Legislature(2019 - 2020)ADAMS ROOM 519
01/29/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB205 || HB206 | |
| Fy 21 Department Budget Overview; Mental Health and Trust Authority | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 205 | TELECONFERENCED | |
| += | HB 206 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 29, 2020
1:33 p.m.
1:33:30 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Mike Abbott, Chief Executive Officer, Alaska Mental Health
Trust Authority; Mary Jane Michael, Chair, Board of
Trustees, Alaska Mental Health Trust Authority; Steve
Williams, Chief Operating Officer, Alaska Mental Health
Trust Authority.
PRESENT VIA TELECONFERENCE
None
SUMMARY
HB 205 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 205 was HEARD and HELD in committee for
further consideration.
HB 206 APPROP: MENTAL HEALTH BUDGET
HB 206 was HEARD and HELD in committee for
further consideration.
FY 21 DEPARTMENT BUDGET OVERVIEW; MENTAL HEALTH & TRUST
AUTHORITY
Co-Chair Foster reviewed the agenda for the day.
HOUSE BILL NO. 205
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; making
appropriations under art. IX, sec. 17(c), Constitution
of the State of Alaska, from the constitutional budget
reserve fund; and providing for an effective date."
HOUSE BILL NO. 206
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:34:15 PM
^FY 21 DEPARTMENT BUDGET OVERVIEW; MENTAL HEALTH AND TRUST
AUTHORITY
1:34:20 PM
Co-Chair Foster invited the testifiers to the table to
begin the presentation.
MIKE ABBOTT, CHIEF EXECUTIVE OFFICER, ALASKA MENTAL HEALTH
TRUST AUTHORITY, introduced himself.
MARY JANE MICHAEL, CHAIR, BOARD OF TRUSTEES, ALASKA MENTAL
HEALTH TRUST AUTHORITY, introduced herself. She began the
PowerPoint Presentation: "Alaska Mental Health Trust
Authority Legislative Presentation" by reviewing the other
trustees as listed on slide 2. They included Chris Cooke,
Vice-Chair; Ken McCarty, Secretary; Verne' Boerner, Program
and Planning Committee Chair; Laraine Derr, Finance
Committee Chair; Anita Halterman, Audit and Risk Committee
Chair; and John Sturgeon, Resource Management Committee
Chair. She also noted the most recent appointment of the
governor, Rhonda Boyles from Fairbanks.
1:35:34 PM
Ms. Michael continued to slide 3: "Trust Beneficiaries."
She reported that in the previous fall the Alaska Mental
th
Health Trust Authority (AMHTA) celebrated the 25
anniversary of the landmark settlement that created the
trust. The settlement was a significant moment in Alaska's
history, and over the last 25 years the Trust had increased
its assets and served thousands of beneficiaries who
experienced mental illness, developmental disabilities,
substance abuse disorders, Alzheimer's disease and related
dementia, and traumatic brain injuries. The Trust was the
only organization of its kind in the United States. It was
a state corporation that maintained a unique position in
Alaska government. The Trust's funds, similar to a private
foundation, were self-generated and granted to projects,
partnerships, and programs that promoted long-term
systematic change and improved the lives and circumstances
of the Trust's beneficiaries.
Ms. Michael continued that looking back in history, prior
to statehood, there were little, if any, services in
Alaska. Children and adults with disabilities were sent out
of state to Morningside Hospital in Portland, Oregon, an
institution that provided custodial care at the time. Often
the individuals were never reunited with their families or
communities again. Significant progress had been made in
Alaska since then. The Trust had invested heavily and
successfully in community-based services such as
residential supports, case management, family caregivers,
supported employment, and day programs. All of the services
she mentioned were far less expensive than institutional
care and insured a better quality of life with families and
community.
Ms. Michael maintained that over the years the Trust had
partnered with the state on many transformational projects
by investing staff time and resources. One such partnership
was the closure of Harborview Developmental Center in
Valdez in 1997. It was the state's institution that once
served people with intellectual and developmental
disabilities. Another was, "Bring the Kids Home," an
Alaskan initiative which brought kids with severe emotional
disabilities who had been placed out of state for treatment
back to Alaska. More recently in 2016, the Trust approved a
multi-year $10 million commitment to support the necessary
administrative and consultant services needed to implement
Medicaid reform. The results were impressive. According to
the Department of Health and Social Services (DHSS), the
state saved more than $210 million in less than 4 years by
implementing the reforms.
Ms. Michael reported that currently, the Trust was
committed to improving the psychiatric crisis continuum of
care. The recent challenges at Alaska Psychiatric Institute
(API) highlighted the gaps in community-based crisis
intervention which, if in place, could reduce the need for
in-patient treatment for many beneficiaries. The Trust was
working with DHSS and other community partners to look at
national models that could be replicated in Alaska to
reduce the need for long-term psychiatric care. The topic
would be discussed in greater detail further into the
presentation.
