Legislature(2017 - 2018)HOUSE FINANCE 519
01/26/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB286 | |
| Fy 19 Budget Overview: Department of Military and Veterans Affairs | |
| Fy 19 Budget Overview: Department of Health and Social Services | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 286 | TELECONFERENCED | |
| += | HB 285 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
January 26, 2018
1:34 p.m.
1:34:11 PM
CALL TO ORDER
Co-Chair Seaton called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
Representative Steve Thompson
ALSO PRESENT
Brigadier General Laurel Hummel, Adjutant General and
Commissioner, Department of Military and Veterans Affairs;
Colonel Robert Doehl, Deputy Commissioner, Department of
Military and Veterans Affairs; Brian P. Duffy, Director,
Administrative Services, Department of Military and
Veterans Affairs; Valerie Davidson, Commissioner,
Department of Health and Social Services; Shawnda O'Brien,
Assistant Commissioner, Finance and Management Services,
Department of Health and Social Services; David Teal,
Director, Legislative Finance Division.
SUMMARY
HB 285 APPROP: MENTAL HEALTH BUDGET
HB 285 was HEARD and HELD in committee for
further consideration.
HB 286 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 286 was HEARD and HELD in committee for
further consideration.
FY 19 BUDGET OVERVIEWS:
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
Co-Chair Seaton reviewed the meeting agenda.
HOUSE BILL NO. 285
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
HOUSE BILL NO. 286
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making supplemental appropriations;
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
1:35:17 PM
^FY 19 BUDGET OVERVIEW: DEPARTMENT OF MILITARY AND VETERANS
AFFAIRS
1:35:19 PM
BRIGADIER GENERAL LAUREL HUMMEL, ADJUTANT GENERAL AND
COMMISSIONER, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS,
introduced herself. She shared that the Department of
Military and Veterans Affairs (DMVA) was headquartered at
the National Guard Readiness Center on Joint Base
Elmendorf-Richardson (JBER).
COLONEL ROBERT DOEHL, DEPUTY COMMISSIONER, DEPARTMENT OF
MILITARY AND VETERANS AFFAIRS, introduced himself.
BRIAN P. DUFFY, DIRECTOR, ADMINISTRATIVE SERVICES,
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS, introduced
himself.
Commissioner Hummel provided a PowerPoint presentation
titled "Department of Military and Veterans Affairs FY2019
Department Overview" dated January 26, 2018 (copy on file).
She reviewed the department's mission on slide 2. The
department provided uniformed members of the Alaska
organized militia, which consisted of the Alaska Air
National Guard, the Alaska Army National Guard, the Alaska
State Defense Force, and the Alaska Naval Militia. The
entities came together to support state mission
requirements. Additionally, the Army and Air Guard had
federal mission requirements for the state. The department
provided homeland security and emergency management
programs and services; a military style education program
for at-risk youth (Alaska Military Youth Academy) - one of
the national guard youth challenge programs around the
country; and services to the state's veteran population.
Commissioner Hummel addressed DMVA's organizational
structure on slide 3. The chart included two additional
organizations that were beyond DMVA's divisions. First was
the United States Property and Fiscal Office, which served
as the chief of the National Guard Bureau's senior
representative to the state, accountable for federal funds
and property in the possession of the National Guard within
Alaska. The office ensured all federal funds were obligated
and expended in conformance with applicable guidelines. She
clarified that the senior representative worked directly
for the chief of the National Guard Bureau. The position
was responsible for ensuring the department was spending
its federal dollars wisely and legally. Second was the
Alaska Aerospace Corporation, which was only
administratively aligned with DMVA.
Commissioner Hummel turned to slide 4 and relayed that the
department accounted for 0.36 percent of the overall state
budget, yet over the past three years the department's team
worked to bring more than 42 times the amount in federal
funding to the state. She continued that the figure had
grown significantly over the past three years despite a
downward turn in general funds. She pointed to the bottom
of slide 5 and detailed that between FY 15 and FY 17 the
department consumed 14 percent less undesignated general
funds (UGF), but garnered 43 percent more federal funding
with that money. The motto was to find and spend the other
guy's money.
1:39:27 PM
Mr. Duffy addressed slide 6 with prepared remarks:
This slide shows the funding history for all fund
sources for the Department, the Alaska Aerospace
Corporation, and the Alaska National Guard Retirement
Benefit appropriations. The DMVA's budget showed a
nominal 4 percent growth over this period. The Alaska
National Guard Retirement Benefit funding is no longer
reflected in DMVA's budget, and we would request
queries on the Alaska Aerospace Corporation be
directed their way.
Mr. Duffy turned to the department's funding by line item
on slide 7:
This slide shows DMVA's funding history by line
item?as you can see, the majority of our funds support
Personal Services costs and the Programs and Services
we execute with nominal funding for travel,
commodities, capital outlays, and those associated
with grants/benefits. This slide also shows the
reductions to Alaska Aerospace receipt authority
reflected in the previous slide.
Mr. Duffy reviewed the department's General Fund funding
history on slide 8:
This slide takes a slightly different look at our GF
historical funding profile and I'll take a minute to
orient you. The blue sections are our normal GF lines,
the red represents funds which historically were a
pass through from DEED to support our Alaska Military
Youth Academy operations?these were incorporated into
our GF line in FY15so blue plus red turns to all blue
in FY15. The green sections represent GF formerly
associated with the Alaska Aerospace Corporation,
again, all removed in FY15. And, the yellow represents
an inflationary adjustment based on the 2017 Consumer
Price Index. So, when you take the sum of blue, red,
and yellow back in FY07 and compare it against our
budget proposal in FY19, what you see is about a 15
percent overall reduction over that 12 year period.
Mr. Duffy highlighted the department's General Fund funding
profile history by appropriation (GF only) on slide 9:
Looking at our GF funding profile history a different
way, what appears to be a significant jump in funding
over time is more easily explainable. That upward
spike in the DMVA appropriation in GF is that transfer
of the former DEED funds we'd previously tracked as
Inter-Agency Receipts. Additionally, you'll see a
moderate increase based on our proposed FY19
increments associated with expansion of the Alaska
State Defense Force, our new Special Assistant
position helping to protect and grow DoD investment in
the State, and support requirements associated with
the gain of the C-17 mission at Joint Base Elmendorf-
Richardson. Additionally, this slide outlines the
Legislature's previous elimination of GF support to
the Alaska Aerospace Corporation.
Mr. Duffy addressed DMVA operating budget requests on slide
10:
Our approach to this year's Operating Budget can best
be binned in three broad categories. Looking first, at
areas where we could further reduce, we recognized
Federal Receipt Authority in our Army National Guard
Facilities Maintenance component exceeded need over
the past few fiscal years; as such, we reduced that
amount by $1 million this budget year to better match
historical actuals. There is no program change in this
area, simply adjusting the books to better align with
historical spend.
