Legislature(2001 - 2002)
02/22/2002 09:06 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 292
"An Act making supplemental and other appropriations; amending
appropriations; making appropriations to capitalize funds; and
providing for an effective date."
This was the second hearing for these bills in the Senate Finance
Committee.
Department of Administration
Section 1(a)(1)
Department of Administration
Finance
Contractual costs for maintenance of the State payroll system
(AKPAY)
$150,000 general funds
DAN SPENCER, Director, Division of Administrative Services,
Department of Administration stated this request is a high priority
item for the Department as the state's "antiquated" payroll system
is requiring constant maintenance and is generating additional
operating expense. He continued that, in addition, the system's
software is being phased out, resulting in the need for the
Department to train programmers to convert existing data to a new
database management system.
Co-Chair Donley asked if a request for training had been included
in the FY 02 budget.
Mr. Spencer affirmed it had been requested, but had not been
funded.
Co-Chair Donley asked why the Department did not re-adjust
priorities to accommodate this need.
Mr. Spencer stated adjustments were made; however, the current
staff time is absorbed in repairing the existing software to keep
it functioning. He stated the Department currently is minimally
staffed and "are in a day-to-day keep the system going mode." He
noted that during the summer, the Department had a staff shortage;
however currently there is a full programming staff. He stressed
that being fully staffed now allows time for people to get the
additional training necessary for the upcoming conversion to new
software.
Co-Chair Donley asked the number of press relation's staff the
Department employs.
ALISON ELGEE, Deputy Commissioner, Department of Administration,
stated the Department has no press officers.
Co-Chair Donley asked if the Governor's office handles the
Department's press releases.
Ms Elgee responded the Department uses the Governor's Office staff
for assistance with press releases.
Co-Chair Donley asked if the Department could not have shifted
"other less priority" resources toward these programming needs.
Mr. Spencer responded, "this is a situation where the Department
has a need and knows the cost of the need and is bringing it" to
the Committee. He stated, "obviously, if you don't feel it rises to
a priority level, we will have to see if we can reassign some folks
or create the savings somewhere else."
Co-Chair Donley asked if the Department has determined this was
such a priority as to "feel it's a need that would cause you to
reassign things" to get it done.
Mr. Spencer affirmed that it is of such a need, and the Department
would have to start reassigning people if this supplemental request
is not granted. He warned that other Department responsibilities
would not be addressed. He stressed that the Department "would
rather not have to stop doing other things."
Co-Chair Donley asked what activities the Department would forego
if it shifted priorities to meet this need.
Mr. Spencer responded that the Department has not created a list
yet, as they have been waiting for the outcome of this request.
Co-Chair Donley stated the Committee had requested a prioritization
list from the commissioner. He surmised the list should have been
created by now.
Mr. Spencer replied that a list was created prioritizing items for
the FY 03 operating budget, but not for the supplemental requests.
Co-Chair Donley stated the Department's correspondence did not
appear to prioritize duties or specify which programs could be
eliminated if resources needed to be shifted to support other
programs.
Mr. Spencer stated the Department's response qualified that the
duties the Department performs are set in statute and the
Department is obligated to fulfill them.
Co-Chair Donley countered that the Governor could introduce
legislation to amend statutes to address this concern.
Mr. Spencer asked the Committee to communicate this suggestion to
the Governor's Office.
Senator Ward confirmed that the request sent to the Department's
Commissioner specifically requested prioritization of programs. He
continued that knowing exact monetary needs of the various
departments' and a list of departments' priorities would assist the
legislature in determining how to address the state's needs in the
FY 03 budget. He clarified that the intent of the letter was for a
prioritization list.
Mr. Spencer voiced appreciation for the clarification. He
reiterated the need for the Department to comply with statutory
mandates, and stated that one mandate involves the state payroll
system and "keeping the employees paid." He continued that these
statutes have been "on the books for some time," and that the
Department has not received a request to consider statutory
changes. He stressed that the Department's roll in prioritizing
programs is presented according to current statute mandates, and
that statutory changes suggested now would not affect the current
situation.
Senator Ward expressed that schools and other entities are
experiencing funding shortfalls and he stated that "government
needs to be reduced some amount, and everybody needs to share in
this a little bit." He requested the Department to examine its
programs "to determine where cuts can be made." He stated this
information in essential in determining the best way for the
Legislature to approach downsizing the budget without doing "across
the board cuts." He stated that the Committee receives requests for
more money; however, they also need to see what programs can "live
with less." He stressed he has not seen any "we can live with less
stuff."
Co-Chair Donley stated the Committee understands the position the
Department is in regarding statutory mandates, and commented that
he had requested suggestions for statutory law changes from the
Department's Commissioner; however, the Commissioner did not supply
any suggestions.
Co-Chair Donley requested the Department to examine any non-
statutory duties and to determine the lowest priority statutory
duties that could be statutorily eliminated or altered to cause the
"least amount of impact upon the services that the state delivers
to the people of the state."
