Legislature(1999 - 2000)

03/24/2000 01:55 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HOUSE FINANCE COMMITTEE                                                                                                         
March 24, 2000                                                                                                                  
1:55 P.M.                                                                                                                       
                                                                                                                                
TAPE HFC 00 - 82, Side 1                                                                                                        
TAPE HFC 00 - 82, Side 2                                                                                                        
                                                                                                                                
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Therriault called the House Finance Committee                                                                          
meeting to order at 1:55 p.m.                                                                                                   
                                                                                                                                
PRESENT                                                                                                                         
                                                                                                                                
Co-Chair Mulder                                                                                                                 
Co-Chair Therriault    Representative Foster                                                                                    
Vice Chair Bunde   Representative Grussendorf                                                                                   
Representative G. Davis   Representative Moses                                                                                  
                                                                                                                                
Representatives J. Davies, Austerman, Williams and Phillips                                                                     
were absent from the meeting.                                                                                                   
                                                                                                                                
ALSO PRESENT                                                                                                                    
                                                                                                                                
Representative Ramona Barnes; Don Shircel, Director, Family                                                                     
Services, Tanana Chief's Conference; Janet Seitz, Staff,                                                                        
Representative Rokeberg; Bob Storer, Executive Director,                                                                        
Alaska Permanent Fund Corporation, Department of Revenue;                                                                       
Jeff, Bush, Deputy Commissioner, Department of Community and                                                                    
Economic Development; Alison Elgee, Revenue Commissioner,                                                                       
Department of Administration; Jim Nordland, Director,                                                                           
Division of Public Assistance, Department of Health and                                                                         
Social Services; Joe Balash, Staff, Representative                                                                              
Therriault.                                                                                                                     
                                                                                                                                
TESTIFIED VIA TELECONFERENCE                                                                                                    
                                                                                                                                
John Mallonee, Child Support Enforcement Division,                                                                              
Department of Revenue; Diane Wendlandt, Assistant Attorney                                                                      
General, Department of Law; Bob Lohr, Division of Insurance                                                                     
                                                                                                                                
SUMMARY                                                                                                                         
                                                                                                                                
HB 18 "An Act making a special appropriation from the                                                                           
earnings reserve account to the principal of the                                                                                
permanent fund; and providing for an effective                                                                                  
date."                                                                                                                          
                                                                                                                                
 HB 18 was heard and HELD in Committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
HB 98 "An Act relating to contracts for the provision of                                                                        
state public assistance to certain recipients in                                                                                
the state; providing for regional public                                                                                        
assistance plans and programs in the state;                                                                                     
relating to grants for Alaska tribal family                                                                                     
assistance programs; and providing for an                                                                                       
effective date."                                                                                                                
                                                                                                                                
 CSHB 98 (HES) was REPORTED out of Committee with a                                                                             
"do pass" recommendation and with two zero fiscal                                                                               
notes: one by the Department of Health and Social                                                                               
Services, published date 3/3/00; and one by the                                                                                 
Department of Revenue.                                                                                                          
HB 290 "An Act relating to stranded gas pipeline carriers                                                                       
and to the intrastate regulation by the Regulatory                                                                              
Commission of Alaska of pipelines and pipeline                                                                                  
facilities of stranded gas pipeline carriers."                                                                                  
                                                                                                                                
   HB 290 was postponed.                                                                                                        
HB 350 "An Act repealing the statutory bars to the State                                                                        
of Alaska's prosecution of a criminal act that                                                                                  
resulted in a conviction or acquittal by the                                                                                    
United States, another state, or territory."                                                                                    
                                                                                                                                
 HB 350 was postponed.                                                                                                          
HB 418 "An Act relating to program receipts collected by                                                                        
the division of insurance and to program receipts                                                                               
collected by the Department of Community and                                                                                    
Economic Development for occupational licenses;                                                                                 
and providing for an effective date."                                                                                           
                                                                                                                                
 CSHB 418 (FIN) was REPORTED out of Committee with                                                                              
a "do pass" recommendation and with two fiscal                                                                                  
impact notes: one by the Department of Community                                                                                
and Economic Development, Occupational Licensing,                                                                               
published date 3/1/00; and one by the Department                                                                                
of Community and Economic Development, Alaska                                                                                   
Seafood Marketing Institute (ASMI).                                                                                             
HOUSE BILL NO. 18                                                                                                               
                                                                                                                                
"An Act making a special appropriation from the                                                                                 
earnings reserve account to the principal of the                                                                                
permanent fund; and providing for an effective date."                                                                           
                                                                                                                                
REPRESENTATIVE RAMONA BARNES noted that she has only offered                                                                    
two bills in her legislative career. She read from her                                                                          
sponsor statement:                                                                                                              
                                                                                                                                
I am offering House Bill 18 to ensure an alternative                                                                            
approach is available to the ongoing debate over the                                                                            
Permanent Fund and the use of its earnings.                                                                                     
                                                                                                                                
