Legislature(2015 - 2016)ANCH LIO AUDITORIUM

10/07/2015 09:00 AM LEGISLATIVE BUDGET & AUDIT

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Audio Topic
09:05:49 AM Start
09:09:07 AM Revised Program - Legislative (rpls)
10:48:57 AM Executive Session
04:06:43 PM Release of Performance Reviews
04:07:51 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Meeting Time: 9:00am - 5:00pm
+ RPLs: TELECONFERENCED
- 06-6-0217 DHSS, Senior & Disabilities Services:
General Relief/Temporary Assisted Living Client
Functional Assessment
- 10-6-5006 DNR, Fire Suppression, Land & Water
Resources: Federal and Local Funded Forest
Resources and Fire Program Projects
EXECUTIVE SESSION: Performance Reviews
Contractors' Preliminary Reports - Performance
Reviews of DHSS
- Behavioral Health
- Long Term Care
- Overall Department Organization
-- Testimony <Invitation Only> --
**Streaming available in JNU in TS Bldg Rm 105**
*This will be a full day meeting with a break
for lunch, and will adjourn at approx. 5pm.*
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                       Anchorage, Alaska                                                                                        
                        October 7, 2015                                                                                         
                           9:05 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Chair                                                                                               
Senator Anna MacKinnon, Vice Chair                                                                                              
Representative Kurt Olson - via teleconference                                                                                  
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Sam Kito                                                                                                         
Senator Lyman Hoffman                                                                                                           
Senator Cathy Giessel                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bert Stedman                                                                                                            
Senator Click Bishop                                                                                                            
Representative Mark Neuman                                                                                                      
Senator Pete Kelly                                                                                                              
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Seaton                                                                                                           
Representative Saddler                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
REVISED PROGRAM - LEGISLATIVE (RPLs)                                                                                            
EXECUTIVE SESSION                                                                                                               
RELEASE OF PERFORMANCE REVIEWS                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CHRIS MAISCH, Director                                                                                                          
Division of Forestry                                                                                                            
Department of Natural Resources                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Presented RPL 10-6-5006.                                                                                 
                                                                                                                                
DAVID TEAL, Director                                                                                                            
Legislative Finance Division                                                                                                    
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered a technical opinion on RPL 10-6-                                                                 
5006.                                                                                                                           
                                                                                                                                
DUANE MAYES, Director                                                                                                           
Division of Senior and Disability Services                                                                                      
Department of Health & Social Services                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented RPL 06-6-0217.                                                                                 
                                                                                                                                
JACQELLI ZIEGENFUSS, Admin Operations Manager                                                                                   
Division of Senior and Disabilities Services                                                                                    
Department of Health & Social Services                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions regarding RPL 06-6-0217.                                                              
                                                                                                                                
MEGAN WALLACE, Attorney                                                                                                         
Legislative Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions regarding RPL 06-6-0217.                                                              
                                                                                                                                
JEFF JESSE, Chief Executive Officer                                                                                             
Alaska Mental Health Trust Authority                                                                                            
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding RPL 06-6-0217.                                                              
                                                                                                                                
DAVID TEAL, Director                                                                                                            
Legislative Finance Division                                                                                                    
Legislative Affairs                                                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered a technical opinion on RPL 06-6-                                                                 
0217.                                                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:05:49 AM                                                                                                                    
                                                                                                                                
CHAIR  MIKE  HAWKER  called  the   Legislative  Budget  and  Audit                                                            
Committee  meeting to  order at  9:05  a.m. Representatives  Kito,                                                              
Olson,  Thompson, and  Hawker and  Senators  Giessel, Hoffman  and                                                              
MacKinnon  were present  at  the call  to  order.   Representative                                                              
Pruitt  arrived  as  the  meeting   was  in  progress.    Also  in                                                              
attendance were Representatives Seaton and Sadler.                                                                              
                                                                                                                                
^REVISED PROGRAM - LEGISLATIVE (RPLs)                                                                                           
              REVISED PROGRAM - LEGISLATIVE (RPLs)                                                                          
                                                                                                                              
9:09:07 AM                                                                                                                    
                                                                                                                                
CHAIR HAWKER announced  that the first order of  business would be                                                              
RPL   10-6-5006,    Department   of   Natural    Resources,   Fire                                                              
Suppression, Land & Water Resources.                                                                                            
                                                                                                                                
9:09:10 AM                                                                                                                    
                                                                                                                                
CHRIS  MAISCH,  Director,  Division  of  Forestry,  Department  of                                                              
Natural Resources,  advised that this  is a "Challenge  Cost Share                                                              
Agreement Between  The Alaska Division  of Forestry and  The USDA,                                                              
Forest  Service   Pacific  Northwest  Region  State   and  Private                                                              
Forestry."   He  explained that  the Division  of Forestry  (ADOF)                                                              
has been a participant  in the Tongass Advisory  Council (TAC) for                                                              
the  last several  years, and  this  cost share  agreement is  the                                                              
recommendation  of  TAC  to the  United  States  Forestry  Service                                                              
(USFS) on  how best to transition  from old growth  timber harvest                                                              
to  young growth  timber harvest  in the  Tongass National  Forest                                                              
while  maintaining a  viable timber  industry.   He stressed  that                                                              
the  state  has  an interest  in  maintaining  Southeast  Alaska's                                                              
current industry  together  with opportunities  to re-grow  as the                                                              
young  growth  volume  in  the  Tongass  National  Forest  becomes                                                              
available.   The agreement,  he noted, is  divided into  two major                                                              
tasks  [referring to  the handout  within  the committee  packets]                                                              
and pointed to Attachment A of the agreement, page 1, Task 1.                                                                   
                                                                                                                                
CHAIR  HAWKER   asked  Mr.  Maisch   to  give  the   committee  an                                                              
opportunity to locate the documentation within their packets.                                                                   
                                                                                                                                
9:12:58 AM                                                                                                                    
                                                                                                                                
MR. MAISCH continued  that Task 1A, B, and C,  are different parts                                                              
of  the project  that  will provide  technical  assistance to  the                                                              
Forest Service  including:  field crew working  with their  staff;                                                              
agreement  on  protocol  to  perform the  work;  and  testing  new                                                              
procedures, particularly  on Task 1B  which is timber  between 40-                                                              
55 years of age.   He referred to the project  as a merger between                                                              
two organizations  with two different  corporate cultures  and two                                                              
ways of  performing technical work,  and said they have  worked to                                                              
come to an  agreement regarding how  to proceed in the  field next                                                              
summer.   The goal of  this, he noted,  is to identify  the amount                                                              
of  young growth  available  for  timber sales  over  the next  15                                                              
years, to help support the industry in Southeast Alaska.                                                                        
                                                                                                                                
9:14:26 AM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER questioned  whether  the purpose  of the  RPL is  to                                                              
accept  $4 million  of federal  U.S. Forest  Service funding,  and                                                              
whether  it is  a grant  or contract  with ADOF  to perform  these                                                              
services.   He further questioned  whether the information  gained                                                              
is  strictly proprietary  to the  state  in that  it is  federally                                                              
funded.                                                                                                                         
                                                                                                                                
MR. MAISCH  responded that  the information  will be available  as                                                              
public  information and  is not  proprietary.   He then  confirmed                                                              
that Chair  Hawker's description of  the project is  correct, that                                                              
within  the $4  million  cost share  agreement  ADOF  does have  a                                                              
match  requirement  to  do  this  work to  help  meet  the  mutual                                                              
primary  goal  of  sustaining the  timber  industry  in  Southeast                                                              
Alaska.                                                                                                                         
                                                                                                                                