Ms. Michael relayed that the Trust's land office continued
to make significant progress. The results of 10 or more
years of work could be seen on the United States Forest
Service Federal Land Exchange. The Icy Cape and Heavy
Mineral Project continued exploration activities finishing
a sixth field session in the coming summer. The recent
closed-bid sale of the Juneau sub-port property would
generate $20 million for the Trust and its beneficiaries.
Not only did the Trust Land Office generate new revenue to
add to the Trust investment earnings, it had been a
stimulus for local economies and created jobs.
Ms. Michael spoke of the Trust's involvement in its
internal organization. The Trust responded to the audit
findings presented to the legislature in the prior year.
The Trust also increased staff and trustee trainings,
established committee charters and protocols, and
streamlined operations to get more grant funds to
organizations serving beneficiaries sooner. The Trust had a
remarkable group of dedicated a resourceful staff. It also
had a strong leader and a board of trustees she had been
proud to serve. The board and stakeholders realized that
the work of the Trust would continue, as there were new
challenges and future generations of beneficiaries that it
would need to care for. The Trust was dedicated and
prepared to meet the challenges it encountered.
Co-Chair Foster indicated Representative Tilton had joined
the meeting.
1:40:39 PM
Representative LeBon thought he heard Ms. Michael mention a
land sale of $20 million. Ms. Michael responded that she
was referring to the sub-port property that had been
discussed over the years.
Representative LeBon asked if the term of the sale was cash
or whether the Trust provided any financing. He wondered
about the Trust's policies on conducting a sale. Mr. Abbott
replied that the Trust could dispose of property in several
different ways. In the case of the sub-port, the buyer
would acquire the sale by depositing approximately $5
million per quarter for 4 quarters. The Trust expected to
receive the final installment in the third calendar year
quarter of 2020. The acquisition would occur at the
beginning of FY 21. In the meantime, the funds would remain
in an escrow until the transaction closed.
Representative LeBon inquired about the rate of interest.
Mr. Abbott indicated the Trust would receive a small amount
of interest during a 12-month period. Once the funds were
accumulated, they would be deposited along with other
similar receipts into the Mental Health Trust Fund corpus
and managed by the Alaska Permanent Fund Corporation (APFC)
for long-term income generation.
Representative LeBon asked if the Trust financed sales. Mr.
Abbott replied that the Trust sometimes financed sales. He
explained that when the Trust sold a piece of land, it was
not uncommon for the buyer to contract with AMHTA to pay it
off over time essentially financing the sale.
Representative LeBon asked for the Trust's typical rates
and conditions. Mr. Abbott responded that the rate was 3
percent over prime.
Mr. Abbott turned to slide 4 showing the overall financial
position of the Trust. He brought approximately 23 years'
worth of the Trust's invested assets to show the committee.
He pointed out that the trend line on the slide was
positive with the exception of a couple of bad years from
FY 08 to FY 10. The Trust had been very successful in
stewarding its assets. The invested assets were the primary
source of income for the Trust's work. The assets have
accumulated by reinvesting earnings in some instances and
through income generated from the Trust's lands. He
explained that whenever the Trust disposed of an asset, the
assets were required to be invested rather than spent.
Co-Chair Johnston asked if the Trust's real estate equity
was land. Mr. Abbott responded that the equity described on
the slide was the equity in the commercial real estate
investments acquired by the Trust over a 5-year or 6-year
period. The equity amounted to approximately $50 million
which had grown over time as described on the slide. It was
managed differently than either the reserves or the corpus
and was the reason for highlighting it as a separate
investment type on the slide.
1:45:27 PM
Co-Chair Johnston asked who was currently managing the
fund. Mr. Abbott replied that it was being managed by the
Trust Land Office with support from a reputable external
real estate advisor, Harvest International, who the Trust
secured late in the prior year. The company assisted the
Trust in making choices around selling assets, leasing
strategies, and management strategies.
Co-Chair Johnston queried where the other assets were and
how they were being invested.
Ms. Michael responded that there was a portion of invested
assets that were managed by APFC. The Trust's funds were a
co-mingled asset with the Alaska Permanent Fund (PF).
Approximately 1 percent of APFC's funds under management
were actually mental health funds. The Trust's
approximately $500 million being managed by APFC
represented about 1 percent of APFC's $60 billion that they
actively managed. The Trust received the benefit of being
blended with APFC's assets. The investment types that APFC
had access to were broader and potentially more beneficial
than those the Trust would be able to obtain if it stood
alone as a self-managed entity. In addition to access to
different investment types, the Trust received a great deal
on investment expenses. He elaborated that by virtue of
APFC managing $60 billion, the Trust was able to strike
attractive deals with APFC's managers on fees. The Trust
paid a pro-rata share of their earnings. The arrangement
was part of the original settlement struck in 1974 and
definitely benefited the Trust.