As the title suggests, HB 18 would make a special, one-                                                                         
time appropriation from the Earnings Reserve to the                                                                             
corpus of the Permanent Fund. The appropriation would                                                                           
include the existing balance of the Earnings Reserve on                                                                         
June 30,1999. As the bill's sponsor, I ask the Finance                                                                          
Committee to amend the effective date in HB 18.                                                                                 
                                                                                                                                
I believe placing the existing balance of the earnings                                                                          
reserve into the corpus of the Fund would serve the                                                                             
dual purpose of further protecting the funds and                                                                                
ensuring the growth of the Permanent Fund.                                                                                      
                                                                                                                                
Representative Barnes added that she received additional                                                                        
information that needed to be considered by the House                                                                           
Finance Committee. She observed that if the whole earnings                                                                      
of the Permanent Fund were put into the corpus of the fund                                                                      
that it could lead to the reduction or elimination of the                                                                       
dividend. She asked the Committee to take action to protect                                                                     
the dividend.                                                                                                                   
                                                                                                                                
Co-Chair Mulder observed that members were  provided with a                                                                     
proposed committee substitute, work draft, 1-LS0163\D,                                                                          
Cramer, 3/20/00 (copy on file). The committee substitute                                                                        
would lower the appropriation to $250 million dollars. He                                                                       
agreed with Representative Barnes that if there were a                                                                          
deposit of the unappropriated balance that there is a real                                                                      
likelihood that there could be insufficient funds remaining                                                                     
in a protracted downward market to pay the dividend.                                                                            
                                                                                                                                
BOB STORER, EXECUTIVE DIRECTOR, ALASKA PERMANENT FUND                                                                           
CORPORATION, DEPARTMENT OF REVENUE observed that the                                                                            
Corporation contracted with Callan Associates Incorporated                                                                      
for a sophisticated model to evaluate a number of asset                                                                         
allocations and decisions including the volatility of any                                                                       
given year. He provided members with a handout titled                                                                           
"Volatility Model, Move Realized Earnings Reserve to                                                                            
Principal at the end of FY00" (copy on file).                                                                                   
                                                                                                                                
Mr. Storer reviewed assumptions used in the modeling                                                                            
provided to the Committee in the handout. Actual investment                                                                     
results were used through December 31, 1999. He explained                                                                       
that expected median returns for the next 5 years were                                                                          
developed in each asset class. The risk associated with each                                                                    
asset class is also reviewed. The statutory formula for the                                                                     
dividend and the current limitations of the Earnings Reserve                                                                    
Account were used. The model was based on the Department of                                                                     
Revenue's fall 1999 estimates for new income. The model was                                                                     
based on the transfer of the realized earnings reserve into                                                                     
the principal at the end of fiscal year 2000.                                                                                   
                                                                                                                                
Mr. Storer reviewed current asset allocation as contained on                                                                    
page 3 of the handout:                                                                                                          
                                                                                                                                
 Cash Equivalents     0%                                                                                                        
 Domestic Bonds      35%                                                                                                        
 Active Large Cap Domestic Equities  17%                                                                                        
 Passive Large Cap Domestic Equities  13%                                                                                       
 Small Cap Domestic Equity    7%                                                                                                
 International Equity     16%                                                                                                   
 Real Estate      10%                                                                                                           
 International Bonds     2%                                                                                                     
                                                                                                                                
Mr. Storer reviewed the market assumptions as contained on                                                                      
page 4 of the handout:                                                                                                          
                                                                                                                                
Inflation over the next 5 years - 3.25%                                                                                         
 Median expected return - 6.7 %                                                                                                 
 U.S. Equity market of large companies - 8.9%                                                                                   
U.S. Equity market of small companies - 10.40%                                                                                  
International Equities - 9.75%                                                                                                  
Real Estate - 8.3%                                                                                                              
International Bonds - 6.5%                                                                                                      
                                                                                                                                
Mr. Storer noted that the standard deviation on domestic                                                                        
bonds would be 5.5%. Two-thirds of the time the median would                                                                    
be expected at plus or minus 5.5 percent. Returns between                                                                       
12.2 and 1.2 percent would be expected two-thirds of the                                                                        
time.                                                                                                                           
                                                                                                                                
Vice Chair Bunde pointed out that the expected return could                                                                     
be twice as much or twice as little. Mr. Storer agreed and                                                                      
gave further examples of the range of returns.                                                                                  
                                                                                                                                
Mr. Storer reviewed page 5 of the handout: range of ending                                                                      
market value. At the end of 1999 the Fund was $25.132                                                                           
billion dollars. The median expected at the end of the year                                                                     
2000 is $27,216 billion dollars. At the end of the year                                                                         
2003, the median of $32,453 billion dollars is expected. At                                                                     
the 75th pecentile in the year 2003, the Fund would be                                                                          
$27,633. He noted that there is a 10 percent chance that the                                                                    
Fund would be worth $25,246 billion dollars in the year 2003                                                                    
if there were a prolonged bear market.                                                                                          
                                                                                                                                
