Legislature(1995 - 1996)
02/20/1996 01:13 PM House CRA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
February 20, 1996
1:13 p.m.
MEMBERS PRESENT
Representative Ivan Ivan, Co-Chair
Representative Alan Austerman, Co-Chair
Representative Kim Elton
Representative Pete Kott
MEMBERS ABSENT
Representative Jerry Mackie
Representative Al Vezey
Representative Irene Nicholia
COMMITTEE CALENDAR
* HOUSE BILL NO. 401
"An Act authorizing the issuance and sale of revenue bonds to fund
public wastewater systems, nonpoint source water pollution control
projects, including solid waste management systems, and estuary
conservation and management projects; authorizing the use of the
Alaska clean water fund to pay and secure the bonds and to pay
costs related to issuance and administration of the bonds;
authorizing certain measures to secure payment of the bonds; and
amending Alaska Rule of Civil Procedure 3."
- PASSED OUT OF COMMITTEE
* HOUSE BILL NO. 400
"An Act relating to welfare reform by establishing the Alaska
Family Independence Program; repealing the aid to families with
dependent children and job opportunity and basic skills programs;
relating to an exemption to Alaska Wage and Hour Act for certain
work activities of the Alaska Family Independence Program; relating
to the duty to support children of minor parents; relating to
certain licenses and applications for a license for persons who are
not in substantial compliance with orders, judgments, or payment
schedules for child support; relating to an exemption to the state
procurement code for certain services for the general relief
program and Alaska Family Independence Program; relating to
eligibility for day care benefits administered by the Department of
Community and Regional Affairs; authorizing the Department of
Health and Social Services to operate a public assistance program
consistent with the Alaska Family Independence Program under
federal waivers and providing certain immunity from liability for
activities of that program; amending Alaska Rule of Civil Procedure
90.3; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 401
SHORT TITLE: REVENUE BONDS: WATER & WASTE PROJECTS
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-DATE ACTION
01/08/96 2378 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2378 (H) CRA, STATE AFFAIRS, RESOURCES, FINANCE
01/08/96 2379 (H) 2 ZERO FISCAL NOTES (REV, DEC)
01/08/96 2379 (H) GOVERNOR'S TRANSMITTAL LETTER
02/20/96 (H) CRA AT 1:00 PM CAPITOL 124
BILL: HB 400
SHORT TITLE: WELFARE REFORM
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-DATE ACTION
01/08/96 2375 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2376 (H) CRA, STATE AFFAIRS, HES, FINANCE
01/08/96 2376 (H) 10 FNS (3-DCED, 5-DHSS, 2-LABOR)
01/08/96 2376 (H) 3 FISCAL NOTES (DOE, DPS, REV)
01/08/96 2376 (H) 5 ZERO FNS (ADM, DCRA, DEC, F&G, DHSS)
01/08/96 2376 (H) 3 ZERO FNS (LABOR, LAW, DPS)
01/08/96 2377 (H) GOVERNOR'S TRANSMITTAL LETTER
02/20/96 (H) CRA AT 1:00 PM CAPITOL 124
WITNESS REGISTER
KEITH KELTON, Director
Division of Facility Construction and Operation
Department of Environmental Conservation
410 Willoughby Avenue, Suite 105
Juneau, Alaska 99801-1795
Telephone: (907) 465-5180
POSITION STATEMENT: Presented HB 401 on behalf of the
Administration.
MARIE SANSONE, Assistant Attorney General
Natural Resources Section
Civil Division (Juneau)
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3600
POSITION STATEMENT: Answered questions on HB 401.
BERDA WILLSON, Assistant Manager
Nome Joint Utilities
City of Nome
P.O. Box 70
Nome, Alaska 99762
Telephone: (907) 443-5288
POSITION STATEMENT: Supported HB 401.
DIANA BENNETT, Finance Manager
Anchorage Water and Wastewater Utility
Municipality of Anchorage
3000 Arctic Boulevard
Anchorage, Alaska 99503
Telephone: (907) 786-5623
POSITION STATEMENT: Supported HB 401.
LEE SHARP, Attorney at Law
Preston, Gates & Ellis
420 L Street, Suite 400
Anchorage, Alaska 99501-1937
Telephone: (907) 276-1969
POSITION STATEMENT: As bond counsel to the state, testified on HB
401.
JAY LIVEY, Deputy Commissioner
Department of Health and Social Services
P.O. Box 110601
Juneau, Alaska 99811-0601
Telephone: (907) 465-3030
POSITION STATEMENT: Presented department's position and answered
questions on HB 400.
JIM NORDLUND, Director
Central Office
Division of Public Assistance
Department of Health and Social Services
P.O. Box 110640
Juneau, Alaska 99811-0640
Telephone: (907) 465-3347
POSITION STATEMENT: Presented department's position and answered
questions on HB 400.
CAROL YAKISH, Social Worker
Kodiak Area Native Association
402 Center Street
Kodiak, Alaska 99615
Telephone: (907) 486-5725
POSITION STATEMENT: Testified on HB 400.
LOUISE CHARLES, Administrator
Job Opportunities and Basic Skills Program
Tanana Chiefs Conference
122 First Avenue
Fairbanks, Alaska 99701
Telephone: (907) 452-8251
POSITION STATEMENT: Supported HB 400.
ANGELA SALERNO, Executive Director
Alaska Chapter, National Association
of Social Workers
1727 Wickersham Drive
Anchorage, Alaska 99507
Telephone: (907) 563-4502
POSITION STATEMENT: Supported HB 400.
GENE OTTENSTOER
Victims of the State; and
Guardians of Family Rights
c/o P.O. Box 1059
Delta Junction, Alaska 99737
Telephone: (907) 895-4805
POSITION STATEMENT: Opposed HB 400.