Mr. Abbott turned to slide 5 which showed the FY 21
earnings and available funding. He reported that at the end
of FY 19 the Trust had more than $450 million in its corpus
and $125 million in reserves. He noted that a portion of
the reserves were managed by APFC and another portion was
managed by the Department of Revenue. There was also the
real estate equity he described. The Trust had been
operating with a percent of market value (POMV) style
revenue generating mechanism for most of the 25 years of
its existence. The Trust was using a 4.25 percent payout
rate based on a 4-year average (4 prior years) of invested
assets. He pointed to the lower left-hand portion of the
slide reporting that it generated more than $24 million of
the total $33 million of spendable income in FY 21. The
other revenue stream totaled over $3 million and was prior
year funds carried forward. He reported nearly $5 million
of spendable revenue came from the Trust Land Office which
differed from the investable revenue it generated. He also
noted revenue in the form of interest earnings from the
Trust's liquid assets (essentially cash) managed by DOR.
Mr. Abbott highlighted the lower right-hand portion of the
slide. He reported that the Trust expected to spend
$33 million in FY 21 which was an appreciable increase over
its spendable income in prior years and reflected a
pleasant trend line. If the Trust made what it expected,
its spendable income should increase by $1 million to
$2 million per year for the following 5 years. It would be
positively influenced when the Trust deposited the
$20 million from the sub-port sale. As it rolled through
the 4-year averaging mechanism, the $20 million at a 4.25
percent payout would generate $850,000 of spendable income
every year forever as currently managed. He emphasized the
income of such an investment.
1:50:25 PM
Representative LeBon asked for the Trust's definition of
real estate equity. He wondered if it was the value on a
cost-basis at the time of purchase or the current market
value. If it was current market value, he inquired how the
Trust determined market value.
Mr. Abbott explained that it represented the Trust's equity
which equaled market value minus debt. The properties had
approximately $40 million or $45 million of debt against
them. The Trust was in a positive position in terms of debt
versus equity. The Trust determined market value by doing
an appraisal every 3 years. In the second and third year of
the cycle, the Trust obtained a broker's letter. Every year
the Trust was capturing an estimate of value. He clarified
that he was only talking about 7 discreet properties.
Therefore, it was not a significant management challenge to
conduct the evaluations.
Representative Carpenter asked if the earnings were in
perpetuity. Mr. Abbott responded that it was absolutely in
perpetuity. The Trust had set a relatively conservative
payout rate designed to generate substantial spendable
income while leaving funds available for inflation proofing
or for other uses. The Trust was managing its assets as if
it was going to be around forever.
Representative Josephson asked who held the mortgages on
the properties. Mr. Abbott responded that 6 of the
properties were mortgaged separately. He did not know who
the mortgage holders were offhand. However, he could
provide the information. The loans were market-based
through institutional grade financers.
Representative Josephson asked if the Trust was in a better
position to borrow against its holdings when it was
reconstituted in the 80s. Mr. Abbott explained that the 7
properties that had debt were acquired between 2010 and
2015 (or 2016). They were obtained separately and
subsequently mortgaged. The mortgage was only applicable
against the property in question. The 6 properties were
held in limited liability corporations (LLC) wholly owned
by the Trust. Therefore, the mortgages could not penetrate
the LLC. The only property at risk in the debt arrangement
was a single property.
1:54:11 PM
Representative Wool asked if the lands were purchased. He
was unaware of the Trust purchasing its own real estate
similar to APFC.
Mr. Abbott informed the committee that in 2010 trust funds
of about $40 million to $50 million were used to acquire 7
properties over a period of about 5 years. The funds could
have been diverted to APFC and invested. However, shortly
after the market crash the trustees looked for alternatives
to increase Trust income while still maintaining the value
of its invested assets. The properties consisted of 2 in
Alaska, 1 in Washington, 1 in Utah, and 3 in Texas. They
were acquired, mortgaged, and were currently managed by the
Trust. He reported that in the Trust Land Office's
spendable income, approximately $2 million of the
$4.7 million shown on the slide, was the net income of the
7 properties. The properties were generating income for the
Trust to use for beneficiaries every year.
Representative Wool asked if the Trust had moved away from
purchasing real estate and was simply managing its
currently owned properties. Mr. Abbott responded that the
Trust presently had no plans of making any further
investments in real estate. As the Trust acquired assets,
they were sent to APFC for management.
Vice-Chair Ortiz asked if there was an annual review of
whether the Trust was keeping up with the needs of its
beneficiaries.
Mr. Abbott responded that the State of Alaska and the Trust
recently adopted a new iteration of the comprehensive,
integrated mental health plan for the state. The plan was
required by statute but had not been adopted since 2006.
The new plan would guide Trust investment and hopefully
guide state investment as well. One of the elements of the
plan would be measuring the Trust's progress against 9
different goals. In future presentations, the legislature
should expect the Trust to bring the data demonstrating its
progress against the expectations outlined in the plan. He
opined that the legislature should hold the Department of
Health and Social Services to the same expectations.
Representative Carpenter returned to the subject of a 4.25
percent payout. He wondered if the Trust had modeled the
payout at 4.5 percent or 5 percent. He asked if either were
feasible for maintaining the principle into perpetuity. Mr.