Co-Chair Mulder clarified that the range of ending market                                                                       
value includes the total fund assets.                                                                                           
                                                                                                                                
Mr. Storer reviewed the range of principle balance. The                                                                         
median expected return is 8.25 percent with the balance                                                                         
inflation proofed. If the earnings were not realized there                                                                      
would be difficulty inflation proofing. The range of                                                                            
inflation proofing includes the deposit of the realized                                                                         
earnings reserve into the fund. Under a median case, the                                                                        
principle balance would be $19,699 billion dollars at the                                                                       
end of the year 2000. This would increase to $24,551 in the                                                                     
year 2001.                                                                                                                      
                                                                                                                                
Vice Chair Bunde clarified that the chart indicates what                                                                        
would have occurred if HB 18 had been law and the excess                                                                        
earnings were placed back into the fund.                                                                                        
                                                                                                                                
Mr. Storer discussed page 7: the range of ending realized                                                                       
earnings reserve balance. Realized earnings drop from $3.9                                                                      
billion dollars in FY00 to $928 million dollars in FY01.                                                                        
This reflects the deposit into the principle. Additional                                                                        
realized income in FY01 would be $928 million dollars. In                                                                       
the lower case scenario there would be virtually no income                                                                      
or a probability of negative income. At the 90th percentile                                                                     
the Earnings Reserve Account would be a negative $953                                                                           
million dollars by the year 2003. There is a 10 percent                                                                         
chance that the Account could grow to $6.2 billion dollars.                                                                     
                                                                                                                                
Vice Chair Bunde clarified that by law the Corporation is                                                                       
required to use the imprudent investor rule.  Mr. Storer                                                                        
agreed and added that a prudent investor would use the                                                                          
median base.                                                                                                                    
                                                                                                                                
Mr. Storer reviewed the range of total distributed income.                                                                      
The mid case scenario at the end of the year 2000 would be                                                                      
$1,260 billion dollars of available distributed income. If                                                                      
the decision were made to put the earnings reserve balance                                                                      
into the corpus the distributed income for the year 2003                                                                        
would be $1,390 billion dollars under the median scenario.                                                                      
He reviewed further scenarios and noted that available                                                                          
distributed income could range from $190 million dollars to                                                                     
$1,976 million dollars in the year 2003.                                                                                        
                                                                                                                                
Mr. Storer referred to the range of the per capita dividend.                                                                    
In 1999 the dividend was $1,770 thousand dollars. By the                                                                        
year 2003, the dividend would be $2,264 thousand dollars                                                                        
under the median scenario. The pay out could range from $263                                                                    
dollars to $3,240 thousand dollars by the year 2003.                                                                            
                                                                                                                                
Co-Chair Mulder stressed that there is a range of                                                                               
volatility. In response to a question by Co-Chair Mulder,                                                                       
Mr. Storer clarified that current statute provides that the                                                                     
determination of the dividend is derived from one half of                                                                       
the balance in the Earnings Reserve Account if there are not                                                                    
sufficient funds to make a pay out on the five year rolling                                                                     
average. Co-Chair Mulder observed that in a protracted bear                                                                     
market where a deposit of the Earnings Reserve balance were                                                                     
made into the Permanent Fund there would no longer be funds                                                                     
available for the default mechanism to kick in with any                                                                         
strength similar to the current size of the dividend.                                                                           
                                                                                                                                
Mr. Storer noted that the Earnings Reserve is currently $7.7                                                                    
billion dollars. Unrealized gains are $3.6 billion dollars.                                                                     
The balance of $4.1 billion dollars is income realized                                                                          
through February 29, 2000. This is the amount that would be                                                                     
available for transfer into the principle of the Fund.                                                                          
                                                                                                                                
Vice Chair Bunde questioned the affect of the legislation on                                                                    
the dividend. Mr. Storer stated that the deposit of $250                                                                        
million dollars would have a nominal affect on dividends.                                                                       
                                                                                                                                
Co-Chair Mulder questioned if there would be risk to the                                                                        
dividend. Mr. Storer stated that the more that is retained                                                                      
the less the impact on the dividend on the out going years.                                                                     
                                                                                                                                
Co-Chair Mulder observed that the intent is not to create                                                                       
risk to dividends, but to make a contribution to the Fund.                                                                      
                                                                                                                                
Vice Chair Bunde questioned how much the legislature had                                                                        
deposited into the Fund over the last 10 years. Mr. Storer                                                                      
did not have an exact number, but stated that the amount has                                                                    
been significant.                                                                                                               
                                                                                                                                
