Legislature(2001 - 2002)

04/27/2002 10:05 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 340 - HOLD HARMLESS PROVISIONS OF PFD PROGRAM                                                                              
CHAIR COGHILL announced that the  next order of business would be                                                               
CS FOR  SENATE BILL  NO. 340(FIN)(efd fld),  "An Act  relating to                                                               
public  notice   of  information   relating  to   permanent  fund                                                               
dividends,  and  to treatment  of  permanent  fund dividends  for                                                               
purposes of determining eligibility for certain benefits."                                                                      
The committee took an at-ease from 10:54 a.m. to 10:57 a.m.                                                                     
Number 2880                                                                                                                     
SENATOR  RANDY  PHILLIPS,   Alaska  State  Legislature,  sponsor,                                                               
presented CSSB 340(FIN)(efd fld).                                                                                               
Number 2899                                                                                                                     
CHAIR  COGHILL  made  a  motion   to  adopt  the  proposed  House                                                               
committee  substitute  (HCS)  for SB  340,  version  22-LS1361\P,                                                               
Cook,  4/24/02, as  a  work  draft.   There  being no  objection,                                                               
Version P was before the committee.                                                                                             
SENATOR  PHILLIPS  explained  that the  difference  between  this                                                               
version  and what  was  passed in  the Senate  is  the P  version                                                               
exempts the longevity bonus by adding the following:                                                                            
    Page   3,   lines   3-4,   "Except   as   provided   in                                                                     
     AS 47.55.020(e)(3), a".                                                                                                    
SENATOR  PHILLIPS explained  that  SB 340  deals  with the  "hold                                                               
harmless" clause.  There is  about $27.35 taken out of everyone's                                                               
PFD  [permanent fund  dividend] to  hold harmless  the people  on                                                               
TAPE 02-48, SIDE B                                                                                                              
Number 2918                                                                                                                     
SENATOR  PHILLIPS  explained  that people  on  SSI  [Supplemental                                                               
Security  Income]  and APA  [Adult  Public  Assistance] would  be                                                               
exempted from this bill and  will receive both their benefits and                                                               
their PFD.   People  on the  Alaska Temporary  Assistance Program                                                               
[ATAP] and those  people receiving food stamps will  have to make                                                               
a decision  the month of  October whether to receive  the welfare                                                               
assistance,  amounting  to  about   $1,240,  or  the  PFD,  worth                                                               
approximately  $7,000, but  not both.   This  money saved,  which                                                               
amounts to over  $4.5 million as proposed by the  Senate, will go                                                               
in the front  section of the budget to deal  with the increase in                                                               
Medicaid.  He added that those  folks on food stamps and ATAP are                                                               
100  percent qualified  for Medicaid,  of which  only 80  percent                                                               
take advantage of  the Medicaid services.  The  money being taken                                                               
away from  them will  go back  to them in  the form  of Medicaid.                                                               
The governor's  projections for Medicaid  is about  $193 million,                                                               
which is  about a  $37 million increase  over the  current fiscal                                                               
Number 2898                                                                                                                     
SENATOR  PHILLIPS  said  there  are   more  and  more  people  on                                                               
Medicaid,  and that  problem  has to  be  resolved; it's  growing                                                               
about  15 to  20 percent  a year.   The  governor asked  for $193                                                               
million; the  House passed $187  million; the Senate  passed $173                                                               
million.   Obviously, the problem  still needs to be  dealt with,                                                               
he said.                                                                                                                        
Number 2862                                                                                                                     
SENATOR  PHILLIPS  informed the  members  that  the whole  intent                                                               
behind  this bill  is to  figure out  how to  fill the  gap.   He                                                               
pointed  out that  the $37  million  is the  largest increase  of                                                               
anything  in the  budget.   Other  parts of  the  budget will  be                                                               
affected  by this,  so  there has  to  be a  way  to balance  the                                                               
increasing costs in Medicaid.                                                                                                   
Number 2832                                                                                                                     
SENATOR  PHILLIPS noted  that many  constituents  over the  years                                                               
have wondered  why the $27.35 is  taken out of their  PFDs.  When                                                               
he explains it to them, they  wonder why this is being taken out,                                                               
since  they've  already paid  federal  income  tax that  goes  to                                                               
welfare.  His main motivation  is to resolve the increasing costs                                                               
of Medicaid,  and this is  the intent of  the Senate to  figure a                                                               
way of reducing that increase.                                                                                                  
Number 2636                                                                                                                     
REPRESENTATIVE  STEVENS asked  if  implementing  this bill  would                                                               
eliminate the $27.35 deduction from everyone's PFD.                                                                             
SENATOR PHILLIPS answered it would  reduce the deduction to about                                                               
$16.  The  $16 would cover the people  receiving social security,                                                               
adult   public  assistance,   and  the   longevity  bonus.     He                                                               
acknowledged that some people say this  is a tax on the poor, and                                                               
he understands how they view it  in that manner, but on the other                                                               
hand the very same group of people are eligible for Medicaid.                                                                   
Number 2563                                                                                                                     
REPRESENTATIVE  WILSON asked:   If  the people  on ATAP  and food                                                               
stamps qualify  for Medicaid but  don't take advantage of  it and                                                               
then go on Medicaid, will that make the Medicaid bill go up?                                                                    
SENATOR PHILLIPS said he didn't have that answer.                                                                               
Number 2522                                                                                                                     