SINEAD PHIPPS
Board of Directors
Guardians of Family Rights
c/o P.O. Box 704
Delta Junction, Alaska 99737
(No telephone listed)
POSITION STATEMENT: Opposed HB 400.
SHARON OLSEN, Chairperson
Alaska Native Coalition on Employment
and Training (ANCET)
320 West Willoughby Avenue, Suite 300
Juneau, Alaska 99802
Telephone: (907) 586-1432
POSITION STATEMENT: Testified on HB 400.
DARLENE DEWEY, Child Care Coordinator
Child Care and Development Block Grants
Kawerak, Incorporated
P.O. Box 948
Nome, Alaska 99762
Telephone: (907) 443-3763
POSITION STATEMENT: Testified on HB 400.
BRENDA AKELKOK
Bristol Bay Native Association
P.O. Box 310
Dillingham, Alaska 99576
Telephone: (907) 842-5257
POSITION STATEMENT: Testified on HB 400.
KRISTEN BOMENGEN, Assistant Attorney General
Human Services Section
Civil Division (Juneau)
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3600
POSITION STATEMENT: Answered questions on HB 400.
ACTION NARRATIVE
TAPE 96-14, SIDE A
Number 0001
CO-CHAIR IVAN IVAN called the House Community and Regional Affairs
Committee meeting to order at 1:13 p.m. Members present at the
call to order were Representatives Ivan, Austerman, Elton and Kott.
Members absent were Representatives Mackie, Vezey and Nicholia.
HB 401 - REVENUE BONDS: WATER & WASTE PROJECTS
Number 0059
CO-CHAIR IVAN noted that committee packets for HB 401 contained
copies of the bill, a bill summary, a sectional analysis, zero
fiscal notes from the Department of Environmental Conservation and
the Department of Revenue and back-up material.
Number 0140
KEITH KELTON, Director, Division of Facility Construction and
Operation, Department of Environmental Conservation (DEC),
presented HB 401 on behalf of the Administration, saying he was
explaining both HB 401 and its companion bill, SB 207. He offered
some background. In 1987, when the Clean Water Act was
reauthorized, it was mandated to drop the construction grants
program and shift it into a low-interest loan program for the
construction of wastewater facilities. It also could apply to
solid waste facilities where ground water contaminants were being
treated, dealing with estuary contamination and controlling
nonpoint source pollution.
Number 0213
MR. KELTON explained that since 1989, DEC had administered the
Alaska Clean Water Fund, a program set up to make those low-
interest loans. The loans, which had fluctuating interest rates
tied to the municipal bond index, were available to incorporated
communities having a dedicated revenue stream to repay the loans.
Typically, the loans were for twenty years, with interest rates of
4 - 5 percent; currently, they were at 3.75 percent. The loans
were, therefore, a fairly attractive financing alternative as
general fund grants diminished. To date, the fund had received
approximately $80 million, a combination of state and federal
dollars. Until the last two years, the demand for those funds had
been less than the availability. However, that trend was
reversing.
Number 0305
MR. KELTON expressed that at the current rate of obligation, the
fund would be used up in two years, except for the revolving
portion that would come back. Twenty-one other states administered
this "leveraged program," using the corpus of the fund as
collateral and selling revenue bonds to leverage the account into
more dollars. Mr. Kelton said DEC had worked with the Department
of Law, bond counsel and the Department of Revenue to come up with
a process that fit Alaska's needs.
Number 0373
MR. KELTON referred to the top half of a wall chart and said, "This
describes the program that we currently have in place, the Alaska
Clean Water Fund, which is capitalized 80 percent by federal
dollars, 20 percent by state." He referred to the blue center
portion, representing current funds, and said, "Of that $80
million, approximately $50 million has been loaned to 24
recipients. In your packets, you will find a list of the
communities that currently have received loans." He added that the
only requirements were being incorporated and having a dedicated
revenue stream. After the fund loaned money to municipal projects,
the repayment stream recycled back into the program. That was what
was in place right now, he said. The $30 million that was left
would be gone in two years unless something was done to "leverage"
that money, he added.
Number 0463
MR. KELTON indicated that HB 401 set up a bond redemption fund,
which would then pay the bond issuance costs to the state bond
committee. That committee would issue bonds for purchase by
investors with the proceeds returning to a bigger Alaska Clean
Water Fund. Those funds would recycle back through projects with
the repayment stream returning to the bond redemption fund to pay
off the bonds, and so forth. There was the possibility of making
that $30 million into a much larger number and funding more
projects statewide. Although the program was not restricted to any
community, by virtue of the fact that it required a dedicated
payment stream, it primarily benefited larger, incorporated
communities. Mr. Kelton indicated there was a list of
participating communities in the bill packet.
Number 0570
CO-CHAIR AUSTERMAN referred to the $50 million in loans already
made and asked, "When does that cycle back in, so that there's not
a need to go out and buy more bonds?"
MR. KELTON replied that the whole repayment stream, as well as
additional federal capitalization, was dedicated to paying off the
bonds. The $50 million already out there was a big incentive to
the bond-buying market, he said, since that repayment stream was
already dedicated. That, in addition to the $30 million currently
unobligated, would provide the corpus to the fund.
Number 0615
CO-CHAIR AUSTERMAN asked if Mr. Kelton was saying the total $80
million of the original fund was going to be the corpus.
MR. KELTON clarified that the $30 million "just sitting there"
would be the main collateral. However, there was money coming back
from the original $50 million already loaned to communities; that
repayment stream, with interest, returned to the fund and provided
assurance to the bond purchasers that the state had the ability to
repay those bonds.
Number 0675
CO-CHAIR AUSTERMAN asked how big the bonds under discussion were.
Specifically, he was curious where the $50 million would go after
it was paid back.