Abbott responded that the Trust had not modeled the
percentages in the prior 5 years. He thought the Trust
would be doing an analysis of its reserves within the
following year. The Trust set a target level for its
reserves which had not been revisited in more than 5 years.
A review of the payout rate had not been done in recent
years and would likely be conducted in FY 22.
Representative Carpenter wondered if it was feasible the
last time the payout rate was reviewed. Mr. Abbot responded
that it was designed to grow the Trust's invested assets
and provide funding for beneficiary-related work in the
near-term. He did not believe that the goals would change
during the next review. He noted that in the early years
when the Trust's assets were significantly smaller, the
payout was around 2 percent. The rate ramped up over the
first 7 or 8 years then settled to 4.25 percent. As the
Trust's assets became healthier and more diversified by the
PF, the Trust became less subject to volatility, and the
payout rate increased. He would not be surprised if
advisors showed the Trust a way to increase the payout
rate, at least marginally, while maintaining the Trust's
objectives about long-term health.
2:00:39 PM
Mr. Abbott reviewed the pie chart reflecting the Trust's
spending plan on slide 6. He reported that the FY 21
spending plan, as approved by the trustees, was made up of
3 components that were described in bright colors on the
chart. He brought attention to the 2 administrative
budgets, the Trust Authority Office (housed within the
Department of Revenue) and the Trust Land Office (housed
within the Department of Natural Resources) which could be
found in the upper right-hand portion of the pie chart.
Mr. Abbott moved clockwise on the pie chart to the Mental
Health Trust Authority Authorized Receipts (MHTAAR)
section. He explained that MHTAAR funds were authorized by
the trustees to be used by state agencies. The funds had to
have receipt authority in the form of a legislative
appropriation. Most of the funds were included in the
mental health budget bill and some were in the operating
budget bill. He noted that legislative appropriation for
the administrative budgets was also required by terms of
the Trust's settlement.
Mr. Abbott reported that the authority grants, represented
by the largest pie on the chart, were the grants made to
non-state agencies for programmatic work. The funds were
given to non-profits, tribes, and local governments and
included the Trust's mini grant funds. The funds were
authorized by the trustees and were not appropriated by the
legislature. The spending did not show up on any
legislative budgeting materials. However, he had plenty of
information on the subject and offered to provide it.
Co-Chair Johnston commented that the state was
transitioning in terms of a behavioral health waiver and a
fee for service. She noted the state grants for the mental
health community were reduced in the prior year. She
wondered if Mr. Abbott thought the state could return to
its previous level of services.
Mr. Abbott responded that the Trust was a part of the
arrangement through SB 74 [Legislation passed in 2016
regarding Medicaid reform]. From the Trust's view, new
Medicaid money would go towards behavioral health. However,
it meant state grants would decrease. Since Medicaid money
came from the federal government, general fund (GF) funding
in grants would be reduced. The Trust was aware of the
circumstances. In the previous year, the Trust was
concerned with cutting grants before the Medicaid funding
came in. He was informed by the department that agencies
that lost grant funds have made them up in Medicaid funds.
He encouraged the legislature to speak to the department.
The Trust, because the start of the funding was choppy,
provided "bridge money" to agencies that would otherwise
have been forced to close their doors. The state funding
showed up by August. The Trust tried to help with the
transition away from grants towards Medicaid. There were
certain services Medicaid would not reimburse. He believed
there would continue to be reductions as the waiver and
other Medicaid-funded services came online.
2:07:04 PM
Co-Chair Johnston suggested that the $13 million was in the
budget because the mental health waiver was not completely
implemented. She wondered if the information was taken into
consideration. Mr. Abbott responded that the Trust took it
into consideration. He emphasized that the Trust's
$13 million was not a substitute for the state's behavioral
health grants. The funds went out to hundreds of different
providers and mini-grant awardees for a variety of purposes
around the state. Only a small fraction of the $13 million
was used to bridge the gap of a timing issue rather than a
delivery challenge. The Trust's message to providers was to
get to Medicaid. The Trust provided significant help and
resources to assist providers in training and building up
their technologies to bill Medicaid. The Trust was not
encouraging people to rely extensively on grants for things
that could be funded through Medicaid.
Representative Josephson asked how providers knew to
telephone the Trust. Mr. Abbott reported that the Trust
reached out to providers who were awarded grants but had
not yet received the funds. There were some providers that
did not have the resources to float until the funding
arrived. The Trust applied its funds to those providers.
Representative Josephson asked Mr. Abbott to describe the
appropriate answer to a query about why there were
community matching grants and behavioral grants.
Mr. Abbott indicated he would channel his inner Jeff
Jessie, the long-time CEO of the Trust for 23 years. He
relayed that when the Trust was re-established in 1994, it
was made clear that the Trust neither had sufficient
resources to back-fill the state's responsibility, nor
should it have that responsibility. The constitutional
obligation of the state to ensure the health and welfare of
its citizens was not diminished by the existence of the
Trust. The Trust's money was designed to layer on top of an
appropriate layer of state and federal funding for Trust
beneficiaries and to do more to help improve their lives.