REPRESENTATIVE  JAMES  indicated  that she  has  heard  anecdotal                                                               
stories which show  that people are coming to  Alaska because the                                                               
programs  are  so  good.   These  programs  are  increasing,  and                                                               
there's  good evidence  that  some recipients  have  not been  in                                                               
Alaska all of their lives.  She  said she thinks that needs to be                                                               
addressed, and this is the way to do it.                                                                                        
SENATOR PHILLIPS reported that one  of his constituents who works                                                               
in  public  assistance has  seen  a  lot  of abuses  within  that                                                               
division as far  as the public taking advantage  of the programs.                                                               
He took his constituent's word for  it because he doesn't work in                                                               
that  office;  he  did  not  solicit  that  phone  call  and  was                                                               
surprised by it.  The constituent  seemed to know what he/she was                                                               
doing and seemed concerned about the abuses.                                                                                    
Number 2402                                                                                                                     
REPRESENTATIVE HAYES asked if the  $193 million that the governor                                                               
proposed in  his budget is  to address the maintenance  of effort                                                               
or  is  above  and  beyond the  maintenance-of-effort  issue  for                                                               
SENATOR  PHILLIPS said  he didn't  know.   He  commented that  it                                                               
doesn't matter what  figure is used; the problem  is still there.                                                               
The  Medicaid situation  needs to  be taken  care of  as soon  as                                                               
possible, and this is one way to do it.                                                                                         
Number 2351                                                                                                                     
REPRESENTATIVE  HAYES  said  that   about  three  years  ago  the                                                               
legislature went  into an agreement  with the  federal government                                                               
to use  some of the  additional monies  from Medicaid to  pay for                                                               
some of the  programs.  United States Senator Murkowski  put in a                                                               
provision to  increase the  amount of  Medicaid payments  for the                                                               
state of  Alaska from  50-50 percent.   When the  legislature was                                                               
working on the five-year plan, this  was a way to address some of                                                               
the  issues.   Since the  federal government  switched how  it is                                                               
doing Medicaid, he argued, the state knew this was coming.                                                                      
SENATOR PHILLIPS said  he thought it was 58-42, and  now it's 52-                                                               
48 or  53-47.   The point is  that the state  funds to  match the                                                               
federal   funds  are   increasing  because   the  percentage   is                                                               
increasing.   Alaska may not be  able to have that  luxury in the                                                               
next few years.  The fact that it  was known it was coming is the                                                               
whole point of this bill.                                                                                                       
Number 2172                                                                                                                     
TABER  REHBAUM,   Arctic  Alliance  for  People,   testified  via                                                               
teleconference.   She  asked the  committee not  to pass  SB 340.                                                               
She  indicated  that Alaskans  on  temporary  assistance are  not                                                               
getting a  free ride.  She  understands that ATAP brings  them up                                                               
to only 67 percent of the  poverty level.  The successful welfare                                                               
reform initiative  and case management system  are really helping                                                               
more  people toward  self-sufficiency and  off state  assistance.                                                               
The  hold  harmless provision  for  ATAP  recipients is  also  an                                                               
important element  in Alaska's welfare reform  success in helping                                                               
people  make  important  investments  toward  self-sufficiency  -                                                               
buying or repairing a car,  purchasing work clothes or equipment,                                                               
getting dental  needs addressed, becoming more  hirable - without                                                               
having to  lose critical  benefits for  that month  or subsequent                                                               
months.  This  bill would yet place another  hurdle before people                                                               
who are struggling  to try to become independent.   She urged the                                                               
committee to not promote this bill.                                                                                             
Number 2087                                                                                                                     
STEVE CONN,  Executive Director, Alaska Public  Interest Research                                                               
Group (AkPIRG), testified via teleconference.   He noted that the                                                               
Alaska  Injured Workers  Alliance and  the Nubian  Sisterhood are                                                               
also in AkPIRG.   The Alaska Injured Workers  Alliance deals with                                                               
the  needs of  injured workers  who fall  between the  cracks for                                                               
social services.  He expressed opposition  to SB 340.  He pointed                                                               
out  that somebody  pays in  the end.   The  amount gotten  for a                                                               
custodial   parent   by   garnishing  the   PFD   will   diminish                                                               
substantially  if this  bill passes.   Small-business  owners who                                                               
deal productively with a low-income  person will eat those debts,                                                               
so they  will pay.   The  Alaska Native  family grants  will lose                                                               
money.   He stated that the  costs are borne by  charities and by                                                               
other people.                                                                                                                   
MR. CONN  concluded that a study  reported in The New  York Times                                                             
last Wednesday  showed that  only one state  of the  fifty states                                                               
from  the 1970s  to 1990s  has  actually reduced  its income  gap                                                               
between the  richest 20 percent  and the poorest 20  percent, and                                                               
that's Alaska.  This is a  positive thing that the permanent fund                                                               
has done.  He told the committee that this is a despicable bill.                                                                
Number 1815                                                                                                                     
BRUCE   KOVARIK,  National   American  Indian   Housing  Council,                                                               
testified via teleconference.  He  told the committee that SB 340                                                               
is misguided,  divisive, and  just plain wrong.   To  repeal hold                                                               
harmless  causes  harm,   he  said.    This  is   a  reversal  in                                                               
