note #8, which is the state general fund share                   
  of the adult public assistance ratable reduction.  She said,                 
  "it's not half and half on the sheet, federal, because adult                 
  public assistance is 100% GF, so there isn't any federal.                    
  So, when we add the GF reduction to adult public assistance                  
  from this ratable, it is 302.8 ($302,800).  When you add                     
  that to the 526 ($526,00) that's the 829 ($829,00) general                   
  fund savings."                                                               
  Number 908                                                                   
  REP. VEZEY asked, if the hold harmless clause was to be                      
  repealed, would it then not be applicable to the fiscal                      
  Number 919                                                                   
  MS. HANSEN stated that if the permanent fund hold harmless                   
  was repealed, the general fund cost would increase, not the                  
  general fund savings because it is paid out of the permanent                 
  fund itself, and one-twelfth of the AFDC budget comes out of                 
  permanent fund hold harmless.                                                
  Number 939                                                                   
  REP. VEZEY said there are no bottom lines in any of the                      
  Number 943                                                                   
  MS. HANSEN agreed and said that a bottom line could be put                   
  on the chart for each year and the total project.                            
  Number 951                                                                   
  REP. VEZEY said it was unusual for the annual operating                      
  costs to decrease as indicated in FY 99.                                     
  Number 957                                                                   
  MS. HANSEN stated that entitlement has been mixed with                       
  operating costs.  She said the savings in FY 99 indicate the                 
  reduction of AFDC recipients.                                                
  REP. VEZEY said that was opposed to the program not being in                 
  MS. HANSEN agreed.                                                           
  Number 968                                                                   
  REP. VEZEY said that figure would total $3 million in FY 99,                 
  while the program is increasing at $40 or $50 million a                      
  Number 972                                                                   
  MS. HANSEN said that she was not implying that the AFDC                      
  program overall would have a lower budget in FY 99 than it                   
  has today, but the savings would be generated over and above                 
  what the estimated cost would be if there was no project.                    
  She further stated that the program would continue to cost                   
  more because increased case loads are projected.                             
  Number 988                                                                   
  CHAIR TOOHEY asked how many people would be in the program                   
  and if during the project would there be people dropping out                 
  and people being added on.                                                   
  Number 995                                                                   
  REP. HANLEY replied that the boundaries of the project will                  
  determine the amount of people participating.                                
  Number 005                                                                   
  MS. HANSEN said Anchorage and Mat-Su were two test areas                     
  that case load sizes and cost estimates were based on for                    
  the fiscal notes.  She said that approximately 1000 people                   
  would go into work while still on AFDC, explaining that the                  
  jobs available to the recipients do not provide enough                       
  income to support a family above the poverty level.  She                     
  further stated that 1000 families would be working while                     
  receiving reduced AFDC payments because of their earnings.                   
  The number of families leaving the project would be low                      
  because the jobs available would not support their families                  
  above the poverty level.                                                     
  Number 037                                                                   
  REP. VEZEY said that the mindset is that the average person                  
  receives public assistance for approximately two years and                   
  indicated that the demonstration project is projecting over                  
  five years.  He asked Ms. Hansen to address that                             
  Number 046                                                                   
  MS. HANSEN replied that in actuality it is not the same 1000                 
  people.  She said in FY 96 there would be an additional 571                  
  clients working who currently are not working.  In Fy 97, it                 
  is projected as an additional 977 clients working.                           
  Number 072                                                                   
  REP. VEZEY stated that as he understood the response, the                    
  figure 1000 indicated additional people that would go beyond                 
  the "normal rotation."                                                       
  Number 078                                                                   
  MS. HANSEN agreed and said that currently 850 households in                  
  the Anchorage and Mat-Su areas have earnings.  In addition                   
  to the 850, it is projected that there will be another 571                   
  households within the demonstration project with earnings.                   
  Number 090                                                                   
  REP. VEZEY asked what the amount of monthly checks would be.                 
  Number 107                                                                   
  MS. HANSEN answered that she was not sure of the volume in                   
  terms of the ratable reduction.  She said that currently                     
  there were 12,600 families on AFDC.                                          
  Number 113                                                                   
  REP. VEZEY said that was "about 150,000 family weeks a                       
  year... which works out to be about ten bucks a family                       
  REP. HANLEY agreed and said that $11 is listed on the chart.                 
