Legislature(2023 - 2024)ADAMS 519

03/07/2023 01:30 PM House FINANCE

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Audio Topic
01:35:15 PM Start
01:36:33 PM HB79
01:36:39 PM Overview: Governor's Fy 23 Supplemental Budget
02:26:39 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 79 APPROP: SUPPLEMENTAL TELECONFERENCED
Heard & Held
+ Overview: FY 2023 Governor’s Supplemental by TELECONFERENCED
Neil Steininger, Director, Office of Management
& Budget
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 7, 2023                                                                                            
                         1:35 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:35:15 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Johnson called the  House Finance Committee meeting                                                                    
to order at 1:35 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bryce Edgmon, Co-Chair                                                                                           
Representative Neal Foster, Co-Chair                                                                                            
Representative DeLena Johnson, Co-Chair                                                                                         
Representative Julie Coulombe                                                                                                   
Representative Mike Cronk                                                                                                       
Representative Alyse Galvin                                                                                                     
Representative Sara Hannan                                                                                                      
Representative Andy Josephson                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Will Stapp                                                                                                       
Representative Frank Tomaszewski                                                                                                
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Neil Steininger, Director, Office  of Management and Budget,                                                                    
Office of  the Governor; James Stinson,  Director, Office of                                                                    
Public  Advocacy,  Department  of  Administration;  Samantha                                                                    
Cherot, Public Defender,  Public Defender Agency, Department                                                                    
of  Administration;  Deb  Etheridge, Director,  Division  of                                                                    
Public  Assistance,  Department   of  Health;  Josie  Stern,                                                                    
Assistant Commissioner, Department of Health.                                                                                   
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 79     APPROP: SUPPLEMENTAL                                                                                                  
                                                                                                                                
          HB 79 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
OVERVIEW: GOVERNOR'S FY 23 SUPPLEMENTAL BUDGET                                                                                  
                                                                                                                                
Co-Chair Johnson reviewed the meeting agenda.                                                                                   
                                                                                                                                
HOUSE BILL NO. 79                                                                                                             
                                                                                                                                
     "An    Act    making    supplemental    appropriations,                                                                    
     reappropriations, and other appropriations; amending                                                                       
     appropriations; and providing for an effective date."                                                                      
                                                                                                                                
1:36:33 PM                                                                                                                    
                                                                                                                                
^OVERVIEW: GOVERNOR'S FY 23 SUPPLEMENTAL BUDGET                                                                               
                                                                                                                              
1:36:39 PM                                                                                                                    
                                                                                                                                
NEIL STEININGER, DIRECTOR, OFFICE  OF MANAGEMENT AND BUDGET,                                                                    
OFFICE OF  THE GOVERNOR, provided a  PowerPoint presentation                                                                    
titled  "Office   of  Management  and  Budget:   Fast  Track                                                                    
Supplemental  Budget HB79,"  dated  March 7,  2023 (copy  on                                                                    
file).                                                                                                                          
                                                                                                                                
Co-Chair Johnson noted  she would leave the  meeting at some                                                                    
point and would pass the gavel to Co-Chair Foster.                                                                              
                                                                                                                                
Mr. Steininger  addressed the  fast track  supplemental that                                                                    
included  three  specific  items  with  a  need  for  urgent                                                                    
legislative action. He  explained that the items  were a bit                                                                    
different than regular supplemental  items. He detailed that                                                                    
other  supplemental   items  were  often  related   to  cost                                                                    
overruns that  may present unanticipated  funding challenges                                                                    
throughout the  course of  the fiscal  year. The  fast track                                                                    
supplemental  items required  additional funding  to execute                                                                    
on  additional  operational  costs   in  order  to  meet  an                                                                    
unanticipated    need   going    into   the    future.   The                                                                    
administration  was looking  for expedited  consideration of                                                                    
the items  to ensure the Department  of Administration (DOA)                                                                    
and Department  of Health (DOH) could  fulfill their mission                                                                    
related  to specific  circumstances  that  arose during  the                                                                    
current fiscal year. He noted  the departments would provide                                                                    
additional detail on the needs included in the fast track.                                                                      
                                                                                                                                
Mr. Steininger highlighted that  the fast track supplemental                                                                    
included a  total of  $8.4 million  including close  to $4.7                                                                    
million  in  undesignated  general   funds  (UGF)  and  $3.7                                                                    
million in  federal funds. He  noted that part of  the total                                                                    
was  a  transfer  of  $3 million  from  Medicaid  to  Public                                                                    
Assistance field  services; therefore, the true  increase in                                                                    
operational costs  was closer to  $8 million UGF  and nearly                                                                    
$4 million in  federal funds. He requested to  hear from the                                                                    
departments on the specifics.                                                                                                   
                                                                                                                                