established  public policy,  and there  is no  reason to  reverse                                                               
this public  policy.   He said  there has been  talk of  a fiscal                                                               
crisis in Alaska for the past 20 years.                                                                                         
Number 1750                                                                                                                     
MR.  KOVARIK  commented  that   this  bill  creates  uncertainty.                                                               
Health and  Social Services  estimates that  about 37  percent of                                                               
the families  that receive  their PFDs  in October  actually have                                                               
them garnished.   There are many families  who voluntarily assign                                                               
their PFDs  to pay  for affordable housing  and other  costs, and                                                               
most  families  probably  use  their   PFDs  to  either  pay  off                                                               
accumulated  debt during  the year  or to  advance payment  other                                                               
family  expenses.   They annualize  their PFDs,  and for  them to                                                               
suffer  the loss  of ATAP,  food  stamps, and  general relief  in                                                               
October, November, or  December, depending upon how  they use the                                                               
funds, is  counterproductive.  The  brunt of that  uncertainty is                                                               
borne by  poor and  low-income families.   He restated  that this                                                               
bill is divisive.                                                                                                               
Number 1614                                                                                                                     
PAULETTE  ALDEN  testified  that  SB  340 will  be  hard  on  the                                                               
families who  won't get both the  welfare and the PFD.   She said                                                               
that it is  wrong to attack the people who  don't have the money.                                                               
People who  do have  money to  live off get  to keep  their PFDs.                                                               
She  commented that  if it  is going  to be  taken away  from one                                                               
person, it should be taken away from everyone.                                                                                  
Number 1446                                                                                                                     
KATHLEEN WARWICK  told the committee how  hard it is for  her and                                                               
her husband  to live  on welfare  and food  stamps with  the high                                                               
cost of groceries and rent.                                                                                                     
Number 1151                                                                                                                     
EUGENE WARWICK  testified about how  hard it  is to live  on only                                                               
$10 a month for food stamps.                                                                                                    
Number 0954                                                                                                                     
TONY   LOMBARDO,    Covenant   House   Alaska,    testified   via                                                               
teleconference.  He explained that  Covenant House is a privately                                                               
funded,  nonprofit agency  which cares  for homeless  and at-risk                                                               
youth.   There  is also  a  program in  Anchorage called  Passage                                                               
House,  which helps  teen moms  transition off  public assistance                                                               
and into self-sufficiency,  and he speaks today  on their behalf.                                                               
Most Passage  House moms come  just barely surviving on  ATAP and                                                               
WIC [Special  Supplemental Nutrition Program for  Women, Infants,                                                               
and Children], even  with the PFD to help  stabilize their lives,                                                               
find  affordable  daycare,  learn  life  skills,  such  as  money                                                               
management, and  find a job over  the course of 12  months to try                                                               
to transition  off public  assistance.   They come  there because                                                               
they are barely  making it on the street and  often fear that one                                                               
false  step will  result in  literally living  on the  street and                                                               
possibly losing their child to state protective custody.                                                                        
MR.  LOMBARDO  indicated that  this  bill  would cut  the  meager                                                               
budgets of  these teen moms  too much,  and they might  resort to                                                               
crime.    When poor  women  are  faced with  bleak  alternatives,                                                               
shoplifting,  drug  dealing,  and prostitution  seem  like  quick                                                               
fixes.   He  sees women  every day  who have  fallen prey  to the                                                               
street culture where crime is a part  of life.  He said that they                                                               
try to  get these  moms out  of that culture  and into  a healthy                                                               
lifestyle.   The state needs  fewer babies in its  custody, fewer                                                               
women  living on  the  streets, and  more  programs like  Passage                                                               
House helping  young ladies into self-sufficiency  and off public                                                               
assistance.    These poor  moms  do  not need  anymore  financial                                                               
crisis or  poverty in their lives.   He stated that  reducing the                                                               
income of  families already at the  poverty level is not  part of                                                               
the solution to dependency on public assistance in Alaska.                                                                      
Number 0830                                                                                                                     
MR. LOMBARDO stated that Covenant  House is opposed to the intent                                                               
of SB 340.   It strives for self-sufficiency for  its clients who                                                               
are  already struggling  at the  barest level  of necessity.   It                                                               
would  be unreasonable  to  compromise the  income  level of  the                                                               
poorest families.                                                                                                               
Number 0768                                                                                                                     
MARIE  LAVIGNE,  Executive   Director,  National  Association  of                                                               
Social  Workers, Alaska  Chapter,  testified via  teleconference.                                                               
She  explained that  they are  a membership  organization of  500                                                               
professional  social workers  across  Alaska and  oppose SB  340.                                                               
Recognizing  the other  testimony this  morning, she  pointed out                                                               
that SB  340 will  impact 5,100 families,  who are  recipients of                                                               
ATAP,  general relief,  and food  stamps, by  making them  choose                                                               
between  receiving their  benefits or  permanent fund  dividends.                                                               
The permanent fund dividend is  a benefit enjoyed by all eligible                                                               
Alaskans.   Why should  recipients of  public benefits  for basic                                                               
support lose this money in order to receive their dividend?                                                                     