9:15:50 AM                                                                                                                    
                                                                                                                                
MR. MAISCH referred  to Task 2, [page 4] and  advised $2.5 million                                                              
is allocated  to Task 1, and $1.5  million is allocated  to Task 2                                                              
of the  $4 million agreement.   He pointed  to Task 2A, B,  and C,                                                              
and said  2A is  to provide workforce  development and  employment                                                              
opportunities  for  residents  of  rural  communities;  2B  is  to                                                              
improve  infrastructure  across  the various  land  ownerships  in                                                              
Southeast  including, state,  private, municipal,  or other  land.                                                              
He advised  that 2C is to  complete a forest  resources assessment                                                              
and  provide  financial  assistance   for  other  land  owners  in                                                              
Southeast Alaska.   He expressed  that $1.5  million is not  a lot                                                              
of money  to perform  2A, B, and  C, but  ADOF has detailed  tasks                                                              
associated with each  with no individual allocation  of money, and                                                              
much  of the  work will  be performed  by third-party  contractors                                                              
through an RFP process.                                                                                                         
                                                                                                                                
9:17:32 AM                                                                                                                    
                                                                                                                                
SENATOR  MACKINNON  referred  to  Task  2,  and  noted  there  was                                                              
supposed to  be a meeting  in July, with  a final work  product on                                                              
August  15th, and  asked whether  that  meeting was  held and  the                                                              
work product produced.   In the event it was  held, questioned why                                                              
the committee did not have specifics.                                                                                           
                                                                                                                                
MR. MAISCH  answered that the  meeting was  held, but due  to this                                                              
year's fire  season, many of the  same people on the  project were                                                              
engaged in dealing  with fire situations in Alaska  and the lower-                                                              
48.   He reiterated  that  this is  the merging  of two  different                                                              
corporate  cultures  with  a number  of  follow-up  meetings,  and                                                              
while  they  are  making  good  progress,  do  not  have  a  final                                                              
agreement on how it will actually be done.                                                                                      
                                                                                                                                
MR.  MAISCH,  with  regard  to the  match,  referred  to  page  1,                                                              
following  Attachment A,  which is  a series  of work-sheets.   He                                                              
advised that  page 1, refers  to Forest Service  contributions and                                                              
cooperator contributions.                                                                                                       
                                                                                                                                
MR. MAISCH  responded yes,  to Chair  Hawker's question  regarding                                                              
the upper  right side of  page 1, which  read: OMB 0596-0217.   He                                                              
explained the  sheet documented  what the Forest  Service fiscally                                                              
is  bringing  to the  table,  both  in  hard dollars  and  in-kind                                                              
contributions.    The  spreadsheet  also  depicts  the  cooperator                                                              
(state)  contributions,  and the  state's  match is  approximately                                                              
$1.4  million.   The match  ratio is  75 percent  federal, and  25                                                              
percent state.   The state matches  are in-kind, with  some salary                                                              
and travel,  but the majority of  the match is in the  "other line                                                              
items,"  and  $1.3  million is  being  matched  by  infrastructure                                                              
improvements  the  state  is  making  in  Southeast  Alaska.    He                                                              
pointed  out  that  in  this particular  case  a  CIP  project  is                                                              
constructing the  Downer Bay Road  on Gravina Island to  a section                                                              
of state  forest and Forest Service  owned land.  He  offered that                                                              
both will  have timber sales associated  with them in  the future.                                                              
He  related that  the match  is  sufficient to  meet the  required                                                              
match for this and,  in fact, it slightly exceeded  the match.  He                                                              
commented that  this project comes  at good time for  the division                                                              
with  the FY2015  budget  reductions,  as  the division  will  use                                                              
long-term  non-perms, and  short-term  non-perms  to help  conduct                                                              
field work and oversee this project.                                                                                            
                                                                                                                                
9:21:26 AM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER surmised  the approximately  $1.4  million in  state                                                              
match for  this project  is a non-cash  requirement other  than it                                                              
is  money that  is already  in the  state budget,  and Mr.  Maisch                                                              
will not  ask for any  additional support  at any time  to support                                                              
this project.                                                                                                                   
                                                                                                                                
MR.  MAISCH responded,  that is  correct.   The  money is  already                                                              
either  in-kind, which  is the  salary  and labor,  or actually  a                                                              
cash  contribution.    He  explained it  is  a  CIP  appropriation                                                              
previously  made,  and offered  that  the  Downer project  is  not                                                              
under  construction  yet  but  is  close  to  being  let  out  for                                                              
construction.  No additional funding is required, he said.                                                                      
                                                                                                                                
9:22:10 AM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON  noted that  the allocation  of $21,000  to this                                                              
project from  the current travel  budget line item  indicates that                                                              
those funds  would not be  available to  be used for  other travel                                                              
opportunities.                                                                                                                  
                                                                                                                                
MR. MAISCH replied, that is correct.                                                                                            
                                                                                                                                
SENATOR  MACKINNON   inquired  as  to  whether  the   division  or                                                              
department will come back and ask for a supplemental request.                                                                   
                                                                                                                                
MR.  MAISCH  answered  no, because  a  lot  of  the travel  is  to                                                              
Southeast Alaska where  he can combine his duties  on this project                                                              
with other  state duties; therefore,  it is counted as  an in-kind                                                              
contribution.                                                                                                                   
                                                                                                                                
9:23:27 AM                                                                                                                    
                                                                                                                                
DAVID TEAL,  Director, Legislative  Finance Division,  Legislative                                                              
Affairs  Agency,  said the  Legislative  Finance  Division has  no                                                              
technical  issues   with  the  RPL,   and  noted   the  department                                                              
originally  submitted it  as a capital  project.   When asked  why                                                              
capital as opposed  to operating, the division  chose to re-submit                                                              
it  as  an operating  RPL.    He  explained  it does  lean  toward                                                              
operating  and that  means the  department  will have  to do  some                                                              
work in the 2017  budget process, but it is nothing  the committee                                                              
should be concerned about as it works either way.                                                                               
                                                                                                                                
CHAIR  HAWKER  noted  that  multiple   year  appropriations  have,                                                              
historically, been  made through the operating budget  rather than                                                              
a capital budget.                                                                                                               
                                                                                                                                
9:24:39 AM                                                                                                                    
                                                                                                                                
SENATOR  MACKINNON  moved and  asked  unanimous consent  that  the                                                              
committee approve the following RPL:                                                                                            
                                                                                                                                
        10-6-5006 Department of Natural Resources, Fire                                                                         
     Suppression, Land & Water Resources $4,000,000 Federal                                                                     
      Receipts as a multi-year operating budget item FY16-                                                                      
     FY18.                                                                                                                      
                                                                                                                                
CHAIR  HAWKER stated  seeing  no  objection, [RPL  10-6-5006]  was                                                              
approved.   Chair Hawker noted  that the documentation  behind the                                                              
RPL was one of  the most thorough he has seen in  a very long time                                                              
and congratulated Mr. Maisch's folks in putting it together.                                                                    
                                                                                                                                
9:25:48 AM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  announced that the  next order of business  would be                                                              
RPL  06-6-0217, Department  of Health  &  Social Services,  Senior                                                              
and  Disabilities  Services,  General   Relief/Temporary  Assisted                                                              
Living Client Functional Assessment.                                                                                            
                                                                                                                                
9:26:18 AM                                                                                                                    
                                                                                                                                
DUANE  MAYES,   Director,  Division   of  Senior  and   Disability                                                              
Services, Department  of Health  & Social Services,  explained the                                                              
General  Relief Assistance  (GRA)  Program has  been in  existence                                                              
since  2004-2005,   and   within  the  Division   of  Senior   and                                                              
Disability Services  is the  component "Adult Protective  Services                                                              
(ATS)" that protects  the vulnerable senior  population throughout                                                              
the state.   He offered that  when the division receives  a report                                                              
of harm,  it is investigated, and  the division then  confirms the                                                              
individual is  at risk.   Subsequent to  the confirmation  of risk                                                              
and  the agreement  of the  individual, the  division will  remove                                                              
the  individual  from  that  location   and  place  them  into  an                                                              
assisted  living home under  the General  Relief Assistance  (GRA)                                                              
Program.  He described  it as an emergent need, a  safety net, for                                                              
vulnerable  populations.     He   explained,  the  division   then                                                              
develops an  exit strategy to  either return the  individual where                                                              
they came  from, or to other  locations.  Over time,  the division                                                              
has taken  in referrals into the  general relief program  from the                                                              
Alaska   Psychiatrist   Institute   (API),   the   Department   of                                                              
Corrections,  and  the  Office  of  Public  Advocacy  (OPA).    He                                                              
described  the  program as  a  general  relief program  with  $8.1                                                              
million in  funding last  year, and through  the last  session and                                                              
governor's  budget  the  program   took  an  approximate  $800,000                                                              
reduction, approximately  nine percent.   He advised  the division                                                              
is working with  Behavioral Health and the Alaska  Housing Finance                                                              
Corporation  to develop this  proposal that  was approved  through                                                              
HUD,  the   "811"  program,  to   increase  exit   strategies  for                                                              
individuals on  general relief into permanent  supportive housing.                                                              
He  noted that  the  program they  have  is temporary  in  nature.                                                              
There  are  approximately  600 individuals  currently  on  general                                                              
relief and with  the "811" project paying subsidies,  the division                                                              
would  remove approximately  60  individuals  from general  relief                                                              
and  place  them   into  permanent  supportive   housing  entities                                                              
throughout the state within the first year.                                                                                     
                                                                                                                                
