Legislature(1995 - 1996)

05/01/1996 02:00 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                           May 1, 1996                                         
                            2:00 P.M.                                          
                                                                               
  TAPE HFC 96-153, Side 1, #000 - end.                                         
  TAPE HFC 96-153, Side 2, #000 - end.                                         
  TAPE HFC 96-154, Side 1, #000 - #593.                                        
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House  Finance Committee                 
  meeting to order at 2:00 p.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Senator  Steve  Rieger; Senator  Lydia  Green;  Kelly Huber,                 
  Staff,  Senator  Halford;  Louise  Charles,  Tanana   Chiefs                 
  Conference; Don  Shircel, Director, Family  Services, Tanana                 
  Chiefs Conference;  Mike Tibbles, Staff, Senator  Green; Jim                 
  Nordlund,   Director,   Division   of   Public   Assistance;                 
  Department of Health  & Social  Services; Jay Livey,  Deputy                 
  Commissioner, Department of Health & Social Services; Curtis                 
  Lomas, Welfare Reform Program, Department of Health & Social                 
  Services.                                                                    
                                                                               
  SUMMARY                                                                      
                                                                               
  SB 89     An Act relating  to the members  of the board  and                 
            staff of the Alaska Permanent Fund Corporation.                    
                                                                               
            HCS CSSB 89  (FIN) a "do pass"  recommendation and                 
            with a  fiscal impact  note by  the Department  of                 
            Revenue, 3/8/96.                                                   
                                                                               
  SB 98     An  Act  making  changes  related  to the  aid  to                 
            families  with  dependent  children  program,  the                 
            Medicaid  program,  the general  relief assistance                 
            program, and the adult public assistance  program;                 
            directing  the  Department  of Health  and  Social                 
            Services to  apply to  the federal  government for                 
                                                                               
                                1                                              
                                                                               
                                                                               
            waivers to implement the  changes where necessary;                 
            relating   to   eligibility  for   permanent  fund                 
            dividends of certain individuals who receive state                 
            assistance, to notice  requirements applicable  to                 
            the  dividend   program;  and  providing   for  an                 
            effective date.                                                    
                                                                               
            SB   98  was   HELD  in   Committee   for  further                 
            consideration.                                                     
  SB 289    An  Act  relating  to  runaway  minors  and  their                 
            families or legal custodians.                                      
                                                                               
            SB 289 was rescheduled to another time.                            
  SB 320    An Act  increasing  the number  of superior  court                 
            judges designated for the Third Judicial  District                 
            to provide  an additional superior  court judge at                 
            Dillingham.                                                        
                                                                               
            SB  320 was reported  out of Committee  with a "do                 
            pass" recommendation and with a fiscal impact note                 
            by the Alaska  Court System,  4/15/96; and with  a                 
            fiscal   impact   note   by  the   Department   of                 
            Administration.                                                    
  SCR 23    Relating to long range financial planning.                         
                                                                               
            SCR 23 was rescheduled to another time.                            
  SENATE BILL NO. 89                                                           
                                                                               
       An Act relating to  the members of the board  and staff                 
       of the Alaska Permanent Fund Corporation.                               
                                                                               
  Co-Chair Hanley provided members  with a proposed  committee                 
  substitute,  Work Draft #9-LS0683\R,  dated 4/30/96 (copy on                 
  file).                                                                       
                                                                               
  SENATOR STEVE  RIEGER, SPONSOR,  compared the  proposed work                 
  draft for SB 89 to the previous version, HCS CSSB  89 (STA).                 
  He noted that  the individuals that could  be selected would                 
  have  competence  and  experience  in  investment  portfolio                 
  management.  The word "wide" was deleted before "experience"                 
  in the  proposed committee  substitute.   The definition  of                 
  cause in Section 4,  Subsection (3) was deleted.   Section 6                 
  of  the  proposed  committee  substitute  was  clarified  by                 
  additional  language:   "The  executive  director and  other                 
  employees  with  investment  responsibilities  serve at  the                 
  pleasure of the board, except that  the board may enter into                 
  employment   contracts  that  do   not  exceed   two  years'                 
  duration."                                                                   
                                                                               
                                2                                              
                                                                               
                                                                               
  Section 6, HCS CSSB 89 (STA), was deleted and a new sentence                 
  was  added:  "Each board member  has a fiduciary duty to the                 
  fund, and each member shall  perform official actions solely                 
  in accordance with that duty."                                               
                                                                               
  Representative  Brown questioned if employees would be hired                 
  by the Board.  Senator Rieger clarified that employees would                 
  serve at the pleasure of the Board.                                          
                                                                               