1:42:15 PM
Mr. Duffy discussed the commitment to divest from Alaska
Army National Guard Former Scout Armories (AKARNG) on slide
11:
Additionally, and in concert with key external
stakeholders such as the National Guard Bureau and the
Alaska District of the US Army Corps of Engineers,
we've undertaken an aggressive plan to divest more
than 60 AK Army National Guard Former Scout Armories.
The termination of the recruiting Federal Scout
Waiver, elimination of the 207th Infantry Group
(Scout), and other factors challenged the AK Army
National Guard's ability to recruit in many rural
locations once operational. Additionally,
participation in the Army National Guard in these
areas diminished to the point where many Former Scout
Armories (sometimes referred to as village Readiness
Centers) no longer fulfill a Federal requirement.
Initial estimates on annual savings is $20K per
property, per year (utilities, maintenance, land fees,
etc.)...with 8 locations already complete, a dozen or
so currently underway, and the remainder projected for
execution over the next four years. It's important to
note the benefactors noted in the "Completed" section
of this slide aren't necessarily representative of
what the final disposition will be for those remaining
to be divested. Each facility has its own attributes
and ownership details...some Federally-owned, some
State, some Municipal, some Tribal, some privately-
owned, etc. Similarly, the land they sit on has this
same type of ownership categories. As such, each will
follow its own path, depending on the relevant
statutes and regulations.
Finally, we retain responsibility to ensure facilities
and properties are free of environmental hazard,
another key element to the sequence in which these
properties can be actioned.
1:43:56 PM
Co-Chair Foster remarked that Nome was not included on the
list (on slide 11).
Mr. Duffy responded that Nome should be included in the
"retain" category on the slide. He relayed the department
would fix the error.
Mr. Duffy continued to slide 12, which showed photo
examples of AKARNG former scout armories:
This slide shows the typical interior of these
facilities, most of which have been vacant for several
years with varying degrees of utility connections
remaining in place.
Mr. Duffy turned to slide 13 and addressed FY 19 operating
budget requests with prepared remarks:
Coming back to our next reduction area, effective
October 1, 2017 the amount of the State Administrative
Agency Grant with the US Federal Government was
increased to cover 100% of our Veterans' Services
Program Manager II's salary and benefits (approx.
$130.5K), as well as other non-personal services
costs...given the opportunity, our intent would be to
re-roll those General Funds to bring on additional
contracted staff to provide services to our
continuously growing Veteran population, now exceeding
70,000.
Finally, with great focus on recruitment and hiring
actions, and proactive management steps, we're
reducing overtime expenditures in our Alaska Military
Youth Academy...a program which continues to exceed
expectations, having graduated the highest number of
cadets in the program's history this past August.
Maintain: With respect to the four major mission areas
I described earlier, baseline funding is generally
maintained at current levels; however, we are taking
action to do some cleanup work this cycle by standing
down our National Guard Military Headquarters
component and moving it under the Office of the
Commissioner. This component only held two positions,
that of our two Assistant Adjutants General for Air
and Army, with nothing else?combining them under the
Office of the Commissioner simplifies our budget lines
and makes good mission sense.
1:45:47 PM
Vice-Chair Gara referenced the department's goal to
minimize unnecessary overtime expenditures pertaining to
the Alaska Military Youth Academy (AMYA). He asked if there
was capacity in the AMYA program to take in additional
students.
Commissioner Hummel answered that the program was at
capacity for the staffing funding levels. She elaborated
the program had a successful recruitment plan and there
were often more applicants than the program could take. She
explained the program would need to hire more staff or
there would be expensive overtime for team leaders.
Vice-Chair Gara asked if it would be beneficial to troubled
youth if the academy had additional staff needed to
increase the program's capacity.
Commissioner Hummel replied that the department absolutely
believed it would be beneficial to Alaska. She elaborated
that the benefit of National Guard youth challenge programs
throughout the U.S. had been well recorded by Rand
Corporation studies that every dollar invested in a
National Guard youth challenge program saved $2.66 of
societal costs. Alaska's youth challenge program was
consistently regarded as one of the top five in the country
- arguably number one or two every year. The academy had a
proactive pre-apprenticeship program that Mr. Doehl would
provide detail on later in the meeting. The department
believed in the program and she believed the statistics on
the program's success spoke for themselves.
Mr. Doehl shared that the director of AMYA, Bob Roses would
be in Juneau later in the week and would be available to
address detailed questions about the academy. The
department had leveraged U.S. Department of Labor funds to
collaborate on more logical career track for academy
graduates. He discussed FY 19 operating budget requests on
slide 13 that included three categories: reduce, maintain,
and grow. He explained the department prided itself on
being a compliance based organization. He shared that the
department had been asked by some committee members why it
had not approached the Legislative Budget and Audit
Committee previously - DMVA had looked at AS 37.07.080, AS
37.05.146 and the Alaska Legislative Budget Handbook dated
October 2016 and it had missed the requirement to do so.
The department would revise its processes in order to be
better equipped to meet the committee's expectations. When
DMVA had looked at the materials it believed were relevant
it had not spotted the requirement.
1:50:00 PM
Mr. Doehl addressed slide 13 and read from prepared
remarks:
First, following direction in the 2016 National
Defense Authorization Act passed by Congress and in
response to the retirement of legacy C-130 tactical
airlift aircraft assigned to the Alaska Air National
Guard, earlier this year, the US Air Force transferred
8 C-17 strategic airlift aircraft from the active duty
component to the Alaska Air National Guard. This
action not only preserves strategic airlift capability
supporting Pacific Command, but restores and improves
similar capabilities for the State to support relief
operations during disasters, search and rescue
missions, and other civil support needs. While the
aircraft and their maintenance requirements remain
fully Federally-funded, we gained operations and
maintenance responsibility for three facilities on
Joint Base Elmendorf-Richardson, totaling more than
480,000 square feet (a large aircraft hangar and two
additional support facilities). This new requirement
brought on 5 new facilities maintenance positions
which are 75 percent supported by Federal funds.
Additionally, this action preserves the existing 250-
person airlift squadron, which is part of the 176th
Wing, continues support to jump training for &
readiness of the 4th Infantry Brigade Combat Team,
25th Infantry Division at JBER, and keeps the Rapid
Reaction Force capability at Fort Wainwright ready and
relevant by having airlift in close proximity to react
quickly when crises emerge.
On the timing of this request, when considering
mission changes, such as this, or new mission beddowns
such as the F-35 deployment into Eielson AFB, the Air
Force uses a process called a Site Activation Task
Force, or SATAF, to assess all the elements necessary
to make the mission successful...these include
manpower, facilities, and other support requirements.
For this action, the SATAF's results, outlining the
transfer of the 3 facilities to the AK Air National
Guard and the need for an additional 5 Labor, Trade, &
Craft positions to operate and maintain them, wasn't
finalized until this past summer.
Additionally, to promote further engagement in and
provide opportunity to rural Alaska, we again propose
further expansion of the Alaska State Defense Force to
include a new 80-person headquarters element in Bethel
and three 70-person scout elements elsewhere in the
State. This $210,000 increment provides funding for
initial equipment and supplies for this new
organization.