9:30:00 AM                                                                                                                    
                                                                                                                                
MR. MAYES noted  that in order to do that, the  division must "get                                                              
a handle"  on the 600 individuals  currently in the program.   The                                                              
process of an  individual entering the program  includes reviewing                                                              
an  application and  medical  documentation,  but a  comprehensive                                                              
functional assessment  and housing survey is necessary  to clearly                                                              
understand  their needs in  order to  develop an appropriate  exit                                                              
strategy.                                                                                                                       
                                                                                                                                
9:30:40 AM                                                                                                                    
                                                                                                                                
CHAIR HAWKER pointed  out the Mr. Mayes did not state  what he was                                                              
asking for.                                                                                                                     
                                                                                                                                
MR.  MAYES replied  that  the amount  requested  is Mental  Health                                                              
Trust Authority  Authorized Receipts (MHTAAR) funding  through the                                                              
Alaska  Mental  Health  Trust  in  the amount  of  $175,000.    He                                                              
explained the purpose  of the money is to hire a  contractor to be                                                              
trained in a Daily  Living Activities 20 (DLA) tool  that has been                                                              
validated, verified,  and actualized by the State of  Georgia.  He                                                              
further  explained the  division would  use this  tool to  perform                                                              
the 2-3 hour  comprehensive assessment, and the  results will give                                                              
the   division   information   necessary   to   make   appropriate                                                              
referrals.   He  reiterated  it  is a  one-time  only request  for                                                              
$175,000 through  the Alaska Mental Health Trust  Authority.  Once                                                              
the  approximate  600 assessment  results  are  accomplished,  the                                                              
division  will have the  capacity internally  to perform  on-going                                                              
assessments  using that  tool.   He expressed  that the growth  of                                                              
the vulnerable population  continues to rise, and  the division is                                                              
challenged to accomplish 600 assessments.                                                                                       
                                                                                                                                
9:32:30 AM                                                                                                                    
                                                                                                                                
SENATOR  HOFFMAN requested,  of  the 600  individuals, where  they                                                              
are located throughout the State of Alaska.                                                                                     
                                                                                                                                
MR.  MAYES  opined  that  70-80 percent  of  the  individuals  are                                                              
located   in  urban  areas   such  as   Southcentral  Alaska   and                                                              
Fairbanks, with  a smaller percent in  rural Alaska.  He  said the                                                              
contract  would be  to assess  all of  the individuals  throughout                                                              
the state.                                                                                                                      
                                                                                                                                
9:33:03 AM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER  surmised  that  Mr. Mayes  is  asking  for  receipt                                                              
authority  for a new  other fund  source of  $175,000 to  complete                                                              
this  activity.    Chair  Hawker   pointed  out  that  the  senior                                                              
services  disability   allocation  within  the  budget   is  $17.9                                                              
million,  of which  Mr. Mayes  has  authority to  administratively                                                              
shuffle money  as necessary.   He questioned whether  $175,000 can                                                              
be found anywhere in the $17.9 million budget.                                                                                  
                                                                                                                                
MR. MAYES responded  that there are other components,  such as the                                                              
home  community  based  services  waiver, and  the  personal  care                                                              
attendant program  where every year the individual  is assessed to                                                              
determine   ongoing  needs.     He  described   the  division   as                                                              
"challenged"  by  the growth,  and  over  the  years there  was  a                                                              
backlog on  its ability to keep  up with the assessments,  and the                                                              
division currently  has 17  assessors.  He  said the  division had                                                              
to  get  "lean  and  mean"  and  revisit  its  structures,  review                                                              
existing tools,  and attempt to  streamline.  He offered  that the                                                              
division is  "hanging on" trying  to deal  with all of  the volume                                                              
and different  components.  He said  his response to  the question                                                              
is that  "we have a challenge  to be able  to keep up with  all of                                                              
this work."                                                                                                                     
                                                                                                                                
CHAIR  HAWKER  advised  Mr.  Mayes  that he  did  not  answer  the                                                              
question and  restated, "you cannot  find $175,000 in  your almost                                                              
$18  million  budget  to  cover  this additional  cost  of  a  new                                                              
contractor."                                                                                                                    
                                                                                                                                
MR. MAYES deferred to Jacquelli Ziegenfuss.                                                                                     
                                                                                                                                
9:35:27 AM                                                                                                                    
                                                                                                                                
JACQELLI ZIEGENFUSS,  Administrative Operations  Manager, Division                                                              
of  Senior  and  Disabilities Services,  Department  of  Health  &                                                              
Social Services, [Available for questions.]                                                                                     
                                                                                                                                
CHAIR HAWKER  reiterated that  this is a  request for  $175,000 of                                                              
new receipt  authority in order  to hire a third-party  contractor                                                              
to conduct  certain assessments.   He pointed out that  the Senior                                                              
and   Disabilities   Services   overall   budget   allocation   is                                                              
$17,926,800,  and asked  "do you  not have  capacity somewhere  in                                                              
that nearly $18  million to come up  with and find a  way to shift                                                              
$175,000 to this project if it's of sufficient priority?"                                                                       
                                                                                                                                
MS. ZIEGENFUSS opined  that the division does not  have sufficient                                                              
authorization  given the  reductions  that occurred  for FY16,  as                                                              
this is  a GF program.   She said  the assessments for  several of                                                              
the waiver  components have  a federal  component; therefore,  the                                                              
division receives  a 50 percent federal match,  which the division                                                              
would not  be able  to utilize federal  dollars in initiating  the                                                              
contract for the general relief assessments.                                                                                    
                                                                                                                                
9:37:26 AM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  asked for  clarification of  her statement  that "if                                                              
we accept this  money from another receipt authority  and it's not                                                              
general funds,  we lose 50  percent federal reimbursement  that we                                                              
would get  if we found some  way to reallocate some  general funds                                                              
for this?"                                                                                                                      
                                                                                                                                
MS. ZIEGENFUSS  answered no, she  clarified the other  assessments                                                              
for the waiver  programs are for Medicaid services;  therefore, 50                                                              
percent federal  match is  received.   She said these  assessments                                                              
are  different in  that the  division  is assessing  clients of  a                                                              
pure  GF program;  therefore,  the division  would  not receive  a                                                              
federal  match.   She  explained  that were  the  division to  re-                                                              
shuffle, in essence, it would be losing the match.                                                                              
                                                                                                                                
CHAIR  HAWKER again  restated the  question, "do  you have  within                                                              
your  $18  million  appropriation,   or  even  within  Senior  and                                                              
Disabilities Services,  that you have the  administrative latitude                                                              
to  allocate as  you choose,  do you  have $175,000  that you  can                                                              
find to re-prioritize to this activity?"                                                                                        
                                                                                                                                
MS.  ZIEGENFUSS answered  that  it would  require  re-prioritizing                                                              
within the division.                                                                                                            
                                                                                                                                
CHAIR HAWKER said she is correct.                                                                                               
                                                                                                                                
MS. ZIEGENFUSS  responded that  the division  does not  have funds                                                              
available that have not already been allocated so ...                                                                           
                                                                                                                                
9:39:24 AM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  interjected that  she made  two statements  of fact,                                                              
and asked her to draw a conclusion from those statements.                                                                       
                                                                                                                                