HB 18 was Heard and Held in Committee for Further                                                                               
deliberation.                                                                                                                   
HOUSE BILL NO. 418                                                                                                              
                                                                                                                                
"An Act relating to program receipts collected by the                                                                           
division of insurance and to program receipts collected                                                                         
by the Department of Community and Economic Development                                                                         
for occupational licenses; and providing for an                                                                                 
effective date."                                                                                                                
                                                                                                                                
Vice Chair Bunde MOVED to adopt work draft, 1-LS1500\I,                                                                         
Utermohle, 3/24/00 (copy on file.) There being NO                                                                               
OBJECTIONS, it was so ordered.                                                                                                  
                                                                                                                                
JANET SEITZ, STAFF, REPRESENTATIVE ROKEBERG spoke in support                                                                    
of the legislation on behalf of the sponsor. She explained                                                                      
that the legislation would add two new areas to the program                                                                     
receipts statute. A correction was made under the Division                                                                      
of Occupational Licensing to exclude business license                                                                           
receipts and Alaska Seafood Marketing Institute (ASMI)                                                                          
receipts were added. She observed that the sponsor supports                                                                     
the committee substitute, but is concerned that pioneer home                                                                    
receipts were excluded.                                                                                                         
                                                                                                                                
Co-Chair Therriault observed that individual licensing                                                                          
groups within the Division of Occupational Licensing would                                                                      
like to contribute funds that could be used for                                                                                 
participation in national training. He noted that ASMI                                                                          
receipts are collected specifically for ASMI marketing. He                                                                      
explained that Co-Chair Mulder expressed the desire to keep                                                                     
the legislation limited in scope.                                                                                               
                                                                                                                                
Co-Chair Therriault clarified that a previous proposed                                                                          
committee substitute was not offered because it would have                                                                      
swept in business licenses. Business licenses generate more                                                                     
than they consume for operation. The excess currently goes                                                                      
to the General Fund. There was no desire to take these funds                                                                    
off budget; therefore they were excluded from the                                                                               
legislation.                                                                                                                    
                                                                                                                                
JEFF, BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY AND                                                                    
ECONOMIC DEVELOPMENT spoke in support of the legislation. He                                                                    
expressed concern that the Division of Insurance was deleted                                                                    
from the legislation. He observed that the Division of                                                                          
Insurance generates fees in the same manner as the Division                                                                     
of Occupational Licensing. He made assurances to the                                                                            
industry that the legislation is not an attempt to raise                                                                        
insurance fees. Insurance fees currently pay for their                                                                          
services. He pointed out that the legislation does not take                                                                     
the fee structure away from legislative oversight. He                                                                           
maintained that any fears by industry were unfounded.                                                                           
                                                                                                                                
Mr. Bush referred to section (Y). He pointed out that the                                                                       
receipts that go to ASMI are tax receipts, which are                                                                            
collected by the Department of Revenue and appropriated to                                                                      
ASMI. He suggested that the term "receipts" may not be                                                                          
appropriate.                                                                                                                    
                                                                                                                                
Mr. Bush spoke in support of an immediate effective date. He                                                                    
noted that an immediate effective date could ease pressure                                                                      
on the supplemental appropriation bill.                                                                                         
                                                                                                                                
Co-Chair Therriault proposed that the bill be held to allow                                                                     
research regarding subsection (Y). He stated that he                                                                            
preferred that the legislation be matched to the new fiscal                                                                     
year. He observed that the title would not prevent the                                                                          
effective date from being changed later.                                                                                        
                                                                                                                                
Representative Grussendorf asked why pioneer home receipts                                                                      
were not included.                                                                                                              
                                                                                                                                
ALISON ELGEE, REVENUE COMMISSINER, DEPARTMENT OF                                                                                
ADMINISTRATION stated that the department supports the                                                                          
inclusion of pioneer home receipts and observed that                                                                            
legislation in the Senate would address pioneer home                                                                            
receipts. She spoke in support of recognizing resident                                                                          
revenues as specific to the pioneer home program.                                                                               
                                                                                                                                
Representative Grussendorf asked why pioneer home receipts                                                                      
and Division of Insurance receipts were excluded from HB
418. Co-Chair Mulder explained that the intent was to keep                                                                      
the legislation narrow in order to hurry its advancement. He                                                                    
stressed that there would be little objection to the two                                                                        
program receipts in the legislation. He observed that others                                                                    
could be added later.                                                                                                           
                                                                                                                                
HB 418 was HEARD and HELD in Committee for further                                                                              
deliberation.                                                                                                                   
HOUSE BILL NO. 98                                                                                                               
                                                                                                                                
"An Act relating to contracts for the provision of                                                                              
state public assistance to certain recipients in the                                                                            
state; providing for regional public assistance plans                                                                           
and programs in the state; relating to grants for                                                                               
Alaska tribal family assistance programs; and providing                                                                         
for an effective date."                                                                                                         
                                                                                                                                
