Legislature(2001 - 2002)
02/14/2002 03:02 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 402-ALASKA TEMPORARY ASSISTANCE PROGRAM Number 0259 CHAIR DYSON announced the first order of business to be HOUSE BILL NO. 402, "An Act relating to diversion payments, wage subsidies, cash assistance, and self-sufficiency services provided under the Alaska temporary assistance program; relating to the food stamp program; relating to child support cases that include persons who receive cash assistance or self-sufficiency services under the Alaska temporary assistance program; and providing for an effective date." CHAIR DYSON stated that Sandie Hoback would be presenting the bill [which was sponsored by the HHES] to the committee. She oversaw changes to Oregon's public assistance program. Public assistance funds in that state were redirected to subsidize wages for workers. Number 0422 SANDIE HOBACK, Independent Consultant, American Institute for Full Employment, testified via teleconference. She indicated that the American Institute for Full Employment conducted the assessment of Alaska's welfare-reform efforts at the request of Senator Lyda Green and Representative Fred Dyson. The report outlines five legislative recommendations, which are incorporated into HB 402. The first recommendation is to amend the state statute to allow for use of the full flexibility permitted under federal law to extend benefits to some long-term recipients. She explained that rather than having an arbitrary 20 percent cap, the department should use narrow criteria to extend benefits to people beyond the 60-month time limit. MS. HOBACK offered that the second recommendation changes the way in which sanctions are imposed upon people who fail to comply with the program. The report advocates a progressive sanction system that includes different stages, but allows the state to close the case when clients are noncompliant. The current system takes 40 percent of the grant away from the family. She said that the first instance of noncompliance allows for immediate restoration of funds upon compliance. The second instance of noncompliance, under the current system, automatically imposes a 6-month waiting period after compliance before the restoration of funds. The third penalty is a 12- month waiting period. She noted that this current system does not provide incentive for cooperation. The 60-month "time clock continues to tick" while the adult is noncompliant. The system proposed in HB 402 stops the time clock during noncompliance; it also calls for immediate restoration of benefits upon compliance. She added that she thought this to be a more family-friendly sanction system. Number 0639 CHAIR DYSON requested examples of compliant and noncompliant behaviors. MS. HOBACK responded that a noncompliant client would be one who did not attend assigned work activities. Each client receives a plan that includes "showing up". A client who does not follow this plan is subject to sanctions. She pointed out that the department might provide more examples of behavior that invokes sanctions. Number 0708 MS. HOBACK said the third recommendation is to enable the provision of services to working families whose income may not be enough [to meet the family's needs]. Except for the time limit, these families would still be eligible for some benefits. The time limit would prevent the family from receiving those benefits and could therefore destabilize the employment situation and could subsequently result in job loss. House Bill 402 addresses self-sufficiency services and allows for the services to be provided to low-income, working families to enable them to stay at work. MS. HOBACK furnished that the fourth recommendation is to strengthen the diversion program. Currently, the division can give up to two months' worth of benefits upfront, rather than put the person on full cash assistance. This allows people to receive extra help in securing a job, and it keeps them out of the public assistance program. She stated that the recommendation is to increase this to three months' worth of benefits. She noted that division staff had indicated two months' benefits might not be enough incentive in many situations; the diversion program is currently used very little. She offered that her work with the division on implementing management recommendations would couple with this fourth recommendation to strengthen "that upfront process". She said, "From the very first day a client walks into the office, they begin in a concerted employment strategy, and diversion becomes a real key to that." Many people's employment needs can be met early on, and they never need be enrolled in the program. Number 0874 MS. HOBACK stated that the fifth recommendation is to authorize a more complete wage-subsidy program that targets the private sector. This worked successfully in Oregon when the state cashed out the food stamp and cash benefits and used them to reimburse private-sector employers. These employers hired clients in training positions and, in many instances, subsequently hired them into the business. She said this worked well for clients, and it became an economic stimulus piece for small businesses. This program allowed small businesses to test expansion plans; businesses often expanded after the wage subsidy was terminated. She concluded, "It really became a win- win [situation]. ... I think it's a really important piece to a comprehensive program". Number 0977 CHAIR DYSON asked Ms. Hoback about proposed changes