Legislature(1993 - 1994)

05/05/1994 09:15 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                 
  Discussion followed  between Ms. Hansen and  Co-chair Pearce                 
  concerning  contract arrangements  associated with  the JOBS                 
  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                 

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