1:39:40 PM                                                                                                                    
                                                                                                                                
JAMES   STINSON,  DIRECTOR,   OFFICE  OF   PUBLIC  ADVOCACY,                                                                    
DEPARTMENT  OF  ADMINISTRATION,  thanked the  committee  for                                                                    
hearing the request by the  Office of Public Advocacy (OPA).                                                                    
He explained that  the funding was needed to  address a dire                                                                    
situation within the agency. He  detailed that OPA caseloads                                                                    
had hit a point where  in-house attrition may occur if there                                                                    
was  not   additional  contract  authority   to  immediately                                                                    
relieve some of the pressure  on the in-house attorneys. The                                                                    
agency  also  faced  other  challenges  independent  of  the                                                                    
caseload  backlog.  He  was  happy  to  provide  details  if                                                                    
members  had  questions.  He  relayed  that  the  additional                                                                    
funding  requested  in  the fast  track  supplemental  would                                                                    
enable  OPA  to  begin  tackling  the  problem  immediately.                                                                    
Without  the funding,  the backlog  would  increase and  the                                                                    
agency would start to lose employees.                                                                                           
                                                                                                                                
Mr. Stinson  understood the Public Defender  Agency (PD) was                                                                    
facing a similar challenge, which  was concerning to OPA. He                                                                    
explained  that  OPA  was  a  downflow  agency;  when  other                                                                    
agencies involved  in the criminal  justice system  were not                                                                    
doing  well,  particularly  the  frontline  Public  Defender                                                                    
Agency, it had a direct  deleterious impact on OPA's ability                                                                    
to  execute its  constitutionally  and statutorily  mandated                                                                    
duties.  He elaborated  that the  situation  put the  agency                                                                    
between "a rock and a  hard place" because there was nowhere                                                                    
for the  cases to  go. The  cases had to  go to  an in-house                                                                    
attorney or  a contractor. The  agency was mandated  to take                                                                    
the cases from the court.                                                                                                       
                                                                                                                                
Representative  Hannan shared  that  she served  on the  DOA                                                                    
subcommittee and supported  the need. She looked  at page 1,                                                                    
line  10 of  the bill  [version A]  and asked  why the  bill                                                                    
would appropriate  money to OPA  in two fiscal years  (FY 23                                                                    
and FY  24). She noted  the bill also included  an increment                                                                    
in two fiscal years for PD on page 2.                                                                                           
                                                                                                                                
Mr.   Steininger   answered   that   the   increments   were                                                                    
supplemental multiyear appropriations. He  turned to slide 3                                                                    
and pointed to a one-time  increment of $750,000 for backlog                                                                    
contractor  support   as  an   example  of   a  supplemental                                                                    
multiyear  appropriation.  He  explained there  a  surge  in                                                                    
activity needed  within OPA and  PD to address  the backlog,                                                                    
which would  not be  completed in  the current  fiscal year.                                                                    
The Office  of Management and  Budget (OMB) had  worked with                                                                    
OPA  and PD  to determine  approximately how  much would  be                                                                    
needed in  FY 23. The  appropriation had been  structured to                                                                    
ensure any  of the  unspent money from  FY 23  was available                                                                    
for use in FY 24.                                                                                                               
                                                                                                                                
Representative Hannan  asked how  it impacted  the agencies'                                                                    
regular  FY  24  budget.  She   asked  if  the  [fast  track                                                                    
supplemental]  increment would  reduce the  agencies' FY  24                                                                    
operating  budget  appropriation. Alternatively,  she  asked                                                                    
whether the supplemental  request was in addition  to the FY                                                                    
24 budget.                                                                                                                      
                                                                                                                                
Mr.  Steininger responded  that the  one-time cost  need and                                                                    
the surge  in support  could be viewed  as a  combination of                                                                    
the  two  appropriations.  The  amount  in  the  fast  track                                                                    
supplemental was the  estimate of what would be  spent in FY                                                                    
23,  but some  of  the  spending may  push  into  FY 24.  He                                                                    
clarified that the fast track  funds were in addition to the                                                                    
FY 24 operating budget funds.                                                                                                   
                                                                                                                                
1:44:43 PM                                                                                                                    
                                                                                                                                
Representative Josephson referenced  Mr. Stinson's statement                                                                    
about  OPA  being a  downflow  agency.  He stated  that  the                                                                    
Department  of Law  (DOL) was  situated  at the  top of  the                                                                    
flow. He highlighted that DOL  was receiving nothing from HB
325 [legislation updating  domestic violence statutes passed                                                                    
in 2022],  which he found  to be astonishing.  He questioned                                                                    
whether OPA  would not need  anything because DOL  would not                                                                    
vigorously prosecute new cases  under HB 325. Alternatively,                                                                    
he  wondered whether  DOL would  prosecute the  cases within                                                                    
its  means.  Yet  OPA   was  anticipating  increased  sexual                                                                    
assault cases and  DOL had communicated it  was not spending                                                                    
any more money. He asked what Mr. Stinson made of that.                                                                         
                                                                                                                                