JIM NORDLAND, DIRECTOR, DIVISION OF PUBLIC ASSITANCE,                                                                           
DEPARTMENT OF DEPARTMENT OF HEALTH AND SOCIAL SERVICES spoke                                                                    
in support of HB 98. He observed that one reason for success                                                                    
around the nation, has been that the Federal welfare reform                                                                     
law afforded the states the flexibility to design and run                                                                       
their own programs. With flexibility caseload has been                                                                          
reduced and savings realized. This has happened all across                                                                      
the nation. In exchange for flexibility, the federal                                                                            
government capped the amount of dollars going to the states                                                                     
in the form of a fixed block grant.                                                                                             
                                                                                                                                
In this same vein, the federal  law allows tribes and Alaska                                                                    
Native organizations to run their own programs. The belief                                                                      
is that programs are better run if they are locally                                                                             
controlled and culturally relevant.                                                                                             
                                                                                                                                
The federal law specifically names the 13 regional Native                                                                       
non-profit organizations as eligible to run their own                                                                           
programs. Under current state law (47.27.070), the                                                                              
Department of Health and Social Services has the authority                                                                      
to coordinate with these organizations in the development of                                                                    
their programs.                                                                                                                 
                                                                                                                                
Federal funding for the Alaska Temporary Assistance Program                                                                     
(ATAP) comes in the form of a block grant. To be eligible,                                                                      
states are required to participate in funding state programs                                                                    
through a maintenance of effort. In Alaska, the maintenance                                                                     
of effort is 80 percent of the amount of funding that the                                                                       
state provided in 1994 to the proceeding program: Alaska                                                                        
Families with Dependent Children (AFDC).  However, federal                                                                      
law did not require a match for Native run programs. Without                                                                    
state funding, Native programs would be left to operate with                                                                    
approximately half the funding that the state program                                                                           
receives, which would inevitably mean cuts in services.                                                                         
                                                                                                                                
(TAPE CHANGE, HFC 00-82, SIDE 2)                                                                                                
                                                                                                                                
Mr. Nordland observed that there is a comparability                                                                             
requirement in the federal law regarding the Native program.                                                                    
The federal government is not likely to approve a Native                                                                        
program without state funding because of the failure to meet                                                                    
the comparability requirement. A Native program cannot be a                                                                     
comparable program with half of the funding.                                                                                    
                                                                                                                                
House Bill 98 allows the state of Alaska to fund a Native                                                                       
family assistance program. It is important to note that the                                                                     
funding is already going to Native clients through the state                                                                    
program. A portion of the funds that are already going to                                                                       
Native clients would be transferred to the Native                                                                               
organization. The Native organization would marry the state                                                                     
funds with the federal block grant that would be going to                                                                       
them directly. The bill has a zero fiscal note. Money would                                                                     
be taken out of the Department of Health and Social                                                                             
Services' budget and transferred to the Native organization.                                                                    
The money transferred would be for cash benefits for work                                                                       
services, childcare, and the kinds of things that are needed                                                                    
to operate the ATAP program. The Native organization would                                                                      
be responsible for running the program.                                                                                         
                                                                                                                                
Co-Chair Mulder observed that the same people would be                                                                          
served. A more direct provider (Native organizations) would                                                                     
be providing the services as opposed to the department.                                                                         
                                                                                                                                
Co-Chair Therriault referred to pages 5 and 6. He observed                                                                      
that the department cannot pay benefits above and beyond                                                                        
those paid in the state program. He clarified that the                                                                          
entire population of an area would be served, not just the                                                                      
Native population.                                                                                                              
                                                                                                                                
Mr. Nordland explained that the federal law requires the                                                                        
state to look at what was spent in 1994 and determine how                                                                       
much was spent on Native families in a particular service                                                                       
area. The federal law also requires that once the service                                                                       
area is set aside that the population within the area can                                                                       
fluctuate and that it is up to the Native organization to                                                                       
decide what the service population is.                                                                                          
                                                                                                                                
Co-Chair Therriault asked for assurances that the Native run                                                                    
operations would be allowed to serve everyone in their                                                                          
service area. Mr. Nordland observed that section 2 speaks to                                                                    
regional public assistance programs. This allows the                                                                            
department to subcontract with the Native organization to                                                                       
serve the entire region, including non-natives. "In some                                                                        
cases we will do that, in some cases we won't, depending on                                                                     
the makeup of the region."                                                                                                      
                                                                                                                                
He added that the bill allows funding of a Native run                                                                           
program. The state currently funds the Tanana Chief's                                                                           
Conference (TCC) program. To receive state funds, TCC had to                                                                    
have a program that was substantially the same as the                                                                           
state's ATAP program. Originally, TCC wanted to do things                                                                       
somewhat differently from ATAP. The bill would allow Native                                                                     
run organizations to depart from what is done under ATAP, as                                                                    
long as the program is still comparable to the state's                                                                          
program. At present TCC only serves the Native population.                                                                      
In Fairbanks, the non-natives are still served by the                                                                           
Department of Health and Social Services. In smaller                                                                            
villages it would make sense to contract with TCC to serve                                                                      
non-Native families.                                                                                                            
                                                                                                                                