During the hurricanes in the Southeastern United
States this past fall, the value of state guards was
invaluable. The State of Texas is calling for doubling
their Texas state guard from 2,500 to 5,000 based on
the success there. In fact, our own Alaska state
defense force ended up deploying to assist with
communications capabilities in Puerto Rico after the
disaster.
Mr. Doehl noted that the Alaska state defense force would
be paid in full by the Federal Emergency Management Agency
(FEMA) for its work in Puerto Rico.
1:52:49 PM
Mr. Doehl continued with prepared remarks:
Furthermore, following early last summer, as the
previous session drew to a close, and after attending
an Association of Defense Communities symposium in
Washington DC while the proposed Base Realignment and
Closure language for the 2018 National Defense
Authorization Act was being written, it became evident
to us Alaska's posture to protect and potentially
growing DoD investment in the State was passive and
reactive at best. With all due respect, we'd posit
the US military presence in AK has been taken for
granted. For many decades, AK coasted on a formula
based on three things: WWII and Cold War
infrastructure, Senator Stevens, and geostrategic
location. WWII was 70 years ago, Cold War ended nearly
20 years ago, Senator Stevens tragically passed away 8
years ago, and yet our geostrategic location remains.
Recent attempted force reductions of the 4-25 at JBER
and F-16s at Eielson are signs we need to step up our
game. Additionally, to increase the responsiveness and
lethality of the Force, the recently released 2018
National Defense Strategy states, "The Department will
also work to reduce excess property and
infrastructure, providing Congress with options for a
Base Realignment and Closure."
Other states are ramping up the competition, too. 35
other states currently have military affairs offices
concerned with force structure and military base
issues, with more than half of these having been
created since 2011. Half of all states report they
retain a private lobbyist in Washington, DC to lobby
on these issues. According to Association of Defense
Communities survey, the average amount spent was
$300,000 annually.
According to same survey, 75 percent of states report
they take advantage of DoD Office of Economic
Adjustment grants...the State of AK has never applied
for these funds. While a priority of Commissioner
Hummel's and our department, DMVA has lacked the
bandwidth and new position is in the process of
coordinating a 2018 grant application for supply chain
study.
Mr. Doehl elaborated that the average state had two to six
full-time employees of the two-thirds of states with
individuals dedicated to military force structure. The
department was asking for one position.
1:55:14 PM
Mr. Doehl returned to reading from prepared remarks:
Many states bond for infrastructure projects to assist
bases. Some award $ directly. For one brief example,
the State of TX created $30 million grant program in
2017 to match community dollars on base related
infrastructure projects projects that typically
lower utility costs. Not that we're recommending this,
but a TX legislator passed subsequent legislation to
make their process immune from Freedom of Information
Act (FOIA) requests so the "competition" couldn't
request materials on their work.
Mr. Doehl added that military facility zones were a good
step forward, but DMVA believed more was needed. He
continued with prepared remarks:
Additionally, it's also time of new opportunity: after
a decade or more of bi-partisan focus through two
administrations, the Pentagon and Congress are
beginning to wake up to threats from a changing
Arctic. One outcome is a down payment on one polar
class ice breaker. However needed, that's not likely
to be home-ported in AK.
North Korea's bellicose stance and work of Senator
Sullivan led to investments in GMD (ground based
missile defense) at Ft. Greely.
So, this is a time of opportunity, wherein, we need to
seize the day in a smart and cost effective yet still
aggressive way. As state legislators understand, two
things are critical to functioning of government and
legislative bodies in particular: personal
relationships and being in the right place when things
start to move. Having staff in DC, in particular,
helps on both accounts.
In past two weeks alone, special assistant has met
with: Association of Defense Communities, National
Guard Association, DoD National Guard Bureau, USCG
Senior Arctic Policy Advisor, NOAA Senior Arctic
Policy Advisor, National Governor's Association staff,
and colleague with similar responsibilities for State
of California. This is, of course, in addition to
meeting Congressional Delegation Staff and others.
In summary on this topic, whereas most States have 2-6
full time personnel on board to perform this important
mission, Alaska had none...as such, on 1 Dec 17, we
brought on an additional Special Assistant position,
stationed in the Governor's office in Washington DC,
to save on per diem and travel, to take on this task.
Mr. Doehl addressed the last two bullet points on slide 13
showing two position requests. He elaborated with prepared
remarks:
Finally, continuing efforts to leverage other fund
sources, we found opportunity to bring on two
additional, 100 percent Federally-reimbursed positions
to carry on critical tasks in the Department. First,
an Emergency Management Specialist in our Army
National Guard component will assist with support
planning & preparedness actions and further synergize
efforts between our State Emergency Operations Center
and our National Guard Joint Operations Center.
Additionally, an Airport Leasing Specialist (really a
Real Property specialist) will take on the task of
tracking and maintaining our inventory of facilities
and infrastructure supporting our Army National Guard,
an effort previously done by a military member;
however, that position was recently deleted by the
National Guard Bureau.
1:58:20 PM
Commissioner Hummel excused herself to attend a training.
Co-Chair Seaton noted that the presentation would need to
end at 2:10 p.m.
Representative Guttenberg asked if DMVA had started a
tsunami preparedness review given the state alert earlier
in the week.
Mr. Doehl answered in the affirmative. He detailed the
department had conducted a thorough after action review. He
explained that the department had federal partners. He
elaborated the coming week the department's director of
Homeland Security and Emergency Management would meet with
his federal counterparts to do a synergized look at the
federal sensors that fed the warning and the state
response. The group would look at what worked, what the
state wanted to improve, and what actions the state needed
to take to better serve Alaskans in the future.
Representative Guttenberg asked about the status of the
veteran cemetery in Fairbanks.
Mr. Doehl answered that he was not certain. He elaborated
that in the past hour Governor Bill Walker had met with the
mayors of Fairbanks (the borough and city) to discuss two
proposed parcels and obtain community feedback, with the
goal of finalizing a plan and developing a contract to
proceed.
2:00:50 PM
Co-Chair Foster spoke to the expansion of the Alaska state
defense force for rural engagement. He referenced the
department's testimony that all but one of 80 positions in
Bethel would be part-time. He wondered whether the average
person would be putting in four hours a week, four hours a
month, or other.
Mr. Doehl answered the typical Alaska state defense member
(including detachments recently opened in Kwethluk and
Quinhagak and a site about to open in Kotzebue) worked one
weekend - typically two 8-hour days done at their own
expense on their own time.
Co-Chair Foster referenced DMVA testimony that the cost
would be $210,000. He asked if the figure was made up of
state funding only or included federal funds.
Mr. Doehl replied it was both - there was currently no
federal funding commitment. The department had made
proposals to address how it met federal Department of
Homeland Security needs. There were some 501(c)(3) funds
donated to the effort from organizations and individuals.
2:02:18 PM
Mr. Duffy returned to the presentation beginning with slide
14. He referenced their earlier testimony on FY 18
supplementals for the C-17 mission gain and a new special
assistant position. Additionally, the department was
finalizing a proposal for an increase to the state's
Disaster Relief Fund, which he would discuss later.