Senator Hoffman reminded Committee members that in the 1990's,
Alaska was the only state in the nation to reduce its budget, and
now other states are evaluating cutting their budgets. He stressed
the need for Alaska to develop a long-term plan to balance the
budget in order to have "a sustainable budget and provide the
services that the people want." He stressed that minor cuts "here
and there" would not accomplish this; and questioned what the
Legislature is doing to achieve the goal of sustainability. He
stated his election district has felt the impacts of cutbacks and
is ready to address whatever is needed to secure a workable budget.
Senator Ward agreed with Senator Hoffman, and said that while taxes
may be necessary to address the revenue shortfall, "government as a
whole is on the table." He insisted that the state's departments
"have an obligation to come in with at least a one dollar
reduction" from the previous year; however "what we have is an
Administration saying we need this much more because this is really
an important thing." He continued "of course it is, but where are
you going to take it from… from government." He stated, "everyone
has to share in this, that the whole burden can't be placed on the
people to keep government going. Let's just do the services that we
need."
Senator Hoffman asked Senator Ward why, if he is supporting
spending "even one dollar less," is he supporting spending
additional money for tourism and other items.
Senator Ward voiced support for Senator Hoffman's remarks and said
the Administration must set the priorities and inform the
Legislature if spending money on such things in the budget as the
Arctic Winter Games, public radio, and the Power Cost Equalization
program are as important as keeping schools functioning. He stated
that everybody has to share in this reduction and start
prioritizing within the Departments. He noted he had not voted for
legislation appropriating funds to the tourism industry, and there
are several other appropriations he would not support; however, he
would prefer the Departments to prioritize programs and reduce
expenditures. He stated the savings could then be reallocated to
programs that "really need the money."
Co-Chair Donley reiterated, "prioritization is more than just
prioritizing new spending, its prioritizing spending you don't have
to do anymore to substitute and make room for the new spending. It
runs both ways and all we see is one way in this Administration."
He stated this is "what concerns" and "disappoints" the
Legislature. He stated the Legislature is continuously told by the
Departments that "it is not our job to prioritize, it's not our job
to make choices." He stated it is hard for the Committee to
determine whether the testifiers are following instructions they
received from the Administration "to put the Republican legislature
in a box, don't help us solve the fiscal crisis, or whether you
really don't know the answer. I don't know whether you are
following instructions or whether you are doing your job." He
commented, "there is a difference between the two, for the people
of Alaska."
Senator Leman stressed the purpose of this meeting is not to cut
the budget, rather to address supplemental requests that increase
the budget. He commented that supplementals are the result of
changing conditions, and he is interested in knowing what
conditions have changed or if the cause is unplanned expenditures
or incorrect planning.
Section 1(a)(2)
Department of Administration
General Relief
Shortfunding for projected caseload.
$273,000 general funds
Ms. Elgee explained this item addresses caseload increases
involving the "placement of vulnerable adults in assisted living
where protected services are needed because the individual is at
risk." She stated this funding was proposed but not funded in the
FY 02 budget.
Co-Chair Donley asked what efforts were made by the Department to
minimize the need for this supplemental request.
Ms. Elgee responded that the Department has been undergoing a
regulation process that will assist the Department to better
control the program. She informed the Committee that when the
revised regulations were first introduced, there was a great deal
of confusion amongst the providers. She stated there was
disagreement as to whether the Department correctly interpreted the
Legislative intent of the program, and the Department was asked by
the Legislature to postpone the adoption of the replacement
regulations until the Legislature had an opportunity to re-review
the regulations. She continued that, at the present time, the
regulations are under review by the Department of Law with an
expected adoption date of July 2002.
Co-Chair Donley asked the amount of money these regulations are
projected to save on an annual basis.
Ms. Elgee responded the Department would meet the parameters of the
prepared fiscal note that was submitted with SB 73 when that
legislation was passed.
Co-Chair Donley asked what efforts have been made to offset the
increase of funding for this program.
Ms. Elgee responded this is a difficult situation as the Department
has been working through "the confusion that has been created"
amongst the provider community as well as amongst Legislators about
the intent of SB 73; specifically the setting of very specific
daily rates that the Department pays assisted living facilities for
placement of an adult in the facility. She detailed the historical
payment plan and the changes imposed by SB 73 relating to the
charges for room, board and services. She stated that by not having
the regulations in place, the Department has had to negotiate a
"payment mechanism" with each provider. She elaborated on the
complications involved if the patient also needs assistance through
the Medicaid waiver. She stated the confusion, combined with an
increase in the number of individuals needing assistance, has
resulted in this supplemental request. She stated that once the
regulations are in place, the Department would be able to work
within the guidelines of the fiscal note.
Senator Green asked what savings would occur if the regulations
were set in place now instead of July.
Ms. Elgee responded the regulations are in final review at the
Department of Law and are not anticipated to be in place until
July; however, at that time, the Department's FY 03 budget proposal
would be in place and would be adhered to.