MS. LAVIGNE  said, heralded as a  cost savings to fix  the fiscal                                                               
gap  and Medicaid  payments for  the state,  this is  yet another                                                               
attack  on the  poor.    There are  no  savings  for the  state's                                                               
general  fund as  funding  for the  hold  harmless program  comes                                                               
directly from the  earnings of the permanent fund.   On behalf of                                                               
the  professional social  workers  who serve  many  of the  5,100                                                               
families who receive  ATAP, general relief, and  food stamps, she                                                               
stated that  the ripple  effect this  will cause  is significant,                                                               
both to the quality of life  and the resources that are available                                                               
to these recipients.  Most  importantly, it reverses the progress                                                               
that has been made on  welfare reform toward self-sufficiency for                                                               
these families and getting them off public assistance.                                                                          
Number 0667                                                                                                                     
MS.  LAVIGNE noted  that the  impact  on 5,100  poor families  in                                                               
Alaska is  going to be  felt in a number  of ways.   Families use                                                               
their permanent funds to buy  the things they can't afford during                                                               
the rest  of the year.   Most low income families  use their PFDs                                                               
to  purchase  things  that  will  help  them  become  more  self-                                                               
sufficient:   rent  deposits,  needed  vehicle repairs,  heating,                                                               
clothing,  shoes for  the children,  dental  care, or  eyeglasses                                                               
that are not  otherwise paid for.  Why penalize  them in October,                                                               
November, and  December when they  are eligible to receive  a PFD                                                               
like other  Alaskans?  In  reality, these families are  not using                                                               
their  PFDs for  trips to  Hawaii or  investment plans  for their                                                               
children's  college fund  or other  luxuries  that many  Alaskans                                                               
have come  to expect each October.   Rather, they are  waiting to                                                               
buy  the necessities  they  cannot afford  on  a limited  monthly                                                               
income.    According  to  her,  this bill  is  unfair  and  mean-                                                               
spirited,  and it  will not  accomplish anything  except singling                                                               
out  the poor  for their  benefits.   On behalf  of the  National                                                               
Association of  Social Workers, Alaska Chapter,  and the children                                                               
and families it serves, Ms.  Lavigne urged the committee to table                                                               
this bill and  go back to work on addressing  the fiscal gap with                                                               
new revenues.  No  more budget cuts on the back  of the poor, she                                                               
Number 0529                                                                                                                     
MARSHALL HARRIS told the committee how  hard it is to live on $10                                                               
for food stamps.  Since he is  legally blind, he can't go out and                                                               
get a job.  He expressed opposition to SB 340.                                                                                  
Number 0347                                                                                                                     
WILLIAM CRAIG, Alaska Independent  Blind, told the committee that                                                               
there  is a  small group  of  people not  defined in  SB 340  who                                                               
collect Social Security  Disability Income (SSDI).   They have to                                                               
meet  a  tight  income  guideline to  get  this  assistance,  and                                                               
currently, they  would probably  be left  out.   There is  also a                                                               
group of  people waiting to  collect SSI  or SSDI, who  collect a                                                               
form  of  adult  public  assistance   while  waiting  for  social                                                               
security to make the decision.   Those people possibly would also                                                               
be left out in the current structure of the bill.                                                                               
Number 0240                                                                                                                     
JIM   NORDLUND,   Director,   Division  of   Public   Assistance,                                                               
Department of Health  & Social Services, told  the committee that                                                               
back  in 1982  when  the  permanent fund  was  created, the  hold                                                               
harmless program  was also created.   For the past 20  years, the                                                               
hold harmless  provision in  law has  ensured that  poor Alaskans                                                               
are given the  full benefit of the PFD.   The principals by which                                                               
the  hold harmless  program was  created  are just  as valid  and                                                               
important today.   This bill changes the law 180  degrees.  Under                                                               
current law, the PFD can't  be counted as earnings concerning the                                                               
eligibility   for  ATAP,   food   stamps,   and  general   relief                                                               
assistance.   This bill says  that the  PFD must be  counted, and                                                               
the  effect  would be  that  for  the  recipients of  ATAP,  food                                                               
stamps,  and  general relief  assistance,  they  will lose  their                                                               
eligibility for benefits for October when the PFD is received.                                                                  
MR.  NORDLUND referred  to the  handout he  passed around.   Even                                                               
with the receipt  of the PFD and  given the fact that  the PFD is                                                               
much  larger than  it  has been  in the  past,  people on  public                                                               
assistance, particularly on  ATAP, are still just  at the federal                                                               
poverty level.   The handout shows  that a family of  three would                                                               
receive  about  $18,700 a  year  from  ATAP,  the PFD,  and  food                                                               
stamps.  Most of the  people on temporary assistance are working,                                                               
but just  to maximize the  full temporary assistance  benefit, he                                                               
noted  that the  calculation shows  a family  of three  who isn't                                                               
TAPE 02-49, SIDE A                                                                                                              
Number 0001                                                                                                                     
MR. NORDLUND said that based upon  the market survey on the cost-                                                               
of-living  in Alaska,  the  cost-of-living  difference for  basic                                                               
expenses is about  $18,300, so it's a difference of  only $400 on                                                               
an annual  basis.  In receiving  full ATAP benefits and  the full                                                               
PFD, this  family of three is  still just at the  federal poverty                                                               
