Legislature(1993 - 1994)
05/05/1994 09:15 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 409(FIN) am(efd fld) An Act relating to the maximum amount of assistance that may be granted under the adult public assistance program and the program of aid to families with dependent children; proposing a special demonstration project within the program of aid to families with dependent children and directing the Department of Health and Social Services to seek waivers from the federal government to implement the project. Co-chair Pearce directed that CS FOR HOUSE BILL NO. 409(FIN) am(efd fld) be brought on for discussion and directed attention to a draft Senate Finance Committee Substitute (8-LS121\L, Lauterbach, 5/2/94). Co-chair Frank explained that the draft increases the ratable reduction from 1.7 to 2.2. He then suggested that his staff speak to other changes. Co-chair Pearce requested that the sponsor of the legislation first speak to the demonstration project. REPRESENTATIVE MARK HANLEY, sponsor of the legislation, came before committee. He explained that the proposed bill attempts to change the way the state administers Alaska's welfare program. He suggested that the best way to reduce welfare costs is to get people off welfare rolls. That approach is consistent in what is happening in other states. There are three parts to the proposed bill: 1. It attempts to remove disincentives to work and provides incentives instead. 2. A workfare program which requires individuals, if they are able, to do either community service or to work for pay in order to receive benefits. 3. A ratable reduction. At the present time, after an individual is on welfare for four months and needs to continue to receive benefits, he or she is only allowed to keep $50 of anything made while working. The proposed bill increases that amount to $200 and allows an individual to keep one-third of "anything after that." That removes a disincentive to work and provides an incentive. It also reduces state costs by allowing the state to keep the two-thirds. The legislation also increases the car allowance. At the present time, the federal government allows an automobile value of only up to $1,500. That was increased to $7,500 in a version passed out of Senate HESS. The bill also eliminates the 100-hour rule which limits certain families to work no more than 100 hours a month. The workfare program requires that an individual do paid work for ten hours a week or unpaid community service work for at least twenty-one hours in order to receive benefits. The bill requires that the community service work portion be contracted out where possible. Representative Hanley acknowledged that the program will cost money to implement. It requires additional eligibility workers as well as people to monitor the program. The ratable reduction in the original bill was intended to cover the cost of the program, but it was eliminated in the HESS version. Representative Hanley voiced his understanding that the ratable reduction was increased to 2.2% in the proposed Senate Finance draft. In response to a question from Senator Kerttula, Representative Hanley explained that the ratable reduction represents a "straight percentage reduction in the benefits paid to recipients of adult public assistance and AFDC." DAVE SKIDMORE, aide to Senator Frank, next came before committee. He concurred that the proposed draft would increase the ratable reduction for both AFDC and APD from 1.7% to 2.2% The only other change in the Senate Finance draft is that the reduction would not be repealed in 1999. It would remain in effect even when the demonstration project is repealed. Mr. Skidmore next directed attention to a Senate Finance Committee fiscal note for the Alaska Work Program. He explained that the Dept. of Health and Social Services initially submitted a note for the bill but when provisions allowing for the contracting of these services were added, the fiscal note increased dramatically. The Senate Finance note returns to original amount since it is believed that costs should remain the same regardless of whether the state or private sector provides the service. Senator Kerttula inquired concerning liability for injuries that might be sustained as a result of workfare. JAN HANSEN, Director, Division of Public Assistance, Dept. of Health and Social Services, came before committee. She explained that part of the proposal includes purchase of insurance comparable to worker compensation. Insurance would thus be covered by the state in a manner similar to the JOBS program. That is included in the fiscal note for the Alaska Work program. The cost amounts to a $25 charge for six-month placement of an individual in workfare. Senator Kerttula next directed attention to page 4, line 14, and inquired concerning the issuing of contracts on a competitive basis. Representative Hanley said that provisions for contracting workfare to the private sector were added on the floor of the House. In some areas there is potentially