Co-Chair Donley asked if the Department is confident of the timing
on the implementation of the regulations as this could affect the
FY 03 budget.
Ms. Elgee affirmed the regulations would be in place by July 1
Senator Green asked the Department for other suggestions to improve
this situation.
Ms. Elgee responded the Department has been working closely with
the Department of Health and Social Services due to the overlap in
departments resulting from the Medicaid waiver for the elderly. She
suggested that changing the Medicaid waiver reimbursement for
assisted living to allow for a community based system would be
beneficial. She explained that the current "Medicaid reimbursement
system is based on an old adult foster care rate structure that was
in place in the early 1990's" and reimburses homes based on the
size of the home, which does not reflect the need level of the
individual. She noted that many of the small homes currently
receive a small reimbursement amount although they care for people
with very high needs. She continued, "we need to get this fixed so
that the assisted living community gets adequately compensated for
the services they are delivering." She stated the Department "is
exploring with Department of Health and Social Services the
opportunity to refinance, through the Medicaid program, a portion
of what is presently paid" to individuals through Adult Public
Assistance. She stated if this endeavor were successful, it would
allow the Department to use funds that are presently in the Adult
Public Assistance Program to "leverage federal funds through the
Medicaid program and shift more costs to the Medicaid program where
we are sharing those expenses with the federal government."
Senator Green asked if classifying some of these costs as emergency
procedures would be beneficial and would allow some of the costs to
be shifted to federal Medicaid; thereby allowing the state to
leverage state funds.
Ms. Elgee responded that, "emergency regulations are very
specifically defined as to what constitutes an emergency."
Senator Green inquired if this could be addressed through current
regulations.
Ms. Elgee stated Medicaid regulations are administered by the
Department of Health and Social Services, and not through the
Department of Administration; therefore discussions need to involve
that Department. She assured the Committee the interpretation of
the regulation "is a very high priority" and the departments have
"agreed to try to expedite this regulation result."
Senator Green requested the Committee to encourage "the expedition
of these revised regulations that would increase funding" and
leverage "state dollars to impact payment for the people in
assisted living homes."
Section 1(a)(3)
Department of Administration
Leasing
Shortfunding for the amount required to pay leases with the
private sector
$1,300,000 general funds
Mr. Spencer commented the original FY 02 request was short-funded
$1.9 million, and based on a recent reassessment of needs, this
amount is needed to pay state long-term leases. He elaborated on
the types and lengths of leases the state currently holds with the
private sector. He stressed that the Department has economized
where it could; however, as leases expire, there are not many lower
cost leases options. He qualified, however, that this request is
significantly lower than the Department projected.
Ms. Elgee cited the Department's success in reducing costs over the
years, and that even with this request factored in, the total
general fund expense for the leasing program is less than the
amount required in FY 01.
Senator Leman inquired about the lease status of the state-owned
Atlin Building.
Ms. Elgee explained that the Atlin Building is included in the
Public Building Fund and the occupants of the building pay rent to
that fund. She stated those monies are used for the maintenance and
operation of that facility. She continued Alaska Housing Finance
Corporation (AHFC) carries the debt service for the Atlin Building.
Senator Leman asked what percent of the building is occupied by
state entities.
Ms. Elgee responded that approximately 80 percent of the building
is occupied by state entities, and the few private tenants have
continuing leases that were in effect when the building was
acquired.
Mr. Spencer stated that tenants are aggressively sought for the few
vacancies that are in the Atlin Building.
Co-Chair Donley stated the public has commented that the state
lease costs are higher than what the private sector would charge.
He restated the Committee's directive to the Department to cut its
lease costs. He stated that the Department has not reduced their
costs as reflected by this supplemental request.
Ms. Elgee responded that the Department has reduced its lease costs
by $600,000 from FY 02 projections. She stated leasing has
historically been under-funded intentionally because so much of the
proposed budget is based on projections. She continued this
process has worked very effectively, and "over the course of the
past ten years," the supplemental requests have been lower than
their corresponding year's projections, thus "avoiding an
unnecessary appropriation of funds." She noted this "keeps pressure
on the Department to reduce these costs."
Section 1(a)(4)
Department of Administration
Leasing
FY 02 appropriation for the Anchorage Jail lease is short
$4,784.38
$4,800general funds
Mr. Spencer stated this request is to correct a technical error in
the debt payment schedule that was not appropriately reflected in
the FY 02 appropriation.
Section 1(a)(5)
Department of Administration
Office of Public Advocacy
Shortfunding of current year exacerbated by increased costs.
$1,865,000 general funds
Mr. Spencer stated this is another agency that has been
historically under-funded. He explained the caseload of this
program continues to increase primarily as a result of contractual
costs of private attorneys representing the individuals that the
Office Of Public Advocacy (OPA) is assigned and required to
represent.
Co-Chair Donley inquired what percentage of this request is the
result of criminal defense work.