  Representative  Martin  questioned  the  use  of  "prudent".                 
  Senator  Rieger  clarified  that  "prudent"  is  in  current                 
  statute.    He  explained  the prudent  investor  rule.   He                 
  referred to HB 525.                                                          
                                                                               
  Representative Parnell MOVED to adopt the proposed committee                 
  substitute,  Work Draft #9-LS0683\R,  dated 4/30/96.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative Brown provided members with Amendment 1 (copy                 
  on  file).   She  explained that  Amendment  1 would  delete                 
  Section 4, page  2, lines 8 - 20.  Senator Rieger maintained                 
  that Amendment 1 would "gut" the bill.  He stressed that the                 
  legislation would help assure that staggered terms occur and                 
  put an  end to  the practice  of each  new Governor  placing                 
  their own people on the Board.  He asserted that the  change                 
  of management is detrimental.  Representative Brown WITHDREW                 
  Amendment 1.                                                                 
                                                                               
  Representative Martin MOVED to report  HCS CSSB 89 (FIN) out                 
  of  Committee with individual  recommendations and  with the                 
  accompanying fiscal note.  There being NO OBJECTION, it  was                 
  so ordered.                                                                  
                                                                               
  HCS CSSB  89 (FIN)  a "do  pass" recommendation  and with  a                 
  fiscal impact note by the Department of Revenue, 3/8/96.                     
  SENATE BILL NO. 320                                                          
                                                                               
       An Act increasing  the number of superior  court judges                 
       designated for  the Third Judicial District  to provide                 
       an additional superior court judge at Dillingham.                       
                                                                               
  KELLY HUBER, STAFF, SENATOR HALFORD  testified in support of                 
  SB  320.    She  explained  that  SB 320  would  provide  an                 
  additional  Superior  Court  judge  in  the  Third  Judicial                 
  District with  the intent  that the  position be located  in                 
  Dillingham.  She  noted that the  Department of Law and  the                 
  Alaska Court System support the legislation.                                 
                                                                               
  Representative Parnell spoke in support of the legislation.                  
                                                                               
  Representative  Mulder  MOVED  to  report   SB  320  out  of                 
                                                                               
                                3                                              
                                                                               
                                                                               
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  SB  320  was reported  out  of  Committee with  a  "do pass"                 
  recommendation and with  a fiscal impact note  by the Alaska                 
  Court System, 4/15/96; and with a  fiscal impact note by the                 
  Department of Administration.                                                
  SENATE BILL NO. 98                                                           
                                                                               
       An  Act making changes  related to the  aid to families                 
       with dependent children program,  the Medicaid program,                 
       the general relief  assistance program,  and the  adult                 
       public assistance program;  directing the Department of                 
       Health  and  Social Services  to  apply to  the federal                 
       government for  waivers to implement the  changes where                 
       necessary; relating  to eligibility for  permanent fund                 
       dividends  of  certain  individuals  who receive  state                 
       assistance, to  notice requirements  applicable to  the                 
       dividend program; and providing for an effective date.                  
                                                                               
  LOUISE  CHARLES, TANANA  CHIEFS  CONFERENCE (TCC)  testified                 
  that TCC is opposed to  the provision requiring grandparents                 
  to assume child support payments  for their grandchildren or                 
  great  grandchildren.     She  noted  that  in   many  cases                 
  grandparents  are  on fixed,  limited  or  no  income.   She                 
  maintained  that this requirement would  be a detriment to a                 
  family structure  that allows grandchildren to remain within                 
  a family unit, rather than being placed in foster care.                      
                                                                               
  (Tape Change, HFC 96-153, Side 2)                                            
                                                                               
  DON SHIRCEL,  DIRECTOR, FAMILY  AND  YOUTH SERVICES,  TANANA                 
  CHIEFS   CONFERENCE,   in   response   to  a   question   by                 
  Representative  Martin,  stated  that   individual  villages                 
  within the  Interior  would  have a  preference  as  to  the                 
  administration of programing.                                                
                                                                               
  Representative Brown questioned  if permanent fund  dividend                 
  eligibility would be affected by the legislation.                            
                                                                               