Mr. Stinson  replied that he  did not  want to speak  out of                                                                    
turn about  DOL and its  strategy for acquiring  funding. He                                                                    
communicated  that his  current situation  was critical.  He                                                                    
stated OPA  was at  a precipice  and the  agency anticipated                                                                    
increased  prosecutions   from  HB   325.  He   agreed  with                                                                    
Representative   Josephson   on    some   of   the   logical                                                                    
inconsistencies. He  posited that  over many  previous years                                                                    
sometimes  there  may  have been  resource  differences  and                                                                    
allocation to  the various agencies. He  suggested that some                                                                    
of what  was impacting OPA may  be tied to a  year where OPA                                                                    
did not receive resources, while  a different agency did. He                                                                    
believed  OMB's  strategy  moving forward  to  approach  the                                                                    
situation holistically  by looking  at the actual  need made                                                                    
sense. He  knew what cases  his attorneys had and  what kind                                                                    
of caseloads they had in  terms of sexual assault cases, and                                                                    
he did not  have the capacity to wait for  the other shoe to                                                                    
drop. Some of  OPA's needs were driven  by ancillary factors                                                                    
such as independent  court action and other  things that may                                                                    
also be stressing the agency.  He relayed that OPA based its                                                                    
fiscal  note off  of projection  from DOL.  He believed  the                                                                    
projection  was  conservative  in  terms  of  what  OPA  was                                                                    
anticipating.                                                                                                                   
                                                                                                                                
1:47:21 PM                                                                                                                    
                                                                                                                                
Representative Josephson  considered the words  "fast track"                                                                    
and thought  the administration  was doing  a good  thing by                                                                    
taking action  immediately. He  asked if  the administration                                                                    
would treat the  bill more like a  supplemental or amendment                                                                    
or if  it was asking  for the  legislation to be  brought to                                                                    
the floor quickly.                                                                                                              
                                                                                                                                
Mr. Steininger  replied that  the administration  was asking                                                                    
for  HB 79  to  be  passed quickly  by  the legislature.  He                                                                    
detailed   that  OMB   took   the  three   items  from   the                                                                    
administration's   existing   supplemental   and   amendment                                                                    
package  and  repackaged  them   into  a  separate  bill  in                                                                    
consideration of  the urgency of  the needs in OPA,  PD, and                                                                    
the Office  of Public Assistance. The  administration wanted                                                                    
the bill  to move forward  cleanly to address the  issues as                                                                    
expeditiously as possible.                                                                                                      
                                                                                                                                
Co-Chair  Johnson   requested  a  report  showing   how  the                                                                    
different funding  had transpired  between the  courts, DOL,                                                                    
and  the OPA  attorneys  to  see if  there  was  a need  for                                                                    
leveling [of  funding] in the  future. She passed  the gavel                                                                    
to Co-Chair Foster.                                                                                                             
                                                                                                                                
1:49:51 PM                                                                                                                    
                                                                                                                                
Representative  Ortiz clarified  he  was  supportive of  the                                                                    
needs  in  the  bill.  He recalled  there  were  fast  track                                                                    
supplementals in the  past that ended up not  being so fast.                                                                    
He  stated the  urgency was  there.  He asked  if there  was                                                                    
anything different about  the way the current  bill had been                                                                    
brought  forward  to  hopefully guarantee  a  more  positive                                                                    
outcome for fast tracking it.                                                                                                   
                                                                                                                                
Mr. Steininger  confirmed that fast track  supplementals had                                                                    
been put  forward in the  past (before his tenure  with OMB)                                                                    
and generally  supplementals passed alongside  the operating                                                                    
and  capital budgets.  The  difference in  the  case of  the                                                                    
current  fast track  was  it  had been  limited  as much  as                                                                    
possible   to  only   three   items   that  presented   true                                                                    
operational  concerns for  state  agencies in  terms of  the                                                                    
impact on the  public, particularly those who  the state had                                                                    
a  higher  moral  obligation to  serve.  The  administration                                                                    
hoped  limiting the  items and  excluding items  requiring a                                                                    
greater policy  discussion would  help facilitate  the speed                                                                    
of the bill and communicate  the urgency of the needs within                                                                    
the agencies.                                                                                                                   
                                                                                                                                
Representative  Ortiz stated  that contracting  for services                                                                    
often  required RFPs  [request for  proposals]. He  asked if                                                                    
the  current situation  was different.  He wondered  whether                                                                    
the  administration would  be able  to contract  out quickly                                                                    
and  get things  moving.  Alternatively, he  asked if  there                                                                    
would be a lag time.                                                                                                            
                                                                                                                                
1:53:01 PM                                                                                                                    
                                                                                                                                
SAMANTHA  CHEROT, PUBLIC  DEFENDER, PUBLIC  DEFENDER AGENCY,                                                                    
DEPARTMENT OF ADMINISTRATION, replied  that PD would be able                                                                    
to  immediately  spend  the funds  on  contracted  cases  to                                                                    
private attorneys. The agency was  currently doing so and in                                                                    
particular to  stave off having  to move to vacate  from new                                                                    
appointments in  Bethel and Nome.  The agency  had exhausted                                                                    
the balance of  funds from its personal services  line to be                                                                    
able  to  contract  the  cases  to  private  attorneys.  She                                                                    
relayed  that the  agency's enabling  statute allowed  it to                                                                    
contract the cases immediately.                                                                                                 
                                                                                                                                