MR. KELTON replied it would go to new projects. It would continue
to recycle. This was one of the questions the Senate committee had
as well, he said, explaining, "We're working on two amendments
right now in their Senate CRA committee that will provide the cap
that you're talking about. The language has not been approved yet
in the Senate CRA committee, but we're expecting it to be heard
tomorrow, and one of the proposals is that they would establish a
$15 million-per-year cap on the amount of revenue bonds that could
be sold, up to $100 million total. This would allow a finite
maximum the state would be able to go in debt on, even though this
particular proposal does not require the full faith and credit of
the state. They're revenue bonds and, basically, the communities
are the ones who are establishing their full faith and credit."
Number 0753
REPRESENTATIVE PETE KOTT asked Mr. Kelton to explain the process as
it existed today, without the new legislation.
MR. KELTON expressed that the program currently provided low-
interest loans from the $80 million combination of state and
federal dollars. As those funds came back as principal and
interest, they were again available for loans. All HB 401 did was
to establish a larger pot of money through the sale of revenue
bonds. The administration of the program would proceed exactly as
before.
Number 0828
REPRESENTATIVE KOTT asked whether, as the fund was depleted, money
would come back to municipalities, keeping that pool of money at
the present level, at least.
MR. KELTON replied, "We definitely expect it will revolve. The
level will be somewhat dependent on how many bonds are sold." He
said they expected it to stabilize and be a revolving loan fund,
providing a fund in the neighborhood of $10 million to $15 million
per year.
Number 0872
REPRESENTATIVE KIM ELTON stated that his understanding was, "At the
present time, we have a loan fund that's capitalized with about $80
million. $50 million of that is already out in loans to
municipalities, leaving $30 million yet to be allocated. Under
this bonding proposal, and if we accept the caps that are being
discussed on the other side, you would have the authority, over a
period of time, to build up your loan fund from the $80 million
that you have now to $180 million at some point in the future,
assuming that the caps that are being discussed on the other side
are imposed."
Number 0872
MR. KELTON said that was correct.
REPRESENTATIVE ELTON continued, saying, "So that you'd have a
revolving loan fund that was partially capitalized with federal
dollars/state dollars/bond dollars, and the pool was $180 million
instead of $80 million."
MR. KELTON indicated that was also correct. He added, "We do
expect that the reauthorization of the Clean Water Act, which is up
again, will include additional federal appropriations into this, so
with a state match, it could ultimately grow above that level."
Number 0950
CO-CHAIR AUSTERMAN asked Mr. Kelton what he saw as the dollar need.
He said, "If, in the last few years, you've been able to keep the
$30 million in there and not have to spend it, but now you say that
there's becoming more of a demand, at some point in time, the
revolving aspect of this thing, where the $50 million comes back in
and is reloaned, is an ongoing process." He asked if more than $80
million was needed if it was on a revolving loan basis.
Number 0981
MR. KELTON replied that additional loans would be limited to the
repayment stream "once the first amount is out there." With
repayment on a 20-year cycle, only 1/20th of that would come back
in any given year. After the money was cycled once, there would no
longer be $80 million until it started coming back.
Number 1018
CO-CHAIR AUSTERMAN said that got back to his original question
about how long the cycle time was.
MR. KELTON responded that they were 20-year loans. He pointed out
that the committee packets contained, in addition to the list of
projects where money had been loaned, a list of communities that
had expressed interest in receiving loans. Currently, that list
involved approximately $78 million. He added, "There is no
certainty or an obligation on their part that they would ever need
to apply for those loans, but that's an expression of interest at
this date. We do this on an annual basis. Some of these projects
will get grants; some of them will fall by the wayside for other
reasons. But at the current rate, which is $13 million a year, we
will be out of that corpus of $30 million within a two-year period.
We're trying to expand our capability of providing loan funds to
communities while we still have this corpus available. Once this
corpus is loaned, we no longer have the collateral available to
sell these revenue bonds. Passage of this legislation this year
will enhance the ability of this legislation to be effective,
because the smaller that gets, the less leveraging we'll have
available."
Number 1126
CO-CHAIR IVAN said he understood there were two situations.
Currently, the Village Safe Water Program made grants to rural
water and sewer projects. In contrast, this program was geared
towards those built-up communities like Anchorage that had the
necessary payback capability, through property taxes or other
revenue streams. Co-Chair Ivan asked if this would free up funds
for water and sewer projects, especially the Village Safe Water
Program, which funded rural areas lacking payback capability.
Number 1180
MR. KELTON replied he would not presume how money might be
appropriated by the legislature. However, the legislature
certainly had the potential, if part of the capital budget demand
were assumed by the loan program, of making additional limited
dollars in the capital budget available to other communities.
Number 1215
CO-CHAIR IVAN referred to the 50/50 municipal matching grant and
asked if this program would free up funds from the municipal
matching grants as they were today. For example, he believed the
average provided was $25,000 per community for use as a matching
grant towards community projects.
Number 1255
MR. KELTON asked if Co-Chair Ivan was talking about the Governor's
matching grants program or DEC's.
CO-CHAIR IVAN replied, "the current capital matching grant
program."
MR. KELTON thought it best to use the two programs in conjunction
with each other. This would provide the ability to increase the
amount of dollars available to local projects. If a community was
short of money after receiving a matching grant, it would certainly
be eligible to borrow the balance from the loan program, he said.
He thought the main place it saved was in the capital budget that
was approved, outside of the matching grants program.
Number 1298
CO-CHAIR IVAN referred to Mr. Kelton's mention of estuary
conservation.
MR. KELTON clarified that was estuary pollution control or
correction. Although it was eligible, they had never received an
application for estuary enhancement. However, it was written into
the federal law, which the state was mandated to repeat in statute.
Number 1335
CO-CHAIR IVAN asked if state agencies were authorized to apply for
loans.