  JIM  NORDLUND,  DIRECTOR,  DIVISION  OF  PUBLIC  ASSISTANCE,                 
  DEPARTMENT  OF  HEALTH  AND  SOCIAL  SERVICES   stated  that                 
  permanent fund  dividend eligibility would not  be affected.                 
  He explained that  the legislation  is divided into  welfare                 
  reform  through waivers  and  comprehensive welfare  reform.                 
  Welfare reform through  waivers would take place  if federal                 
  reforms  are not  initiated.  If  federal welfare  reform is                 
  enacted the legislation would implement  welfare reform in a                 
  comprehensive manner.  Both forms would cut benefits for two                 
  parent  families  for   the  months  of  July,   August  and                 
                                                                               
                                4                                              
                                                                               
                                                                               
  September.                                                                   
                                                                               
  Mr. Nordlund maintained that in a two parent family, where a                 
  parent has the  ability to participate in  summer employment                 
  or subsistence  activities, that a cut in the benefit during                 
  this time is a fair way to look at reducing the program.                     
                                                                               
  MIKE TIBBLES, STAFF,  SENATOR GREEN noted that  the seasonal                 
  benefit reduction  is contained  on page 17,  lines 24  -25.                 
  One or both of the parents could be unemployed.                              
                                                                               
  CURTIS LOMAS,  WELFARE REFORM PROGRAM, DEPARTMENT  OF HEALTH                 
  AND SOCIAL SERVICES  explained that eligibility  is measured                 
  against the principle wage earner's employment.                              
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Lomas  discussed the definition of "family".   He noted that                 
  the child must be living with  someone that they are related                 
  to  in some degree.  Parents do not have to be married.  The                 
  income  of  both  parents are  counted  regardless  of their                 
  marriage status.                                                             
                                                                               
  Representative Brown referred  to the  shelter clause.   Mr.                 
  Lomas explained that families that have low housing expenses                 
  receive a reduction.   Families that do not incur  a minimum                 
  of $240  dollars  a  month  in housing  expenses  would  not                 
  receive this portion of their Aid to Families with Dependent                 
  Children (AFDC) payment.   He  further noted that  currently                 
  AFDC families  with two  parents are  paid $102  dollars per                 
  month more than families with  one parent.  The  legislation                 
  would pay a family with the same amount of children the same                 
  regardless of the number of parents living in the home.                      
                                                                               
  In  response  to  a question  by  Representative  Brown, Mr.                 
  Nordlund  observed  that the  legislation would  establish a                 
  five  year limit for  benefits, on page  14.  He  noted that                 
  Section 7  only takes  effect if  federal welfare reform  is                 
  enacted.                                                                     
                                                                               
  JAY  LIVEY, DEPUTY  COMMISSIONER  DEPARTMENT  OF HEALTH  AND                 
  SOCIAL  SERVICES emphasized that the provisions contained in                 
  the  comprehensive  portion  of  the legislation  have  been                 
  contained in all the  proposed versions of federal  reform.                  
  He noted that the State will have to comply with federal law                 
  to obtain federal money.                                                     
                                                                               
  Representative Brown  questioned the  advantage of  enacting                 
  state reforms before federal reforms are enacted.  Mr. Livey                 
  replied  that  the  Department  gains  planning  time.    He                 
  stressed that federal reform will  completely change the Aid                 
  to Families with Dependent Children Program.                                 
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
  Mr. Nordlund noted that the trigger date is October 1, 1996.                 
  If  federal reforms  are not  implemented by  that date  the                 
  State will implement waivers.                                                
                                                                               
  Representative Brown  asked if  the provisions  of the  bill                 
  apply equally  throughout Alaska.    Mr. Nordlund  responded                 
  that the waiver portion  of the bill does not  apply evenly.                 
  The waiver approach  would implement  pilot projects in  the                 
  State.  The pilot  areas have not been selected.   He stated                 
  that  Anchorage would  be one  of the  sites.  The  State is                 
  required  to  set up  a  pilot  program consisting  of  3,00                 
  families.  Anchorage is the  only community that could  meet                 
  this  requirement.   He noted that  comprehensive provisions                 
  would apply throughout the whole state.                                      
                                                                               
  In  response  to  a question  by  Representative  Brown, Mr.                 
  Nordlund observed that Native  organizations will be allowed                 
  to contract  with the  federal government  for provision  of                 
  services.                                                                    
                                                                               
  Representative  Brown  referred to  the 10  percent hardship                 
  provision.    Mr. Nordlund  stated  that the  Department has                 
  concerns regarding  the application of  the 5 year  limit in                 
  the state of  Alaska.  He  observed that if federal  reforms                 
  are enacted there will be a 20 percent exemption.  He  noted                 
  that the  legislation allows for  a 10 percent  exemption or                 
  the maximum percent allowed under federal law.  He clarified                 
  that the intent is to go to the greater amount.  Mr. Tibbles                 
  noted  that  when the  legislation  was drafted  the federal                 
  level was anticipated  at 10 percent.   He pointed out  that                 
  the language would allow  the State to respond to  the level                 
  enacted in federal legislation.                                              
                                                                               