Representative  Coulombe stated  her understanding  that the                                                                    
backlog was  a result of  the COVID-19 pandemic.  She looked                                                                    
at the contractor  rate cap increase [on slide  3] and asked                                                                    
if  it reflected  an anticipation  of more  cases coming  or                                                                    
whether it  was digging the  agency out of the  backlog. Her                                                                    
immediate  concern was  the existing  backlog. She  asked if                                                                    
the funding [in  the bill] would enable the  agencies to get                                                                    
out of the backlog. She asked how long it would take.                                                                           
                                                                                                                                
Mr.  Stinson replied  that the  answer was  both. He  stated                                                                    
that the  HB 325 supplemental  was designed to head  off the                                                                    
anticipated  increase;  however,  in  the  interim  that  in                                                                    
addition to  the increased contractor rate  and cap increase                                                                    
included in  the fast  track would  tackle the  backlog. The                                                                    
agency was  getting additional resources  to get to  the end                                                                    
of  the current  fiscal year.  He relayed  his understanding                                                                    
that the  governor's FY  24 budget  proposal was  the moving                                                                    
forward plan. He stated that  like PD, OPA had a procurement                                                                    
exemption  because the  service was  mandated. He  explained                                                                    
that  OPA   would  have  the  ability   to  instantly  begin                                                                    
contracting. He added that news  of the fast track items had                                                                    
resulted  in  some  increased interest,  especially  amongst                                                                    
former  public defenders,  former OPA  employees, and  other                                                                    
defense agency firms.                                                                                                           
                                                                                                                                
Representative  Coulombe  asked  whether  the  courts  could                                                                    
handle the cases if they  increased quickly. She wondered if                                                                    
there would be a scheduling obstacle with the courts.                                                                           
                                                                                                                                
Mr.  Stinson answered  that when  cases  were contracted  to                                                                    
private counsel,  contractors were better able  to negotiate                                                                    
and perhaps  fully investigate the  cases. He stated  it was                                                                    
an interesting question of whether  or not there were enough                                                                    
judges as  well. He believed  it would depend on  the number                                                                    
of cases  that were pushed  to trial. The current  issue was                                                                    
the backlog. For  example, if a serious felon  was caught in                                                                    
FY 19  or FY  20 that needed  to go to  trial, the  case was                                                                    
going on three  to four years old. The other  issue was that                                                                    
cases continued  to come in.  He explained it  was necessary                                                                    
to contract some of the cases  out in order to get breathing                                                                    
room   for   the   in-house   attorneys.   The   independent                                                                    
contractors  had  less  cases  and  more  options  at  their                                                                    
disposal  and  therefore a  better  ability  to resolve  the                                                                    
cases short  of trial.  He understood  the court  system was                                                                    
trying  to   get  creative   with  things   like  settlement                                                                    
conferences and  other items. There were  differing opinions                                                                    
on how successful  the options were, but  there were options                                                                    
that  existed. He  understood  the point  that  there was  a                                                                    
potential  for a  series of  bottlenecks. He  stated that  a                                                                    
relief valve was needed for some  of the cases. The need for                                                                    
PD was urgent as well.                                                                                                          
                                                                                                                                
1:57:13 PM                                                                                                                    
                                                                                                                                
Ms.  Cherot echoed  the comments  made by  Mr. Stinson.  She                                                                    
emphasized the importance of digging  out of the backlog and                                                                    
providing  relief for  existing overburdened  attorneys. The                                                                    
agency's new attorneys needed time  to gain more experience.                                                                    
She relayed that  the agency was waiting for  its next class                                                                    
of  attorneys to  start. She  detailed that  the next  class                                                                    
would  include third  year law  students  graduating in  the                                                                    
spring and law  clerks would start in  August and September.                                                                    
The money would not instantly  fix or erase the backlog that                                                                    
had accumulated over  years, but it would  help immensely to                                                                    
provide  relief  and stave  off  having  to not  accept  new                                                                    
appointments in  Nome and Bethel and  potentially Palmer and                                                                    
other  areas  of  the  state.  She  stated  it  was  a  dire                                                                    
situation  for  clients   and  overburdened  attorneys.  The                                                                    
agency did not want to see  the backlog increase and did not                                                                    
want to lose more district attorneys.                                                                                           
                                                                                                                                
Co-Chair Edgmon asked  if the $7.8 million total  on slide 3                                                                    
was a  typo. He noted  the subtotals  did not result  in the                                                                    
$7.8 million shown.                                                                                                             
                                                                                                                                