  CHAIR TOOHEY asked for teleconference testimony.                             
  Number 125                                                                   
  PUDGE KLEINKAUF, Concerned Citizen, testified on HB 409.                     
  She reminded the committee that last session AFDC payments                   
  were cut and at the same time the state passed the largest                   
  capital construction bill in the history of the state.  She                  
  said that HB 409 would continue to penalize the 25,000                       
  children receiving AFDC by giving them a ratable reduction                   
  for the second year in a row.                                                
  TAPE 94-17, SIDE A                                                           
  Number 000                                                                   
  MS. KLEINKAUF stated that Section 3 would reduce benefits                    
  for adult public assistance by 1.7% above last years cut.                    
  She felt that the committee and state did not realize that                   
  with the proposed legislation the poor families and children                 
  would be paying for the demonstration project.                               
  MS. KLEINKAUF said that waivers cost money and that the                      
  state should not penalize public assistance recipients in                    
  order to pay the cost of waivers needed for the project.                     
  She cautioned the committee that there could be                              
  constitutional problems raised by the use of waivers that                    
  would treat AFDC children differently than other groups.                     
  She reminded the committee of the already established JOBS                   
  program, and that the program could be used to implement                     
  some of the concepts in HB 409.                                              
  MS. KLEINKAUF said that the state should offer tax                           
  incentives to businesses to hire welfare recipients,                         
  therefore eliminating them from welfare rolls.                               
  Number 390                                                                   
  REP. BUNDE inquired as to whether Alaska has the highest                     
  welfare payments in the nation, and if the ratable reduction                 
  took place, would they still be the highest payments.  He                    
  also asked if Alaska's cost of living was still considerably                 
  higher than the rest of the nation.                                          
  Number 431                                                                   
  REP. HANLEY said Alaska does have the highest payments and                   
  there was a 25% adjustable factor in both AFDC and adult                     
  public assistance.  In regards to Ms. Kleinkauf's                            
  statements, he believed there would be no constitutional                     
  problems.  He said the JOBS training program focuses on                      
  people who are least likely to obtain work and therefore are                 
  trained extensively.                                                         
  MS. HANSEN felt that by doing the demonstration project,                     
  there would be more support for it in the long run.                          
  Number 537                                                                   
  MS. KLEINKAUF stated that most people are strongly in                        
  support of Section 5 that allows for waivers, and the                        
  problem area was in Section 6 with the workfare concept.                     
  She felt that DHSS should take some responsibility in hiring                 
  welfare recipients off the rolls.  She also explained that                   
  women would be better able to get off the rolls if the state                 
  was more strict with child support payments.                                 
  Number 607                                                                   
  CHAIR TOOHEY asked for further teleconference testimony.                     
  There was none.                                                              
  Number 648                                                                   
  REP. VEZEY asked what the methodology to the monthly                         
  payments pertaining to dependent children living with a non-                 
  needy relative.                                                              
  Number 669                                                                   
  MS. HANSEN answered that the department was asked to come up                 
  with a figure that would equate to the cost of the project                   
  in the most expensive year, which was a 1.7% ratable                         
  Number 728                                                                   
  REP. B. DAVIS stated that she was supportive of waivers.                     
  She said, with all the work that needs to be done, it would                  
  be impossible to implement the statute within FY 95.  She                    
  conveyed her opposition to what she felt was asking the                      
  poorest of Alaskans to pay for the project through ratable                   
  reductions.  She stressed the enforcement of child support                   
  payments to alleviate the welfare rolls.  She felt that job                  
  availability was more important than job training.                           
  Number 820                                                                   
  MS. HANSEN thanked Rep. Hanley for taking the initiative                     
  with the proposed legislation.  She reminded the committee                   
  that the waiver would allow for a demonstration project,                     
  which means that not everyone can be a part of the control                   
  group.  She referred to Governor Hickel's position paper on                  
  welfare reform and said that the position paper cited                        
  factors, that are in the demonstration waiver, as areas that                 
  need to be changed federally so that the state can also                      
  change them.                                                                 
  Number 893                                                                   
  CHAIR TOOHEY asked for further testimony or questions.                       
  There were none.                                                             
  Seeing no further business before the committee, CHAIR                       
  TOOHEY ADJOURNED the meeting at 4:55 p.m.                                    

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