MS. ZIEGENFUSS answered no.                                                                                                     
                                                                                                                                
MR. MAYES added  that as a result  of where the division  is today                                                              
compared to last  year, the staff was reduced by  24 positions and                                                              
consequently  all of the  functions of the  24 staff  are absorbed                                                              
within  the division.   He  said  the division  is doing  business                                                              
lean  and attempting  to  reconfigure how  it  will meet  workload                                                              
demands.   He  said he  would like  to respond  that the  division                                                              
could probably  find [$175,000], but it  is looking at  all of the                                                              
division's  components  to determine  whether  additional  funding                                                              
can be found to meet needs throughout the division.                                                                             
                                                                                                                                
9:40:54 AM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON  asked whether the  24 positions he  referred to                                                              
were all filled  positions and asked him to give  the committee an                                                              
idea of  actual workload  transition.   She acknowledged  that his                                                              
team works  very diligently  to accomplish  services important  to                                                              
each Alaskan.                                                                                                                   
                                                                                                                                
MR. MAYES responded  that the 24 positions were  filled, and noted                                                              
that for  a long time he  will remember meeting  individually with                                                              
each of the individuals to give them their pink slip.                                                                           
                                                                                                                                
9:42:09 AM                                                                                                                    
                                                                                                                                
SENATOR  MACKINNON   surmised  that  individuals   were  hired  to                                                              
process applications for Medicaid expansion.                                                                                    
                                                                                                                                
MR. MAYES  said the 24 position  were throughout the  division and                                                              
some were  "that, yes,"  and others  within the Quality  Assurance                                                              
unit ...  with a variety of  components, two positions  within the                                                              
Child  Protective  Services  unit, and  scattered  throughout  the                                                              
division.                                                                                                                       
                                                                                                                                
9:42:49 AM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON  noted that Mr. Mayes  let 24 go, and  asked how                                                              
many   individuals  were   then   hired  to   implement   Medicaid                                                              
expansion,  because  that was  a  choice.   She  opined that  some                                                              
legislators said  it was  a choice that  would impact  seniors and                                                              
people with disabilities.                                                                                                       
                                                                                                                                
MR. MAYES  questioned whether  Senator MacKinnon  was speaking  to                                                              
bringing on additional positions for Medicaid expansion.                                                                        
                                                                                                                                
SENATOR MACKINNON  asked whether she  was correct in  stating that                                                              
this administration did that.                                                                                                   
                                                                                                                                
MR. MAYES said, that's correct.                                                                                                 
                                                                                                                                
SENATOR  MACKINNON inquired  as  to whether  it was  more or  less                                                              
than 24 positions.                                                                                                              
                                                                                                                                
MR. MAYES advised that he could not answer that question.                                                                       
                                                                                                                                
9:43:32 AM                                                                                                                    
                                                                                                                                
CHAIR HAWKER pointed  out that the roll of the  Legislative Budget                                                              
and  Audit Committee  is  advisory,  and that  Mr.  Mayes has  the                                                              
authority after 45  days of submitting notice to  the committee of                                                              
the  RPL   to  move  forward   and  do   with  the  RPL   as  [the                                                              
administration] will,  regardless of the committee's  opinion.  He                                                              
asked whether  Mr. Mayes  would commit  to respecting  the opinion                                                              
of this  committee in not going  forward should the  committee not                                                              
approve it today.                                                                                                               
                                                                                                                                
MR. MAYES  said he was  not aware that  after a certain  number of                                                              
days the  division  can move forward  with the  RPL regardless  of                                                              
the decision made today.                                                                                                        
                                                                                                                                
CHAIR HAWKER  expressed surprise that  Mr. Meyer was not  aware of                                                              
the process by which Medicaid expansion occurred.                                                                               
                                                                                                                                
MR. MAYES said he was stating "what I know."                                                                                    
                                                                                                                                
9:44:34 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT  asked if there is someone who  can speak to                                                              
this.  He referred  to a memo from Legislative  Legal and Research                                                              
Services,  page  1,  paragraph   3,  referencing  a  statute  that                                                              
provides  for  an  increase  of an  appropriation  item  based  on                                                              
additional  federal or other  program receipts,  and said  that in                                                              
this  case, the  discussion  does not  pertain  to federal  funds,                                                              
which  was the Medicaid  expansion.   He asked  whether this  RPL,                                                              
being from  the Mental Health  Trust Authority, then  falls within                                                              
the designation of other program receipts.                                                                                      
                                                                                                                                
CHAIR  HAWKER advised  Representative  Pruitt that  the answer  to                                                              
his question is, yes.                                                                                                           
                                                                                                                                
9:45:21 AM                                                                                                                    
                                                                                                                                
MEGAN   WALLACE,   Attorney,  Legislative   Legal   and   Research                                                              
Services,  Legislative   Affairs  Agency,  responded   that  Chair                                                              
Hawker is  correct, the Mental  Health Trust Authority  Authorized                                                              
Receipts  (MHTAAR)  funds  are considered  program  receipts  and;                                                              
therefore, are subject to the RPL process.                                                                                      
                                                                                                                                
REPRESENTATIVE  PRUITT surmised  that  if this  were general  fund                                                              
money that wouldn't be the case.                                                                                                
                                                                                                                                
MS. WALLACE answered, that is correct.                                                                                          
                                                                                                                                
REPRESENTATIVE   PRUITT  asked   whether  statutorily   designated                                                              
receipts  of   programs  such  as,   DNR  forestry   with  certain                                                              
designated receipts  ... if  it was an  expansion of  that program                                                              
and  utilizing  those  receipts,  would  the  committee  have  the                                                              
ability  to say  yes  or no,  and  then after  45  days could  the                                                              
governor approve the utilization of those monies.                                                                               
                                                                                                                                
MS.  WALLACE explained  that if  the  additional program  receipts                                                              
referred to had  not already been appropriated then  yes, he would                                                              
be  able  to  utilize  that program.    Although,  she  noted  the                                                              
legislature  does already  appropriate  some  program receipts  in                                                              
the budget  so it  would have  to be  additional program  receipts                                                              
received  that the legislature  did not  anticipate or  previously                                                              
appropriate.                                                                                                                    
                                                                                                                                
9:47:08 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT  surmised that  the only thing  the governor                                                              
cannot   override  the   legislature   on,  after   45  days,   is                                                              
specifically  general  fund  money.    He  further  surmised  that                                                              
should the  governor find  it in  "some other  pocket" he  can use                                                              
it.                                                                                                                             
                                                                                                                                
MS.  WALLACE stated  as long  as it  is federal  or other  program                                                              
receipts  that have not  previously been  appropriated then,  yes,                                                              
he can make  the request through  the RPL process.  She  offered a                                                              
caveat that each  RPL must be taken as they come  and examine each                                                              
one, but generally yes, that is correct.                                                                                        
                                                                                                                                
9:47:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  referred to  the  $175,000,  and noted  that                                                              
should the department  attempt to receive that  money from another                                                              
portion  of the  division,  that would  mean  $175,000 of  matched                                                              
funding for federal  Medicaid receipts would not  be available and                                                              
thereby turning  back another $175,000  of Medicaid receipts.   He                                                              
said with regard  to additional program receipts,  the legislature                                                              
doesn't always  anticipate all of  the available  program receipts                                                              
for various  programs.  In the  event more money is  received than                                                              
anticipated,  he  pointed  out,  that this  process  provides  the                                                              
opportunity to consider  that money and then allow  for that money                                                              
to be  utilized to provide  state services."   He noted,  that for                                                              
clarification  should the  division take  $175,000 out of  another                                                              
place  in the  division,  it  would  jeopardize "our"  ability  to                                                              
bring  in some  federal Medicaid  receipts.   Representative  Kito                                                              
asked whether he was correct.                                                                                                   
                                                                                                                                
MR. MAYES deferred to Jeff Jesse.                                                                                               
                                                                                                                                
9:49:29 AM                                                                                                                    
                                                                                                                                
JEFF JESSE,  Chief Executive Officer,  Alaska Mental  Health Trust                                                              
Authority, Department  of Revenue,  in response to  Representative                                                              
Kito's question, advised it is a question for the fiscal folks.                                                                 
                                                                                                                                