to the 20- percent cap on benefit extensions. He then added: I have some small concern that ... if there's not enough industry in the small community where those people live to give a reasonable expectation of a job, that we ought to be doing something to encourage - or even enable - the folks to move where there are more employment opportunities. Did you ... run into that in Oregon? MS. HOBACK responded, "Not nearly to the extent that you have that issue in Alaska." She noted that rural pockets in Oregon do have some similarities, and people were encouraged to move. She added that Alaska has complex cultural issues. She agreed with Chair Dyson, saying, "Everything possible should be done to encourage people to move where there is ... employment." Number 1029 REPRESENTATIVE WILSON asked whether assessments to measure a client's job strengths and interests were administered. MS. HOBACK offered that one of the tenets of the "work-first" approach is that the labor market is the best determinant of a client's employability. She indicated that administering many "high-intensity, paper kinds of assessments" has been shown by research to be an inaccurate indicator of employability; she advocates using the labor market as an employability indicator. It is important, she acknowledged, to assess what people want to do and then place them in the most appropriate job. She summarized by saying: People should be consulted, and they should be able to look for jobs that they really want to do. At the same time, I think, you really need to shy away from doing extensive kinds of vocational assessments, at least at the beginning of this process until the person really has had a chance to test the labor market and learn from that experience. Number 1126 REPRESENTATIVE JOULE inquired whether Ms. Hoback worked with other departments, such as the Department of Education and Early Development, to coordinate [these proposed changes]. He mentioned that this would give young people a chance to see potential opportunities. Number 1150 MS. HOBACK explained that in Oregon, a more holistic approach to the family was taken. "We were very much involved with K-12 education, involved with making sure that the children were attending school, those kinds of things," she said. The Oregon program included special activities targeting children in these families. She observed that she had not witnessed as many of these kinds of activities in Alaska. Number 1187 CHAIR DYSON requested a "snapshot of success" of the work-first initiative in Oregon. MS. HOBACK reported that Oregon's program was studied by Manpower Demonstration Research Corporation, an employment and training research group. This study found that, for a statewide program, Oregon produced some of the best results in helping people obtain and keep jobs and increase their wages. Oregon's has become known as the best welfare-reform program in the country, she said; she speculated that this was due to the work- first approach and bringing in the right kind of partners. Oregon reduced its [public assistance] caseload by 65 percent, she supplied. Number 1263 CHAIR DYSON inquired how the Oregon program recruited businesses to participate as employers. MS. HOBACK replied that the Oregon program had a private-sector "champion". This business encouraged other businesses to become involved in the program. Utilizing this business as the private-sector outreach proved to be very effective, she pointed out. Prior to their involvement, many of these employers disliked and distrusted government-subsidy programs. The Oregon reform workers adopted the perspective of the employer to make the program as simple as possible. Number 1330 CHAIR DYSON asked, "Did organizations like the chambers of commerce ... work with you?" MS. HOBACK said: They absolutely did. We made a real effort to reach out to the chambers and to the various business organizations within communities. And many of them embraced this totally and did a lot of the marketing for us. Number 1346 REPRESENTATIVE JOULE inquired whether these business partnerships were established before or after the legislation was submitted. MS. HOBACK answered, "Both." Groundwork had been laid before the legislation, and then the legislation was a catalyst to "get on with it." Number 1400 REPRESENTATIVE COGHILL stated that Alaska has many nonprofit organizations that depend heavily on federal and state monies. "This would be one more subsidy," he offered. He asked how Oregon had dealt with this issue. MS. HOBACK replied that Oregon might not have comparable numbers of private nonprofits. Oregon did, however, use this program with its nonprofits. The Oregon program targeted the small- business sector, because this is where people would find jobs. Alaska, on the other hand, must assess this as a "situational issue". Number 1469 CHAIR DYSON asked about labor unions as partners. MS. HOBACK answered that labor unions did not initially understand the program and were concerned it would replace existing labor. After program workers clarified that this program was about new work opportunities, labor unions were predominantly supportive, she stated. Number 1511 CHAIR DYSON inquired whether jobs created in the Oregon program were primarily low-skilled, low-paying jobs. MS. HOBACK replied, "Actually, it ran the gamut." Employers were reimbursed at the minimum-wage level; Oregon's minimum wage is $6.50, the highest in the nation. Employers could supplement that amount and often paid workers significantly