Mr. Duffy turned to slide 15 and read from prepared
remarks.
Our Capital requests consists of Federal Authority
only, allowing opportunity to continue use of grants
received to support our Homeland Security mission
across the State. Specifically, our State Homeland
Security Program (SHSP) and Pre-Disaster Mitigation
(PDM) Grant Program increase mitigation, preparedness,
response, and recovery capability for local and State
government. Our requested authority factors in older
appropriations. As the grants come in, they are
drawing down on the older appropriations. Because of
this, the amount the Department request year-to-year
will fluctuate based on the amount already available
in existing appropriations.
Additionally, our Capital Budget request includes
receipt authority associated with the National Guard
Counterdrug Support Program (CDSP) which supports law
enforcement agencies in drug enforcement operations,
assists in training Law Enforcement Officers, and
provides community-based drug awareness programs. Our
team currently provides intelligence support to this
effort and would share in the proceeds from assets
seized and sold under the U.S. Department of Justice
Asset Forfeiture Program, designed to deter crime by
depriving criminals of profits and proceeds from their
illegal activities.
Finally, while we have no specific deferred
maintenance requirements in this budget, we'll look to
compete with other State agencies in this area,
pending passage of the Alaska Economic Recovery Plan.
Mr. Duffy addressed the department's manpower levels from
2008 to 2018 on slide 16. He explained that when history
was combined with actions taken in the DMVA budget
submission, there was a net reduction of almost 20 percent
and a reduction of 63 positions over the past six years.
The proposed FY 19 budget showed a net growth of seven
positions - two were 100 percent federally funded, five
were 75 percent federally funded/25 percent state funded,
one was 100 percent GF funded. He noted that one non-
permanent position had been taken off the books because
DMVA could not get into agreement with the local bargaining
unit.
Representative Wilson asked about the reason for the
removal of 16 positions from the academy in FY 17. She
wondered if there had been a drop in enrollment or other.
Mr. Doehl answered that there had been two reasons. First,
the department found there were positions DMVA lacked
funding for. Second, cutbacks had to be made in some area
and DMVA had discovered that improved scheduling and
efficiencies allowed the work to be done at the same level
of service with fewer people. Additionally, there had been
vacant positions that had not been filled for years - the
empty PCNs [position control numbers] had been removed for
more transparency.
Representative Wilson requested the information. She knew
there were federal funds normally tied to AMYA depending on
what had been done in the state. She considered whether
something could be done to enable more Alaskans to take
advantage of the academy. She reasoned that it was an
entirely different issue if DMVA could not fill the
positions.
2:06:14 PM
Mr. Duffy moved to slide 17 and read from prepared remarks:
With our programs currently operating at the minimum
levels to avoid mission failure, recruitment and
retention is a key focus area. While we've generally
been successful in filling vacant positions timely, we
have our instances where we remain challenged. Our
Internet Specialist position in the Department is on
its fourth recruitment action within a year with
interviews scheduled in the very near future.
Additionally, our Alaska Aerospace teammates show a
long-term vacancy which they can discuss further with
you separately.
2:06:47 PM
Mr. Doehl shared that slides 18 through 20 showed detail on
the department's allocations/programs including funding,
the number of employees, the population DMVA reached, and
whether they were required by the state constitution, the
federal government, or by state statute. He noted that the
National Guard headquarters allocation went to zero because
DMVA proposed transferring the two positions to the Office
of the Commissioner.
Mr. Duffy turned to slides 21 and 22 and read from prepared
remarks:
Health Care costs for our Department, mainly the State
contribution to employee plans and Workers
Compensation payments, averaging between 8-9 percent
over the last several years, generally trend along
with most other Departments...
...focusing specifically on the DMVA, you can see our
Health Care costs over time with details on the
Employer Contribution and Workers Compensation. I'd
attribute the downward trend primarily to the
reduction in positions we've seen over the last six
years (63 in total).
Mr. Duffy moved to slide 23 and spoke about the
department's promotion of a healthy lifestyle:
Cost aside, we are focused as a Department on
promoting a healthy lifestyle. Our uniformed members
of the National Guard must comply with height, weight,
and fitness standards. We offer a variety of wellness
programs to our members and their families. Our major
operating locations have, or are in close proximity
to, buildings or areas for fitness activities. Our
AMYA cadets and cadre participate in regular physical
activity. And, on the topic of spiritual wellness, our
National Guard Chaplain Team is available to all our
members whether in uniform or not.
2:08:34 PM
Mr. Duffy reviewed slides 24 through 26 related to the
Disaster Relief Fund. The fund included numerous proposals
for increasing the FY 18 supplemental and FY 19 budget. The
fund was executed under authority vested in AS 26.29.300
and was a legislatively approved, readily available fund
source to speed relief and recovery actions during various
emergency situations. He read from prepared remarks:
...in general, when an event occurs, local
jurisdictions will perform the initial response. If
the events exceeds their capacity, they may request
assistance from the State, following which the DMVA
Commissioner will convene a multi-agency Disaster
Policy Council to review the facts and circumstances
surrounding the event and prepare recommendations for
the Governor to consider. As you can see in the lower
part of the slide, cost estimate thresholds dictate
actions requires by the Executive Branch and, in
response to more severe situations, include required
approvals by the Legislature.
This slide depicts the final authorized history over
the last six years for our Disaster Relief Fund...the
UGF figures shown include all actions taken by the
Legislature to appropriate funding for this purpose,
be it through the Governor's Budget request,
supplementals, or other authorized actions.
Additionally, it shows the amount of Federal funding
authorized during the same period for request approved
at that level. Many of you may recall the devastation
seen following the spring breakup of the Yukon and
Koyukuk Rivers in May of 2013, wherein the communities
of Circle and Galena experienced catastrophic impacts
from both riverine flooding and the ballistic impact
of river ice. In Galena, ~90 percent of all residences
and public/commercial infrastructure that was located
outside of the ring levy protecting the runway and the
Galena Interior Learning Academy were impacted by
floodwaters and ice. This necessitated the emergency
evacuation of a majority of the residents to both
Fairbanks and Anchorage. Due to the severity of the
disaster, and the impact to individuals and families,
the Governor authorized implementation of both the
Individual and Family Grant (IFG) program and the
Temporary Housing program. The President also declared
the disaster and implemented the federal version of
IFG. The damage was so widespread and severe that the
State of Alaska and FEMA provided temporary housing
and emergency congregate sheltering for upwards of 18
months, in order to mobilize resources and volunteer
agencies to rebuild and repair homes that were
destroyed or damaged from the floods in each
community. In addition to that disaster, two more
disasters were declared in Fiscal Year in the October
Kenai Peninsula Borough Floods and the 2013 November
Storms (federal DR-4162).