MR. KELTON replied that federal language authorized state agencies
to be eligible for loans. He noted that was an item that the
Senate CRA committee had also questioned. As a result of that
committee's work, he said, there was an amendment that would be
prepared and heard the next day which redefined that to eliminate
state agencies.
Number 1368
CO-CHAIR IVAN referred to the term "liberally construed" and asked
for a definition.
MARIE SANSONE, Assistant Attorney General, Natural Resources
Section, Civil Division (Juneau), Department of Law, explained that
in terms of statutory construction, the term "liberal construction"
meant that this statute should be broadly construed to give effect
to its beneficial purposes of providing money for the public
wastewater projects and other pollution projects. The term was
fairly standard in statutes, Ms. Sansone said. In contrast,
"strict construction" or "narrow construction" would indicate a
much more restrictive view of the words of the statute.
Number 1477
REPRESENTATIVE KOTT asked if underground storage tanks would fall
within the scope of HB 401.
MR. KELTON indicated that would have happened only if they were
going to make loans to state agencies. Some states had dedicated
this program to that purpose, he added. He emphasized the fund
primarily would be for new construction.
Number 1534
REPRESENTATIVE KOTT asked for an explanation of "state aid
intercept."
MR. KELTON responded that the packet contained a more complete
discussion of that issue. In a nutshell, the bond counsel had
informed them that having the "state aid intercept" language in
there meant the difference between selling the bonds at a "AA"
rating versus an "A" rating. "It's assurance to the buyers of the
bonds that there's less chance of default," he said. If there was
a default by a borrower, the state agency or agencies with control
of the funds could intercept undesignated funds to repay the
defaulted loan. It would apply to specifically appropriated funds,
Mr. Kelton said. He referred to an example in the packet and added
that in the nationwide history of the loan program over the past
seven years, there had been no defaults. In Alaska's history,
there had not been a single late payment. They did not view this
as a significant problem, he emphasized. Any community that
defaulted would ruin its own credit rating.
Number 1651
BERDA WILLSON, Assistant Manager, Nome Joint Utilities, City of
Nome, testified via teleconference in favor of HB 401. She asked
that the funds be provided only to communities in need and not to
state agencies.
Number 1738
DIANA BENNETT, Finance Manager, Anchorage Water and Wastewater
Utility (AWWU), Municipality of Anchorage, testified via
teleconference in favor of HB 401 and SB 207, its companion bill.
She read from a prepared statement:
"Although AWWU shares a common work force and management team, it
is actually two separate utilities for regulatory purposes,
establishing separate rates for service and incurring separate debt
for capital projects. The wastewater utility relies substantially,
in fact, almost entirely, on the Alaska Clean Water loan fund to
finance its comprehensive capital improvement plan. We anticipate
borrowing $4-6 million annually from the loan program. I hope the
funds will be available to do so.
"The low-interest loan program has been extremely popular and well
received throughout the country. The Anchorage Wastewater Utility
has borrowed $8.8 million from this low-interest loan program, at
rates substantially lower than would be possible in the regular
bond market. We estimate this has saved the ratepayers at least
$400,000 over the past four years, in addition to the flexibility
the program affords us. In the years this Alaskan program has been
in existence, ADEC has made loans totaling $53 million. There is
still a tremendous need for low-cost funding throughout the state.
ADEC received requests for $13 million in loans for the current
fiscal year.
"The bill now under discussion will allow what many other states
have done and leverage this initial capitalization money from the
federal government. Increasing the amount of funds available
allows projects to be completed sooner than if we have to wait for
our projects to move above the `cut line.' This is a good way to
increase the pool of money available for necessary water quality
projects, without putting any other programs at risk. The burden
for repayment remains with the communities requiring the funds and
there is a strong incentive for them, or for us, to continue to
make our repayments.
"Without increasing the availability of funds, at the current
request level of $13 million a year, the state is going to run out
of money to loan in only two years. The loans are being repaid,
but the repayment stream has not reached equilibrium yet, and when
it does, it will still only be, I believe, $4-5 million, which is
well below the projected need. The communities around the state
need this source of low-interest money to help finance sorely
needed water quality improvements.
"The revenue bonds will be backed, not by the full faith and credit
of the state, but by the revenue coming from repayment of the
loans. As you've heard, in the history of the low-interest loan
program, there has never been a default -- not in the entire United
States. In fact, in Alaska, there has never even been a late
payment. These bonds will be extremely safe. The state will not
be required to `bail out' any agency over this.
"You may have seen a Municipality of Anchorage memo listing some
recommended changes in this bill. The Utility is substantially in
favor of the bill as was originally written; however, we were asked
to comment on the bill, with an eye to any proposed changes. This
Utility works closely with ADEC and we have agreed among our two
groups that this bill, with or without any or all of the suggested
revisions, is extremely workable and will benefit the whole state
of Alaska. I urge you to pass this bill. Thank you for your
time."
Number 1930
LEE SHARP, Attorney at Law, Preston, Gates & Ellis, testified via
teleconference that his firm had been acting as bond counsel to the
state, assisting ADEC with some of the language in HB 401. He
expressed that he was available for questions with respect to the
peculiarities of bonding.
Number 1954
CO-CHAIR AUSTERMAN asked Mr. Kelton how long ago the loan program
had begun.
MR. KELTON replied the program had been in place about six years.
CO-CHAIR AUSTERMAN referred to the $15 million per year of maximum
bonding, with $50 million being repaid over 20 years. He suggested
there was a time frame for looking at getting that $15 million
stream coming back, so that bonding would no longer be needed.
Number 1969
MR. KELTON said it depended on the lengths of the loans. Although
most were 20-year loans, some were less. To come up with a firm
figure was difficult. For example, if all $80 million were already
loaned for 20-years, the maximum principal repaid per year would be
$5 million. There may be interest, as well. That was a long ways
from the demand of $15 million, even if all the money were out
there and repayments coming back.