  Mr. Lomas  estimated that  Native  organizations would  have                 
  greater latitude to reflect the economic conditions in their                 
  areas.                                                                       
                                                                               
  Representative   Kelly   questioned   the    definition   of                 
  "emotional" as contained in  Subsection (c) on page 9.   Mr.                 
  Nordlund  noted that  under existing law  the State  has the                 
  option  to  require teen  parents  to  remain at  home.   He                 
  stressed that the provision ensures that if a teen parent is                 
  required to live in their parents  home, that the Department                 
  can assure  that it  is a  safe living  environment for  the                 
  teen.                                                                        
                                                                               
  Mr.  Livey  noted that  the  teen  would have  to  live with                 
  another adult or  in a  supervised setting if  they did  not                 
  remain at home.   He  stated that the  teen might live  with                 
  another adult relative or neighbor.                                          
                                                                               
  Representative  Brown   referred  to   provisions  for   the                 
                                                                               
                                6                                              
                                                                               
                                                                               
  redetermination of benefits  on page 50.  Mr. Nordlund noted                 
  that  this  language   was  added  in  the   Senate  Finance                 
  Committee.  He noted that if the total amount of state funds                 
  appropriated  for AFDC  or  the Alaska  Temporary Assistance                 
  Program was greater in  FY 99 than appropriated  in FY 97  a                 
  benefit  reduction  would   be  implemented  equal   to  the                 
  percentage  of the increase.   This  is a  default.   If the                 
  Legislature  does  not  take action  to  change  the benefit                 
  structure based on a  needs study that will be  completed by                 
  the Department the default will be implemented.  He stressed                 
  that this  applies to  total state  operating money  and not                 
  capital funds.   He acknowledged  that the legislation  does                 
  not allow  for the reduction  to be diffused in  the case of                 
  high  unemployment.    He  noted  that  the  language  is  a                 
  compromise.  If  the caseload is reduced  the provision will                 
  not be needed.                                                               
                                                                               
  Representative Brown noted that funding for job training and                 
  childcare was reduced  from the  Department's request.   Mr.                 
  Nordlund noted  that  the  comprehensive  approach  requires                 
  funding  for  job  training  and  childcare.    Out  of  the                 
  Department's $6  million dollar request, one million dollars                 
  have  been  appropriated.    He  observed that  without  the                 
  additional $5 million dollars it will be difficult to reduce                 
  the caseload.                                                                
                                                                               
  Representative   Brown   referred  to   the  confidentiality                 
  provisions on page 45.   She asked the why  legislators need                 
  to have special access to confidential AFDC records that are                 
  not available to other  members of the public.   Mr. Tibbles                 
  maintained that legislators are not able to address concerns                 
  of  constituents  without  access to  the  information.   He                 
  emphasized  that this  provision allows  the Legislature  to                 
  assure that the program is working.                                          
                                                                               
  Representative   Therriault   noted   the    difficulty   of                 
  legislators  would  have  tracking   down  this  information                 
  regarding  constituent concerns  without the  use of  staff.                 
  Confidential information  would not be  available to  staff.                 
  He acknowledged the need for double checks.                                  
                                                                               
  Representative  Brown suggested  that the  legislation could                 
  read:  "In response  to investigation of a  particular fraud                 
  report, the Department may disclose information  relating to                 
  the disposition."                                                            
                                                                               
  Representative  Grussendorf questioned  if an  audit by  the                 
  Legislative Budget and  Audit Committee would  consider more                 
  than the flow of  funds.  He didn't think the concerns could                 
  be addressed  by the Ombudsman.   He expressed  concern with                 
  the  wording  of the  provision.    He asked  if  a standing                 
  committee could respond to the concerns.                                     
                                                                               
                                7                                              
                                                                               
                                                                               
  Representative  Therriault  expressed  concern that  without                 
  access  to the  information  legislators  cannot respond  to                 
  specific allegations made to them by constituents.                           
                                                                               
  Representative Grussendorf asked  how the Department handles                 
  allegations of frauds  by legislators  or individuals.   Mr.                 
  Lomas stated that all  reports are given to the  case worker                 
  handling the case.  Mr. Nordlund acknowledged that there has                 
  been a back  log of fraud investigations.   He noted  that 5                 
  additional   fraud  unit   positions   were  added   by  the                 
  Legislature  in FY 96.   He  anticipated that  an additional                 
  position would be added in FY 97.                                            
                                                                               