Mr. Steininger confirmed it was a typo.                                                                                         
                                                                                                                                
Mr. Steininger turned  to slide 4 that  covered the Division                                                                    
of  Public   Assistance  under  DOH.  He   deferred  to  the                                                                    
department for detail. The proposed  amount was $3.1 million                                                                    
UGF. The administration was  proposing transferring the $3.1                                                                    
million in  excess Medicaid Services funds  and $3.7 million                                                                    
in federal funds.                                                                                                               
                                                                                                                                
DEB  ETHERIDGE,  DIRECTOR,  DIVISION OF  PUBLIC  ASSISTANCE,                                                                    
DEPARTMENT OF  HEALTH, relayed that  DOH was  experiencing a                                                                    
tremendous   backlog   in   SNAP   [Supplemental   Nutrition                                                                    
Assistance Program]  cases (also known as  food stamps). She                                                                    
explained  that due  to the  backlog individuals  were going                                                                    
without  benefit. She  elaborated  it was  critical to  some                                                                    
areas in Alaska because they  were a "food desert" without a                                                                    
food bank or  access to food. The department  was asking for                                                                    
additional staff  and support to handle  its virtual contact                                                                    
centers  in order  to  pivot  other staff  to  move off  the                                                                    
contact center  and work on  the backlog. She  reported that                                                                    
in addition  to the SNAP  backlog, there had  been cascading                                                                    
effects to other programs.  Additionally, the department was                                                                    
planning  to  unwind  from   the  public  health  emergency,                                                                    
meaning the  department would  be doing  redeterminations on                                                                    
all Medicaid  recipients starting  April 1  for the  next 12                                                                    
months.  The  request in  the  fast  track supplemental  was                                                                    
aimed at addressing the backlog and the upcoming effort.                                                                        
                                                                                                                                
Co-Chair Foster asked how many  staff would be brought on to                                                                    
help with the SNAP backlog.                                                                                                     
                                                                                                                                
Ms.   Etheridge   answered,   "30   individual   eligibility                                                                    
technicians."                                                                                                                   
                                                                                                                                
Representative  Stapp asked  if there  were any  other funds                                                                    
(outside of  Medicaid Services)  within the  department that                                                                    
could be  reallocated to  pay for the  need. He  noted there                                                                    
was a huge vacancy rate  in the Medicaid Services section of                                                                    
the department.                                                                                                                 
                                                                                                                                
2:02:04 PM                                                                                                                    
                                                                                                                                
JOSIE STERN,  ASSISTANT COMMISSIONER, DEPARTMENT  OF HEALTH,                                                                    
answered it was  the only pot of money with  enough funds to                                                                    
support the needs of the Division of Public Assistance.                                                                         
                                                                                                                                
Representative  Stapp relayed  that the  subcommittee talked                                                                    
at  length about  mid-term and  long-term solutions  for the                                                                    
problems  facing  the  Division of  Public  Assistance,  but                                                                    
there  had  not been  significant  time  spent on  immediate                                                                    
relief for  SNAP beneficiaries. He stated  that the governor                                                                    
had spent $1.7  million on food. He highlighted  there was a                                                                    
$6.9 million  reappropriation for  a capital  project, which                                                                    
also came  out of  the same  pot of money.  He asked  if the                                                                    
legislature needed to take  the $6.9 million reappropriation                                                                    
and direct it to an immediate need for SNAP.                                                                                    
                                                                                                                                
Mr. Steininger stated his understanding  of the question. He                                                                    
believed Representative Stapp was  asking whether any of the                                                                    
other excess  money in the Medicaid  Services program should                                                                    
be directed to other needs.                                                                                                     
                                                                                                                                
Representative Stapp agreed.                                                                                                    
                                                                                                                                
Mr. Steininger  answered that  OMB was  confident in  the $3                                                                    
million in excess  money in the Medicaid  program to satisfy                                                                    
the need. He  noted that Medicaid projections  were not hard                                                                    
and  fast. He  detailed that  there was  money spent  out of                                                                    
Medicaid  programs  weekly.   The  structure  Representative                                                                    
Stapp was  referring to for  the IT system for  the Division                                                                    
of  Public Assistance  was structured  to  use whatever  was                                                                    
remaining at  the end of  the year  to buy down  the general                                                                    
fund cost  in FY 24  for the  IT system. He  elaborated that                                                                    
the implementation  of the IT  system was a solution  to the                                                                    
issue; therefore, the appropriation for  the IT system was a                                                                    
critical need  to the  division's work.  He stated  that any                                                                    
redirection of  the funds used  to fulfill the need  for the                                                                    
IT system  would result in  exacerbated problems  within the                                                                    
Division of Public Assistance.                                                                                                  
                                                                                                                                
