Legislature(1995 - 1996)
03/01/1995 09:15 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 37
"An Act relating to treatment of permanent fund
dividends for purposes of determining eligibility for
certain benefits; and providing for an effective date."
Senator Phillips stated for the record that he is
representing District L. The committee substitute before
the committee basically gives the option of the welfare
recipient to decide to accept monies from welfare programs
or the permanent fund dividend, but not both. Historically,
in 1981, the legislature passed the permanent fund dividend
with a hold harmless. Approximately $2 million was paid out
of the general fund up to 1986. In 1986, the legislature
decided to have the recipients of all the PFD's pay for the
hold harmless. That amount is $22 million currently, which
translates to $41.45 per person. There are 573,000 people
receiving the dividend. The CS excludes only the Adult
Public Assistance recipients and the Supplemental Security
Income recipients. Basically, they will receive their
benefit plus the permanent fund dividend. The other 39,500
people will have to make a decision whether to take the
permanent fund dividend for that particular month or their
financial assistance from other programs.
Co-chair Halford asked about the fiscal note attached to the
bill.
Senator Phillips responded that it has been difficult
obtaining a fiscal note. He had just received it an hour
prior to the meeting, asked the department to explain it.
He also wanted to make clear that the SSI and APA recipients
will both receive their benefits plus their PFD. The hold
harmless would cost those receiving the PFD, $4.2 million
or, approximately $8 per person. This deduction would
include 8,000 people. Senator Phillips stressed he chose to
exclude from the CS the APA and SSI recipients since this
category of people can least help themselves.
Co-chair Halford asked Senator Phillips to move the proposed
CS and explain it to the committee. Senator Phillips MOVED
CS for SB 37 9-LS0449/G, Cook, dated 2/15/95. (See
subsequent hearing of 3/9/95 for adoption of updated draft,
3/17/95). Co-chair Halford asked if there were any
objections to adopting CS as the working vehicle. Without
objection, the CS for SB 37 is ADOPTED.
Senator Phillips explained that the bill would effect 39,500
people and would exclude only those on APA and SSI. The
total is 8,000 on APA and SSI. Co-chair Halford asked for
consideration in adopting a program allowing those on public
assistance to check off a block on their permanent fund
application indicating an equal number of monthly dividend
payments. This would avoid exceeding the welfare
guidelines, with administrative costs deducted from their
individual dividends. Co-chair Halford's intent is to
mitigate the effect of not taking from everyone else's
dividend to fund the hold harmless.
Senator Rieger supports this action. He has a POM which
says that federal rules allow for this action.
Co-chair Halford asked Elmer Lindstrom, Special Assistant to
the Commissioner of Health & Social Services to address the
committee.
Mr. Lindstrom stated that the department is opposed to
passage of SB 37. The entire text of his presentation is
attached.
End: SFC-95, #8, Side 1
Begin: SFC-95, #8, Side 2
Mr. Lindstrom also noted that the department did supply
Senator Phillips with draft fiscal notes to reflect the
draft CS that was made available to H&SS.
Senator Sharp spoke of the "check-off" recommended by Co-
chair Halford. He pointed out the "double-dipping" effect.
He stressed the frustration of the state making payment of
the permanent fund dividend which takes the obligation away
from the federal in that month. He would like to find a
resolution to the problem which allows people the ability to
absorb the additional amount opposed to dropping off the
role because of the income. He felt there must be a more
sensible plan to the present inequity of payment
distribution.
Mr. Lindstrom answered that there has not been a detailed
analysis of the problem, though it has been mentioned
previously and the department is going to look at it. The
first guess is that it would increase the cost of the hold
harmless program. He explained that when individuals
receive their dividend, they spend it immediately in one
month, resulting in the loss of their benefit for one month.
By spending it all in one month, they are over the cap for
benefits for that one month. But, if that $1,000 were to be
spread over 3 or 4 months, it would be a dollar for dollar
reduction in each of those months, resulting in an increase
cost of the hold harmless program in total. Added onto that
would be additional administrative costs.
Senator Sharp inquired if the 47,000 people involved in the
program are up against the income cap? Mr. Lindstrom
responded that in the one month expenditure of the dividend,
the income puts them significantly over the income cap for
that month. The results are a loss of income for the one
month. That amount that is considerably over the cap, we are
not having to hold harmless. But if you spread that amount
over a greater period it would be subject to reimbursement.
Mr. Curtis Lomas, Program Officer, Division of Public
Assistance with the Department of Health & Social Services
spoke to the issue of Senator Sharp's question. He stated
that there has been considerable discussion regarding
quarterly and monthly payments with the dividend. To state
it clearly, public assistance
payments are not an "on" and "off" situation. If the income
is below the limit for the program there is eligibility for
payment, but it is reduced by the amount of the total
income. In a typical case with a family on AFDC, if
everyone in the family gets the
dividend payments in October, it will result in the family
being ineligible for that month. The loss to that family is
approximately $923, if they have no other income. In the
department's analysis in the past, the calculations across
all the programs that are both hold harmless and permanent
fund dividend, a monthly payment scheme for the dividend
roughly doubled the cost of the hold harmless program.