Mr. Duffy advanced to slide 27 and continued with prepared
remarks on the Disaster Relief Fund:
In terms of the current fiscal picture, at the
beginning of this week, our DRF balance was
approximately $4.8M. We have two recently declared
disasters in the North Slope and Kenai Peninsula
Boroughs which are projected to decrement this amount
by approximately $3.5M, leaving only $1.3M as our
projected available balance as we approach the window
for Breakup in 2018. Our $2M request in the FY19
budget combined with an amount being finalized for
submission as a potential FY18 supplement
appropriation will restore our DRF to a level which
will help us rapidly respond to communities in crisis
and aid in their recovery.
2:11:44 PM
Mr. Doehl provided wrap up on slide 28:
In summary, while we're a small Department, we have a
BIG impact. Our programs are operating at the minimum
funding and/or staffing levels to avoid mission
failure. Finally, we're looking to invest where the
mission dictates, but are keeping sharp eyes focused
on leveraging other fund sources when available.
Co-Chair Seaton thanked the department for its
presentation.
2:12:28 PM
AT EASE
2:14:41 PM
RECONVENED
^FY 19 BUDGET OVERVIEW: DEPARTMENT OF HEALTH AND SOCIAL
SERVICES
2:14:53 PM
VALERIE DAVIDSON, COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, introduced herself and department staff.
She provided a PowerPoint presentation titled "Department
of Health and Social Services House Finance: FY2019
Department Overview" dated January 26, 2018 (copy on file).
She began on slide 2 and detailed that the Department of
Health and Social Services (DHSS) was originally
established in 1919 as the Alaska Territorial Health
Department. With the formal proclamation of statehood on
January 3, 1959, the department's responsibilities were
expanded to include the protection and promotion of public
health and welfare. The slide included links for the DHSS
homepage and other resources that may be helpful for
individuals looking for more information about the
department. The department's constitutional authority was
located in Article 7. The duties of the department were
located in statute in Title 47. The last link on the slide
was for the DHSS FY 19 proposed budget. She noted the next
four slides had been prepared by the Legislative Finance
Division (LFD).
2:18:10 PM
SHAWNDA O'BRIEN, ASSISTANT COMMISSIONER, FINANCE AND
MANAGEMENT SERVICES, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, turned to slides 3 showing the department's
designated general fund budget (DGF) from FY 09 to the
current year. The trend had been a decreasing budget until
the most recent year. The FY 19 budget request included the
department's increase to the Medicaid program. She shared
that more detail would be provided throughout the
presentation.
Ms. O'Brien turned to slide 4, which showed the entire
funding for DHSS by line item. She detailed the majority of
the department's funding was located in the grants and
benefits line, the majority of the funds were benefits
going to recipients throughout Alaska, some of which were
paid out to various grantees across the state. The grants
program had been growing steadily. Most of the other line
items had remained fairly static over time.
Ms. O'Brien moved to a breakout of the DHSS budget General
Fund (GF) only by division (slide 5). The bottom of the
chart showed all of the different divisions in the
department and depicted how their funding had trended over
the years. There was not a significant amount of change to
the divisions with the exception of the Medicaid program
shown at the top. The Medicaid funds represented the
governor's FY 19 budget, but excluded the GF request in the
supplemental budget. She noted the chart appeared lower
than what the department had actually requested due to the
supplemental.
Representative Wilson referenced the $127 million increase
attributable to Medicaid. She understood $100 million
should have been included in the budget the previous year.
She remarked there had been a decrease in the past and
asked if Medicaid expansion was responsible for the
substantial uptick [from the previous year].
Ms. O'Brien replied that the department had been on the
record the previous year that its number for FY 18 was not
going to be 100 percent accurate. The UGF growth in the
department for Medicaid was not attributed to expansion.
The growth was largely due to non-expansion categories. She
detailed that enrollment numbers had increased
substantially.
Representative Wilson requested written information showing
the growth in Medicaid and Medicaid expansion separately
over the past five years. She wondered if it was the
economy or that more people learned about the program and
had access.
Ms. O'Brien replied that there was a slide that would
address the issue later on.
Representative Ortiz asked where the day habilitation (day-
hab) services program was housed in the budget. He asked if
it was included in Senior and Disability Services.
Ms. O'Brien replied that it was in the Medicaid program -
it was included in the green bar representing Medicaid on
slide 5. She explained that the services were built into
the Medicaid budget - it was difficult to see them
separated that way.
2:22:03 PM
Vice-Chair Gara stated that looking at the Medicaid
expenses per fiscal year meant the FY 18 number should be
$100 million higher and FY 18 should show $27 million in
expected growth. The testimony from [Office of Management
and Budget] director Pat Pitney was that reimbursement
rates had been cut in some areas but there were no
additional programs. He asked if his statements were
accurate.
Ms. O'Brien answered in the affirmative. From the
perspective the funds had already been expended, there
would be a $27 million difference in GF spending only
between what the department expected to spend in FY 18 on
into FY 19.
Ms. O'Brien moved to slide 6 that illustrated a breakout of
the DHSS budget by division including all fund sources. The
Medicaid number showed a larger increase between FY 18 and
FY 19. The increase combined the GF request in the
supplemental as well as the RPL [revised program
legislative] approved earlier in the year for $525 million.
Co-Chair Seaton remarked that Ms. O'Brien had stated that
the $127 million Medicaid line on the previous slide did
not include supplementals.
Ms. O'Brien clarified that the department's FY 19 request
showed the total $127 million increase in UGF, while the FY
18 number on slide 6 did not.
Vice-Chair Gara asked about the RPL request for $529
million. Ms. O'Brien replied clarified the $525 million
request had been approved in November.
Vice-Chair Gara stated that it was almost half of the
department's GF budget. He asked for detail.
Ms. O'Brien answered that the $525 million was a federal
authority increase representing the increase to the
Medicaid program for several categories in the Medicaid
services areas.
2:24:53 PM
Ms. O'Brien moved to a bar chart on slide 7 illustrating
the funding sources across the department. She highlighted
some of the changes in the FY 19 budget. The largest
changes were through the Medicaid program. The other
changes were more in line with technical changes, including
a $1.4 million increase in funding to the Office of
Children's Services (OCS) to fully fund the positions added
in the FY 18 budget. The department had also requested $6.5
million in federal authority in the OCS budget in line with
an RPL request the previous year due to increased federal
claiming potential from efficiencies achieved in the DHSS
cost allocation process. The Alaska Pioneer Homes increased
its federal receipt authority to accommodate an increase it
would receive in reimbursement from the Veterans
Administration beginning in October 2018. The largest
change occurred in 2017 (not identifiable on the slide) -
the department had been able to utilize features in its
accounting system to better identify sources of funding
that were truly GF match versus GF funding sources. There
was a large amount of funding across the department that
represented a change from GF to GF match - about $130
million.
2:27:05 PM
Ms. O'Brien continued to address slide 7. There was a
request in the governor's budget to continue funding for
the Senior Benefits Program. She detailed it was not a
budget change and would not be shown as such from FY 18 to
FY 19; however, the program was due to sunset in the
current year.
Representative Wilson thought the state had been seeking a
waiver.
Ms. O'Brien replied that nothing had been passed in 2017 to
extend the program.
Representative Wilson thought the state had been eligible
for waivers to offset some of the cost. She believed it had
been in SB 74 in a past year.