2:04:55 PM                                                                                                                    
                                                                                                                                
Ms. Etheridge  answered it was a  multipronged approach. The                                                                    
division was  currently focused  on staffing  and additional                                                                    
support   through   contracting.   She  relayed   that   the                                                                    
division's legacy  system was not  prepared to be  as nimble                                                                    
as the  existing AIRES system.  She confirmed that  in order                                                                    
for the  division to be prepared  it had to be  able to move                                                                    
off of the legacy system onto the cloud based portal.                                                                           
                                                                                                                                
Representative  Stapp   asked  for  verification   that  the                                                                    
administration  was confident  the money  was available  for                                                                    
the reappropriation  and a capital  request of  $6.9 million                                                                    
for  an  IT  system;  however, the  administration  was  not                                                                    
confident  the  money  may  not  be  available  for  another                                                                    
purpose.                                                                                                                        
                                                                                                                                
Mr.  Steininger answered,  "Not exactly."  He was  confident                                                                    
the $3  million on slide 4  would be available in  excess in                                                                    
Medicaid  unless there  were massive  increases in  Medicaid                                                                    
reimbursements in the weekly check  writes. The structure of                                                                    
the  appropriation   for  the  IT  project   would  use  the                                                                    
remaining  amount available.  The cost  was estimated  to be                                                                    
$6.9 million  but it could  end up  being $1 million  or $18                                                                    
million. He explained that if  the $6.9 million estimate was                                                                    
applied to an  immediate need, because the  $6.9 million may                                                                    
not  be realized  in  excess in  the  Medicaid program,  the                                                                    
immediate  need  meant to  receive  the  funds would  be  in                                                                    
jeopardy.  He clarified  that the  appropriation for  the IT                                                                    
project was  structured to backfill  with general  funds. He                                                                    
highlighted  that the  IT project  would also  take time  to                                                                    
execute; therefore, any shortfall  could be addressed in the                                                                    
next  legislative  session.  He  stated  that  if  the  $6.9                                                                    
million was used as a  direct grant to communities, it would                                                                    
be necessary to wait until  the true lapse from the Medicaid                                                                    
program was known after August 1  in order to execute on the                                                                    
appropriation.                                                                                                                  
                                                                                                                                
2:07:46 PM                                                                                                                    
                                                                                                                                
Representative Stapp  asked why  a reappropriation  would be                                                                    
included  for a  capital request  if the  administration was                                                                    
not confident the money would  be available. He wondered why                                                                    
the administration would  not just request all  of the money                                                                    
out  of general  funds  rather than  from a  reappropriation                                                                    
that may or may not materialize.                                                                                                
                                                                                                                                
Mr.  Steininger  replied they  were  doing  so in  order  to                                                                    
ensure the amount of money obligated  out of FY 24 funds was                                                                    
as low  as possible. He  highlighted that OMB  had projected                                                                    
an FY  24 deficit of  greater than $400 million  in previous                                                                    
presentations. In order  to achieve the needs  of the state,                                                                    
it was necessary  to use every budgeting  tool possible. One                                                                    
of  the  tools  was  to use  reappropriations  of  estimated                                                                    
values to try to reduce the need for FY 24 revenues.                                                                            
                                                                                                                                
Representative  Josephson wanted  to  ensure providers  were                                                                    
paid and  that payments due  in July  were paid in  July. He                                                                    
asked, "Can we be confident about that?"                                                                                        
                                                                                                                                
Mr.   Steininger  answered   that  the   administration  was                                                                    
confident  the  appropriation  shown  on slide  3  could  be                                                                    
executed  without  creating any  risk  to  providers in  the                                                                    
Medicaid program.                                                                                                               
                                                                                                                                
Representative Josephson  stated that  he was in  support of                                                                    
the proposal if it was  the way the administration wanted to                                                                    
provide  a  partial  cure for  SNAP,  redeterminations,  and                                                                    
freeing up staff to work on the backlog.                                                                                        
                                                                                                                                
Mr.  Steininger explained  that current  revenue projections                                                                    
combined with  the supplemental budget needs  (including the                                                                    
transfer on  slide 4) left a  zero dollar surplus in  FY 23.                                                                    
He stated  it was necessary  to look at all  available tools                                                                    
to meet the state's needs in  FY 23 and FY 24. He elaborated                                                                    
that OMB  had asked agencies  to look within  their existing                                                                    
budgets to determine  whether there was money  that could be                                                                    
moved around to achieve  a supplemental need. The Department                                                                    
of  Health  had  identified  the  excess  Medicaid  Services                                                                    
funding to meet the Division of Public Assistance need.                                                                         
                                                                                                                                
2:11:18 PM                                                                                                                    
                                                                                                                                
Representative Galvin asked for  verification there would be                                                                    
no  unintended consequences  where  people  did not  receive                                                                    
needed  services  if  the  [Medicaid  Services]  funds  were                                                                    
transferred.                                                                                                                    
                                                                                                                                
