Legislature(2003 - 2004)
04/14/2004 01:41 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 383-CHILDREN'S TRUST GRANTS The committee took up SB 383. MS. MARGO McCABE, Alaska Children's Trust (ACT) Fund Board, testified from Anchorage and explained the four key provisions in the bill. The first eliminates the $50,000 cap that currently exists in granting awards to potential grantees seeking funds for programs eliminating child abuse and neglect in Alaska; the second requires that the project include a plan for self-sufficiency and program maintenance; the third limits funding to four years; the fourth allows the board to discontinue grant awards when outcomes are not being achieved. SENATOR LYDA GREEN referenced page 2, line 10 that says, "75 percent of the first-year..." and asked where in the bill the $50,000 cap was removed. MS. McCABE confirmed that the $50,000 provision is being repealed. SENATOR GREEN asked if the whole section is being repealed. CHAIR DYSON noted this was Section 2. SENATOR GREEN asked why it's necessary to go from 50 to 75, and wondered if the intent is for the grant to become the sole support for this program, or if the project has energy of its own to create something that's being matched or added to. MS. McCABE explained that one component is to eliminate the $50,000 cap. Potential grantees can ask for a small size grant in the amount of perhaps $5,000, or in an amount in excess of $50,000. Second, it relates to self-sufficiency. The first year, a grantee can apply for funds to cover up to 75 percent of program costs; in the second year that amount can be 50 percent; in the third and fourth year that can be 25 percent. In addition, ACT is asking that there be a sustainability plan from the start in order to ensure that the entities have plans substantiating that the programs don't go away after the funding stops. This provides for greater flexibility in choosing the recipients of grant awards. SENATOR GREEN asked what might be the maximum amount given to a single entity if there isn't a cap. MS. McCABE said it varies in different states. The average grant across the country is about $50,000. The current board favors continuing to fund the smaller grants. There are opportunities to fund larger programs, as seen in other states. She mentioned Missouri as recently having an average grant size of $100,000 to 17 family-resource centers. She reiterated that a maximum or minimum amount is not being proposed so that greater flexibility can be achieved. SENATOR GRETCHEN GUESS confirmed that while this might be the intent of the current board, it sets a precedent so that there could be a grant for $250,000 at some future time. That isn't the intent of the trust or statute, but it would be allowed with this change. MS. McCABE responded that the current board's thinking "is not that" and that while concern regarding what future boards would do is necessary, this legislation would open the door for private foundations to give larger amounts of money that could then be turned around to larger programs. She said the board would have to exercise due diligence in making sure that the right amount of funds go to the programs most effective in combating this problem. She said the current board is capable of making such decisions, and she hopes the same will hold true with future boards. SENATOR GREEN asked her to repeat what she said about private foundations. MS. McCABE said, for example, if a private foundation chose to give $100,000 but indicated that the money needed to be spent by the end of the year, or there was some condition on it, it would be hard to break that into smaller grants and turn it around quickly. This legislation would allow for the flexibility to issue a larger grant. She informed members that a $600,000 appropriation could be coming to the fund in this cycle. The monies would have to be spent relatively soon - possibly by September - and the goal would be to spend the money on small community-based programs but also to invest in a media campaign or some other larger program that could help combat the problem of child abuse and neglect. She said that is just one example, and the hope is that over the next few years, part of the strategic planning process would be to attract larger sums of money from different entities including private foundations, and perhaps the federal government. SENATOR GUESS asked if the current funding of the trust, besides fund raising, comes from interest payments from the principal that was invested somewhere in line with the permanent fund. She questioned whether $600,000 could be deposited in the principal so that the board could use the interest from that to fund programs. MS. McCABE said that wouldn't be possible in this particular case because the money is to be spent in this fiscal year, in the federal government's current appropriations cycle. She thought specific language in that particular allocation says it can't be added to principal, but needs to be spent on programs. She said it could be that future appropriations or donations from private trusts are not worded that way. SENATOR WILKEN said he had three questions, and he began by asking whether the trustees support SB 383 because they are referred to obliquely in the sponsor statement. MS. McCABE responded that the current board of the ACT fund supports the bill. The thinking is that it provides greater flexibility to the board in the grant-giving process, and allows for more responsiveness to community needs and allows for grants of all sizes. Particularly, the pieces that require the sustainability plan and the ability of the board to discontinue grants if objectives aren't met will help to ensure that monies are being spent appropriately on programs that will help to end this problem. SENATOR WILKEN asked how the trust has interfaced with other funding sources, for example the Rasmussen Foundation. He said he was going to request a letter regarding another issue; perhaps the answer to that question could be included in the letter. He then asked how the Children's Trust money has been leveraged in the past to access other capital pools. MS. McCABE asked if he wanted her to respond at this time. SENATOR WILKEN said no, but that since SB 383 was going to Senate Finance, he would appreciate an answer at that time along with the letter having to do with the '05 grants. He expressed concern as to why the '05 grants haven't yet been designated. That was brought to his attention from folks in Fairbanks, he said. He wrote a letter to the commissioner about a month ago inquiring as to the status; he asked Ms. McCabe to follow up on that letter so that when the bill comes to Finance, she could provide him with an answer as to the status of the '05 grants, the intent of the department, and the answer to the leverage issue. MS. McCABE agreed to do so. SENATOR GREEN asked if the entire funding package of the Children's Trust goes through the regular process with the capital budget or if it's possible to dispose of and award grants outside the legislative budget process. SENATOR WILKEN said he believes it is outside of the budget process and it's not in the capital or operating budgets. He asked Ms. McCabe if this is correct. MS. McCABE said the fund is a separate entity and that "we spend the net income of it." SENATOR GREEN said she has seen a report for the year after it came back, so she would also like an updated report of what happened in the last two years. SENATOR WILKEN asked if the status of grants in the last couple of years would be available. MS. McCABE said absolutely, that the annual report was just prepared. She said she had the information available, but was happy to put it in letter format with additional detailed information on the grants for the Finance Committee. SENATOR WILKEN said he would also pass that information on to people in Fairbanks who expressed the concern. CHAIR DYSON noted Senator Wilken's presumption that SB 383 would pass out of committee today was probably true. He said if or when it gets to Finance, he would enjoy a list of the recipients. Since President Bush and Alaska's administration is so interested in involving the faith-based community in providing human services, he was particularly interested to see if the Children's Trust has involved folks from those communities, or not. SENATOR GREEN asked if there were enough applicants to fill the $600,000 request, or if they were not up to par. MS. McCABE said unfortunately the money has not yet been received. If it comes, it would be in June or July because of delays in Congress in passing appropriation bills this past year. Because the fiscal year ends around September, those funds would need to be spent by then. In that 3-month period, an RFP would need to be submitted, and potential grantees would need to respond. There could be a lot of responses from different entities for smaller projects, and there would be support for those if they met the objectives. She expressed wanting to retain flexibility to work on some larger projects. A media campaign is a very interesting project because it could heighten awareness of the problem, and provide a resource for people to turn to. She noted that Rebecca Parker reminded her that the media campaign could be used to leverage obtaining additional funds into the trust by promoting the trust itself, and making it known that contributions are accepted. SENATOR GREEN asked if the $600,000 is from federal dollars. MS. McCABE said yes. SENATOR GREEN said very often there is a waiver provision or an extension, and wondered if this was a possibility. MS. McCABE said they would pursue that. The board didn't actively solicit these monies and they are trying to figure out how to work with and use them and make sure they are meeting the requirements if those funds materialize. In the next couple of years, the strategic plan includes becoming more proactive in looking for monies like this from private foundations and other entities. The board is trying to understand the process right now. SENATOR GREEN asked, "Have you put the word on the street that this is a possibility?" MS. McCABE said, "No, we haven't wanted to disseminate that information until we're sure it's going to be deposited in the fund." SENATOR GUESS referred to Section 1, line 4, "the net income of the trust" and mentioned the use of the interest off of the trust. She asked why the $600,000 couldn't go to the principal, but "that's not net income, that would be outside of that." She asked if the Children's Trust couldn't use that money for the media campaign because it has to award a grant to someone else for that media campaign, and that campaign has to have a self- sufficient proposal. If the grant comes through, she said she was confused whether the Children's Trust or a grant recipient would do that media campaign, and how such a large media campaign would be sustained over time. MS. McCABE responded that the board hasn't decided where that money might go, but she thinks it would go toward small community-based grants as well as something like a media campaign. In current statute, there is some leeway in spending money to promote the fund. Also, there are other organizations interested in this idea that could be a grant as well. Like the tobacco prevention campaign, which was an alliance of a number of different entities, and was funded in part through grant monies. It could go that route as well. She advised that they would meet on April 30 to review the current grant and to address some of these issues. CHAIR DYSON agreed that Senator Guess's question regarding the language on page 1, line 4, "In awarding grants from the net income..." allows them to be a pass-through agency for grants authorized for other organizations. He said what the trust wants to do is probably fine, in general. He could argue that Senator Guess's concern could be better dealt with in Finance, so the bill could either be passed along to deal with that issue, or it could be set aside and addressed on Friday while the language gets fixed. He asked Senator Guess for she opinion. SENATOR GUESS noted that neither she nor Senator Davis were on the Finance Committee. SENATOR GREEN read from AS 37.14.200, "the principal of the trust consists of legislative appropriations to the trust and gifts, bequests, and contributions of cash or other assets from a person" and asked if the government could be considered as a "person" and said this implied that the contribution would go into the principal. This needs addressing, she said. CHAIR DYSON asked Kaye Saxon if she would speak to this concern. MS. KAYE SAXON, Alaska Children's Trust Board, testified from the Mat-Su and emphasized that removing the $50,000 cap will allow flexibility regarding the monies they do have. She said there are many new trustees on the board who were trying to find their footing and determine parameters. CHAIR DYSON suggested that Senator Guess was correct in assuming that the $600,000 could not be used as a pass-through, so perhaps the trust board could propose an amendment that could be addressed in the Finance Committee. SENATOR BETTYE DAVIS suggested this issue be dealt with in the Finance Committee. CHAIR DYSON stated that Senator Guess raised an excellent question. SENATOR DAVIS moved to report SB 383 out of committee with individual recommendations and the accompanying zero fiscal note(s). CHAIR DYSON asked if there was any objection. Seeing and hearing none, it was so ordered.