Mr. Spencer could not provide that specific information; however,
he stated the estimate is based on the current caseload, and its
comparison to prior years. He stated there are a lot of variables
that affect the Office.
Co-Chair Donley asked if there is any intent language in the budget
that supports the Department's position that the OPA was
intentionally under-funded, and that a supplemental is expected.
Mr. Spencer responded there is no such supportive language.
Co-Chair Donley inquired if a Senate Finance Co-Chair had inferred
this in any conversation.
Mr. Spencer responded there was no specific conversation regarding
this matter.
Senator Donley asked why the Department concluded that a
supplemental request was appropriate.
Mr. Spencer stated that the conclusion was reached when no change
was made in the program, after a history of approximately thirteen
years of being under-funded. He stressed it is difficult to predict
the costs of this program; however, he stated, the Department has
been "pretty accurate in the last couple of years."
Co-Chair Donley asked if there are any statutory or structural
organizational changes that can be addressed to reduce the cost of
the program.
Mr. Spencer replied not at this time.
Senator Hoffman inquired as to why the caseloads are so expensive
Mr. Spencer responded that some of the expense is generated by an
effort to reduce the backlog of children's cases.
Co-Chair Donley stated the budget was increased in FY 02, and
inquired if the "high degree" of budgetary increases the OPA has
been receiving would address this backlog or whether the caseload
is increasing and driving the budgetary growth.
Mr. Spencer stated the backlog of cases is primarily child-in-need-
of-aid cases and although the backlog of these cases has been
reduced, the program continues to grow.
Co-Chair Donley asked if this growth is due to "statutory changes
that are increasing the protection for children, because the
government is more aggressive about reaching out and protecting
children, or is that there are more children in need of aid for
some social reason."
Mr. Spencer responded "all of the above." He continued there is no
one single factor, and that a larger population also contributes to
the growth.
Ms. Elgee stated that changes at the state and federal level have
mandated "tighter timeframes in terms of permanency planning for
children."
Senator Hoffman inquired if the increase in child in need of aid
cases can be attributed to any particular area of the state.
Ms. Elgee responded the Department would provide a breakout of
caseloads to the Committee.
Section 1(a)(6)
Department of Administration
Public Defender
Shortfunding of current year need and fiscal notes
$600,000 general funds
BARABARA BRINK, Director, Public Defender Agency, Department of
Administration, testified via teleconference from Anchorage and
explained this supplemental request is the result of reduced
funding and higher costs due to increases in caseloads and
workloads. She explained that half of the request is the result of
reductions in the Agency's Smart Start program FY 02 budget
request. She detailed that the under-funding essentially eliminated
two attorneys in the OPA; however the caseloads continued to
increase due to the responsibilities of the Smart Start Program.
She continued that the Agency is obligated to investigate every
report of child neglect and harm. She stated she made the decision
to keep the two attorneys to continue to represent children within
the strident timelines required by statute. She mentioned these
attorneys also work on Balloon Project cases, another child
placement program.
Ms. Brink informed the Committee that a portion of the request is
for funds for legal support and attorney reclassification She said
the reclassification was necessary to retain qualified staff.
Ms. Brink summarized the balance of the request as covering the
"accumulative affect of not being funded sufficiently to handle"
the increasing caseloads the Court appoints to the Agency.
Ms. Brink stated the Department has taken steps to avoid the need
for supplemental funding including: laying off an investigator in
the Kodiak office; attorneys working long hours without
compensation; and the elimination of on-call staffers.
SFC 02 # 15, Side B 09:54 AM
Ms. Brink continued that the Agency has also reduced its training
budget, hired at lower ranges, and reduced the amount of
computerized legal research. She stated that the Agency's caseload
exceeds maximum recommended levels, and she feels the Agency has
done everything it can to stay within its budget. She stated the
Department is trying to recruit a Jesuit volunteer from Catholic
Social Services to work for the Agency in the Bethel office as
funding was not sufficient within the Agency to staff this
position.
Ms. Brink stated the Agency's responsibility is to its clients and
to the Court.
Section 1(a)(7)
Department of Administration
Public Defender
Mental Health Court attorney approved by the Mental Health
Trust
$73,000 MHTAAR
Ms. Brink stated the Alaska Mental Health Trust Authority
recommends the Agency receive these funds to assist its mentally
ill population caseloads. She stated this money would allow the
Agency to devote one full-time attorney to handle this work.
Co-Chair Donley stated a recent audit [copy not available]
questions decisions that were made, and the number of appeals that
were made by the Office of Public Defenders, and asked what the
Agency has done to address these concerns.
Ms. Brink did not recall these concerns addressed in the audit
report.
Co-Chair Donley stated the comments were included as quotes from
individuals interviewed about the operations of the Agency.
Ms. Brink stated that one individual made such comments in a
statewide survey of prosecutors, members of the Court System, and
the Departments of Law and Corrections. She clarified this survey
was no included in the Audit report.
