Legislature(1993 - 1994)
02/11/1994 03:00 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Juneau. 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 lower. 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 note. 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 magnitude. 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 $375,000. 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 note? 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 columns. 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 place. 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 year. 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 discrepancy. 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 month." 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 reduction. 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.