CO-CHAIR IVAN asked if others wished to testify; there were none.
Number 2062
REPRESENTATIVE ELTON noted that HB 401 had several other committee
referrals. In light of that, he moved that HB 401 move from the
committee with individual recommendations and attached zero fiscal
notes. There being no objection, it was so ordered.
HB 400 - WELFARE REFORM
Number 2093
CO-CHAIR IVAN noted that committee packets for HB 400 contained a
copy of the bill, the Governor's transmittal letter and numerous
fiscal notes from affected agencies.
Number 2133
JAY LIVEY, Deputy Commissioner, Department of Health and Social
Services (DHSS), expressed his intent to provide an overview of
both HB 400 and the progress of welfare reform in Washington, D.C.,
as those issues seemed to be linked.
Number 2148
MR. LIVEY explained there seemed to be two major issues with regard
to what was happening in D.C. The major change was replacing the
entitlements with block grants. Historically, Aid to Families with
Dependent Children (AFDC) had been a joint federal-state
partnership in which the federal government matched state
expenditures. If populations increased or the economy turned
downward, adding welfare recipients, the federal government would
participate with the state in funding those additional costs. With
block grants, however, that was not necessarily the case. The
block grant amount coming to the state would be based on a prior
expenditure year, which in Alaska's case would probably be 1994.
If the cost of AFDC rose in the future, it would leave the state
with the choice of adding funds or making changes to the program.
Number 2218
MR. LIVEY said the second major theme in D.C. was that welfare was
more than AFDC. In the U.S. Congress, welfare reform included
changes to child support, food stamp, child care, Medicaid and
other programs. In addition, there were bills in Congress
combining and placing into block grants all the employment and
training money currently coming to the states. On the federal
level, welfare reform meant comprehensive changes to a lot of
programs that were interactive and which affected each other.
Number 2260
MR. LIVEY explained that a stand-alone welfare reform bill had
passed both the House and the Senate in the U.S. Congress; that
bill had been vetoed by the President. In addition, there were
welfare reform proposals currently under negotiation in the Budget
Reconciliation Act. Recently, the National Governors Association
had met in D.C. and come up with a proposal about welfare reform.
Congressional hearings were scheduled on those provisions over the
next couple of weeks. Mr. Livey thought there was a good chance
something would happen in welfare reform in the next year.
Number 2296
MR. LIVEY said the ambiguity of not having federal welfare reform
had made everyone's jobs a little more difficult. However,
regardless of what happened in D.C., he felt reform should go
forward. If the U.S. Congress and the President went forward with
welfare reform, then HB 400 would provide a framework. If that did
not happen, HB 400 offered a way of applying for waivers that would
implement as many provisions of the bill as possible.
Number 2336
REPRESENTATIVE ELTON expressed concern that there was no protection
from future congresses. If the block grant level was "x" one year,
it did not necessarily mean it would not be "y" the next year.
States would also have to pick up costs if federal funding was
reduced by a future congress.
Number 2362
MR. LIVEY affirmed that was correct. The bill, he said, was
written so that the block grant amount received in 1996 would
essentially be appropriated to the state every year for five years.
However, of course, Congress could come back and change that action
at any time.
REPRESENTATIVE ELTON noted that was exactly what the state had done
to municipalities under revenue sharing municipal assistance.
Number 2383
JIM NORDLUND, Director, Central Office, Division of Public
Assistance, Department of Health and Social Services (DHSS),
indicated that the process leading to the legislation had been
quite thorough. The bill was the product of several state agencies
besides DHSS, including the Departments of Labor, Law, Community
and Regional Affairs, Education, Administration, Revenue, and
Commerce and Economic Development, as well as the Alaska Housing
Finance Corporation (AHFC) and the new Alaska Human Resources
Investment Council (AHRIC). An interagency task force had met over
the summer and in the fall; input from that task force was included
in the bill. In addition, HB 400 was the product of the Governor's
blueprint for welfare reform which was released May 1, 1995. There
had also been community meetings held in late summer and fall,
funded by the legislature, in 14 areas of the state. Finally, HB
400 had been based on legislation introduced the previous year.
TAPE 96-14, SIDE B
Number 0006
MR. NORDLUND emphasized that HB 400 was one element of a plan that
also included changes in the budget, as well as administrative
changes in DHSS that depended on neither the budget nor HB 400.
Number 0023
MR. NORDLUND set out the primary principles behind their approach
to welfare reform: 1) welfare would no longer be a permanent
solution but would provide a temporary safety net; 2) work would be
emphasized; 3) benefits would be limited; and 4) recipients would
assume a measure of responsibility towards moving off public
assistance and into the work force.
Number 0074
MR. NORDLUND touched briefly on changes in the operating budget.
In the current budget, they were requesting a "reinvestment of
saved benefit dollars." This past year, he explained, there had
been a drop in the case load, which he suggested was, in part, due
to the state's welfare reform efforts. They wanted to see those
dollars reinvested into job training and child care, which were
both essential for successful welfare reform.
Number 0104
MR. NORDLUND said his agency was trying to change the culture of
the welfare office. In the past, they had simply determined
eligibility and issued benefits. Now, they wished to work with
clients to develop self-sufficiency plans and help them through the
necessary steps. They were co-locating their agency with the
Department of Labor's Division of Employment Security at various
locations around the state, both for programmatic and symbolic
reasons.
Number 0141
MR. NORDLUND explained that the bill itself, HB 400, was a
comprehensive redesign of what was currently the AFDC program. It
focused on work and self-sufficiency, as well as providing the
necessary tools. It completely repealed the AFDC and JOBS
programs. Instead, it started over with a new program, the Alaska
Family Independence Program (AFIP). The implementation of AFIP was
based on what DHSS anticipated to be changes in federal law. As
Mr. Livey had mentioned, if the federal law did not change and
allow the state to implement the new program through the sweeping
changes envisioned in HB 400, there were provisions in the bill
that would allow DHSS to go forward and apply for waivers to
implement as many changes as possible.