Co-Chair Therriault acknowledged that the populations are                                                                       
large enough in Fairbanks to run two separate programs, but                                                                     
expressed concern that the state not be in the position of                                                                      
administering to a handful of people when there is a large                                                                      
Native organization serving the Native population. He                                                                           
maintained that it makes more sense to serve the entire                                                                         
regional base. Mr. Nordland estimated that the state would                                                                      
contract in some areas to serve the entire population.                                                                          
                                                                                                                                
Vice Chair Bunde pointed out that 60 percent of rural                                                                           
Alaskans are non-Natives. Mr. Nordland noted that the region                                                                    
that TCC serves is 50/50 Native/non-Native. Half of the                                                                         
families on ATAP in Southeast Alaska are Native. In the                                                                         
Bethel area there are 800 Native and 10 non-Native families                                                                     
being served. He observed that the ratio depends on the area                                                                    
of the state and the definition of rural. Vice Chair Bunde                                                                      
acknowledged that there can be a difference in the makeup of                                                                    
the total population and the population being served.                                                                           
                                                                                                                                
DON SHIRCEL, DIRECTOR, FAMILY SERVICES, TANANA CHIEF'S                                                                          
CONFERENCE spoke in support of the legislation. He read the                                                                     
following prepared statement to the committee:                                                                                  
                                                                                                                                
I have been the Director of TCC's Family Services for                                                                           
the past sixteen-years. I hold a Master of Science                                                                              
degree in Behavioral Disabilities and administer                                                                                
approximately $8 million of the total $55 million                                                                               
dollar TCC annual budget of state and federal health                                                                            
and social service programs.                                                                                                    
                                                                                                                                
As a social service professional and program planner, I                                                                         
strongly support HB 98. In a state, of our unique size,                                                                         
it makes a lot of sense to regionally design and                                                                                
administer temporary assistance programming. HB 98 is                                                                           
consistent with the same rationale from which state and                                                                         
federal Welfare Reform emerged. Programs closest to the                                                                         
people are more responsive, relevant, effective and                                                                             
efficient than large centrally operated "one size fits                                                                          
all" programs planned and administered outside the                                                                              
community.                                                                                                                      
                                                                                                                                
This January we completed our first year of operating                                                                           
of a Regional Native Family Assistance pilot program.                                                                           
While it is still too early to fully access the overall                                                                         
success of the project, some of the preliminary                                                                                 
statistics indicate that we're headed in the right                                                                              
direction.                                                                                                                      
                                                                                                                                
In January of 1999 when the state fully transitioned                                                                            
the program to TCC there were 440 cases. This January,                                                                          
a year later, our monthly caseload was 356 families.                                                                            
Like the state's temporary assistance program our                                                                               
monthly caseload is the lowest it's been in the past                                                                            
three years. Villages in the interior feel we're headed                                                                         
in the right direction. Our preliminary statistics also                                                                         
indicate that more Native families receiving temporary                                                                          
assistance - particularly those who live in rural                                                                               
communities of the interior - are working for the check                                                                         
they receive. Village leaders feel really good about                                                                            
that.                                                                                                                           
                                                                                                                                
Alaska's rural communities through their Regional Non-                                                                          
profit Corporations have been designing programs to                                                                             
better fit the needs of their families. Many have also                                                                          
been developing local and regional infrastructures that                                                                         
now rival the state's capacity to provide a comparable                                                                          
level of local service delivery, especially in rural                                                                            
remote areas.                                                                                                                   
                                                                                                                                
Villages in the TCC service area feel good about our                                                                            
partnership with the state on this pilot project - but                                                                          
they feel that they could do more and get a still                                                                               
bigger bang out of their buck if they were allowed to                                                                           
incorporate other regional variations within the                                                                                
temporary assistance programs administered by the                                                                               
Regional non-profits. HB 98 would allow Native family                                                                           
assistance programs the degree a flexibility needed to                                                                          
do more with the same program dollar.                                                                                           
                                                                                                                                
For example; the state's plan finances One-Stop Centers                                                                         
with a wide range of services to help people to get off                                                                         
of welfare. But the state plan finances such centers                                                                            
only in a handful of Alaska's urban centers.                                                                                    
                                                                                                                                