level.   His point  is even  with the receipt  of the  PFD, these                                                               
families are still poor by anybody's definition.                                                                                
MR. NORDLUND  pointed out that the  temporary assistance caseload                                                               
has  declined by  40 percent  since welfare  reform took  effect.                                                               
There  has been  success in  moving people  into self-sufficiency                                                               
and employment and  off of temporary assistance.   He referred to                                                               
the other  chart in the  handout that shows the  percentage taken                                                               
out of the PFD  for the hold harmless program.   It went from 3.5                                                               
percent in 1996  to 1.5 percent in  2001.  Due to  the success of                                                               
welfare reform  and the  growth of  the permanent  fund dividend,                                                               
there's a much lower percentage  coming out of the individual PFD                                                               
checks to pay for the hold harmless program.                                                                                    
Number 0201                                                                                                                     
MR.  NORDLUND said  the general  relief assistance  program is  a                                                               
program  for the  poorest of  the poor.   It  predates statehood.                                                               
This program  pays for indigent  burials when there is  no family                                                               
or no  other means to  pay for those burials.   Administratively,                                                               
SB 340  is going to cause  the division more work  to take people                                                               
off  the program  for the  month of  October and  then make  them                                                               
eligible again in November.                                                                                                     
MR.  NORDLUND said  that 40  percent  of ATAP  recipients do  get                                                               
their  PFD check  garnished, and  some people's  entire check  is                                                               
garnished.   So, there will be  some individuals on ATAP  for the                                                               
month of  October that  will not  get a welfare  check or  a PFD.                                                               
They will have no income to support their family for that month.                                                                
Number 0332                                                                                                                     
CHAIR COGHILL asked  if that would hold true if  it were a court-                                                               
ordered garnishment.                                                                                                            
MR. NORDLUND said he believed so.                                                                                               
MR. NORDLUND  noted another  problem for  families in  October is                                                               
that  they will  not  receive a  welfare check  on  the first  of                                                               
October,  and  the  PFD  does  not arrive  until  the  middle  of                                                               
October, so  for the  first two  weeks of  October, they  will be                                                               
unable to  pay their rent.   That impact has to  be considered in                                                               
this legislation.                                                                                                               
Number 0379                                                                                                                     
MR. NORDLUND  commented that Senator  Phillips' reasons  for this                                                               
bill - wanting  to plug the hole  in the Medicaid budget  - are a                                                               
bit like "robbing Peter to pay  Paul."  That isn't proper in this                                                               
regard.     The  fund  source   can  be  switched   without  this                                                               
legislation.   He pointed  out that in  the Senate  budget, funds                                                               
have  been backed  out  in  the same  amount  of  money that  the                                                               
permanent  fund earnings  had been  put in.   He  maintained that                                                               
there is  no net increase in  the Medicaid budget because  of the                                                               
provisions of this legislation.                                                                                                 
Number 0489                                                                                                                     
MR. NORDLUND emphasized that this  fund source switch can be done                                                               
in the budget  without this bill.  If this  bill doesn't pass and                                                               
the  Medicaid budget  was partially  funded  with permanent  fund                                                               
earnings, then it would be up  to the department.  It would still                                                               
lose  the  fund source  out  of  the  department's pay  for  hold                                                               
harmless, but  at least it  would be  up to the  department, with                                                               
other earnings, to  pay for the hold harmless  programs, which is                                                               
something it  would do.   He added  that that would  impact other                                                               
services  under  the  ATAP program,  particularly  childcare  and                                                               
other work services.  It  would be the department's position that                                                               
it would continue to pay the hold harmless program.                                                                             
MR. NORDLUND  recognized that the  fiscal gap is a  real problem,                                                               
but in  the end if  something isn't  passed that really  helps to                                                               
solve the  gap -  any broad-based  tax - it  would be  a shameful                                                               
thing to  be left  with making cuts  to the poor.   He  urged the                                                               
committee not to pass SB 340.                                                                                                   
Number 0760                                                                                                                     
MR. NORDLUND  replied to a  question from Chair Coghill  that for                                                               
individuals on SSI  and APA who also receive food  stamps, he did                                                               
believe that SB 340 would reduce those food stamps benefits.                                                                    
Number 0804                                                                                                                     
REPRESENTATIVE JAMES  said she doesn't  know what is going  to be                                                               
done to solve the fiscal issue,  but there is a good reality that                                                               
the permanent  fund dividend will be  reduced in the future.   It                                                               
has to be  realized that Alaska cannot tax itself  enough to fill                                                               
the gap; it  has to grow itself  out.  She asked  what these same                                                               
poor people are  going to do if  the PFD is reduced  to a smaller                                                               
amount.  She wondered if they  are still going to be in desperate                                                               
situations, or if they can provide for themselves in other ways.                                                                
MR. NORDLUND said  that he suspected that the poor  will face the                                                               
same loss of  income to their family as more  fortunate people if                                                               
the  PFD  goes down.    He  maintained  that  the poor  would  be                                                               
suffering  at least  equally with  those more  fortunate if  that                                                               