Co-chair Halford noted that based on the payment, the gap in
the state's welfare programs, between eligibility and
poverty line is very small. Mr. Lomas confirmed 7%. Co-
chair Halford confirmed that the gap is increasing as we
reduce payment. He noted that it increased by the action of
the last legislature. Mr. Lomas confirmed that it increases
every year as the cost of living goes up. Co-chair Halford
noted that it hinged on repealing the automatic cola. He
said that there are not enough votes in the legislature to
take this money out of the dividend this year, and he felt
that this issue will not go away.
Co-chair Frank asked for an analysis from the Department of
Health and Social Services showing the calculations of the
PFD that was done on a monthly basis?
Senator Donley asked what the cost to the state is, versus
the federal government, of transferred payments no longer
received. Mr. Lomas responded that the formula for the
federal and state funded program is 50%/50%. That applies
to Medicaid and AFTC program.
Co-chair Frank asked if the assumption included recipients
choosing the dividend and foregoing their benefits? Mr.
Lomas said that people apply for their dividend, because in
almost every instance, they loose more if they choose public
assistance over the dividend. Co-chair Frank stated that in
an earlier analysis he had seen, it was unlikely that
Medicaid would be lost. Mr. Lomas stated that with few
exceptions that was true. The Medicaid Program is an anomaly
of federal law that allows us to disregard dividend payments
in most Medicaid cases as income. It only kicks in as an
eligibility factor if somebody holds onto it beyond the
month that they received it, then it is treated as an asset.
Co-chair Frank stated that assumptions are made that people
are going to forego their benefits if this law were to pass
and continue to get the permanent fund dividend. He asked
if minors can apply for their dividends, once they turn 18,
as long as parents do not apply for them? Mr. Lomas said
that was his understanding. He commented that Mr. Williams
testified to that effect when he was with the PFD Division
earlier this year. Co-chair Frank asked for analysis
regarding support from other programs versus money from PFD,
and how families might make decisions on one or the other
program.
Senator Zharoff asked if PFD's could be used for education?
Mr. Lomas stated that under current operating policies, when
the dividend for the advanced college tuition program is
checked off, we do not treat it as a n asset for public
assistance purposes.
Mr. Lindstrom stressed to the committee the impact the
reduction would have for the family. This would be the
equivalent of a 7-1/2% rateable reduction. These are poor
families that receive their dividends and spend their
dividends very quickly.
Co-chair Halford asked what income is not accountable for
purposes of welfare? Is there any exempt income and what is
it? Mr. Lomas responded that almost all income counts. Co-
chair Frank asked if Native Corporation Dividends count
under all categories? Mr. Lomas specifically said that
there was a provision in the Native Claims Settlement Act
(amendments were enacted in 1988 which applied to SSI, AFDC
and APA programs) that holds harmless the first $2.0 per
individual per annum. In the Food Stamp Program payments
are not counted unless held over 6 months, then it is
considered an asset. The Medicaid Program follows the rules
of the AFDC and SSI programs. The first $2.0 per individual
per annum is disregarded. There are other very minor income
exclusions, such as the Foster Grandparent Program, which
gives grants to seniors to act as surrogate grandparents.
There are a few very specific provisions in federal law that
exclude some rather unusual sources of income. He stated
that there are also portions of earned income that are
disregarded in the various programs as incentives to work
and as recognition that there are costs related to working.
The whole dollar amount of earnings is not generally
counted. Those disregards vary depending upon the program.
Co-chair Halford asked for a list of all disregards along
with a one-page matrix that states the program, eligibility
guidelines (in terms of dollars), and the normal payment
amount that the permanent fund hold harmless contributes to
that program. A single page that lays out the programs,
eligibility, payment, and contribution of the hold harmless,
by program. He also wanted clarity on why the state cannot
change the law and provide for an income disregard for the
permanent fund dividend instead of a hold harmless for the
PFD.
Senator Zharoff inquired about public assistance for the
seasonally employed. He asked, if a person is on public
assistance at the time the application for the PFD or
receipt of the PFD comes out, does that exclude that person
from participation for the entire year? Mr. Lomas responded
that this legislation does not impact anyone's eligibility
for PFD, it only impacts eligibility for the hold harmless
and public assistance programs. The PFD is treated only as
income if you happen to be on public assistance when you
receive it. If employed and not in the caseload when the
dividend is received, there is no eligibility to weigh
against and no hold harmless consideration.
Co-chair Frank asked for a seasonal study for the caseload
by month. Senator Sharp asked if the permanent fund
dividend effects the Energy Assistant Grants and low income
housing? Mr. Lomas responded that they are not counted for
the Energy Assistance Program which is a federally funded
program that provides the department with latitude in terms
of accountable income.
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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