Number 0192
MR. NORDLUND noted that HB 400 was broadly constructed. Many
things the department planned to do would be done by regulation.
He suggested the fiscal note might provide a better idea of how the
program would operate than would the bill itself. Mr. Nordlund
cited examples of ways the department would limit assistance.
Number 0218
MR. NORDLUND referred to limits on benefits and said they were
carrying forward "what looks to be a requirement from the federal
government that there'll be a 60-month lifetime limit on benefits."
Secondly, they anticipated basing payment levels on household
expenses, reducing benefits, for example, to families receiving
free or subsidized housing. That would result in a savings of
approximately $2 million; in the fiscal note, DHSS was asking for
a realignment of those savings into increasing the earned income
disregard, which would provide further incentive for recipients to
take jobs. There were a number of work incentives in the
legislation, Mr. Nordlund added.
Number 0295
MR. NORDLUND said teens would be required to live at home and
finish their high school education or obtain their GEDs in order to
receive benefits. One-parent families would receive higher
priority than two-parent families. Sanctions or disqualifications
would also be established for recipients who refused to take
appropriate jobs, assuming adequate child care was available and
that they were adequately trained for that employment. Mr.
Nordlund pointed out the heavy emphasis in HB 400 on work and job
development. The Governor and DHSS intended for all recipients to
be in work-related activities within two years of first receiving
benefits. A family would also be required to adhere to a self-
sufficiency plan developed between case workers and the family.
Mr. Nordlund said HB 400 also eliminated "what are currently
federal regulations that are disincentives to work," one of which
was the 100-hour rule that disqualified any individual who worked
more than 100 hours per month. He explained that most states were
doing away with that, either under waiver programs or state law.
Number 0394
MR. NORDLUND noted that current recipients were allowed a car
valued at up to $1,500, which in many cases precluded adequate
transportation to work. Under HB 400, that provision was
eliminated for one car. In addition, HB 400 provided incentives
for development of self-employment, if a recipient was so suited.
Opportunities for community service were also expanded through
nonprofit organizations.
Number 0428
MR. NORDLUND emphasized that the primary reason AFDC existed, and
the reason DHSS wanted a cash assistance program to continue, was
that there were still poor people in Alaska with families. The
bill continued to maintain a safety net for low-income individuals
with children. What had been painstakingly avoided under HB 400
was making across-the-board benefit cuts. Instead, cuts were being
made to provide incentives to work and to provide equity to
families currently receiving AFDC.
Number 0481
MR. NORDLUND said the bill provided services to teen parents to
ensure they had safe homes. He said they were working to establish
better cooperation and communication between food banks and food
kitchens in the state, as well. He mentioned a food coalition
established by Commissioner Perdue. More community involvement was
envisioned in the administration of what was currently the AFDC
program, Mr. Nordlund said. Currently, the public assistance
program was based on a state-to-client relationship, with 450
employees in 12 offices located around the state. In the future,
under welfare reform and the flexibility it would provide, he
envisioned that local communities, including Native organizations,
local nonprofits or municipalities, could take over part of what
the Division of Public Assistance was currently administering. Mr.
Nordlund added that HB 400 gave grant authority to DHSS to do that.
Number 0555
MR. NORDLUND explained that if a federal welfare bill were signed
into law, there was little doubt it would contain a Native set-
aside provision allowing Native organizations to contract directly
with the federal government to provide what is currently the AFDC
program. The Administration was in support of that, Mr. Nordlund
said. Furthermore, there was language in HB 400 that asked DHSS to
coordinate and cooperate with Native organizations as they worked
with the federal government to establish their own programs.
Number 0608
MR. NORDLUND mentioned that child support was a big part of the
bill, which increased the tools available to the Department of
Revenue's Child Support Enforcement Division to collect payments
from child support obligors. With regards to this, the language in
HB 400 was identical to that in the previous year's legislation.
He said language relating to possible withholding of individuals'
occupational or driver's licenses in lieu of child support payments
would probably be required by the federal government under welfare
reform proposals currently being considered by the Congress.
Number 0663
MR. NORDLUND concluded by saying there was a section-by-section
analysis which had been provided with the legislation.
CO-CHAIR IVAN referred to the possibility of block grants going to
the state, with some diverting to the Native community. He asked
if that would decrease the number of personnel in the Division of
Public Assistance.
Number 0695
MR. NORDLUND replied that the correct way of portraying that
relationship would be that the monies coming from the federal
government would not go to the state, but would go directly to the
Native organizations. It would be a direct federal-Native
relationship for the federal share of that money. To answer Co-
Chair Ivan's question, he said there would probably be some affect
on the number of employees. However, that was hard to determine
right now because currently the division also administered the food
stamp program, as well as the adult public assistance programs.
Their staff would still need to do eligibility for those programs,
while the Native organizations would do eligibility for the AFDC
programs. He anticipated a reduction of staff if they gave up to
Native organizations not only the benefit dollars, currently
administered by the state, but also some of the administrative
dollars. However, it was too difficult to quantify right now, he
reiterated.
Number 0750
CO-CHAIR IVAN mentioned that he had voted for a measure that passed
the House last session. He asked what the differences were between
HB 400 and the bill that passed the House the previous year.
Number 0772
MR. NORDLUND explained that last year's legislation was based on
current law. "The way we wanted to achieve welfare reform was
through waivers in the federal law," he said, adding that was a
much more piecemeal approach. On the other hand, this year's
legislation was a sweeping, comprehensive change, wiping clean the
current AFDC and child support statutes and starting all over. "We
are doing this in anticipation of federal welfare reform," he said.
"Last year's legislation was based upon existing federal and state
law."