were the situation.                                                                                                             
REPRESENTATIVE  JAMES asked  if  Mr. Nordlund  knew  how many  of                                                               
these  people  don't  get  their  PFD  checks  because  they  are                                                               
MR.  NORDLUND replied  that the  only figure  he has  is that  40                                                               
percent  of the  caseload  get  their PFD  garnished.   Some  are                                                               
garnished  the   whole  amount  and   some  are   garnished  only                                                               
Number 1026                                                                                                                     
REPRESENTATIVE JAMES  asked if  there are  any statistics  in the                                                               
increase in APA and SSDI recipients.                                                                                            
MR. NORDLUND  answered there are.   The APA program has  grown at                                                               
about 3 percent the past ten years.                                                                                             
REPRESENTATIVE JAMES  reiterated that there is  no empirical data                                                               
on the growth,  but there is anecdotal evidence  that people have                                                               
moved to  Alaska because of the  programs.  She said  she doesn't                                                               
mind helping  the poor  and disabled in  Alaska, but  wasn't sure                                                               
she  wanted to  take  care  of those  from  other states  because                                                               
Alaska is so generous.                                                                                                          
Number 1128                                                                                                                     
MR. NORDLUND  agreed that  for the last  eight years  the comment                                                               
that people are  coming to Alaska for the good  benefits has come                                                               
up.  All  the empirical evidence his department has  been able to                                                               
discover finds that is not true.   The biggest reason people come                                                               
to Alaska  is because  their families  are up  here.   The second                                                               
reason  is because  of  the impression,  from  the pipeline  days                                                               
perhaps,  that there's  still a  lot of  employment and  economic                                                               
opportunities  in Alaska.   There  could  be people  who come  to                                                               
Alaska  because  they  think the  welfare  benefits  are  better,                                                               
however, he said the PFD is  probably the main reason many people                                                               
move to Alaska and not  necessarily because of the higher welfare                                                               
Number 1299                                                                                                                     
REPRESENTATIVE JAMES expressed concern  about Alaska's becoming a                                                               
magnet state.   She asked  if there was a  way to tell  if people                                                               
come from other states when they apply for benefits.                                                                            
MR. NORDLUND  said there was  a place  on the application  to say                                                               
whether they  had received  benefits in another  state.   If they                                                               
don't tell the truth, it's fraud.                                                                                               
Number 1374                                                                                                                     
REPRESENTATIVE FATE asked if anyone  has ever done an analysis of                                                               
either disposable or discretionary income  of the people who fall                                                               
below the poverty line.                                                                                                         
MR. NORDLUND answered not that he is aware.                                                                                     
Number 1460                                                                                                                     
REPRESENTATIVE STEVENS  asked how the Native  assistance programs                                                               
fit with Senator Phillips' chart.                                                                                               
MR. NORDLUND said Senator Phillips  doesn't have it on his chart.                                                               
He  explained  that  under federal  welfare  reform  law,  Native                                                               
organizations  are  allowed  to  run their  own  TANF  [Temporary                                                               
Assistance to Needy  Families] program.  The TANF  program is the                                                               
federal  welfare program,  and Alaska's  state version  is Alaska                                                               
Temporary   Assistance  Program.      There   are  three   Native                                                               
organizations in  Alaska that run the  TANF program.  There  is a                                                               
line item  in the  budget, Tribal Assistance,  and that  is where                                                               
the state grants money to  those Native organizations to run that                                                               
program.    The effect  of  this  bill  would also  affect  those                                                               
REPRESENTATIVE  STEVENS  asked  if  the Native  families  are  an                                                               
addition  to Senator  Phillips' list  who would  be affected,  or                                                               
would those families be under another category.                                                                                 
MR. NORDLUND  said this  bill causes  a fund  source loss  to the                                                               
temporary assistance  program of  about $3.2  million.   If those                                                               
funds  are taken  out of  the temporary  assistance program,  the                                                               
Native family assistance  program would also be  docked the same.                                                               
The Native family assistance program  is equitable with the state                                                               
program.   If  the state  programs loses  funds, then  the Native                                                               
program would lose funds too.                                                                                                   
Number 1640                                                                                                                     
REPRESENTATIVE  HAYES asked  about the  maintenance of  effort in                                                               
the Medicaid budget from the Senate numbers.                                                                                    
MR.  NORDLUND  answered that  the  Medicaid  budget isn't  funded                                                               
through a  maintenance of  effort.   It's the  traditional 50-50.                                                               
For every dollar of general fund  put into the Medicaid budget, a                                                               
dollar of  federal money is earned.   When general funds  are cut                                                               
back, the federal funds are cut back.                                                                                           
Number 1698                                                                                                                     
JOHN  SHERWOOD,  Unit  Manager, Beneficiary  Eligibility  Policy,                                                               
Division  of Medical  Assistance, Department  of Health  & Social                                                               
Services, explained  that the maintenance of  effort requirements                                                               
in the  Medicaid budget  don't have to  be worried  about because                                                               
the  state is  spending well  above that  level.   In the  larger                                                               
budget,  the  state  budget   represents  basic  program  growth,                                                               