Ms. Brink stressed that the Agency monitors and conducts meetings
to scrutinize what issues the Agency might appeal. She informed the
Committee that a criminal defendant has a constitutional right to
appeal, and the Agency has to abide by his or her decision.
Co-Chair Donley asked if the Agency could decide against making a
"frivolous appeal or create some new law that doesn't really make
sense just because some defendant wishes."
Ms. Brink responded that was correct, and she stressed that the
Agency has never presented a frivolous appeal. She stated, however,
the Agency does have a duty to provide a defendant with an appeal
if the defendant wishes.
Section 1(b) & (c)
Department of Administration
Senior Services
Senior Services Employment Program hold harmless - Federal
regulations not promulgated so funds not needed
($120,000)
Ms. Elgee stated that in the year 2001, the Department was notified
of federal changes that affected how much the Department could pay
seniors in programs administered under the Commission on Aging. She
stated the Legislature added money to the program in order to
address the federal change; however federal regulations are
forthcoming and the need for this allocation is not necessary this
fiscal year.
Section 19
Miscellaneous Claims
Department of Administration
Miscellaneous Claims: -0-. Stale-dated warrants: $23,744.07
$23,700 general funds
Mr. Spencer stated this request would pay invoices from previous
fiscal years.
Department of Community and Economic Development
Section 2(a)
Department of Community and Economic Development
Alaska Aerospace Development Corporation
Replace $311.9 of unrealized FY 02 Alaska Science & Technology
Foundation Investment Earnings with AADC receipts
$ 0 fund request
Section 2(a)
Department of Community and Economic Development
Alaska Aerospace Development Corporation Facilities
Maintenance
Replace $69.2 of unrealized Alaska Science & Technology
Foundation FY 02 Investment Earnings with AADC receipts
$ 0 request
TOM LAWSON, Director, Division of Administrative Services,
Department of Community and Economic Development, stated the Alaska
Aerospace Development Corporation (AADC) normally receives an
annual appropriation from the Alaska Science and Technology
Foundation (ASTF). He furthered this request is a funding source
change necessary because of a poor performance of the (ASTF)
endowment the past year. He noted that this request would change
the funding source to cover the expected shortfall.
Senator Green asked for clarification that general funds would be
used to fund this shortfall.
Co-Chair Donley stated the Governor, not the Legislature, is
proposing to use general funds to cover this request.
Mr. Lawson clarified that this request does not involve general
funds.
Co-Chair Donley asked which funds would be used to replace the
endowment funds.
Mr. Lawson responded that Aerospace Corporate receipts, which are
earnings generated from launches at the site, would replace the
endowment funds.
Co-Chair Donley clarified that corporate receipts would be used to
fund the shortfall.
Co-Chair Donley asked if there are any projections regarding the
Endowment's performance in FY 03.
Mr. Lawson informed the Committee that at a recent ASTF Board
Meeting, Robert Storer, Executive Director of the Alaska Permanent
Fund Corporation and managers of the ASTF Endowment, estimated the
earnings of the fund would be approximately 2.9 percent of the
principal; therefore the earnings would be approximately $2.9
million for FY 02.
Co-Chair Donley stated it is difficult to project the amount of
receipts. He inquired as to how the Department would be
compensating for the market downturn and its affect on the
Endowment fund.
Mr. Lawson responded the Department is addressing each endowment
earnings situation on a one-by-one basis. He specified that AADC
has received partial funding from ASTF for several years. He
continued that in the Governor's FY 03 Budget Request these funds
are not included.
Co-Chair Donley clarified that the AADC funding specified in the FY
03 budget consists entirely of corporate receipt funds.
Mr. Lawson responded yes, with additional CIP funds from federal
projects.
Senator Hoffman asked for a projection of corporate receipts
generated by launches.
Mr. Lawson cited three launches are scheduled for FY 03.
Co-Chair Donley inquired as to what other state programs would have
a shortfall due to loss of ASTF endowment funding.
Mr. Lawson stated that the University would be affected by the
shortfall in ASFT endowment fund earnings.
Section 2(c)
Department of Community and Economic Development
Alaska Aerospace Development Corporation Facilities
Grant from the US Department of Defense for Kodiak Launch
Computer Improvements - Infrastructure Safety Upgrades,
Range Safety System, and Road Improvements
$20,000,000 federal funds
Mr. Lawson stated this capital project is funded by a federal grant
to provide safety upgrades and improvements to the facility. He
said the funds are expected to be available in May 2002.
Department of Corrections
Section 3(a)
Department of Corrections
Facility - Capital Improvement Unit
The $160.5 general fund fiscal note funding Ch.32, SLA 2001
(HB 149 Private Prison in Kenai) is no longer needed since
Kenai voters rejected the proposal. Funds are reappropriated
to inmate Health Care.
DWAYNE PEEPLES, Director, Division of Administrative Services,
Department of Corrections, stated this appropriation request is the
result of not building a private prison in the Kenai area as
approval of the project did not pass a vote of the people in the
affected area. He stated these funds were never expended and are
now available for reappropriation.