The Trust also employed money in partnership with state and
federal agencies to help state and federal money go
further, of which Medicaid reform was a good example. The
Trust contributed $10 million that would have otherwise
been GF money to Medicaid expansion and reform knowing tens
of thousands of Trust beneficiaries would gain access to
care and improved care. From the Trust's point of view,
Medicaid expansion and reform had been a huge success for
Trust beneficiaries.
2:11:55 PM
Mr. Abbott turned to slide 7: "FY 21 GF/MH
Recommendations." He spoke about the governor being
required to submit an operating budget for the Trust. The
Trust was required to make recommendations to the
administration and the legislature which would support
Trust beneficiaries. He pointed to the GF/MH column which
showed what the Trust recommended. He clarified that the
column really represented GF even though it indicated
GF/MH. The column was titled GF/MH because it was based on
a recommendation of the Trust. He highlighted that the
orange columns, which reflected the governor's proposed
budget for FY 21, did not include all of the trustees'
recommendations for GF contributions. He would not review
all of the related pros and cons, but the Trust would be
working with the finance committees and relative
subcommittees through the budget process. He would
encourage members to consider adding some of the funding
back into the budget. Developing a budget was a multi-stage
process. The trustees developed their recommendations in
September of the prior year, the governor submitted it to
the legislature along with the operating budget in mid-
December, and the legislature took action.
Vice-Chair Ortiz asked how the Trust arrived at its'
recommendations. Mr. Abbott responded that it was difficult
to provide a definitive answer, as it was somewhat of an
art. He opined that it did not represent every dollar the
Trust thought could or should be spent to help
beneficiaries. The Trust was spending some of its own money
in certain areas while encouraging the state to contribute
GF in a complimentary way. The process was more qualitative
than quantitative, and, therefore difficult to describe. He
was happy to discuss the merits of each of the individual
budget items at another time.
2:15:34 PM
Co-Chair Foster mentioned GF money in terms of what the
board was recommending versus what the governor was
proposing. He asked if the governor was recommending
$5.5 million less than what the board was recommending. Mr.
Abbott replied that the difference equaled approximately
$4.5 million. The Trust recommended $5.9 million. Whereas,
the governor's budget recommended $1.5 million.
Co-Chair Johnston asked about the request for matching
funds from the GF. She wondered if a program would end if
matching funds were not provided. Mr. Abbott reported that
the Trust might revisit its contribution to certain
programs if the state did not provide the match that was
anticipated. In certain instances, it might not be worth
doing the program if it was significantly less money. In
some cases, programs started out as state priorities to
which the Trust made smaller contributions. If the state
was not interested in certain programs any longer, it might
not be worth the investment of the Trust. Each of the items
would require a different calculation.
Co-Chair Johnston highlighted the Homeless Assistance
Program. She wondered if the program would be crippled. Mr.
Abbott thought the question should be directed to the
Alaska Housing Finance Corporation (AHFC). He suspected it
would significantly reduce the impact or benefit of the
program. He did not want to speak to its ultimate impact.
Co-Chair Johnston inquired about the Special Needs Housing
Grant. She did not think the project could be cut
altogether. She asked if she was accurate. Mr. Abbott
believed she was correct. He thought that in the case of
the Special Needs Housing Grant there was a reduction in
funding of about $1.75 million. The program could remain in
operation at a reduced funding level.
Co-Chair Johnston asked about the Holistic Defense Project
in Bethel. Mr. Abbott responded that the project could not
operate at the level of $193,000. The state had been a
large contributor. He would not expect the program to
continue the way in which it operated currently without all
or most of the state GF contribution.
Co-Chair Johnston asked about the IT Telehealth Service
System Improvement Project. She queried whether funding
went towards licensing or for something else. Mr. Abbott
would have to follow-up with the committee.
2:19:55 PM
Representative Carpenter what to clarify the vision that
had been discussed on previous slides regarding Medicaid
and authority grants. He thought he heard Mr. Abbott report
that there were particular grants that came out of the
$13 million the Trust had encouraged entities to seek
funding through Medicaid. He asked if he was correct.
Mr. Abbott responded, "Not exactly." He explained that the
funding the Trust provided was not likely to be replaced by
Medicaid funding. The grants that could be replaced by
Medicaid funding were the state GF (behavioral health)
grants. In the previous year the grants totaled about
$50 million. The grants had been shrinking. As Medicaid was
increasing, the grants were supposed to decline in equal
fashion. State GF funds, rather than Trust funds, were
being replaced by Medicaid funds.
Representative Merrick referred to page 7, line item 3. She
noted the MHTAAR request for $300,000 and $1 million in GF.
The governor's budget proposed $1.3 million for MHTAAR. She
asked why the numbers were combined in the governor's
budget.
Mr. Abbott thought Representative Merrick asked a great
question. It was new for the governor to recommend an
increase in the Trust's contribution to a program. Legally,
the administration or the legislature could increase the
Trust's contribution. He explained that MHTAAR were
authorized receipts. If the Trust's money did not show up,
it would not get spent. He would not be surprised if it was
a mistake on the part of the governor. He thought it would
be adjusted in the governor's amended budget or the Trust
would work with the finance committees to make a change.