higher than minimum wage. The average wage for program workers was about $8.25 an hour, she furnished; some were making $12.00 to $14.00 an hour, and some were paid minimum wage. Number 1571 REPRESENTATIVE COGHILL requested her perspective on the program's inclusion of workforce development or "career-ladder" strategies. MS. HOBACK replied that the Oregon program included workforce development. She noted the need to integrate funding sources. "We did a fair amount of experimentation around the career- ladder idea, she said. "How do you bring somebody in[to]... a nursing home position, and then ... move them up into a higher professional sort of a nursing situation?" Program managers worked with community colleges and industry to develop those career ladders while keeping a client on the job. She acknowledged that Oregon is still working on this facet of the program; it is a complex component, but must be part-and-parcel of this whole agenda. Number 1650 REPRESENTATIVE WILSON inquired whether the Oregon program paid for schooling, such as training a nurse's aide. MS. HOBACK responded that the program allowed for short-term, targeted vocational training. She explained that specific training was provided upon assurance of employment in that field. Research has shown it is important to get people employed as quickly as possible; long-term training programs generally don't work as well for this population. She reported that the most effective approach included providing minimal, necessary training for entry-level positions and then augmenting a client's work experience with training designed to upgrade his/her skills. Number 1717 CHAIR DYSON asked about the time limit for subsidized employment for an individual. MS. HOBACK replied that six months was the limit for training positions. CHAIR DYSON asked, "Did you find [that] many employers at the end of the six months ... eliminated the position?" MS. HOBACK answered that most of the employers hired their employees after the subsidy expired. The placement rate, including clients who stayed in the same position and those who applied their skills to a new position, was over 80 percent, she offered. "I think that's even more impressive when you realize the folks that we put into those jobs ... were the folks that had ... the most challenges [and] the most barriers to employment," she added. Number 1769 CHAIR DYSON commented that many Alaskan jobs are seasonal in nature. He asked about Oregon's experience with seasonal work. MS. HOBACK answered, "Yes. We have a fair amount of seasonality in the employment here." She recounted her experience in Sitka, where she received feedback indicating that this type of program might serve as a "bridge" for employers in the off-season. Employers, enabled by the wage subsidy, could train workers during this time and prepare them for the summer season. CHAIR DYSON asked whether clients in Oregon worked in agriculture or fish processing. MS. HOBACK said yes; clients were placed in any kind of work, including agriculture, food processing, and fishing. Number 1855 REPRESENTATIVE COGHILL asked if Oregon's program included accountability measures and progressive sanctions, and he inquired about the incidence of the sanctions' imposition. MS. HOBACK affirmed that Oregon's program did use both of these elements. She explained that the sanction rate decreased in most parts of Oregon. She ascertained that this was because "we were able to get people's attention much quicker." Number 1906 JIM NORDLUND, Director, Division of Public Assistance, Department of Health and Social Services, offered the division's perspective on the proposed legislation. He thanked the committee for sponsoring HB 402 and noted the division's support of it. However, the division does have some concerns about some of the provisions. He recounted that the division personnel did have some initial apprehension about the assessment of the welfare program; they are, nonetheless, pleased with the results. He offered that this success was largely due to Ms. Hoback's knowledge and expertise. "In the end, what we thought was going to be a bad thing, frankly, turned out to be a good thing," he said. "And the recommendations have a lot of veracity." He noted that many of the proposed changes are operational; the division has hired Ms. Hoback as a consultant to assist in the implementation of these changes. Number 1985 MR. NORDLUND observed that last year the division was advocating for the change recommended in the first provision. He stated that this provision is the most important to the division. Victims of domestic violence, families with disabled children, or parents with disabilities often need extended benefits. He predicted that in the next two years, the number of families needing assistance beyond the 60-month time limit will exceed the 20-percent cap. Objective, strict criteria would instead be used to identify families needing extended benefits. Number 2051 CHAIR DYSON expressed his concern that people without the aforementioned hardships and who are able to work, but who are living in places without employment, could have a taxpayer- subsidized lifestyle. He said, "How do we go about making that judgment, of finally, when we say, 'No more living at taxpayer expense; you need to relocate where there's some job opportunities.' How do we make that call?" MR. NORDLUND replied that protections against that were the time limit and the requirement that clients participate in work activities. People who might