Ms. O'Brien believed Representative Wilson may be thinking
of the Senior and Disabilities program. She was addressing
the Senior Benefits Program in the Public Assistance
budget.
Ms. O'Brien advanced to the Medicaid budget from FY 15 to
FY 19 on slide 8. The slide was meant to illustrate how the
budget for Medicaid services had grown; however, the GF
budget for FY 19 was still under the FY 15 UGF amount. The
information reflected the department's work to reduce its
GF spending through reform efforts and other activities.
2:28:57 PM
Ms. O'Brien spoke to slide 9 that included a breakout of
the state's population and Medicaid. The bottom portion of
the chart highlighted Medicaid enrollment beginning in
2000. The population had been between 600,000 and 700,000
at the time. The population had steadily increased until
the past couple of years. She believed the most recent
Department of Labor and Workforce Development figures
showed a slight population decrease. There was a breakout
for the expansion enrollment compared to the regular
Medicaid enrollment beginning in 2016 (shown in yellow).
The projections for FY 18 and FY 19 were on track with
trends.
2:30:13 PM
Commissioner Davidson moved to slide 10. There were 98 rows
of programs within DHSS, which had been numbered to make
tracking easier. The gray portion of the charts represented
roll ups for the department and particular divisions. She
pointed out the "rating of the importance to mission"
column and used the Pioneer Home allocation in row 3 as an
example and noted the rating was listed as "critical." She
shared that the department had used the House Finance
Committee's criteria from the previous year. Critical meant
the allocation or program was directly accomplishing the
department's constitutional or statutory authority mission
statement. An "important" classification meant an
allocation or program may not relate directly to core
services but perhaps provided indirect supports and
services that would need to be reassigned if the program
did not exist. There was a "rating of effectiveness" column
using as scale of 1 to 3. She explained a rating of 1 meant
DHSS was getting the job done, a rating of 2 meant it was
getting the job done but with substantial opportunity for
improvement, and a rating of 3 meant it was not getting the
job done and opportunity for improvement was limited. Row 1
showed the department total of $3.25 billion, comprised of
$1.165 billion UGF, $79.1 million DGF, $1.885 billion in
federal funds, and $123.146 million in other funds
(typically program receipts).
Commissioner Davidson reviewed the specific divisions
beginning with the Alaska Pioneer Homes with a $63.34
million budget (1.95 percent of the department's overall
budget) on row 2. Row 3 reflected Pioneer Home management
and row 4 was the majority of staffing and the component
that provided services directly in the home.
Commissioner Davidson turned to slide 11 and addressed the
Division of Behavioral Health in row 5. The division's
total budget was $133.4 million (4.1 percent of the
department's overall budget). She did not intend to review
each row, but would review division areas with the largest
number of employees and largest UGF.
2:34:19 PM
Commissioner Davidson turned to slide 12. She reported that
the Alaska Psychiatric Institute (API) had the highest
number of employees at 252. She detailed that API was an
80-bed facility and had been notorious recently in news
media. She shared that in 1963 the facility had been a 220-
bed facility; it reached its highest bed number of 225 in
1965. She elaborated there had been a national effort
beginning in 1973 to move away from institutional care -
especially for individuals living with disabling conditions
and serious and chronic mental illness. At that point the
occupancy at the old API began to decline intentionally.
When the new facility was contemplated a feasibility study
had been done recommending a 124-bed facility, which also
identified 40 forensic beds. She believed at the time a
compromise had been made to house 80 beds and 10 forensic
beds. She explained that there had been adjustment going
from 220 beds down to 80 - the impact was being felt at
present. The department knew more now than it had at the
time - people had made the best decisions based on the
information they had at the time - if more had been known
they may have done things differently.
Commissioner Davidson elaborated that the department was
required to do a Joint Commission for the Accreditation of
Hospital Organizations (JCAHO) annually. The department was
requiring room remodels including bathrooms. Therefore, API
would be down 10 beds in the first phase and 10 beds in a
different wing of the facility during the second phase. She
noted it was a challenge.
2:37:27 PM
Commissioner Davidson shared that the largest UGF in
Behavioral Health was on row 6 (slide 11) pertaining to
treatment and recovery grants. The department appreciated
the committee's effort to address substance abuse
disorders; the $6 million provided previously had made an
impact in the community. As a part of the governor's public
safety action plan there was a multi-year request for an
additional $18 million to help address addiction related
issues, especially in the opioid epidemic facing the state.
Representative Tilton mentioned a large number of grants
within the Division of Behavioral Health and within DHSS
that were growing. She was concerned about overlapping
services and asked for comment.
Commissioner Davidson responded she could follow up with
some of the information. The department's biggest
opportunity for change in that regard would come from the
1115 waiver. The department would submit its waiver
application to the Centers for Medicare and Medicaid
Services (CMS) on January 31. The department had worked
with tribes, stakeholders, providers, and beneficiaries
over the past couple of years to change how it addressed
behavioral health services. Items that were most often
funded through Behavioral Health were the high acuity level
of care. The waiver would allow DHSS to do earlier
interventions much sooner so that individuals did not rise
to level of acuity seen currently. One of the waiver
requirements would be performance metrics and measures.
2:39:51 PM
Representative Tilton asked about streamlining information
in Behavioral Health. She recalled working on the budget as
a legislative staffer in the past and noted streamlining
was a big challenge. She remembered a group had been formed
to look at the issue - she asked about the status.
Commissioner Davidson replied she could follow up with the
information. One of the challenges throughout DHSS programs
was an increase in the amount of federal reporting
requirements. She observed that sometimes in healthcare it
felt like there was one step forward and one or more steps
backwards.
Representative Guttenberg asked about rows 8 and 9 related
to Behavioral Health (slide 11). He remarked that many
grant recipients had issues with how the grants were
administered. He remarked that the department rated its
effectiveness as a 2. He asked what actions DHSS was taking
to improve effectiveness.
Commissioner Davidson responded that a major impetus to
receive the 1115 waiver was to remove many of those
barriers. She acknowledged that the department was
sometimes the impediment to being able to make progress.
The department had received substantial feedback from
stakeholders that the administrative burden was
significant. The 1115 waiver would waive the Social
Security Act requirements that were currently passed
through to grantees. The opportunity to waive some of the
requirements would make a huge difference for DHSS.
Representative Guttenberg referenced row 8, column 2 on
slide 11. He pointed to the $700.2 and asked if it was a
number or a cost code.
Ms. O'Brien replied that the $700.2 was a fund source.
Commissioner Davidson turned to slides 13 and 14 pertaining
to OCS. Row 15 included a division total of $163.97 million
represented slightly over 5 percent of the department's
overall budget. Front line social workers in row 18
accounted for the majority of employees and rows 20 through
23 pertained to the foster care, adoption, and guardianship
payments formula. She thanked the committee for the
additional front line staff, which had made a significant
difference. For the first time in the first quarter of FY
18, 23 more children had been discharged than were removed,
which was a substantial change. She discussed that between
FY 14 and FY 16, 30 percent more children had been removed
rather than discharged.