Mr. Peeples stated this request, if granted, would transfer these
general funds to address the short-funding in inmate health care.
He explained that this program has historically been short-funded,
and he informed the Committee that the FY 01 budget shortfall of
$1.7 million was subsidized by utilizing retirement incentive
program (RIP) savings and other funds in the Department. He
continued that due to "population growth in the Department", and
the exhaustion of RIP savings, the Department predicts an
approximate $2 million shortfall this year.
Mr. Peeples informed the Committee "the Department is in the
process of modernizing its medical services, including closer
utilization review, developing an electronic medical information
system, renegotiating services contracts, reevaluating the health
services it is providing for its inmates, distinguishing between
sentenced population and un-sentenced population."
Co-Chair Donley asked for "the distinction" between sentenced and
un-sentenced population.
Mr. Peeples responded that the Department is responsible for the
entire inmate population, and has been providing uniform health
services to all inmates regardless of their status. He explained
that the Department is planning to "emulate" a plan currently being
used in Oregon and Washington, identifying specific health services
based on incarceration time. He continued that the plan would
specify chronic and preventive health care services coverage for
sentenced inmates, as well as the care to be provided to an un-
sentenced inmate based on the length of their incarceration.
Chair Donley clarified that if an inmate is incarcerated for a
short amount of time, the state's legal obligation to address an
individual's long-term health care issues would be reduced.
Section 3(b)
Department of Corrections
Inmate Health Care
Shortfunding in health care costs resulting from continued
inflation of pharmacy costs, staff salaries (includes $676.0
for health care worker/nurses salary costs), contract
physician costs and hospital care.
$1,839,500 general funds
Mr. Peeples informed the Committee that the Department is exerting
"tighter control on a pharmacy formulary" of what drugs would or
would not be issued. He stated that the acceleration in pharmacy
costs in FY 01 compared to FY 00 reflects an increase of $400,000,
with expectations of the same amount of increase when comparing FY
02 to FY 01. Mr. Peeples stated new control measures include: a
closer review of contract services; staffing patterns; and
switching to keep-on-person drugs. He stated the acceleration of
costs should be reduced in FY 03 as a result of the implementation
of these measures.
Co-Chair Donley asked if the Department could explain what was the
"driver' of the increase in pharmaceutical costs.
Mr. Peeples responded there was not a single factor. He continued
that there would always be a certain number of very expensive
cases, however, the increasing costs of pharmaceuticals and
inflation drive the expense. He informed the Committee that the
Department projects a seven to nine percent rate of inflation in FY
01, and double-digit inflation figures in FY 02.
Co-Chair Donley inquired if the Department anticipates costs
continuing in this manner.
Mr. Peeples responded these costs would continue to increase. He
furthered that a portion of this supplemental request is the result
of the Department experiencing medical cost under-funding in FY 00,
and this combined with a statewide adjustment in nursing salaries
in FY 01, has resulted in approximately half of this $2 million
request being attributed to "legacies we have been carrying
forward."
Co-Chair Donley stated that the state's obligation to provide
medical care has been driven by court decisions. He inquired if
there is any sort of "chart" which reflects the long-term scenario
associated with illnesses from which the Department could determine
a course of medical treatment based on an inmate's length of
incarceration.
Mr. Peeples responded that he was not aware of any long-term
medical synopsis, and that historical medical management indicates
that providing treatment for long-term inmates is the best
approach. He stated there is no one answer to the cost increases,
however the Department is looking at various solutions such as:
creative financing or providing alternative funds to cover some of
the medical expenses; medical parole activities; and the
refinancing of some health care cases.
Co-Chair Donley voiced that from the public policy perspective, and
in consideration of the public's perception that inmates are being
provided more medical options than the public could afford, the
Department "needs to strike a balance" between following court
ordered criteria and keeping medical coverage within acceptable
levels. He asked if a policy or procedure chart could be developed
that would reflect how the Department arrives at the appropriate
course of action regarding medical coverage.
Mr. Peeples stated the Department would provide a copy of the
current health plan to the subcommittee.
Senator Hoffman asked if the correctional facilities use generic
brands of pharmaceuticals.
Mr. Peeples responded that generic brands are primarily used, and
explained that Alaska "participates in a multi-state consortium"
which purchases drugs at a very good price.
Section 3(c)
Department of Corrections
Parole Board
Shortfunding in operations due to increased prisoner hearings
and Parole Board activity
$100,000 general funds
LARRY JONES, Executive Director, Parole Board, Department of
Corrections, explained this request is the result of a technical
change in the budgetary process in FY 02. He stated that
historically the Parole Board was funded using a DOC BRU; however,
"a new plateau" of expenses has been reached as the result of such
things as increased hearings due to recently enacted victim impact
laws. He continued that the Parole Board is supportive of these new
regulations; however, having victims and the accused face to face
at parole hearings tends to lengthen the proceedings, resulting in
fewer hearings per day. He reiterated that the new regulations
affect the Parole Board in a "very positive" way.