increase  in  eligible  people  and  is  required  to  pay  rates                                                               
sufficient to have  adequate providers.  The  only other increase                                                               
that would be included in the  budget would be things in terms of                                                               
financing where  more total  dollars are spent  to bring  in more                                                               
federal revenue.                                                                                                                
REPRESENTATIVE  HAYES  reiterated that  80  percent  of the  100-                                                               
percent-eligible people currently use Medicaid.   He wondered how                                                               
much it would cost the state  if that 20 percent went on Medicaid                                                               
because  they wouldn't  have their  permanent fund  checks during                                                               
that month.   He thought it would cost more  than the fiscal note                                                               
of SB 340.                                                                                                                      
MR. SHERWOOD  said that has not  been analyzed.  These  costs are                                                               
difficult  to  analyze  because  some  medical  expenses  can  be                                                               
deferred.   If  somebody was  short  of funds  one month,  he/she                                                               
might  not necessarily  seek Medicaid  that  month; he/she  might                                                               
just defer the  cost until another time.  For  the most part, the                                                               
people with high medical need  will have the Medicaid coverage if                                                               
they are  on these other programs.   At any given  time, the vast                                                               
majority of dollars  spent are on the relatively  small number of                                                               
people  receiving  Medicaid who  were  actually  sick or  have  a                                                               
healthcare  need  in   that  month.    Most   people  don't  have                                                               
healthcare needs  that need to  receive on-going care.   Some do,                                                               
but most of  those people would probably fall  into the exemption                                                               
for people receiving  APA and SSI.  There could  be some problems                                                               
as people have  less disposable income available to  pay for some                                                               
of the  services not  covered or  covered in  a limited  way like                                                               
dental care.                                                                                                                    
Number 1909                                                                                                                     
CHAIR  COGHILL   asked  how  the  childcare   assistance,  rental                                                               
assistance, and  those types of  things are accounted for  as far                                                               
as the hold harmless issue goes.                                                                                                
MR.  SHERWOOD  answered  that   medical  assistance  provided  to                                                               
individuals, either through Denali  KidCare or through the family                                                               
Medicaid  program, would  fall under  Medicaid,  but he  believes                                                               
that a  lot of support  that's been  provided to the  family does                                                               
fall under adult temporary assistance.                                                                                          
Number 2036                                                                                                                     
MR. NORDLUND said  there is a different set of  dynamics going on                                                               
with the temporary assistance program  and its attendant programs                                                               
such as  childcare, work services,  Medicaid, and those  kinds of                                                               
things.   The cost drivers of  Medicaid and the reason  why there                                                               
is such  a large  deficit in  the state  are really  unrelated to                                                               
what's  going  on with  temporary  assistance  program.   On  the                                                               
temporary  side, the  caseload has  gone down  40 percent  so the                                                               
money that  used to be paid  to those families in  benefits, some                                                               
of those funds  have been reinvested into  childcare and services                                                               
that  do help  social  workers  at DFYS.    There  has been  some                                                               
reprogramming  of  those funds.    Mr.  Nordlund emphasized  that                                                               
there still has been a net  savings to the general fund, that has                                                               
grown to about  $50 million annually, due to welfare  reform.  It                                                               
is not entirely  correct to say that money has  just been shifted                                                               
from welfare payments  over to other services.  There  has been a                                                               
net  savings  to the  general  fund.    He  said that  there  are                                                               
separate  issues on  the Medicaid  side  that drive  the cost  of                                                               
Medicaid [up].                                                                                                                  
Number 2121                                                                                                                     
CHAIR COGHILL agreed they are  talking about two different things                                                               
although  they  convert.   For  example,  the daycare  assistance                                                               
dollars that  are significantly  federal are  in fact  taking the                                                               
place of what  would normally have been paid under  ATAP, so that                                                               
isn't seen  in the  general fund, but  it's still  dollars there.                                                               
The  dollars are  equal;  they're just  coming  out of  different                                                               
pots.   Welfare is not  reduced; it  just changes how  it's done.                                                               
In many  cases, it is  making people  more productive, but  it is                                                               
still getting welfare from the government.                                                                                      
MR. NORDLUND said Chair Coghill  was basically correct in what he                                                               
said.    Instead of  spending  money  on welfare  payments,  it's                                                               
helping  with childcare  payments,  and  that's certainly  better                                                               
because childcare  is much closer  to getting that person  on the                                                               
road   to  total   self-sufficiency   because  they're   working.                                                               
However, it's  not a  one-to-one relationship.   The  money taken                                                               
from  welfare payments  and put  into childcare  is not  equal to                                                               
that  savings.   There are  families who  have entirely  gone off                                                               
public  assistance and  don't receive  childcare  because of  the                                                               
effects of  welfare reform.   He reiterated  that there is  a net                                                               
Number 2250                                                                                                                     
CHAIR  COGHILL noted  that the  whole  human services  area is  a                                                               
significant portion of Alaska's budget,  and Alaska has been good                                                               
to  people.   He doesn't  want people  to characterize  this hold                                                               