9:49:46 AM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON  stated her question goes to  Medicaid expansion                                                              
and  asked  how the  legislature  can,  in  the next  round,  have                                                              
confidence  in  the numbers  Mr.  Jessee  brings forward  for  his                                                              
receipt  authority.   She questioned  how  Medicaid expansion  was                                                              
funded  and  the  administrative  costs, without  coming  to  this                                                              
committee  to ask  for  that transfer,  and  also making  $175,000                                                              
available  for  something  else.     She  further  asked  what  is                                                              
remaining, are  more funds available  to do other things  that the                                                              
legislature may  have wanted  to weigh in  on as far  as utilizing                                                              
those for other benefits the Trust's beneficiaries may need.                                                                    
                                                                                                                                
MR. JESSE  referred to Medicaid  expansion and explained  that the                                                              
trustees recognized  the challenges that  the state would  face in                                                              
implementing  Medicaid expansion.   He offered  their belief  that                                                              
on the whole  there would be a  net financial benefit  not only to                                                              
the  state,   but  to   "literally"  thousands   of  the   Trust's                                                              
beneficiaries   who   would   become   eligible   under   Medicaid                                                              
expansion.   He  pointed  out that  in an  effort  to assist,  the                                                              
trustees authorized  the first year  administrative expenses  as a                                                              
way of making the  first year a no-cost effort with  the idea that                                                              
the  savings that  would  come from  expansion  would then  offset                                                              
ongoing  administrative   expenses.    For  example,   within  the                                                              
Department of  Corrections, he personally  reviewed the  number of                                                              
eligible inmates,  under expansion, that should an  inmate go into                                                              
a hospital  for 24-hours or  more, would the  cost be paid  by the                                                              
Medicaid program,  as opposed to currently being  paid 100 percent                                                              
by GF.   He expressed  confidence that  after looking at  the data                                                              
there  would be  a hard savings  of at  least $5  million, so  the                                                              
trustees made the  administrative expenses funds  available, which                                                              
was discussed  during the session  as various bills  moved through                                                              
the process.   During  the special  session the  board's view  was                                                              
that the  trustees made  that money available  if the  state chose                                                              
to  move forward  with  expansion and  pursue  making these  folks                                                              
eligible and  trying to improve  services and save money  over the                                                              
long run.   He pointed out that  how the state made  that decision                                                              
was  a political  decision,  in the  board's  view, involving  the                                                              
legislature   and  administration   with   many  discussions   and                                                              
disagreements.   He related  that it  was not  the board's  job to                                                              
weigh  in on  one  side  or the  other  on that  larger  political                                                              
debate.   He remarked  that  if the court  had told  the state  it                                                              
couldn't  move forward  with expansion,  the  Trust's money  would                                                              
not have been available ...                                                                                                     
                                                                                                                                
9:53:53 AM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON  related that  the question  she had  asked was,                                                              
where  the board  found  new money  to  make  available after  the                                                              
legislature  did not act  on Medicaid.   She  asked how  many more                                                              
receipts are still  available to be distributed based  on what Mr.                                                              
Jessee presented  to the legislature,  which was a  very different                                                              
picture on his allocation of receipts.                                                                                          
                                                                                                                                
CHAIR  HAWKER additionally  requested  the  Mr. Jessee  include  a                                                              
brief  summation   of  how  the  Mental  Health   Trust  Authority                                                              
operates, and the legislature's jurisdiction over the funds.                                                                    
                                                                                                                                
MR.  JESSEE  advised  that  the   board  operates  with  an  asset                                                              
management  policy that is  a percentage  of market value  entity,                                                              
as to  its cash assets  that are primarily  in the  permanent fund                                                              
with a small portion of reserve income ...                                                                                      
                                                                                                                                
CHAIR  HAWKER interjected  that  those funds  are  managed by  the                                                              
permanent  fund,  and that  Mr.  Jessee  must  be careful  in  his                                                              
description of the permanent fund.                                                                                              
                                                                                                                                
MR.  JESSEE clarified  that the  Trust's cash  funds, the  corpus,                                                              
are managed  by the  Alaska Permanent  Fund Corporation  as  it is                                                              
similar to  a mutual fund  in that it  pays its share  of expenses                                                              
and it  receives its share  of their profits  or loss.   The Trust                                                              
distributes  money from  that  corpus on  a  percentage of  market                                                              
value  basis,  4.25 percent  per  year,  which  goes into  a  pool                                                              
available  in the following  year for  administrative expense  and                                                              
the  programmatic  expenses of  the  mental  health program.    In                                                              
addition,  he advised,  the  Trust  land office  generates  income                                                              
from  its  natural resources  and  lands  which  is added  to  the                                                              
payout from  the permanent  fund, additionally  there are  smaller                                                              
sources  of funds  coming in  each year.   The  trustees have  the                                                              
ability to  spend that money  without a legislative  appropriation                                                              
directly making  grants to  entities in  the state, he  explained.                                                              
However, he noted,  should the board work through  a state agency,                                                              
it must  have receipt  authority  in order to  receive and  expend                                                              
those funds,  which are Mental  Health Trust Authority  Authorized                                                              
Receipts  (MHTAAR).   He  explained that  the  legislature is  not                                                              
appropriating  trust funds,  they are authorizing  the receipt  of                                                              
those funds, such  as federal funds.  Each year  the trustees make                                                              
budget    recommendations   based    upon    its   focus    areas,                                                              
collaborations   with  other   state   agencies,  or   legislative                                                              
initiatives.   He  offered that  during  their September  meeting,                                                              
where  the  budget is  set  out,  the trustees  generally  do  not                                                              
allocate 100 percent  of the projected available income.   He said                                                              
the  board  usually  holds  back  anywhere  from  $600,000  to  $1                                                              
million  out  of  approximately  $24  million  for  a  variety  of                                                              
reasons.   For example,  he said, it  may be during  conversations                                                              
with  the Office  of Management  & Budget  that an  administration                                                              
would like  to pursue an initiative  and would like help  from the                                                              
Trust,  and due to  the unallocated  funds the  trustees are  able                                                              
upon  occasion  to  assist.    Similarly  within  the  legislative                                                              
process  last   session,  within   the  discussions   of  reducing                                                              
recidivism  the board offered  $125,000 of  MHTAAR, with  $125,000                                                              
of GF,  to fund  the Alaska Criminal  Justice Information  Center.                                                              
Normally, he  noted, because it  is a state function  the trustees                                                              
can only fund  it for a certain  period of time, but  the trustees                                                              
did  not make  that  condition  for  the Alaska  Criminal  Justice                                                              
Information Center  due to the state's fiscal crisis  and the fact                                                              
that this  function must  continue for  some length  of time.   He                                                              
said that general  relief is a good example of  a well-intentioned                                                              
program funded  exclusively with  general funds.   In  the board's                                                              
view, it  has become  a default  program to put  people in  to get                                                              
them  housing. He  questioned when  general funds  are reduced  in                                                              
what manner  will those  people  be served, and  advised that  the                                                              
board  spoke  with  the  department  regarding  the  reduction  of                                                              
services ...                                                                                                                    
                                                                                                                                
10:02:33 AM                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON   interjected  that  Mr.  Jessee   advised  the                                                              
committee  that the  board sets  aside $600,000  to $1 million  in                                                              
unallocated  money.  She  then requested  the specific  amount the                                                              
board   allocated   for   administrative   costs   [for   Medicaid                                                              
expansion]  that  she  believed  was $1.4  million,  which  is  in                                                              
excess of  the money  he told  the committee  was available.   She                                                              
again  asked  where  the  funds  came  from,  and  how  much  more                                                              
unallocated money is available.                                                                                                 
                                                                                                                                