Number 0830
CO-CHAIR IVAN asked about the difference between last year's five-
year time line and the current one.
MR. NORDLUND explained that the previous year's legislation would
have been signed by the Governor except for the five-year
provision. Whether intentional or not, the way the Attorney
General's Office read that legislation was that the five-year limit
would have kicked in for individuals starting at birth. Any child
who was a beneficiary of the AFDC program for five years would
never be eligible for AFDC again, even if he or she needed
assistance later as an adult with children. The Governor had felt
that was exceptionally harmful to children and with some regret had
to veto an otherwise good piece of legislation because of that
provision, Mr. Nordlund noted.
Number 0885
CO-CHAIR IVAN referred to the Alaska Family Independence Program
(AFIP). He asked about differences between AFIP and the AFDC and
JOBS programs that would be replaced.
Number 0906
MR. NORDLUND said the reason the JOBS program was no longer
identified was not because that program was considered unimportant.
In fact, he said, they envisioned the whole public assistance
agency essentially becoming like the JOBS program. To make sure
that the AFDC program, as they knew it in the past, no longer
existed, they had thought it appropriate to rename it. It was also
renamed on the federal level, he noted.
Number 0971
REPRESENTATIVE ELTON said he was "half-way comforted" about the
five-year limit. He asked if the five-year limit did not kick in
until the age of majority.
MR. NORDLUND nodded yes.
REPRESENTATIVE ELTON asked, "if a person, a parent, has been in the
program from the age of 21 to 26, what happens to the kids in that
family once the parent is kicked out?" He further asked what
percentage of the client base would probably be kicked out by a
five-year limit.
Number 1014
MR. NORDLUND clarified that what was envisioned under the federal
law, which was being carried through in this legislation, was that
after 60 months of receiving benefits, the entire family would be
ineligible to receive benefits again. Once a child in that family
grew up and had offspring, establishing a new case, he or she would
be eligible.
Number 1039
REPRESENTATIVE ELTON expressed concern over having a program that
kicked a child out for the failure of a parent to "matriculate from
the program, whatever the structure of that might be." He said he
assumed that the structure of HB 400 anticipated the federal
requirement of a 60-month limit and that there was nothing the
state could do about that.
Number 1076
MR. NORDLUND replied, "We don't know exactly what the state could
do about that. We don't know where we're going to be, necessarily,
in five years, once this provision kicks in." He added that it was
of great concern to the Administration what happened to families
going over the 60-month limit. It was their goal to not allow that
to happen. "We need to bring as many forces to bear as we can to
make sure that those individuals are given every opportunity to
move into the work force as possible," he said. He noted that
there was currently either a 15 or 20 percent exemption, depending
on which version of the federal welfare reform was looked at; the
National Governor's Association had suggested it be 20 percent.
That exemption would mean 20 percent of the case load would be
exempt from the 60-month limit. Presumably, that exemption would
apply to people who were disabled and unable to work, or else
individuals living in areas with chronically high unemployment
areas. "This continues to be a source of concern to us," he said.
He voiced the need for child care and job training to get people
back into the work force.
Number 1163
MR. LIVEY agreed the bill put much more responsibility on the
family, as well as on the department. He referred to the fiscal
note and the bill and said that in conjunction with the budget,
what was proposed was taking some savings from case load reductions
and continually reinvesting those savings into job training, child
care, adult basic education and so forth, so that people could work
their way off the program.
Number 1222
CAROL YAKISH, Social Worker, Kodiak Area Native Association (KANA),
testified via teleconference, saying she had some concerns, mainly
because of her work with the Bureau of Indian Affairs (BIA) general
assistance program for the Native villages on Kodiak Island. One
concern was not knowing whether BIA general assistance programs
would continue or how they would fit into the state block grant
areas, as well as whether KANA, as one of the 12 listed
organizations, would or would not take on responsibility for what
was now known as the AFDC program. Ms. Yakish thought the impact
on the villages would be great. She was concerned about
incorporating the requirements of the programs within the isolated
villages that had chronic high unemployment.
Number 1356
LOUISE CHARLES, Administrator, Job Opportunities and Basic Skills
Program, Tanana Chiefs Conference, testified via teleconference
from Fairbanks in favor of HB 400, which she thought was fair to
urban and rural welfare recipients alike. She discussed the
obstacles faced by people in welfare-to-work programs and provided
an overview of the tribal JOBS program. It was impossible to serve
all eligible clients with their current funding, Ms. Charles said,
although they were trying their best. She cited examples of
agreements with other local agencies. She noted that many clients
needed developmental or adult education courses prior to gaining
skills to get jobs that paid well enough to make workers self-
supporting. Ms. Charles provided examples of clients who had moved
from the AFDC rolls because of job training programs and indicated
more funds were needed for that. She emphasized the necessity of
looking at local solutions for rural areas.
Number 1944
ANGELA SALERNO, Executive Director, Alaska Chapter, National
Association of Social Workers, testified via teleconference from
Anchorage, saying her association represented 450 social workers
statewide. She spoke in favor of HB 400, which offered a well
developed and workable plan for removing recipients of AFDC into
work. Considering the five-year limit, she said, recipients would
need work that would support their families. She expressed strong
approval of the job training and child care provisions of HB 400,
both for people at school and at work, as well as provisions to
increase child support collections. She commended the department
for their work on the bill.
Number 2115
GENE OTTENSTOER, Victims of the State and Guardians of Family
Rights, testified via teleconference from Delta Junction, asking
how much federal funding the state received by passing this bill
and others like it, such as bills on domestic violence.
Number 2177
MR. NORDLUND replied that this bill did not directly affect the
amount of federal funding to be received. Instead, it anticipated
a federal block grant, which would likely be the amount of money
received for the AFDC and JOBS programs, as well as for AFDC
administration, in FY 1994. That amount was less than amounts
currently received. This bill was written envisioning fewer
federal dollars available to the state for the administration of
these programs, Mr. Nordlund added.