Presently, the Trust was not planning on contributing more
than $300,000 in the trustees' proposal.
Representative Josephson asked about the Holistic Defense
Project. Mr. Abbott deferred to someone else from AMHTA.
2:23:10 PM
STEVE WILLIAMS, CHIEF OPERATING OFFICER, ALASKA MENTAL
HEALTH TRUST AUTHORITY, explained that the Bethel Wholistic
Defense Project was a joint project in which the Trust had
been working with the Public Defender Agency and Alaska
Legal Services. It was a pilot model from a program in
Brooklyn, NY. Several people had conducted a site visit to
observe the model. The model brought together an
individual's criminal charges, looked into whether the
person had any civil cases or legal issues going on, and
brought them together working in concert to get them
resolved simultaneously.
Co-Chair Foster wondered if the program would continue, as
it had been referred to as a pilot program. Mr. Williams
responded that the program was currently operating. The
funds were in Bethel. The additional funds would help
maintain the Bethel project as well as look at expansion in
either Nome or Kotzebue.
Mr. Abbott continued to slide 8 which discussed the Trust
Land Office. He mentioned it was a separate division within
DNR wholly dedicated to managing the Trust's land assets.
The Trust owned approximately 1 million acres of land that
was part of its original entitlement. The Trust had
disposed of about 30,000 of the acres which led to some of
the receipts seen earlier in the presentation. The slide
showed 1 year (FY 19) of Trust Land revenue activity. The
Trust received revenues from all sorts of resource types.
The ratios between the different asset types changed
radically from year-to-year depending on commodity prices
and other variables. For instance, some years there might
be less revenues from timber but more revenues from
minerals. The slide provided a 1-year snap shot. In FY 19
roughly half of the money was generated in a such a way
that it had to be invested. The other half was generated in
such a way that it was available for spending immediately.
In some years it was balanced differently. In the current
year it was about a 50/50 split in spendable revenue versus
investible revenue.
2:26:32 PM
Vice-Chair Ortiz asked Mr. Abbott to elaborate about a land
exchange in Southeast Alaska between AMHTA and the U.S.
Forest Service.
Mr. Abbott responded that several years prior the
U.S. Congress and the Alaska Legislature specifically
authorized an exchange of lands whereby the Trust would
give up a significant quantity of acreage in Southeast
Alaska generally located near or adjacent to communities
including Ketchikan, Petersburg, Wrangel, Sitka, and
Juneau. In Exchange, the Trust would acquire lands in the
Tongas National Forest. The Trust's interest was in gaining
access to lands less objectionably developed than lands it
owned at the time. For a variety of reasons residents of
Ketchikan did not want to see Dear Mountain harvested. The
purpose of the Trust owning land was to generate revenue.
It was not a multi-use land manager. The Trust was managing
for money for its beneficiaries. The Trust was required to
measure the use of properties for the benefit of its
beneficiaries. As a result of community interests and other
interests, it was determined that the Trust should acquire
lands primarily on Prince of Wales Island and Shelter Cove
near Ketchikan.
Mr. Abbott continued to report that the Trust was towards
the end of the exchange process which had taken
significantly longer than anticipated. The exchange had
been broken into phases. Phase 1 had been completed which
meant that some of the parcels near Ketchikan had reverted
to the U.S. Forest Service, and some of the parcels in the
area of Prince Wales Island had been transferred to the
trust and were actively being harvested. He relayed that
the Trust had a harvesting operation under contract before
the exchange was consummated. It was contingent on the
exchange going through. There was a significant amount of
interest in the timber. The largest timber manufacturer in
Alaska was at risk of losing access to any wood. There were
a number of entities invested in seeing the deal finalized.
Phase 2 was currently under way, and he anticipated its
completion in the middle of the following year. The Trust
remained committed to completing the exchange. He believed
it would net millions of dollars-worth of value which the
Trust would deploy to its beneficiaries.
2:30:19 PM
Mr. Abbott continued to slide 9: "25 Years of Supporting
Beneficiaries." Some of the Trust's signature
accomplishments had been in the areas listed on the slide
including Harborview, Bring the Kids Home, and Medicaid
reform and expansion.
Mr. Abbott turned to slide 10 detailing Medicaid reform and
expansion. The Trust made an initial investment or
commitment of investment of $10 million about 4 years
prior. By the end of FY 20 the $10 million would be fully
expended. The money had given the department the ability to
move forward with several key elements of the reform
process. There were several pieces of Medicaid reform that
impacted Alaskans generally. The ones that had impacted the
Trust's beneficiaries included the development of the
administrative services organization and the 1115 waiver.
They were both underway and moving forward. He believed
Medicaid expansion and reform had been a "big win" for
Trust beneficiaries.