qualify for a subsidy extension aren't necessarily exempt from work activities. People with disabilities who are able to work are expected to pursue work activities. Sanctions would be imposed if they failed to do so, he stated. CHAIR DYSON asked, "Do you, in your policy, say that a bona fide work activity is to move where there's a job?" MR. NORDLUND responded that the division has helped people to relocate to find employment. Number 2112 REPRESENTATIVE JOULE noted his concern with forcing people to move. He pointed out that hub communities offer more employment opportunities. "Would job-sharing work?" he asked. "That would enable people to live in their community but work in another community and still bring that income back." He stressed the need to look beyond simply moving people and to seek ways to help people "have value" and bring that value back to their community. MR. NORDLUND agreed that this was an excellent idea and a way to take advantage of seasonal employment opportunities. This could be made a part of a family's self-sufficiency plan. Number 2175 CHAIR DYSON said, "There's no way that anyone's in favor of forcing somebody to move." He acknowledged the need, however, to address the issue of people wishing to live at taxpayer expense and unwilling to relocate to gain employment. He queried, "What's the administration's policy? How do we go about making those decisions?" REPRESENTATIVE JOULE suggested that HB 402 is a step in the right direction. Similarly, people receiving services need to change their thinking. People living near hub communities should be looking for opportunities in these hubs, he offered; employers also need to look at job-sharing opportunities for employees. Number 2236 MR. NORDLUND added that the wage subsidy would provide employers with incentive to hire people off the public assistance rolls. He then continued with his analysis of the bill's provisions. The second provision changes how sanctions are imposed. He noted the general agreement that the current system offers few incentives for compliance; an immediate reinstatement of benefits upon compliance is the best incentive. He noted that some concern exists in the division pertaining to the complete family sanction for noncompliance; this program benefits poor families - the children are most harmed when benefits are completely taken away. He said: We feel that we have worked with you, Mr. Chairman, and think we put some provisions in the legislation that would provide ... adequate protections to make sure that a family isn't inadvertently cut off because of poor casework, that there's proper review to make sure that if a family is completely cut off, that we know the circumstances of the family and, particularly, what will happen to those children, and if it's determined that ... the children truly could be harmed if the benefit is completely cut off, that we would take measures to help protect those children, one of which could be ... making direct payments to landlords to pay the rent. ... That's the apprehensive side. MR. NORDLUND continued: The positive side is ... that without being able to go to a full-family sanction, ... our own workers ... have seen situations where there are some clients, and not very many, who ride those sanctions out, and just say, "We're not going to have anything to do with you. Don't bother me." And there's really nothing more we can do about it. We think we need to be able to do more to help bring families into compliance. ... We didn't propose to have in here the full-family sanction. But we would not necessarily oppose it, as long as those protections are in the bill. MR. NORDLUND noted that the third thing that Ms. Hoback brought up was the ability to continue to provide work-related services to families. TAPE 02-10, SIDE B Number 2445 MR. NORDLUND said: We have thought about putting this kind of language in legislation before. And now, particularly, as we ... get closer to the 60-month limit, we see that we might want to provide work-related [support] to families that does not trigger the clock. We thought that that would be a good thing to do. MR. NORDLUND continued: The bill does go on; the bill is quite thick, and one of the reasons is that ... every time that we reference "assistance" in the statute, we had to make the distinction between what is ongoing, cash assistance, i.e., the welfare check, versus self- sufficiency services, which is helping with transportation, with child care, those kinds of things that help the family stay on the job. So, we think that's an important provision of the bill. MR. NORDLUND offered that the fourth change is relatively minor. It allows a diversion payment of up to three months' benefits instead of two months' benefits. He emphasized that the real issue is how the department will "operationalize that taking advantage of the diversion program." The department is working with Ms. Hoback on this matter to ensure a strong, "work- oriented, upfront process" is in place. He acknowledged that the department currently has an eligibility focus upfront. He said, "We want to make sure ... that all of our staff is asking the question when somebody comes in for assistance: 'Why are you really here? Do you really need to go on assistance? Is there some way we can help you to move down the road and not go onto the program?'" He offered that before welfare reform, a client coming in due to car trouble, for example, would be put on the program to help him/her fix the car. Currently, the