Mr. Jones reported that the Parole Board has also become involved
in addressing the Department of Corrections' medical costs through
a new "special medical parole" program. He detailed the stringent
eligibility requirements for this type of parole and explained that
the medical expenses of individuals on medical parole are covered
by a different funding mechanism than through the Department of
Corrections.
Co-Chair Donley asked if the eligibility requirements for this
medical parole could be better "crafted."
Mr. Jones responded that discussion is underway to present new
language to the Legislature.
Co-Chair Donley stated that in recent "no-frills prison"
legislation, criteria was actually "liberalized" to allow for
increased usage of the medical parole program. He stated that if
the program needs further flexibility, legislation to address that
could be "entertained."
Mr. Jones agreed that more flexibility would be needed.
Mr. Jones assured the Committee that the five-member Parole Board
has strived to save money even in light of increased workloads by
implementing such measures as changing the logistics of the
hearings. He continued that travel expenses are high as this is a
"traveling board." He noted that the Parole Board has received the
same compensation level since 1984, and "this is all but a full-
time job."
Co-Chair Donley clarified that the Board is paid a per diem.
Mr. Jones stated that in addition to compensation, Board Members
are paid $75 for a half day and $100 for a full day of business as
established in 1984.
Co-Chair Donley inquired if the number of Board members should be
increased or if subcommittees could be introduced.
Mr. Jones responded that other states have tried subcommittees and
have gone back to a single Parole Board. He noted that the current
five-member Parole Board compliments the size of Alaska's prison
population, and would be sufficient until the prison population
becomes "substantially greater." He continued that the Board holds
its decision-making to a high standard where public safety is
concerned. He stated the Board recognizes that some individuals do
not receive an adequate sentence to benefit from Department of
Corrections' treatment programs, and if those individuals are
released on parole, "they can be ordered, as part of a parole
condition, to participate, on their own dollar, in a private
treatment program."
Senator Hoffman asked about the contractual amount of $60,000
purchases.
Mr. Jones stated the funding would primarily cover travel costs,
shipping of files, telephonic costs of hearings, and other
operational costs of the Board.
Co-Chair Donley commented he has received favorable reports about
the operations of the Parole Board, and voiced appreciation for the
"good job" they are doing. He cited that any negative comments he
receives are not with the Parole Board but with the fact that the
Parole Board is required to review certain cases after a relatively
short time of incarceration.
Mr. Jones voiced appreciation for the support the Parole Board has
received from the Legislature.
Section 3(d)
Department of Corrections
CIP
Offender Tracking Information System Development
$762,000 federal funds
Mr. Peeples explained that this federally funded capital project
request would allow for completion of an automated medical
information system being co-developing with State of Utah.
Section 19
Miscellaneous Claims
Department of Corrections
Miscellaneous Claims: $3,204.11
$3,200 general funds
Mr. Peeples noted this request would provide funds to pay for "old"
medical and shipping invoices.
Department of Education and Early Development
Section 5(a)(1)
Department of Education and Early Development
Pupil Transportation
Cost for new bus routes approved in current year
$541,600 general funds
KAREN REHFELD, Director, Division of Education Support Services,
Department of Education and Early Development, explained that this
item is a request for funds to cover pupil transportation.
Ms. Rehfeld noted that the current funding appropriation is not
sufficient to cover these costs.
EDDY JEANS, Manager, School Finance and Facilities Section,
Division of Education Support Services, Department of Education and
Early Development, explained to the Committee that prior to FY 02,
the Department of Education and Early Development projected pupil
transportation costs; however, beginning in FY 02, the Department
receives the cost projections directly from the school districts.
He continued that during this transition, some school districts did
not include projections for new routes. He stated that when the new
school year began, the new routes had to be factored in at the
local level, resulting in this supplemental request.
Senator Leman commented that last year, transportation costs were
increased "quite a bit," and he inquired as to what other factors
in addition to fuel costs and negotiated contracts have caused the
increase in new routes.
Mr. Jeans replied that the increase last year was the result of new
contracts that were negotiated for the Anchorage, Fairbanks, Kodiak
and Mat-Su areas. He stated that this year's increases are due to
an increase in routes and exampled that Fairbanks had an increase
in traditional programs and special education summer school routes.
He continued that North Slope Borough students had been using
public transportation buses, however, those students are now using
school buses. He continued that in another area, a new school was
built, and the school district had to reassign routes to transport
students.
Mr. Jeans informed the Committee that the state reimburses
hazardous routes, even if within a mile and a half of the school,
at 100 percent, and that regular routes within a mile and a half of
a school are reimbursed at 50 percent.
Senator Green inquired if the state has always reimbursed school
districts for summer school transportation.
Mr. Jeans responded that state reimbursement for summer school
transportation is restricted to special education transportation.
Senator Hoffman asked why there has been a reduction of
transportation costs in some areas.