Mr. Abbott advanced to slide 11 and reviewed Medicaid
reform success. One of the state's major objectives was to
expand care without increasing GF expense. He looked at a
graph at the bottom right of the slide. The green line on
the top described the increase in enrollment or Medicaid
users. The growth was primarily associated with Medicaid
expansion. The columns indicated the amount of money that
had been spent. He drew attention to the blue portions. The
GF portions, had not grown significantly. Essentially,
state GF spending had been flat while service to Alaskans
had gone up radically. Many of the Alaskans being served
(either originally served through Medicaid or served
through expansion) were Trust beneficiaries.
Representative Josephson stated that about 10 to 11 months
earlier there had been a number of hearings where the
administration proposed cutting the state contribution to
Medicaid by excluding certain classes of beneficiaries (not
Trust beneficiaries but Medicaid beneficiaries) and making
efforts with the Centers for Medicare and Medicaid Services
(CMS) to exclude them formally. He asked if AMHTA took a
position on the issue.
Mr. Abbott replied in the affirmative. He elaborated that
adult dental was the specific service type that the
administration recommended be removed from base Medicaid.
Over the years, adult dental moved in and out of being a
core service in Medicaid. He reported that about
8 to 10 years earlier AMHTA had provided start-up funding
to ensure adult preventative dental benefits for
beneficiaries. The trust opposed the administration's
efforts to exclude adult dental from Medicaid. He did not
believe the department anticipated any service reductions
as a result of their FY 21 Medicaid funding proposal. There
were several cost savings measures that were intended to be
enacted but not ones that would appreciatively change
service levels. He was not authorized to speak on behalf of
the department but had heard it many times.
2:35:44 PM
Mr. Abbott discussed the gap in services in the psychiatric
crisis continuum of care presented on slide 12. He
indicated the gap in crisis care was seen as a result of
the pressure that had been placed on the Alaska Psychiatric
Institute (API) and had not been addressed. He provided
several examples of the crisis. He spoke of the impacts on
emergency rooms that were becoming boarding facilities for
Alaskans with psychiatric issues requiring care beyond what
they could provide for themselves. The problem existed in
Alaska's jails which were also becoming boarding facilities
for Alaskans with psychiatric requirements. The backs of
police cars were becoming de facto holding areas for
individuals in a wide range of crisis circumstances.
Mr. Abbott continued that the Trust along with department
had been working together to address the needs in the area
of psychiatric crisis to reduce the impact on hospitals,
first responders, and correctional facilities. Maricopa
County in the Phoenix Metro Area in Arizona had a different
approach to crisis care which had been tested and vetted
for more than 10 years. The Trust contracted with the same
entity, RI, that helped Maricopa County deal with the
issue. Representatives from RI met in Anchorage, Mat-Su,
and Fairbanks with dozens of stakeholders across the
continuum of care. Based on their visit, they made
recommendations to the Trust that could be implemented in
Alaska. The Trust had been working closely with the
department who shared the Trust's eagerness. He gave kudos
to Deputy Commissioner Al Wall for elevating the concern
inside state government and by identifying solutions like
the ones in Arizona. He would be proposing that the
trustees add significant funding for crisis care work to
the Trust's FY 21 budget at their next meeting scheduled
for the following morning.
2:39:22 PM
Mr. Abbott reviewed the Crisis Now Model on slide 13. There
were three areas of focus. The first was to implement
regional statewide crisis call centers. The call centers
would be staffed with clinically trained staff available
24/7 to support Alaskans dealing with a variety of crisis
care requirements. The crisis care lines in Arizona were
able to address the needs of the majority of people who
called them without needing any further service. They
helped people address the near-term needs and steered them
to longer-term solutions.
Mr. Abbott continued that if the crisis care lines were not
enough to address an issue for an individual, responders
would have the ability to dispatch another new service type
that did not currently exist in Alaska: mobile crisis
teams. They were typically 2 person teams that were
available 24/7 and worked hand in glove with first
responders providing support and ultimately addressing
crisis care requirements. Crisis care responders would be
deployed to sites such homes, work places, and schools.
Many of the crisis events in Phoenix took place in schools.
The teams went to assisted living facilities or wherever
the need existed. Maricopa County, serving 4 million
people, had 26 different teams which allowed for
significant 24/7 coverage. He thought scaling would be a
challenge for Alaska. In Maricopa County, if a first
responder or a dispatcher identified a need, a crisis team
responded immediately. Typically, the response time was
less than 20 minutes. In almost every case, the first
responder left upon the arrival of the crisis team unless
there was a dire safety concern. In many instances, the
first responder leaving the scene de-escalated the
situation. He relayed that typically the team members
consisted of a clinician and a peer, a person with some
lived experience such as being in recovery from substance
abuse. In most cases, the teams were able to address the
need in place, help stabilize the individual and their
environment, provide the individual with information, and
follow up with outreach.
Mr. Abbott indicated that the third focus of the model was
to provide residential stabilization programs. They were
typically short-term drop-off or receiving facilities where
people in crisis could go. If a mobile crisis team was
unable to help a person, the individual could be taken to a
drop-off facility. No one was turned away, the hallmark of
the program in Arizona. It was a "no wrong door" approach.