Representative Wilson looked at row 18 on slide 13. She
observed there were 66 vacant positions at the time the
presentation had been compiled. She spoke to the vacancy
rate in the department's budget book and noted the FY 18 to
FY 19 change from $2.5 million to $1.6 million. She asked
if the $921,000 difference was UGF the department could
spend because it was no longer part of the vacancy rate.
Ms. O'Brien asked if Representative Wilson was speaking
about the budgeted vacancy rate changes from year to year.
Representative Wilson answered in the affirmative.
Ms. O'Brien explained that the department annually
evaluated how it spent in the prior year, how it claimed
federal funds, and how spending took place across the
department and divisions to determine whether an alignment
of funding was needed based on how it anticipated spending
in the coming year. Often the department was caught in the
middle of spending because it was closing out a budget year
while developing a management plan for the current year and
the budget for the following year. She stated the process
typically required staff to estimate whether changes would
occur.
Ms. O'Brien addressed vacancy rates and explained there was
a fluctuation across all components depending on whether
funding had changed somehow. She cited the increment
received by the department the previous year as an example
of something that could impact how much the department
needed to budget for a vacancy rate. Sometimes changes were
seen because the department had deleted positions or
funding was no longer available in certain areas;
therefore, funding sources were shifted to other line
items. The change represented an alignment of how positions
were being funded and how the department had spent in FY
17.
Representative Wilson remarked that the [$921,000]
difference was substantial. She was trying to determine,
without adding any additional positions, whether the
$921,000 was UGF or federal UGF. She was trying to better
understand what had been learned, about substantial
changes, and how much money may leave the state coffers
that had not previously been spent because the department
had held months open for vacancies.
Ms. O'Brien replied that she would follow up with more
specific detail on the component. The money that was
appropriated to the front line social worker component by
line item did not change. How the positions were funded
showed the change, not the overall funding for the entire
budget.
2:48:32 PM
Commissioner Davidson addressed the Division of Health Care
Services on slides 15 and 16. Row 24 reflected the division
total of $21.866 million or 0.67 percent of the
department's overall budget. Medical assistance
administration (row 28) accounted for the majority of
division employees. The individuals were responsible for
getting Medicaid claims paid and much of the work
designated by SB 74 [Medicaid reform legislation passed in
2016]. She noted that Medicaid expenditures were not shown
within the division and were included in some of the last
slides of the presentation.
Commissioner Davidson moved to the Division of Juvenile
Justice on slides 17 and 18. Row 30 showed the division
total of $58.4 million, representing 1.8 percent of the
department's overall budget. Rows 31 through 39 reflecting
the majority of the division's employees were tied to
client services in facilities or probation services. The
Nome Youth Facility had been added back into the base
budget in FY 18, which had been carried forward in FY 19.
She detailed it was a 14-bed facility with an average daily
population of 7 (there was currently a population of 10).
The department was converting 4 of the beds for long-term
treatment for youth in juvenile detention at the
recommendation of a consultant report provided a couple of
years back.
Commissioner Davidson turned to slides 19 and 20 pertaining
to the Division of Public Assistance. Row 43 reflected the
division total of $299.028 million or 9.19 percent of the
overall department budget. Field services were the majority
of the division's employees (row 53), responsible for
providing services directly to Alaskans.
2:50:58 PM
Commissioner Davidson turned back to row 45 on slide 19 and
detailed that adult public assistance was the largest UGF
program, which also satisfied the maintenance of effort
requirement for Medicaid. Row 49 pertained to senior
benefits.
Vice-Chair Gara detailed that funds had been reduced to
adult public assistance in the past year and moved to OCS.
He asked for verification that adult public assistance had
not been short funded.
Ms. O'Brien replied in the affirmative.
Commissioner Davidson turned to slides 21 through 24
pertained to the Division of Public Health. Row 58 (slide
21) showed the division total of $117.372 million or 3.6
percent of the department's overall budget. Public health
nursing (row 59) accounted for the division's largest
number of employees. Row 69 on page 24 for community health
grants had been zeroed out. She explained that community
health aide training grants had been refinanced through the
Medicaid program and had been eliminated from the community
health grant component. She elaborated it had worked out
well for the state because the fund source had been 100
percent GF when in the community health grant line item;
the transfer to the Medicaid program meant grants were
funded with significant federal match and were included in
the community health aide and practitioner and behavioral
health aide and practitioner rates. She expounded that the
state received 100 percent federal match when Indian Health
Service (IHS) beneficiaries who were also Medicaid
beneficiaries, received care in IHS facilities.
Commissioner Davidson addressed the Division of Senior and
Disabilities Services on slides 25 through 28. Row 70
included the division total of $61.86 million or 1.9
percent of the overall budget. Senior and disabilities
services administration on row 73 represented the bulk of
the program. She detailed that the division had
consolidated much of its staff into a single component to
reduce some of the administrative burden and create some
management efficiencies. The 166 figure included protective
services specialists, health program managers, medical
assistance administrators, nurses, and other; only 10 of
the staff, including the director, represented
administrative functions.
2:54:31 PM
Commissioner Davidson returned to slide 25, row 71, where
the grant components were consolidated into a single
component (three separate components had been consolidated
into one) to realize efficiencies. Slides 29 through 31
showed the department's support services. The division
total was $42.658 million or 1.3 percent of the
department's overall budget (row 80). Information
technology services accounted for the majority of the
division's employees - the IT manager and 16 employees had
transferred to the Office of Information Technology at the
Department of Administration.
Commissioner Davidson moved the Division of Medicaid
Services on slide 32. She shared that a number of years
back the legislature had requested to see the costs because
it had been confusing when the costs were buried in the
divisions. Row 94 reflected the division's total budget of
$2.289 billion or 70.38 percent of the department's overall
budget. Row 95 showed behavioral health services, row 96
included adult preventative dental Medicaid, row 97
included health care Medicaid services, and row 98 included
senior and disabilities Medicaid services.
2:56:41 PM
Representative Ortiz asked if row 98 included funding for
day-hab services. Commissioner Davidson replied in the
affirmative.
Representative Ortiz had heard concern from constituents
there had been cuts to day-hab funding. He asked why there
had been a cutback in day-hab services when overall
Medicaid funding had increased.
Commissioner Davidson replied that the department had tried
hard to limit Medicaid growth. The increases in Medicaid
growth were largely due to the economic downturn - a higher
number of Alaskans were eligible and enrolling in Medicaid.
She explained that even with limitations on day-hab
programs, the overall cost of Medicaid was increasing. Even
with the Medicaid growth, the overall FY 19 UGF budget
request was less than the FY 15 request.
Representative Ortiz asked if the department had determined
growth could not be limited in certain areas, so it had to
choose to limit it in other areas in order to limit overall
Medicaid cost growth.
Ms. O'Brien answered in the affirmative. To contain
Medicaid costs the department looked at opportunities where
it was possible and the department was not limited by
statute or regulation. Specific to hay-hab services,
regulations had been changed to accommodate a request to
reduce Medicaid costs. The Division of Senior and
Disabilities Services program staff had worked to modify
the regulations, which she believed went into effect in
July [2017]. The intent was to do as little harm as
possible while continuing to provide a level of care or
services that would benefit people.