MR. JESSEE  advised that  in addition to  the payout  the trustees                                                              
make  each  year,   the  trustees  also  have   an  obligation  to                                                              
inflation proof  and in any given  year the trustees  consider the                                                              
earnings from  the permanent fund  and how those funds  compare to                                                              
the  4.25 [percent]  payout.   He  commented that  a challenge  is                                                              
that it is a  perpetual trust; therefore, they cannot  go into the                                                              
principal of  the fund.   As a result,  an income reserve  was set                                                              
up of  four times  that payout  for the  years the permanent  fund                                                              
returns  are less  than the  4.25 percent  payout.   In years  the                                                              
permanent fund  is greater  than 4.25 percent,  the first  step is                                                              
filling  the  reserve to  400  percent,  and  the second  step  is                                                              
inflation  proofing.    Over  time   the  board  tracks  inflation                                                              
proofing and when  the reserve is fully funded,  and the principal                                                              
fully inflation  proofed, the trustees  can review the  payout for                                                              
a  potential increase.    For example,  he  said,  when the  Trust                                                              
started in  1995 the payout was  3 percent, and after  funding the                                                              
reserve, inflation  proofing the  original $200 million,  over the                                                              
years increased  the payout  to 4.25 percent.   He explained  that                                                              
last year,  the excess  above the payout  and reserve  was roughly                                                              
$30 million, yet  approximately $38 million is needed  to catch up                                                              
with inflation proofing.                                                                                                        
                                                                                                                                
10:07:08 AM                                                                                                                   
                                                                                                                                
MR. JESSEE advised  that the trustees determined  that the purpose                                                              
of  inflation  proofing  is to  protect  future  beneficiaries  by                                                              
ensuring  that the principal  continues to  provide resources  for                                                              
the  mental  health  program  then,  and  not  overcommit  to  the                                                              
current year's  beneficiaries.  He  stated that when  the trustees                                                              
discussed  Medicaid expansion  they  determined  that $30  million                                                              
was  available for  inflation  proofing, so  the  $1.4 million  is                                                              
coming out  of the  additional income above  the payout  and above                                                              
filling  the  reserve  that  would   be  available  for  inflation                                                              
proofing.    He  commented  that  the  board's  argument  is  that                                                              
getting "literally"  thousands of beneficiaries covered  by health                                                              
insurance now is  more valuable to future beneficiaries  than what                                                              
$1.4 million  put into the  permanent fund for inflation  proofing                                                              
would generate  over that future  timeframe.  He conveyed  that it                                                              
is an "unusual"  action on the part of the trustees,  based upon a                                                              
unique opportunity  to protect  thousands  of beneficiaries  for a                                                              
long  time to  come.    He reiterated  that  the $1.4  million  is                                                              
coming  out  of  that additional  funds  available  for  inflation                                                              
proofing, and it  leaves the Trust with, instead  of approximately                                                              
$8  million short  of  fully inflation  proofing  the  fund it  is                                                              
approximately  $9.4 short.   He  pointed out  that when  reviewing                                                              
the macro  level, as  the fund  revenue and  expenses change  over                                                              
time, is  a very small  percentage of the  overall fund.   Another                                                              
reason  the trustees  took money  from that fund  was to  preserve                                                              
the unallocated  funding and  assist such  projects as  the Alaska                                                              
Criminal Justice  Information Center  and this particular  RPL, he                                                              
explained.                                                                                                                      
                                                                                                                                
10:10:03 AM                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON stated  that  Medicaid expansion  was a  policy                                                              
choice and  not a  political choice,  in that this  administration                                                              
chose  from a policy  perspective  to expand  Medicaid and  it had                                                              
nothing to do with  politics.  She said, "It is  a policy decision                                                              
and it is not political."                                                                                                       
                                                                                                                                
MR.  JESSEE apologized  and advised  he meant  "political" in  the                                                              
sense  of  a  separation  of powers  decision,  not  that  it  was                                                              
partisan.   There  are  two branches  of  government  that had  to                                                              
figure out  whether the  state would move  forward, and  the board                                                              
is just trying to protect the beneficiaries.                                                                                    
                                                                                                                                
10:11:39 AM                                                                                                                   
                                                                                                                                
SENATOR  HOFFMAN  surmised  the  $1.4 million  was  taken  out  of                                                              
inflation  proofing   and  not  out   of  a  combination   of  the                                                              
unallocated $600,000 to $1 million.                                                                                             
                                                                                                                                
MR. JESSEE  answered yes, it was  taken out of what  was available                                                              
for inflation proofing.                                                                                                         
                                                                                                                                
SENATOR  HOFFMAN   asked  whether   Mr.  Jessee  is   asking  this                                                              
committee  to spend  $175,000 out  of the  unallocated portion  of                                                              
$600,000 to $1 million.                                                                                                         
                                                                                                                                
MR. JESSEE  said yes  that's correct,  in order  to avoid  a short                                                              
term reduction  in service.  He  said the board noted  that if the                                                              
division had to  get this one-time funding out of  the rest of the                                                              
program  it would  reduce  direct  services, and  since  it is  an                                                              
administrative  function  the  board  would  rather  supply  those                                                              
funds than have the services to the beneficiaries reduced.                                                                      
                                                                                                                                
SENATOR HOFFMAN surmised  that the decision to  spend $1.4 million                                                              
was the  board's decision,  and the  [$175,000] must be  allocated                                                              
by this committee.                                                                                                              
                                                                                                                                
10:13:15 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  PRUITT referred  to the  prior inflation  proofing                                                              
testimony, and said  it appears to be over several  years that the                                                              
$30 million has been built up.                                                                                                  
                                                                                                                                
MR. JESSEE responded no, actually that's in the last year.                                                                      
                                                                                                                                
REPRESENTATIVE  PRUITT  asked whether  that  becomes  part of  the                                                              
principal.                                                                                                                      
                                                                                                                                
MR. JESSEE  answered that  it has  in the  past, but the  trustees                                                              
have started  to put  that into a  "nominal designation,"  and for                                                              
accounting purposes  it is considered part of  the principal, "but                                                              
it's not,"  it is in  a category where  the trustees  could access                                                              
it if necessary.   He described it as a hybrid  between income and                                                              
principal,  because  once  it's  in  the  principal  the  trustees                                                              
"can't get at it."                                                                                                              
                                                                                                                                
10:14:30 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  PRUITT  surmised  that the  [trustees]  have  been                                                              
given the  leeway to manage  that, in terms  of whether  they have                                                              
the  ability  to  touch  it  at   a  future  timeframe.    Or,  he                                                              
questioned, is  it like the  permanent fund where  the legislature                                                              
places the inflation  proofing and it goes into  the principal and                                                              
is not available  for appropriation to the legislature.   He posed                                                              
the question,  for money  from the  Mental Health Trust  Authority                                                              
to be expended does  it have to have the approval  of the board or                                                              
can the  administration utilize  that money without  going through                                                              
the board.                                                                                                                      
                                                                                                                                
MR.  JESSEE replied,  "Absolutely  not," the  governor and/or  the                                                              
legislature  cannot expend  Trust  funds without  the approval  of                                                              
the board of trustees.                                                                                                          
                                                                                                                                
10:15:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE PRUITT  opined that as  the state moves  forward in                                                              
the  next  couple   of  years  every  department,   including  the                                                              
Department of  Health & Social  Services, will  feel a pinch.   He                                                              
expressed concern  that, with the  legislature being the  board of                                                              
directors  of  the state  reviewing  the  finances of  the  state,                                                              
potentially  there  will  be  money  available  out  there  to  be                                                              
expended and  [yet] the legislature  does not have the  ability to                                                              
say whether  it is an appropriate  utilization for the  state.  He                                                              
reiterated  that  because  things  are  changing as  a  state,  it                                                              
appears there  is potentially a  lot of money out  there available                                                              
to utilize in  manners that the legislature may  feel is different                                                              
from the direction it wants to go.                                                                                              
                                                                                                                                