more than one organization that could do the work. There is thus need to provide for competitive award. Further discussion followed between Senator Kerttula and Representative Hanley regarding the qualifications of entities to be granted such contracts. Representative Hanley stressed that the organization would have to have experience to qualify. Further discussion of the issue followed with Jan Hansen regarding establishment of criteria for evaluation of experience. Representative Hanley explained that while the department initially intended to conduct workfare on its own, concern arose in the House that private organizations were available to provide the service. The Fairbanks Native Association was cited as an example. Jan Hansen stressed that the "contract" referenced in the bill relates to administrative services for workfare rather than for the individual participant in the program. The division of public assistance would be the administrative entity if the program is not contracted to the private sector. Discussion followed between Ms. Hansen and Co-chair Pearce concerning contract arrangements associated with the JOBS program. Senator Kerttula expressed concern that private-sector contracts might, in the end, cost more than state administration. He then asked if the legislation contained safeguards to ensure that that was not the end result. Co- chair Pearce asked if the House would be amenable to a conceptual amendment requiring that the department first ascertain whether private-sector contract would be less rather than more expensive. Representative Hanley advised that he would have no problem with such a provision. He noted, however, that the original fiscal note for workfare was approximately $300.0, but the cost increased to $1.4 million after inclusion of provisions for private-sector services. The Representative advised he was unsure why costs are expected to increase so dramatically. Senator Kerttula voiced support for a conceptual amendment. Co- chair Frank suggested that the amendment include a report to the legislature on both costs and avoided costs. The Co- chair next voiced the following conceptual amendment: Provide for private sector contracting if, after having received the bids, the department determines that the private sector could do it more effectively and inexpensively than the state. In determining that, the department must analyze the avoided costs and report findings to the legislature, annually. Jan Hansen voiced concern that assessment of costs after receipt of bids would be unfair to contractors who devote substantial time and cost to bid preparation. Both Senator Kerttula and Co-chair Pearce suggested that the bid proposal include information to the effect that the state is seeking to make the above-mentioned evaluation. Jan Hansen commented that the state should perhaps seek information rather than a request for bids. Responding to earlier statements regarding the dramatic increase in the fiscal note when allowance for private- sector contracting was included, Ms. Hansen explained that a portion of the cost was the department assessment that contracting would cost more. Another part of the increase resulted from discovery that the cost to the department had been severely underestimated. The third piece of the cost relates to review of workfare in other states. The department could not find another state that was contracting out the effort. All were performing the service in house. The department thus reviewed the range of costs in other states and based its estimate on those numbers. Co-chair Frank MOVED for adoption of a conceptual amendment to add language requiring that the department report to the legislature the avoided costs and the cost of contracted provision of these services under subsection (b) (page 4, lines 12 through 21). No objection having been raised, the conceptual amendment was ADOPTED. Co-chair Frank then MOVED for adoption of SCS CSHB 409 (Finance) work draft "L." No objection having been raised, work draft "L" was ADOPTED. Co-chair Frank MOVED that SCS CSHB 409 (Finance) pass from committee with individual recommendations together with accompanying fiscal notes. No objection having been raised, SCS CSHB 409 (Finance) was *REPORTED OUT of committee with the following fiscal notes: SFC/ Alaska Workfare 0 DH&SS, AFDC 0 DH&SS, Eligibility Determination 0 DH&SS, PA Administration 200.1 DH&SS, PA Data Processing 631.4 DH&SS, Child Care 0 DH&SS, AFDC (3,080.6) DH&SS, APA ( 619.2) DH&SS, PFD ( 423.2) Co-chair Frank and Senators Jacko and Sharp signed the committee report with a "do pass" recommendation. Co-chair Pearce and Senators Rieger and Kelly signed "no rec." Senator Kerttula signed "do not pass." *PLEASE NOTE - The SCS CSHB 409 (Finance) containing the conceptual amendment was never produced due to difficulties encountered in attempting to develop appropriate language. The bill was returned to committee 5/6/94, and an alternative SCS CSHB 409 (Finance) was reported out at that time.