Mr.  Steininger  replied  that based  on  OMB's  projection,                                                                    
there was more  than enough surplus in  Medicaid Services to                                                                    
cover the  $3 million. The  appropriation made to the  FY 23                                                                    
Medicaid budget assumed there would  only be two quarters of                                                                    
enhanced Federal Medical Assistance  Percentage (FMAP) in FY                                                                    
23.  However,  the state  would  receive  enhanced FMAP  for                                                                    
close to  four quarters,  which resulted in  excess Medicaid                                                                    
funds.                                                                                                                          
                                                                                                                                
2:12:48 PM                                                                                                                    
                                                                                                                                
Representative  Coulombe   referenced  Medicaid  eligibility                                                                    
redeterminations.  She noted  the  department had  discussed                                                                    
the SNAP backlog. She asked if  the funding would be used to                                                                    
hire three new eligibility technicians.                                                                                         
                                                                                                                                
Ms.  Etheridge   responded  that  the  title   was  Medicaid                                                                    
eligibility redeterminations;  however, the  department took                                                                    
a "whole  case" approach. She elaborated  that an individual                                                                    
was  often "multi  program" and  the department  worked "all                                                                    
program," which  applied to the SNAP  program. She clarified                                                                    
that the  department would  hire 30  eligibility technicians                                                                    
to work all programs.                                                                                                           
                                                                                                                                
Representative Coulombe  asked if the proposal  all depended                                                                    
on  hiring   30  new  people   or  retraining   30  existing                                                                    
employees.                                                                                                                      
                                                                                                                                
Ms. Etheridge  replied that it  would involve hiring  30 new                                                                    
employees.  She  added  that a  number  of  individuals  had                                                                    
already  been   hired  and  were  currently   going  through                                                                    
training.                                                                                                                       
                                                                                                                                
Representative  Coulombe asked  how  long it  would take  to                                                                    
hire and train the individuals.                                                                                                 
                                                                                                                                
Ms. Etheridge  responded that expedited training  took eight                                                                    
to ten weeks  with 100 percent follow up  to ensure quality.                                                                    
She  explained there  was  100 percent  case  review for  an                                                                    
additional four weeks.                                                                                                          
                                                                                                                                
Representative  Coulombe surmised  that the  money would  be                                                                    
fast tracked but would not  solve anything for another three                                                                    
months.                                                                                                                         
                                                                                                                                
Ms. Etheridge  answered there were  a number  of individuals                                                                    
in various stages of hire and  training who would be able to                                                                    
work on the SNAP backlog  while the others were training and                                                                    
preparing for  the Medicaid  redeterminations, which  had to                                                                    
start in April.                                                                                                                 
                                                                                                                                
Representative Coulombe  asked for the  existing individuals                                                                    
in the system.                                                                                                                  
                                                                                                                                
Ms.  Etheridge replied  that  there  were approximately  120                                                                    
individuals who  were able  to draw  down work  and approve.                                                                    
She  stated  the department  had  to  use merited  staff  to                                                                    
approve  those.  There  was  another  group  of  individuals                                                                    
handling  the  initial  workflow, which  involved  receiving                                                                    
applications,  electronic  signature,  and  the  filing  and                                                                    
registering of cases in the database.                                                                                           
                                                                                                                                
2:16:15 PM                                                                                                                    
                                                                                                                                
Co-Chair Edgmon  asked about the  funding source  behind the                                                                    
fast track  bill. He  asked for  verification that  it would                                                                    
not require a Constitutional Budget Reserve (CBR) draw.                                                                         
                                                                                                                                
Mr. Steininger agreed that the  bill would not require a CBR                                                                    
draw.                                                                                                                           
                                                                                                                                
Co-Chair Edgmon  asked if  the funding  source would  be the                                                                    
Statutory Budget Reserve (SBR).                                                                                                 
                                                                                                                                
Mr.  Steininger  clarified  the funding  source  was  excess                                                                    
revenue in FY 23. Under  current projected revenue there was                                                                    
roughly $115  million in excess  FY 23 revenue that  had not                                                                    
been  appropriated. The  bill would  use the  unappropriated                                                                    
excess funds.  He explained that  the total  equaled roughly                                                                    
$115  million   when  adding  in  the   governor's  proposed                                                                    
supplemental requests  in the other supplemental  budget. He                                                                    
stated that  the total came  in underneath the  $115 million                                                                    
level  and did  not  require a  three-quarter  vote for  CBR                                                                    
access.                                                                                                                         
                                                                                                                                
Co-Chair  Edgmon  remarked  there   was  still  one  quarter                                                                    
remaining  in the  fiscal  year. He  surmised  that OMB  was                                                                    
projecting  forward for  the remaining  quarter in  order to                                                                    
assume there was a $115 million surplus.                                                                                        
                                                                                                                                
Mr.  Steininger  answered  affirmatively.  The  most  recent                                                                    
public forecasts  were released on December  15 through mid-                                                                    
December [2022]. The spring forecast  from the Department of                                                                    
Revenue  (DOR) would  come  out towards  the  end of  March,                                                                    
which would provide an update  to the amount available in FY                                                                    
23. He  stated that  the the  bill would  not require  a CBR                                                                    
vote  because  it  was  well  under  the  current  projected                                                                    
excess. He  relayed that depending  on the  upcoming revenue                                                                    
estimate  it may  be necessary  to look  for other  tools to                                                                    
handle the other supplemental requests.                                                                                         
                                                                                                                                