MR. JESSEE  offered that Representative  Pruitt's point  is "right                                                              
on,"   and  the   flip  side   is  the   opportunity  the   state,                                                              
legislature,  and administration  have to  work with the  trustees                                                              
to further  what the legislature  would like to  see accomplished.                                                              
Frankly,  he  pointed  out,  this  RPL  is part  of  that  as  the                                                              
legislature  wants to  reduce  the cost  for  this general  relief                                                              
program.  Therefore,  he related, the board is  offering to assist                                                              
by paying for  an assessment of  the 600 people in the  program to                                                              
determine what they  need, whether there is a  cheaper alternative                                                              
to  serve them,  whether other  funding sources  can be  accessed,                                                              
and whether there  is a manner in which to reform  this program so                                                              
not only will  the current reductions not harm  beneficiaries, but                                                              
future reductions  can be  achieved.  It's  a two-edged  sword, he                                                              
described,  in that there  is an  opportunity for the  legislature                                                              
to  work  with  the  board  as   well,  which  is  why  under  the                                                              
settlement the  trustees make recommendations to  the legislature.                                                              
In  the event  the  legislature does  not  agree, the  legislature                                                              
writes  a letter  to  the  Trust every  year  to explain  why  the                                                              
legislature  did not  follow the  proposals of  the trustees,  and                                                              
what  the legislature  would like  to  see done  differently.   He                                                              
explained  that  direct  feedback   from  the  legislature  and/or                                                              
governor is an  important part of the settlement  and offered that                                                              
the board  welcomes  the opportunity  to be full  partners  in the                                                              
reform and  budget reduction  future Alaska  faces.  For  example,                                                              
he  pointed  out,  the  trustees   funded  the  contract  for  the                                                              
Department of  Health &  Social Services to  review reform  in the                                                              
Medicaid program because  if that program is not  reformed it will                                                              
not be sustainable.   He stated that when it collapses  of its own                                                              
weight, if  something is not  done collectively the  beneficiaries                                                              
are   harmed.      He  said,   "We're   very   wanting   to   work                                                              
collaboratively with  the legislature because that's  the only way                                                              
our  beneficiaries  are  going  to be  successful  in  the  coming                                                              
challenges that we all face."                                                                                                   
                                                                                                                                
10:19:30 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE PRUITT  said he appreciates that but  it still gets                                                              
to the point of,  there's always a reason to spend  money, there's                                                              
always a  good program,  and almost  everything in the  Department                                                              
of Health  & Social  Services is  a good  reason.  He  highlighted                                                              
that the  issue is that  there is a  growing amount of  money, and                                                              
if the legislature  feels it is  not the direction to  go forward,                                                              
the trustees  have the ability  to disagree with  the legislature.                                                              
The trustees  can continue in their  direction with a  growing pot                                                              
of money based on  the fact that the trustees chose  to not put it                                                              
in  the  principal   of  the  fund,  he  stated.     He  expressed                                                              
hesitation in that  it is still the legislature's  ability to make                                                              
policy  related to  health and  social services  but, "I  wouldn't                                                              
say that  it's been  ... there's  the ability to  go around  it or                                                              
that it is being done, but I think there's the potential there."                                                                
                                                                                                                                
10:20:58 AM                                                                                                                   
                                                                                                                                
SENATOR HOFFMAN commented  that there are many  entities in Alaska                                                              
that  do  not  fall  under  the  Executive  Budget  Act  that  the                                                              
legislature  does not  have control  over  funds.   He noted  that                                                              
this fund is  even further ... the legislature  decides which ones                                                              
they  are  and  are  not  under,   but  the  Mental  Health  Trust                                                              
Authority  Fund  is  even  further   protected  because  it  is  a                                                              
settlement under a lawsuit against the state.                                                                                   
                                                                                                                                
MR. JESSEE  agreed with Senator  Hoffman, and said  he understands                                                              
the  Medicaid  expansion  is  very  controversial,  and  described                                                              
various prior  opportunities wherein  the partnership  between the                                                              
Trust and  the State had been  mutually beneficial for  many, many                                                              
years.  Notwithstanding  the issues around Medicaid  expansion, he                                                              
opined  that this  system  has worked  well  to everyone's  mutual                                                              
benefit and would like to continue to in the future.                                                                            
                                                                                                                                
10:23:10 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER  stressed he  would  like  to  make clear  that  the                                                              
Mental Health Trust  Authority and the money, land,  and resources                                                              
the Trust  possesses was established  as a result of  the finality                                                              
of a lengthy lawsuit decided by the Alaska Supreme Court.                                                                       
                                                                                                                                
MR. JESSEE answered that is correct.                                                                                            
                                                                                                                                
CHAIR  HAWKER surmised  that the  money and those  assets  were in                                                              
fact, although the  Trust is a government entity,  specifically by                                                              
the  results  of  that  settlement  completely  removed  from  the                                                              
control of the legislature.                                                                                                     
                                                                                                                                
MR.  JESSEE responded  yes, with  the exception  that the  trust's                                                              
administrative   budget,  salaries,  must   be  approved   by  the                                                              
legislature   to  prevent  empire   building  its   administrative                                                              
structure.                                                                                                                      
                                                                                                                                
CHAIR HAWKER  commented that it is  only by choice that  the Trust                                                              
provides  program funds  on behalf  of  its beneficiaries  through                                                              
the legislature's budget.                                                                                                       
                                                                                                                                
MR.  JESSEE  said that  is  correct,  and  pointed out  that  even                                                              
though the  Trust makes grants outside  of the budget  process, it                                                              
has a  priority to  work in conjunction  with the legislature  and                                                              
administration  because it  does  not want  to  create a  separate                                                              
mental  health   program  when  it   is  trying  to   integrate  a                                                              
comprehensive  mental  health program.    He  noted that  in  this                                                              
case, the  Trust could  have probably  assessed these  people, but                                                              
this is  a departmental function  because it manages  the program.                                                              
He  explained  the  Trust  is  trying  to  transition  from  a  GF                                                              
dependent  system  of  care to  a  system  of  care that  is  more                                                              
efficient, effective, and cost less GF.                                                                                         
                                                                                                                                
10:26:26 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER   expressed  the   importance  of  the   legislature                                                              
confirming members  of the Mental Health Trust  Authority Board of                                                              
Trustees  as it is  the authority  the legislature  has over  this                                                              
agency and once  a member is confirmed, they are  in the decision-                                                              
making  role.     He  noted  that  occasionally   the  legislature                                                              
overlooks  the  people  appointed  to this  agency  in  how  truly                                                              
important the role is that they play in the State of Alaska.                                                                    
                                                                                                                                
REPRESENTATIVE  PRUITT  expanded  that while  he  understands  the                                                              
Mental  Health  Trust Authority's  separation,  its  independence,                                                              
and  what it  was made  for, the  [concern]  is that  there is  an                                                              
entity with  the potential  to move the  legislature and  move the                                                              
direction of  policy.  As Chair  Hawker highlighted, he  said, the                                                              
department is  the one that will move  forward and do it.   In the                                                              
event  there is approval  by the  trustees and  acceptance  by the                                                              
administration,   outside   of   the   legislative   process,   it                                                              
essentially  has the  ability to  make a state  agency accept  and                                                              
move forward on  a program the legislature did  not initially feel                                                              
was  the  direction  it  wanted  to go  -  for  example,  Medicaid                                                              
expansion.   He described it as  an interesting dynamic  with what                                                              
the  institution has  and  why it  is  important  to not  overlook                                                              
appointees to the various boards.                                                                                               
                                                                                                                                
10:28:40 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SADDLER referred  to Mr.  Jessee's statement  that                                                              
the  $1.4 million  expenditure was  "unusual,"  and asked  whether                                                              
there has  been precedent  in which the  trustees have  decided to                                                              
use money  instead of inflation  proofing and restoring  the short                                                              
fall for any  other policy priorities.  He questioned  whether the                                                              
Trust  expects to do  this type  of transaction  more often,  what                                                              
criteria is used, or is this the first time it has happened.                                                                    
                                                                                                                                
MR. JESSEE  opined it may have  happened in the past  and couldn't                                                              
recall the  circumstances,  but the description  is accurate  that                                                              
it would  be an extraordinary  situation where the  trustees would                                                              
look at doing  that.  The reason  being that the system  is set up                                                              
in its normal course  to run differently and, he  added, under the                                                              
settlement  inflation proofing  is  discretionary on  the part  of                                                              
the  board  such that,  income  from  the  Trust  may be  used  to                                                              
inflation proof.   He  said the trustees  have taken  the position                                                              
that   in  the   long   run  their   fiduciary   duty  to   future                                                              
beneficiaries  does require  them to prioritize  using income  for                                                              
inflation proofing.   He said  he believed  the same is  true with                                                              
the permanent fund but was unsure.                                                                                              
                                                                                                                                