  Mr. Livey discussed  benefit restructuring.   He noted  that                 
  incentives for AFDC  participants to  work have been  added.                 
  The auto  allowance  has  been  changed to  allow  for  more                 
  reliable transportation.                                                     
                                                                               
  ANGELA  SOLARNO,  NATIONAL  ASSOCIATION  OF  SOCIAL  WORKERS                 
  stated that the legislation allows Alaska to  respond to the                 
  mandate  of  federal  welfare  reform  in a  productive  and                 
  beneficial way.  She spoke in  support of incentives to work                 
  contained in Section 1.    She maintained that provisions in                 
  Section 7,  the comprehensive package,  represents the  best                 
  thinking   of   Alaska   policy   makers,   social   service                 
  professionals,  community members  and the recipients.   She                 
  spoke  in support of Section  23, Delinquent Obligor's.  She                 
  observed that this Section has the potential to generate $16                 
  million dollars in additional AFDC receipts.                                 
                                                                               
  Ms. Solarno  discussed three areas of concern.  She referred                 
  to  page  14,  line 20.    She  stressed  that the  National                 
  Association  of  Social Workers  are  opposed to  a lifetime                 
  limit on public  assistance benefits.   She maintained  that                 
  this  section ignores the facts regarding the use of welfare                 
  in  Alaska.     She  stressed  that  the  majority  of  AFDC                 
  recipients use welfare  in times  of crisis and  transition.                 
  The average  time on the  program is  2 years.   She alleged                 
  that this  provision will result in some  families living in                 
  poverty.  She cited studies that  show that for every dollar                 
  cut from public  assistance the State will  eventually spend                 
  $1.50  to  $1.90  dollars  in  health  care  cost  and  lost                 
  productivity.                                                                
                                                                               
  Ms. Solarno stated  that they are  opposed to the  unlimited                 
  access  by   legislators  to  confidential  records.     She                 
  questioned the purpose  of the provision.   She acknowledged                 
  that fraud exists but emphasized  that additional funds have                 
  been made available for fraud investigation.                                 
                                                                               
  Ms. Solarno referred to Section 54, page 50, Redetermination                 
                                                                               
                                8                                              
                                                                               
                                                                               
  of Benefits.  She summarized that a rateable reduction would                 
  be triggered by  an increase in state  funds appropriated to                 
  the program.  If  caseloads go up, for any  reason including                 
  economic downturns, benefits will go  down.  She recommended                 
  that  language   be  added   to  diffuse   the  trigger   if                 
  unemployment rates rise.                                                     
                                                                               
  Ms. Solarno expressed support for job training and childcare                 
  funding.   She maintained that job training and childcare is                 
  the engine that will move people off welfare.                                
                                                                               
  In response to a question  by Representative Therriault, Ms.                 
  Solarno discussed the  inclusion of the term  "emotional" in                 
  regards to a teen  parent's welfare.  She acknowledged  that                 
  it is a  mental health issue.   She stressed that  emotional                 
  abuse occurs as a very damaging  and dangerous condition for                 
  children.  She spoke in support of retaining the language.                   
                                                                               
  SENATOR  LYDIA  GREEN,  SPONSOR,  spoke  in support  of  the                 
  legislation.  She  noted that the 5 year issue is not in the                 
  waiver portion of the bill.   She noted that the Senate  has                 
  concerns  regarding  the  ability of  Legislators  to access                 
  confidential  records.  She  emphasized that legislators are                 
  held to  a high  standard.   She noted  that the  provisions                 
  contain   guidelines  on   the   use  and   containment   of                 
  confidential  information   which  would   be  accessed   by                 
  legislators.    She  emphasized  that  the  purpose  of  the                 
  legislation  is  to  lower and  increase  the  efficiency of                 
  funding.   She maintained  that case  load will  be reduced.                 
  She observed that the legislation  will be reviewed in  four                 
  years.    She emphasized  that  the  State could  face  a 90                 
  percent match for this  entitlement in 5 to 6  years without                 
  amendment.  She stated that  she anticipates that there will                 
  be extra money in federal welfare  reform block grants.  She                 
  observed that provisions for an  emergency account would put                 
  this money, with a legislative  appropriation, back into the                 
  system.  She stressed that the deferred benefit is the trade                 
  off for the rateable reduction.                                              
                                                                               
  SB 89 was HELD in Committee for further consideration.                       
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 4:05 p.m.                                           
                                                                               
                                                                               
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