Many people that arrived at the facilities were transported
in the backs of police cars. He reported that the typical
hand-off time in Maricopa County was 1.5 minutes. The
police officers pulled up, got the person out of the car,
reported what they knew about them, and released them to
the clinicians at the facility. The residential
stabilization programs had 2 types of facilities including
a 23-hour non-residential care facility and a 72-hour
short-term care facility. The programs had been very
successful. Most of the people at the facilities left on
their own and returned to the continuum of care getting
community-based mental health care. Medicaid would pay for
many of the services. The Crisis Now Model was something
the state needed and the Trust wanted to help support. He
indicated that the program would be implemented in the
urban areas to start. It was recommended that the Trust
make a multimillion-dollar contribution in FY 21 to get the
program off the ground. Presently, the Trust was not asking
the state for GF.
Co-Chair Foster wondered how the program would be
implemented in rural Alaska. He understood that the program
would likely start in the urban centers but hoped an effort
would extend to rural Alaska. Mr. Abbott was optimistic
that at least the call center could be a statewide
operation in the beginning. The Trust was committed to
working with tribal providers in rural Alaska to see how
much of the model could be implemented. It would not likely
have the same level of emergent service delivery that was
more plausible in greater density areas. He reiterated that
the Trust was 100 percent committed to extending the model
to rural Alaska. Co-Chair Foster appreciated the efforts of
the Trust to look outside the box and to try new things.
2:49:28 PM
Vice-Chair Ortiz asked if the Trust had determined any cost
savings for the program. Mr. Abbott responded that Phoenix
experienced a net cost savings. All of the different payers
that paid into their healthcare system had seen neutrality
or savings. He was certain that hospitals, the correctional
system, and first responders in Alaska would see
significant improvement. He could not speak to the
potential savings the Fairbanks Police Department, for
instance, might experience because of officers being able
to focus their time doing more public safety-related
duties. He did not know how entities would deploy their
resources. The Trust was working under the assumption that
it would not cost the state additional monies. The monies
would come primarily through Medicaid. As the Trust did
more planning and more implementation it would have more
information. If the Trust wanted to build out the system
beyond what typical health payers would pay, then
discretionary contributions might have to be made. The
contributions might be community-based.
2:52:58 PM
Co-Chair Johnston appreciated having been to Arizona to
look at the crisis model. She noted that Phoenix had a
managed Medicare system unlike Alaska. She did not want the
problems to side-line the Trust's project. She also noted
that Arizona's Medicaid paid for telehealth in the home.
The Native health service also offered telehealth. She
indicated telehealth for mental health treatment seemed to
be an effective model. Mr. Abbott relayed that the state
was moving to managed care for behavioral health. He
reported that Optimum Health was currently under contract
to provide administrative services. It would feel like
managed care for behavioral health through Medicaid. He
speculated that it would facilitate the movement towards
the new crisis model. Co-Chair Johnston added she did not
want efforts to be premature and delay progress.
Mr. Abbott had a couple more slides on the Crisis Now Model
but thought he had presented enough information. He was
available for questions.
2:56:46 PM
Representative Wool applauded the Trust's behavioral health
efforts towards intervention. He noted the population
difference in Arizona versus Alaska. He had talked with the
Department of Corrections (DOC) about the number of beds
filled with people with mental health issues. There were
far more beds filled in correctional facilities than at
API. The model would lighten the load for DOC and for law
enforcement. He thought if the crisis teams could get
mobile it would be incredibly helpful in urban centers as
well as in rural areas. He also thought telehealth for
behavioral health was already available in Alaska. He noted
that people in custody were not eligible for Medicaid. He
reiterated that he thought Alaska already had telehealth
for behavioral health through Medicaid.
Mr. Abbott confirmed that there was telehealth in Alaska.
Typically, the format was clinic-to-clinic. Representative
Johnston was referring to telehealth being provided in the
home.
Representative Wool noted HIPPA being an issue with
unsecured telephone lines. Mr. Abbott indicated there were
challenges with HIPPA and telehealth. However, it was
likely the challenges would be defeated.
Representative Josephson asked if the Crisis Now Model
could be found in the budget bill. Mr. Abbott indicated
there was nothing to see in the budget, as it was funded
through other means including money from the Trust.
Representative Josephson recalled Mr. Abbott mentioning
that several Trust budgetary items did not have to be
appropriated through the legislative process. He noted that
every penny spent by the university had to be approved by
the legislature. Mr. Abbott commented, "This is better." He
thanked the committee for questions from members.
Co-Chair Foster reviewed the agenda for the following day.
ADJOURNMENT
3:02:02 PM
The meeting was adjourned at 3:02 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Trust 2020 H FIN Final 1.28.20.pdf |
HFIN 1/29/2020 1:30:00 PM |
AMHTA Overview HFIN |
| H FIN Follow Up_AK Mental Health Trust Authority_2.5.20.pdf |
HFIN 1/29/2020 1:30:00 PM |
AMHTA Response to Overview Questions |