Co-Chair Edgmon  had heard  from the  other body  that there                                                                    
may be  some concern about running  out of money by  the end                                                                    
of  the fiscal  year.  He referenced  the  testimony by  Mr.                                                                    
Stinson and Ms. Cherot and got  a sense the situation was at                                                                    
an emergency level. He asked  why the situation had not been                                                                    
brought up much earlier.                                                                                                        
                                                                                                                                
2:19:06 PM                                                                                                                    
                                                                                                                                
Mr. Steininger answered that the  items had been included in                                                                    
the  governor's budget  amendment packages  and supplemental                                                                    
budget at  the normal timeline  of release. He  relayed that                                                                    
as soon  as the administration  found out about the  OPA and                                                                    
PD  emergent issue,  it had  put  forward budget  amendments                                                                    
shortly  after. He  confirmed  the  situations qualified  as                                                                    
emergencies,  which  was  the  reason  the  items  had  been                                                                    
included  in the  fast track  supplemental bill.  He relayed                                                                    
that OMB was keeping an eye  on available revenue for FY 23;                                                                    
however, OMB was encouraging swift  adoption of the specific                                                                    
supplemental items  in the bill, which  were well underneath                                                                    
any  amount  of  change  that   may  occur  in  the  revenue                                                                    
projection. He explained that separating  the items from the                                                                    
other  supplemental funding  needs such  as wildfires  would                                                                    
enable  time for  ample conversation  on those  more regular                                                                    
supplemental items.                                                                                                             
                                                                                                                                
Co-Chair  Edgmon  remarked  that putting  an  appropriations                                                                    
bill on  the floor at  an early  stage in session  opened up                                                                    
and  invited   the  possibility   of  all  types   of  floor                                                                    
amendments. He  advised that  the requests  in the  bill had                                                                    
better be worth  it. He clarified that he was  not trying to                                                                    
imply the  requests were not  worth it. He  highlighted that                                                                    
any member  would have the  ability to offer  any amendment.                                                                    
He found the issue concerning.                                                                                                  
                                                                                                                                
Representative   Josephson   referenced   Mr.   Steininger's                                                                    
statement that  the amount was  well under the  $115 million                                                                    
excess.  He   agreed  that   was  mathematically   true.  He                                                                    
referenced  Mr. Steininger's  statement that  when including                                                                    
the  additional supplemental  requests,  the  total was  not                                                                    
under  the  $115  million. He  referenced  Mr.  Steininger's                                                                    
suggestion  that any  variability  in oil  price should  not                                                                    
matter too  much. He  believed the opposite  to be  true. He                                                                    
was unclear whether FY 23 would  be fully funded. He did not                                                                    
want to  be difficult,  but he wanted  to ensure  the fiscal                                                                    
year was fully funded. He  noted he knew of numerous options                                                                    
to do  so and was  available to help.  He was ready  to vote                                                                    
for the bill but needed clarity.                                                                                                
                                                                                                                                
2:23:18 PM                                                                                                                    
                                                                                                                                
Mr.  Steininger replied  that when  considering  all of  the                                                                    
supplemental  expenditure needs  for  additional items  like                                                                    
wildfires,   the   Department   of  Corrections,   and   the                                                                    
Department of Public Safety, the  state was at a zero dollar                                                                    
surplus/deficit for  FY 23 under current  projected revenue.                                                                    
The items  resulted in  a total general  fund need  of under                                                                    
$4.7 million. He  stated that based on the  current price of                                                                    
oil and  revenue projections, the  bill could be  passed and                                                                    
signed without  a three-quarter vote  to access the  CBR. He                                                                    
stated that when the revenue  forecast updates came from DOR                                                                    
at the end of  the month, there may or may not  need to be a                                                                    
conversation about how  to balance FY 23  with the available                                                                    
revenue  and the  supplemental needs.  He  remarked that  it                                                                    
would be  a broader conversation about  the available tools.                                                                    
He relayed  that waiting to  have a conversation  before the                                                                    
needs in  the bill were  addressed would hamper  the state's                                                                    
ability to service a large  set of fairly needy Alaskans; it                                                                    
was the reason for the bill.                                                                                                    
                                                                                                                                
Mr. Steininger  thanked the committee for  its consideration                                                                    
of the bill.                                                                                                                    
                                                                                                                                
HB  79  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair  Foster reviewed  the  schedule  for the  following                                                                    
day.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:26:39 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:26 p.m.                                                                                          

Document Name Date/Time Subjects
HB 79 OMB Fast Track Supplemental Budget Overview HFIN 23.03.07 .pdf HFIN 3/7/2023 1:30:00 PM
HB 79