diversion program helps keep them off the program. Number 2278 MR. NORDLUND stated that the department supports the fifth provision, providing for a wage subsidy. He pointed out that provisions in the law already exist to authorize "work supplementation" with the temporary-assistance benefit. House Bill 402 additionally allows food stamp benefits to be converted to cash for a wage subsidy. He added that the department needs to do a better job "operationalizing" this; it cannot be completely solved with legislation. He expressed concern regarding the use of food stamps, because the federal agency administering this program is very restrictive. "It's, frankly, a bit of a nightmare to work with those folks," he said. Food stamp benefits cannot be taxed; if the benefit is paid to the client in the form of wages, that income cannot be taxed. He noted that there are some administrative problems with this. But he added that Oregon was able to accomplish this, and the division is willing to make these changes. Number 2207 CHAIR DYSON asked Ms. Hoback about how to measure the department's success in using the work-first subsidized- employment model. MS. HOBACK replied, "I don't know that you'd want to specifically put that measurement in the statute. I think the important things are the ... hard outcomes that you are putting in there, and this program should just be another tool in order to accomplish that." She added that the Oregon legislature required her to report annually on the subsidy program. An annual report by the department to the legislature could provide members with information such as the number of people in the program, types of employers being used, average wage, and how many people received jobs as a result of the program. Number 2142 REPRESENTATIVE WILSON asked Ms. Hoback whether seasonal workers who applied for unemployment following the work season were counted as a success in the program. MS. HOBACK responded that the client's initial placement would have been counted a success. She noted that once a client was earning minimum wage at a full-time position, he/she was ineligible for cash-assistance benefits in Oregon. If that job is lost, the client becomes eligible for unemployment insurance, which is administered by another system. She said, "Unless they exhaust those benefits and then come back to us and are eligible for our program, we probably wouldn't have any involvement in that family." Number 2072 REPRESENTATIVE COGHILL asked Mr. Nordlund about the effect of the subsidized work program on the 60-month benefit limit. MR. NORDLUND replied that he believed that if the benefit is being paid out in the form of a subsidy, and if the portion of HB 402 passes that distinguishes between cash and self- sufficiency services, it would be considered self-sufficiency services and the "clock would not be ticking." MS. HOBACK agreed that this is indeed true. Number 2026 REPRESENTATIVE COGHILL expressed his concern regarding nonprofits and that this might become a "make work" program that will extend the program beyond control. MR. NORDLUND answered, "The very fundamental thing that we're trying to do with families is not to 'make work.'" He noted that this work might be an entry-level job, and it will have a six-month limit on it. The department wants to see a progression from a temporary, entry-level job to higher-paying jobs that do not require a subsidy. He referred to performance measures developed with the finance committee which ensure that progression and said, "Frankly, we'd be failing in one of our performance measures if we took too much advantage of that program and just made it ... 'make work' opportunities." Number 1971 CHAIR DYSON pointed out that he has worked with Ms. Hoback to put those kinds of performance measures into the missions and measures. REPRESENTATIVE COGHILL asked about ways in statute to encourage the development of the career-ladder idea. He noted that many employers are in need of employees; he acknowledged that Representative Joule's idea of job sharing is one creative solution to address the issue of getting people into the workforce. Number 1930 MR. NORDLUND suggested that the members should "feel some comfort" that performance measures are now in place to show wage progression, which is tantamount to career progression. Number 1920 WILLIAM CRAIG asked what will happen to disabled people [as a result of HB 402]. CHAIR DYSON responded that a disabled person who is able to work would have a better opportunity to gain employment through subsidized employment. Number 1873 REPRESENTATIVE JOULE asked about the intent to move HB 402. CHAIR DYSON indicated that it is his intention to move HB 402. REPRESENTATIVE JOULE also asked about the next committee of referral. He pointed out that when HB 402 was noticed, it had no number designation. This may have impeded communication about the bill to constituents. Number 1822 CHAIR DYSON responded that the bill will go to the House Finance Standing Committee next. He added that members saw the bill before it was filed; there is a companion bill in the Senate, SB 293, which is an identical bill. It is scheduled to be heard in the Senate Health, Education and Social Services Standing Committee on February 22. Number 1782 REPRESENTATIVE COGHILL moved to report HB 402 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 402 moved out of House Health, Education and Social Services Standing Committee. CHAIR DYSON extended his appreciation to Mr. Nordlund and Ms. Hoback.