harmless thing as pulling the rug  out from under them; it isn't.                                                               
In the whole context of issues,  certainly it is robbing Peter to                                                               
pay  Paul,  but so  are  taxes,  whether  it's federal  taxes  or                                                               
whatever else is done at  the community level on matching grants,                                                               
et cetera.  He agreed this is a complex issue.                                                                                  
REPRESENTATIVE HAYES  asked if  SB 340 would  have any  effect on                                                               
HB 402.                                                                                                                         
Number 2365                                                                                                                     
MR. NORDLUND said there isn't a  direct effect except to say that                                                               
HB 402 will  give the department more tools to  help people reach                                                               
self-sufficiency.   The more  people who  reach self-sufficiency,                                                               
the less  draw there will  be on  the permanent fund  earnings to                                                               
pay for this program.                                                                                                           
CHAIR COGHILL asked if recipients are helped with budgeting.                                                                    
MR. NORDLUND  said that  case management  is provided  to clients                                                               
and  case  managers   do  work  with  clients   on  their  family                                                               
budgeting.   Unfortunately, on  the APA  side, the  APA caseloads                                                               
are  very high  for individual  workers, so  they don't  have the                                                               
time to spend with clients that they would like.                                                                                
MR. NORDLUND replied to a question  from Senator Phillips.  As he                                                               
remembers the history of this,  originally when the hold harmless                                                               
program was  created, it was  paid for with  unrestricted general                                                               
funds.    The funding  source  changed  some  time ago  when  the                                                               
legislature  changed  it to  come  out  of  the earnings  of  the                                                               
permanent fund, which is also general fund [money].                                                                             
SENATOR PHILLIPS  disputed that because  the $27.34 comes  out of                                                               
Alaskans' PFDs.                                                                                                                 
CHAIR  COGHILL asked  what  the  actual fund  source  is for  the                                                               
dollars withheld  from the permanent  fund dividend for  the hold                                                               
harmless provision.                                                                                                             
Number 2621                                                                                                                     
NANCI JONES,  Director, Central  Office, Permanent  Fund Dividend                                                               
Division,  Department of  Revenue,  answered that  it  is in  the                                                               
formula for the dividend calculation.   The departments get their                                                               
appropriation  from   the  average  five-year  earnings   of  the                                                               
permanent fund.   That's  the source  of all  the appropriations.                                                               
The Department of Health &  Social Service has allowances whereby                                                               
it estimates how much it will  need for its various programs, and                                                               
[those monies] are appropriated annually by the legislature.                                                                    
SENATOR PHILLIPS  explained that the  $27.34 would be  reduced to                                                               
around $16, which would take care of APA and SSI recipients.                                                                    
Number 2915                                                                                                                     
CAREN  ROBINSON, Lobbyist  for  Alaska  Women's Lobby,  testified                                                               
that she hoped  this bill will be tabled in  this committee.  She                                                               
told the  members that  most of  the areas  of concern  have been                                                               
spoken to.   She  expressed concern on  the designation  of funds                                                               
that  could not  be guaranteed  that next  year or  the following                                                               
year that  the money  taken from these  recipients would  then go                                                               
into  Medicaid,   which  is  the  intent   of  this  legislation.                                                               
Secondly, she  stated her hope  that the committee  clearly knows                                                               
whom this would  hurt.  Many of  the adults who will  be hurt are                                                               
lifelong  Alaskans.    Possibly  through death  of  a  spouse  or                                                               
because  of  illness,  people  could  fall  under  the  temporary                                                               
assistance   program  and   would  lose   their  permanent   fund                                                               
dividends.  She  said the Alaska Women's Lobby  is also concerned                                                               
about  the women  who are  victims of  violent crimes.   A  large                                                               
number of recipients are women  who are domestic violence victims                                                               
or  sexual assault  victims,  or their  children  are victims  of                                                               
sexual assault.                                                                                                                 
TAPE 02-49, SIDE B                                                                                                              
Number 2965                                                                                                                     
MS.  ROBINSON said  they  shouldn't be  punished  and lose  their                                                               
permanent fund dividend  because of a situation  in which they've                                                               
had to get assistance from law  enforcement and have had to leave                                                               
their homes, and possibility leave  their communities and jobs to                                                               
get away  from a very  violent situation.   She said  [the Alaska                                                               
Women's Lobby]  is concerned about what  SB 340 will do  to those                                                               
women and children.  She encouraged  the committee to ask all the                                                               
questions.  She has talked to a  lot of people and found out that                                                               
the PFD has become a necessity whether they have money or not.                                                                  
Number 2886                                                                                                                     
CHAIR COGHILL said  he doesn't see this as  punishing people when                                                               
society  has been  very benevolent  in  many ways.   Society  has                                                               
agreed to help the less fortunate and  has done a good job.  When                                                               
it comes  to this type of  income, he struggles with  being asked                                                               
to accept it and  say it's not income for these  services.  It is                                                               
a priority choice.                                                                                                              
CHAIR COGHILL closed public testimony and announced that SB 340                                                                 
will be held over.                                                                                                              

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