Mr. Jeans responded that in some areas parents transport their
children and in other areas, such as Juneau, the school district
contracts the bus transportation out and incurs less administrative
costs. He noted that administrative costs are reimbursed under the
Department of Education and Early Development transportation
program. He continued that as districts request new routes, the
Department of Education and Early Development asks them to rework
existing routes to ensure efficiency.
Senator Green cited the back-up information as stating that without
this additional funding, the Department of Education and Early
Development would have to prorate school district payments in FY
02. She asked if this would be a statewide pro-ration whereby all
school districts would be penalized for those with overages.
Mr. Jeans responded that is correct; that all districts would be
uniformly pro rated.
Co-Chair Donley asked for confirmation that current statute
requires the reimbursable percentage for transportation expensed
for districts to be a minimum of 90 percent, and that non-district
reimbursement is a minimum of 100 percent.
Mr. Jeans stated that is correct.
Section 5(a)(2)
Department of Education and Early Development
Schools for the Handicapped
Education costs for children in state custody who require out-
of-state placement
$165,500
Ms. Rehfeld explained that this request is for children who are in
state custody under Family In Need services, but "because of their
severely emotionally disturbed condition," these children are
housed in out of state residential treatment programs. She stated
that "most of these children are Medicaid eligible; however,
Medicaid does not provide coverage for educational costs of their
treatment program. She reported this request would pay for those
costs.
SFC 02 # 16, Side A 10:42 AM
Co-Chair Donley inquired if these costs are included as regular
budget items.
Ms. Rehfeld responded that within the FY 02 operating budget, there
is $500,000 to cover these programs based on historical needs;
however, based on current numbers of children in this program,
projections are that the budget will be short this requested
amount.
Co-Chair Donley asked if this the result of increased costs of the
program or an increase in the number of children in the program.
Ms. Rehfeld responded that the length of treatment is the "driver"
of this need, as the children are staying in the program longer
therefore the educational costs are increasing.
Senator Green asked if this money is paid to other states.
Ms. Rehfeld responded that the Department's money is actually
allocated to the Department of Health and Social Services, which
pays the costs of these various out-of-state treatment programs.
Senator Green clarified that other states are ultimately paid for
these services.
Ms. Rehfeld concurred.
Senator Green stated there is recent legislation that addresses
bringing these children back to the state for treatment.
Section 5(b)
Department of Education and Early Development
Foundation
Use balance in foundation program resulting from the October
student count to fund supplemental needs.
($1,975,900) general funds
Ms. Rehfeld stated this decrement projection is based on the
October 2001 statewide student count and this amount will be
available in the current year appropriation.
Section 5(c)
Department of Education and Early Development
CIP
Federal School Renovation, Individuals with Disabilities
Education Act (IDEA) and Technology grants for local school
districts
$5,400,000 federal funds
Ms. Rehfeld commented this is a capital supplemental request
through which a one-time federal grant appropriation would be
available to the Department of Education for construction of new
schools and major maintenance projects for schools meeting certain
criteria.
Co-Chair Donley asked if there is a list of qualifying school
projects in the back-up material.
Mr. Jeans replied that a list is currently not available as the
Department is still working with the federal government to
determine which projects meet the eligibility criteria. He stated
that the Department is working from the list of CIP projects that
were not funded this prior year.
Co-Chair Donley stated the Legislature would need more specifics
before the request could be approved.
Mr. Jeans stated there is federal eligibility criterion imposed on
the State regarding this funding that dictates how the projects are
selected. He continued that the list is being finalized and would
be provided to the Legislature. He stated that 75 percent of this
grant money is available for school construction with 25 percent to
be awarded on a competitive basis for technology activities and
renovation necessitated by the Americans with Disabilities Act.
Senator Hoffman asked if federal education reform measures would be
implemented in FY 02.
Mr. Jeans responded the education reform measures pending in
Congress would not be implemented until FY 03.
Ms. Rehfeld clarified that federal education reform appropriations
would be reflected in the Governor's FY 03 operating budget.
Section 5(d)(1)-(2)
Department of Education and Early Development
Along with a reappropriation of $198,600 from the Department
of Law, this will fund the McGraw-Hill assessment contract
increase of $498,900
Ms. Rehfeld stated this request pertains to the statewide
assessment program, specifically to current efforts re-focusing on
high school qualifying exit examination measuring the essential
skills required for students to graduate.
Senator Green asked if funds specified for reappropriation in
Section 5(d)(2) could be used for other purposes.
Co-Chair Donley responded the $198,600 amount is from a State
settlement and could be re-directed by the Legislature.
Ms. Rehfeld responded this allotment was re-appropriated to fund
this request in the Governor's budget proposal.
Co-Chair Donley asked Senator Green to review the High School
Qualifying Exit Exam funding in the FY 02 budget and determine the
total funding appropriation.
Ms. Rehfeld stated the cost of the contract to administer the exit
exam has increased as well as the cost of revisions, field-testing,
and printing needs. She concluded the total cost of the exit exam
in FY 02 would be approximately $4 million.
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