CHAIR HAWKER stated  that Mr. Jessee is correct, which  is why the                                                              
legislature  separately appropriates  inflation proofing  into the                                                              
permanent  fund  each  year  from  the  available  permanent  fund                                                              
receipts.                                                                                                                       
                                                                                                                                
10:30:45 AM                                                                                                                   
                                                                                                                                
DAVID TEAL,  Director, Legislative  Finance Division,  Legislative                                                              
Affairs,  said  the department  referred  to  options  in the  RPL                                                              
under   Home  and   Community  Based   Services  Medicaid   Reform                                                              
(1915(i)(k)) of  the federal code.   He stated the  options appear                                                              
to  be irrelevant  to  this RPL  because  they  are not  effective                                                              
until FY18.   He advised that the  point does no harm  to this RPL                                                              
which is for  immediate money to perform assessments  to determine                                                              
eligibility  for  housing assistance  under  AHFC  811 grants  and                                                              
that program may  start as early as November  with the assessments                                                              
and  housing some  time later.   He  noted the  real question  was                                                              
something that  wouldn't have  come up  until recently  when there                                                              
are decrements  in the  budget.   In the event  there had  been no                                                              
decrements  this  RPL probably  would  have not  raised  technical                                                              
questions.   However, the  governor and  legislature did  cut this                                                              
program from  the general  fund of  approximately $800,000,  which                                                              
lead the  division to  question whether adding  money back  to the                                                              
program would  make it appear  that this committee  was overriding                                                              
the will of the  legislature.  He referred to a  10/1/15 memo from                                                              
Legislative Legal  and Research Services wherein  it concluded the                                                              
RPL  was a  valid  request because  the  request  for funding  was                                                              
MHTAAR receipts,  and the  cut was general  funds.   Although, the                                                              
legislature indicated  it wanted to cut the program,  there was no                                                              
clear  indication the  cut was  a desire  to cut  the services  as                                                              
opposed to  simply a pressure  to reduce the  budget.  Due  to the                                                              
fact these  are a different source  of funds not available  to the                                                              
legislature  at  the  time  the budget  was  reviewed,  they  then                                                              
appear  as additional  program  receipts making  it  a valid  RPL.                                                              
Given  that, he  pointed out,  the  technical issues  go away  but                                                              
clearly there are  [two sides of the coin here],  and it is purely                                                              
a decision by the committee.                                                                                                    
                                                                                                                                
10:34:30 AM                                                                                                                   
                                                                                                                                
CHAIR HAWKER  offered that  the issue the  committee is  facing is                                                              
that   there   is  clearly   a   legally   valid  RPL   from   the                                                              
administration,  and the  concerns raised  by Legislative  Finance                                                              
are also quite legitimate.   He said, "If we approve  this RPL are                                                              
we contradicting  the intent  the finance  committees."   He asked                                                              
what  the committee  wants  to  do, and  is  the action  it  takes                                                              
something that would  be condoned, or not condoned,  by the larger                                                              
legislature that the committee represents.                                                                                      
                                                                                                                                
MR. JESSEE  disagreed with  the statement  that 1915(i)(k)  is not                                                              
relevant to  the RPL  because the issue  is reform moving  forward                                                              
and the  necessity  of assessing  600 people  to determine  how to                                                              
shape  reform to  get them  served  while minimizing  the draw  on                                                              
general  funds.   He  explained that  in the  short  run he  would                                                              
agree,  but  it is  part  of  a  longer term  reform  strategy  to                                                              
understand more of  what these people need and what  they might be                                                              
eligible for that would reduce general funds.                                                                                   
                                                                                                                                
10:36:32 AM                                                                                                                   
                                                                                                                                
MR. TEAL  agreed  with Mr.  Jessee, and  said he  did not mean  to                                                              
imply  that they  were  irrelevant  to this  RPL  because the  RPL                                                              
process  is  typically  seen  as a  short-term  [issue]  that  the                                                              
legislature did not  have a chance to address.  He  added that the                                                              
1915  options, because  they  are  available beginning  FY18,  one                                                              
would expect the  full legislature to deal with the  issue and the                                                              
long-term  reform aspects.   The  RPL itself  deals only with  the                                                              
AHFC program, he explained.                                                                                                     
                                                                                                                                
10:37:17 AM                                                                                                                   
                                                                                                                                
SENATOR HOFFMAN  added that  the $800,000 cut  is still  in effect                                                              
and the  additional funds  [$175,000] are  one-time funds,  and he                                                              
could not see how this effects the adopted legislative budget.                                                                  
                                                                                                                                
10:37:40 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:37 to 10:47 a.m.                                                                          
                                                                                                                                
10:47:45 AM                                                                                                                   
                                                                                                                                
CHAIR   HAWKER   offered   appreciation    for   the   committee's                                                              
participation  in  the  discussions   that  flushed  out  a  solid                                                              
grounding  for  a  decision  and asked  Senator  MacKinnon  for  a                                                              
motion.                                                                                                                         
                                                                                                                                
10:48:11 AM                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON  moved and  asked  unanimous consent  that  the                                                              
committee approve the following RPL:                                                                                            
                                                                                                                                
     06-6-0217  Department  of   Health  &  Social  Services,                                                                   
     Senior     and    Disabilities     Services,     General                                                                   
     Relief/Temporary   Assisted  Living  Client   Functional                                                                   
     Assessment  $175,000   Mental  Health  Trust   Authority                                                                   
     Authorized Receipts as an operating budget item.                                                                           
                                                                                                                                
CHAIR HAWKER  announced that  seeing no  objection, RPL  06-6-0217                                                              
was approved.                                                                                                                   
                                                                                                                                
^EXECUTIVE SESSION                                                                                                              
                       EXECUTIVE SESSION                                                                                    
                                                                                                                              
10:48:57 AM                                                                                                                   
                                                                                                                                
CHAIR  HAWKER announced  the next  order of business  would  be an                                                              
executive session.                                                                                                              
                                                                                                                                
10:49:09 AM                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON moved  and asked  unanimous  consent, that  the                                                              
Legislative  Budget  and  Audit  Committee  enter  into  executive                                                              
session  under AS  24.20.301 to  discuss confidential  performance                                                              
review reports.                                                                                                                 
                                                                                                                                
CHAIR HAWKER announced that seeing no objection, so ordered.                                                                    
                                                                                                                                
10:49:34 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:49 a.m. to 4:05 p.m.                                                                      
                                                                                                                                
4:05:31 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER brought  the committee  back to  order at 4:05  p.m.                                                              
Representatives  Kito, Olson,  and  Hawker  and Senators  Giessel,                                                              
Hoffman, and MacKinnon were present at the call to order.                                                                       
                                                                                                                                
^RELEASE OF PERFORMANCE REVIEWS                                                                                                 
                 RELEASE OF PERFORMANCE REVIEWS                                                                             
                                                                                                                              
4:06:43 PM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON  moved the committee  to release  the Department                                                              
of  Health  &  Social  Services   preliminary  performance  review                                                              
reports to the agency for response:  behavioral health, long-                                                                   
term care, and administrative structure.                                                                                        
                                                                                                                                
4:07:12 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER advised  the question before the committee  is moving                                                              
the  three  preliminary  reports:   behavioral  health,  long-term                                                              
care,  and  administrative   structure  to  the   agency  for  its                                                              
comment.  There being no objection, it was so ordered.                                                                          
                                                                                                                                
4:07:38 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER ascertained there was no additional business before                                                                
the committee.                                                                                                                  
                                                                                                                                
4:07:51 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the                                                                       
Legislative Budget and Audit Committee meeting was adjourned at                                                                 
4:07 p.m.                                                                                                                       

Document Name Date/Time Subjects
Agenda_LBA_7Oct15.pdf JBUD 10/7/2015 9:00:00 AM
2015-10-07_RPLCompletedPacket.pdf JBUD 10/7/2015 9:00:00 AM