Over the course of the first six months of the TCC                                                                              
pilot program we developed a community based service                                                                            
delivery infrastructure that included 37 existing                                                                               
community based offices and assigned staff located in                                                                           
one stop centers in each of the communities of the                                                                              
service area created through shared funding from state                                                                          
and federal program funds. These shared staff and                                                                               
facilities were funded through the combined resources                                                                           
of other federal programs to minimize administrative                                                                            
cost and maximize the level of collaboration with other                                                                         
support services needed by families seeking to enter                                                                            
the labor market. These small community based service                                                                           
centers serve as locally accessible, culturally                                                                                 
appropriate single points of entry for families needing                                                                         
assistance and also as the single points of contact for                                                                         
a regional service providers and employers seeking to                                                                           
get information about their services and employment                                                                             
opportunities to potential clients.                                                                                             
                                                                                                                                
The small size of each of these village one stop                                                                                
service centers allows for personal attention,                                                                                  
individualized planning, and services tailored to the                                                                           
needs of each family as well as the accurate, timely                                                                            
and ongoing monitoring of each client's progress. The                                                                           
TCC Regional Native Family Assistance program                                                                                   
incorporates a service delivery infrastructure in which                                                                         
people are working with people.. .not paper! They know                                                                          
each other and regularly interact as members of the                                                                             
same community and work together toward a common goal                                                                           
to move on to work and to be more self-sufficient in                                                                            
providing for the needs of their family.                                                                                        
                                                                                                                                
Under HB 98 the TCC Native family assistance program                                                                            
could impose the following standards not permissible                                                                            
under current state statute. 1) All applicants would be                                                                         
required to undergo alcohol and substance abuse                                                                                 
evaluations and follow the recommendations of their                                                                             
evaluation or lose a percentage of their benefit (for                                                                           
those who comply with the evaluation recommendation                                                                             
within six months -- their benefits would be restored                                                                           
and the percentage of their benefit which was withheld                                                                          
would be returned to them upon successful completion of                                                                         
their treatment). With the enabling legislation of HB
98 we'd not only be able to provide benefits for an                                                                             
indigent family, we'd be more able to assertively                                                                               
approach the problem of alcohol and substance abuse and                                                                         
even create bonus incentives for parents who comply ...                                                                         
all on the same dollar.                                                                                                         
                                                                                                                                
Under HB 98 TCC's Native Family Assistance Program                                                                              
could require all parent's receiving benefits to attend                                                                         
their children's parent teacher conferences and include                                                                         
their children in regular health screenings and                                                                                 
immunizations made available in their community.                                                                                
Failure to do so would result in a small but noticeable                                                                         
reduction in their benefits for that month. With the                                                                            
enabling legislation of HB 98 we'd be able to promote                                                                           
better parenting by encouraging increased involvement                                                                           
in their children's school work and increased vigilance                                                                         
regarding their children's immunization and general                                                                             
health ... and once again we'd be doing it all on the                                                                           
same dollar that we currently receive. Our program                                                                              
cannot impose such sanctions under current state                                                                                
statute.                                                                                                                        
                                                                                                                                
TCC's original Native Family Assistance program plan                                                                            
included a provision to more assertively approach the                                                                           
issue of domestic violence. That plan provided that in                                                                          
two parent households in which domestic violence is a                                                                           
problem -- the perpetrator would be required to leave                                                                           
the home and receive counseling -- by court order if                                                                            
necessary. He/she could receive a portion of the                                                                                
household benefit only if they continued counseling                                                                             
outside the home. Such sanctions and incentives (none                                                                           
of which incur any additional cost to the program) are                                                                          
not possible without the enabling legislation of HB 98.                                                                         
                                                                                                                                
In regards to getting people off of welfare and on to                                                                           
work, there are many different ways to accomplish these                                                                         
goals. There are many good ideas in Alaska. HB 98                                                                               
simply allows these two realities to merge and to do so                                                                         
in each of the diverse regions of the state. "What                                                                              
works in Alabama doesn't necessarily work in Alaska-and                                                                         
the way they do it in Anchorage doesn't always make                                                                             
sense to the people in Angoon. HB 98 is about more                                                                              
local control and getting a bigger bang for the same                                                                            
buck.                                                                                                                           
                                                                                                                                
Villages in the interior continue to support the                                                                                
recommendations of the Alaska Native Commission                                                                                 
especially those related to local control, decreasing                                                                           
dependency, encouraging self-sufficiency and developing                                                                         
jobs and local economies. Our experience to date, we                                                                            
feel indicates that we're headed in the right                                                                                   
direction. We hope you do too. Thank you for your time                                                                          
and this opportunity to testify.                                                                                                
                                                                                                                                
Vice Chair Bunde expressed appreciation of TCC's efforts. He                                                                    
questioned how evaluations of drug and alcohol abuse are                                                                        
carried out. Mr. Shircel observed that TCC has a general                                                                        
screening, similar to the state. He stated that they would                                                                      
like to require that every person that applies for                                                                              
assistance go through an entire evaluation. The evaluations                                                                     
would be done locally. The idea is to put real teeth into                                                                       
what the community desires.                                                                                                     
                                                                                                                                