Number 2236
MR. OTTENSTOER voiced that this bill and others like it were geared
to strip families of wealth and freedom and put them under the
whips of slavery. It not only attacked the Constitution, Bill of
Rights and Magna Carta, it was an attack on the back-bone of our
country, which was the family. Anyone who would vote for this bill
or any like it was committing treason. A better plan of attack for
welfare reform would be to put recipients to work doing jobs that
were not very nice. This would not only save money, but would
inspire recipients to get off welfare.
Number 2333
SINEAD (ph) PHIPPS, Board of Directors, Guardians of Family Rights,
testified via teleconference from Delta Junction, saying the bill
went against the Declaration of Independence and was another form
of unconstitutional attack on families, making it a crime to be
poor, because most poor families were not politically correct.
This bill was a back door for Communist take-over. It would not
help anyone to become more self-sufficient but promoted more
dependency on the government. It advocated the promotion of
Healthy Start and similar programs by way of back door taxing. It
tried to control every aspect of a person's life, taking away the
rights and freedoms guaranteed by the Constitution of the United
States and the Holy Bible. The state appeared to be wanting to
receive more federal bounty. It appeared to be a means of robbing
from people to separate them from any possible means of wealth that
they may obtain to get ahead. More government control was not what
was needed. This was not a way of freedom, but a way of bondage.
Ms. Phipps disapproved renaming AFDC and disagreed with Section 36,
page 35.
TAPE 96-15, SIDE A
Number 0001
MS. PHIPPS concluded her comments by saying, "You are committing
treason and sedition, and do you know ... what could happen to you
for doing that?"
Number 0073
SHARON OLSEN, Chairperson, Alaska Native Coalition on Employment
and Training (ANCET), noted that Ed Thomas had given testimony and
provided copies the previous day to "the Senate committee." She
mentioned some personal background and then read from a three-page
document entitled, "Testimony on Welfare Reform Legislation,
February 20, 1996," which she provided to the current committee as
part of a packet prepared by ANCET.
MS. OLSEN furnished background on the Tribal Job Opportunities and
Basic Skills (JOBS) Program; discussed consolidation of programs
under PL 102-477 and the joint partnership between Alaska Natives
and the federal government to provide services; and made
recommendations. Briefly, the recommendations addressed the
following: 1) strengthening government-to-government relationship
between Alaska tribes and the state government; 2) supporting the
Governor's inclusion of a tribal match for FY 1997; 3) stimulating
economic development, with special emphasis on creating job
opportunities for those dependent on public assistance; 4)
consulting with tribal governments in development of state waiver
requests; 5) inviting tribes who were willing and able to contract
with the state for a block grant as a demonstration project until
the federal government passed welfare reform legislation; and 6)
developing Tribal JOBS Plans for the next two years.
Number 0804
CO-CHAIR IVAN shared his opinions about the state of Alaska not
recognizing "so-called village tribal governments." He
acknowledged there was a debate over the sovereignty issue that he
wished could be set aside. The tribal government IRAs had been in
place for centuries, he said, and were part of a community that
could help in the welfare reform process, if the arguments could be
set aside.
Number 0869
DARLENE DEWEY, Child Care Coordinator, Child Care and Development
Block Grants, Kawarek, Incorporated, testified via teleconference
from Nome. Referring to AS 47.27.025 (a), regarding family
assistance, she suggested that if the system intended to help
families on AFDC become self-sufficient, assets should not be
considered in determining benefits. She did not favor a time
limit. She said most of the clients in the program lacked job
skills. She thought clients in rural villages who were taking
college classes should be considered. It cost money to leave the
village, she said, and having time limits would only put children
in jeopardy.
Number 1054
MS. DEWEY referred to definitions under AS 47.27.090 and said since
so many programs were involved, she recommended that the
legislature come up with one flat income guideline. The clients
using those services were AFDC clients and should not have to
report every penny that went past their front door, she said.
"Please define income, whether it is going to be earned or
unearned, and delete assets as part of the applicant's
requirements," she concluded.
Number 1112
BRENDA AKELKOK, Bristol Bay Native Association, testified via
teleconference from Dillingham. She explained that as a tribal
entity, the association was interested in developing community
service and work experience positions under contract with the
state. However, they wondered what provisions there would be to
indemnify "these Native entities from liability if something should
happen to a work experience participant while they were on the
job." She assumed such people would not be covered by Workers
Compensation. She asked Mr. Nordlund to respond.
Number 1171
MR. NORDLUND deferred to Kristen Bomengen to reply.
KRISTEN BOMENGEN, Assistant Attorney General, Human Services
Section, Civil Division (Juneau), Department of Law, said there
might be a couple of different circumstances that had been
described here. She acknowledged that all questions about what
coverages would be required had not yet been answered. For
subsidized employment, the entity employing the person would need
to ensure there was Workers Compensation coverage. "I think that
there may be an unlimited number of potential liability issues,"
she said. She pointed out that she was not really prepared to
address all of those issues. "I think that there will be some
provisions where someone is hired working on behalf of an outside
employer, where we would, under state law, have to recognize the
Workers Compensation provisions," she added.
Number 1257
MS. AKELKOK responded that had answered some of the questions.
However, she was still interested in seeing, for community service
positions with nonprofits or state agencies, what protection there
would be for the tribal entity, as well as for the state. She
added that concluded her testimony for now.
Number 1280
CO-CHAIR IVAN asked if there was any further testimony. He noted
that the bill would be considered again. He thanked the
participants and mentioned that the next meeting would address HB
409 and HB 383.
Number 1331
ADJOURNMENT
There being no further business to conduct, CO-CHAIR IVAN adjourned
the House Community and Regional Affairs Committee meeting at 3:09
p.m.
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