Vice Chair Bunde found it interesting that some rural areas                                                                     
wish conservative screening.                                                                                                    
                                                                                                                                
In response to a question by Vice Chair Bunde, Mr. Shircel                                                                      
gave a brief overview of his "Behavior Disabilities" degree.                                                                    
                                                                                                                                
In response to a question by Co-Chair Mulder, Mr. Shircel                                                                       
clarified that TCC receives direct federal funding. Half of                                                                     
the funding that TCC has received for their operation has                                                                       
come directly from the federal government; the other half                                                                       
comes through the their two-year agreement with the state of                                                                    
Alaska, which is about to expire. The legislation would not                                                                     
change the percentage coming from the federal government.                                                                       
Direct funding from the federal government comes from the                                                                       
federal amount calculated based on 1994 state expenditures                                                                      
to Native families. All regional non-profits and Metlakatla                                                                     
are eligible to receive direct federal funding. He                                                                              
emphasized that it requires a great deal of planning and is                                                                     
a very complex program. Other regional non-profits have been                                                                    
cautious to assure that any services that they elect to                                                                         
provide directly are done as well as current programs.                                                                          
                                                                                                                                
Co-Chair Therriault pointed out that AS 47.27.070 allows the                                                                    
department to coordinate with Alaska Native organizations as                                                                    
designated under federal law.                                                                                                   
                                                                                                                                
In response to a question by Representative G. Davis, Mr.                                                                       
Nordland noted that TCC is currently the only Native                                                                            
organization that is operating. At least two other                                                                              
organizations are in the planning stage. He acknowledged                                                                        
that there is some level of duplication, to the extent, that                                                                    
there are two administrative entities in some regions.                                                                          
                                                                                                                                
Mr. Nordland emphasized that the program will not                                                                               
necessarily lead to better levels of efficiency. He stressed                                                                    
that the program would be better run at a local level. The                                                                      
program would provide a greater level of local control                                                                          
                                                                                                                                
Representative G. Davis questioned if federal law would                                                                         
prohibit TCC from administering to non-natives. Mr. Nordland                                                                    
responded that federal law would not preclude Native                                                                            
organizations from administering to non-Natives.                                                                                
                                                                                                                                
Co-Chair Mulder MOVED to report CSHB 98 (HES) out of                                                                            
Committee with the accompanying fiscal notes. There being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB 98 (HES) was REPORTED out of Committee with a "do pass"                                                                    
recommendation and with two zero fiscal notes: one by the                                                                       
Department of Health and Social Services, published date                                                                        
3/3/00; and one by the Department of Revenue.                                                                                   
HOUSE BILL NO. 418                                                                                                              
                                                                                                                                
"An Act relating to program receipts collected by the                                                                           
division of insurance and to program receipts collected                                                                         
by the Department of Community and Economic Development                                                                         
for occupational licenses; and providing for an                                                                                 
effective date."                                                                                                                
                                                                                                                                
Co-Chair Therriault observed that discussions with the                                                                          
department clarified that the taxes to the Alaska Seafood                                                                       
Marketing Institute (ASMI) come from two sources. The tax                                                                       
sources need to be identified.                                                                                                  
                                                                                                                                
JOE BALASH, STAFF, REPRESENTATIVE THERRIAULT provided                                                                           
information on HB 418. He explained that the legislative                                                                        
legal staff confirmed that the previous language would only                                                                     
apply to the minimal amount of materials and information                                                                        
brochures sold by ASMI. The taxes did need to be referenced.                                                                    
The legal counsel recommended adding the following language:                                                                    
                                                                                                                                
receipts from the seafood marketing assessment (AS                                                                              
16.51.120), the salmon marketing tax (AS 43.76.110)                                                                             
                                                                                                                                
Co-Chair Therriault MOVED to ADOPT a conceptional amendment                                                                     
to replace the language on line 8, page 1 to specifically                                                                       
reference receipts from the seafood marketing assessment (AS                                                                    
16.51.120), the salmon marketing tax under (AS 43.76.110)                                                                       
and other receipts of the Alaska Seafood Marketing Institute                                                                    
(ASMI). There being NO OBJECTION, it was so ordered.                                                                            
                                                                                                                                
Co-Chair Mulder MOVED to report CSHB 418 (FIN) out of                                                                           
Committee with the accompanying fiscal notes. There being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB 418 (FIN) was REPORTED out of Committee with a "do                                                                         
pass" recommendation and with two fiscal impact notes: one                                                                      
by the Department of Community and Economic Development,                                                                        
Occupational Licensing, published date 3/1/00; and one by                                                                       
the Department of Community and Economic Development, Alaska                                                                    
Seafood Marketing Institute (ASMI).                                                                                             
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting was adjourned at 3:12 p.m.                                                                                          
House Finance Committee 15 3/24/00                                                                                              

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