Vice-Chair Gara stated there were four categories of
Medicaid services. He surmised that people tended to think
of going to the doctor or emergency room when they thought
of Medicaid. He believed that area was health care Medicaid
services, which accounted for approximately half the
Medicaid budget.
Commissioner Davidson replied in the affirmative. She
elaborated that a service fell under the health care
Medicaid services category if a service was not related to
behavioral health, adult preventative dental, or senior and
disabilities.
Vice-Chair Gara stated there had been $100 [million]
misestimated for FY 18 and an extra $27 [million] in FY 19
for Medicaid. He asked for a breakdown in the budget
subcommittee of where the funds were anticipated in
relation to the four Medicaid categories. He asked for
verification that a senior visiting the emergency room
would fall under health care services as opposed to senior
and disabilities services. He believed senior and
disabilities services included things like Alzheimer's and
other specialized senior services.
Commissioner Davidson agreed and relayed the department
would provide the information pertaining to the first half
of Vice-Chair Gara's question. Secondly, in order for
something to be considered a senior and disabilities
service it was a category of service. It was not if a
person experiencing a disabling condition went to the
emergency room or a person of a certain age went to the
emergency room.
3:01:23 PM
Representative Guttenberg stated the committee had numerous
discussions about adult daycare the previous year. He
referenced the department's testimony about downward
pressure on the budget. He recalled discussions with the
department about the delivery of services and the number of
hours available per week. He referred to changes in
regulations, one change had been everyone had to be paid a
certain level even though the assigned duties were
different. He asked if people were receiving the same
levels of service as they had in the past. He wondered what
was no longer being accomplished.
Commissioner Davidson answered that day-hab services had a
lower cap than before. There were a number of changes at
the federal level that states had to comply with. The
department had been able to achieve savings through
refinancing the efforts. She explained that in FY 17 the
goal had been to save $32 million GF through the tribal
refinancing effort. She communicated that a savings of $35
million had been achieved. The department was on track to
save its goal of $42 million GF in FY 18. There were other
cases where the department had thought the opportunity to
refinance was not possible. She cited 1915(i) and 1915(k)
as an example. She elaborated that the 1915(i) opportunity
was something the department hoped to implement to save GF
by receiving an enhanced federal match; however, the way it
would have converted the program would have driven up some
of the state GF costs. The department was continuing to
pursue the opportunity through a 1915(c) to ensure the
services continued, but the level of anticipated savings
would not be achieved. She relayed that people would not
receive the same level of day-hab services as before.
3:04:50 PM
Representative Wilson spoke about behavioral and substance
abuse grants including the governor's $18 million request.
She asked if the Alaskans who were not eligible for
Medicaid and Medicaid expansion were eligible for the
grants.
Commissioner Davidson referenced a prior $6 million
appropriated by the legislature to frame how the $18
million request came together. In FY 17 the legislature
appropriated $6 million for substance abuse treatment and
the department awarded three grants over a three-year
timeframe. She explained that none of the grants were
possible without significant leverage resources from the
community. For example, the Central Peninsula Hospital
received a $2.5 million grant to do detox, which began in
August 2017 with a capacity of six beds and potential to
increase to ten. The average length of stay was five
[days], many beneficiaries returned for monthly Naltrexone
shots. The funds to purchase the facility had been provided
by the Kenai Peninsula Borough on behalf of the hospital. A
second grantee was Set Free Alaska in Mat-Su, which had
received a $1 million grant for residential substance use
disorder for women and children. The facility had opened in
August 2017 and reached capacity by November 2017. The
facility housed twelve treatment beds for women with an
additional four beds for their children. The Mat-Su Health
Foundation had purchased the facility and contributed
$400,000 for the building renovations.
3:07:07 PM
Representative Wilson clarified that she was trying to
determine whether the individuals who had participated in
the programs had not been eligible for Medicaid or Medicaid
expansion and needed another resource to receive help. She
believed the reason many of the programs originated was to
help Alaskans without insurance or the ability to receive
the services. Under Medicaid expansion more people had
access to care. She was trying to determine whether the new
programs were targeting individuals without their own
insurance, Medicaid, or Medicaid expansion.
Commissioner Davidson answered that a large part of the
funds were used as startup funds for organizations
interested in providing the service. She did not believe
the organizations were making a determination on whether
eligible recipients were Medicaid beneficiaries or not. In
order for an organization to bill Medicaid for a service it
had to enroll as a provider. The third grantee in case she
had been discussing was to the Tanana Chiefs Conference in
Fairbanks in the amount of $2.5 million. The organization
opened a sobering center in December 2017 with assistance
from the Alaska Mental Health Trust Authority for the
facility.
Representative Wilson stated there had never been a
discussion on the grants after Medicaid expansion to
determine who the grant beneficiaries were. She remarked
that currently one of the biggest [cost] drivers were
grants going out. She requested to have the discussion at
some point.
Co-Chair Seaton replied that facilities had to be in place
and Medicaid was providing services but not facilities. He
believed the grants were to activate facilities to take
recipients - whatever program provided the actual service
could be reimbursed. There was not reimbursement for
construction of facilities.
3:10:10 PM
Representative Ortiz returned to line 98 pertaining to
senior and disabilities services (slide 32). He referenced
Commissioner Davidson's statement it had been the goal to
save $32 million and $35 million had been saved, which was
commendable. He asked if the cuts to day-hab services had
been part of the aforementioned savings plan.
Commissioner Davidson replied that the $32 million in
savings was through the tribal claiming policy Governor
Walker had negotiated with the former U.S. secretary of
Health and Human Services. She detailed the state received
100 percent federal match when IHS beneficiaries who were
also Medicaid beneficiaries, received care in IHS
facilities. The department did see more opportunities in
terms of the provision of long-term care services and
supports, which included senior and disabilities services
by developing care coordination agreements between tribal
and non-tribal organizations, but it had not been part of
the day-hab limitation of hours. The issues were separate.
Co-Chair Seaton communicated any further discussion of the
issue would need to happen outside of the committee meeting
due to current time constraints. He asked about hepatitis C
driving costs and remarked on the high number of cases in
Alaska. He wondered if the state planned to address the
issue. He wanted to determine how efficient and effective
the department was in utilizing the community health
service portion that saw a large reduction in cost for
providing hepatitis C vaccinations. Additionally, the AMHTA
had a revision in its policy and was no longer avoiding
prevention programs if it prevented AMHTA from acquiring
new beneficiaries. He asked if DHSS was able to work on
prevention of the development of mental health problems.
Alternatively, he wondered if DHSS only focused on
treatment of people who had developed mental health
problems. He wanted to circumvent avoidable healthcare
issues, which would limit future costs. He asked the
department to follow up on the questions.
3:14:05 PM
Representative Kawasaki returned to the day-hab program
discussion. He believed the program had gone from 800 hours
divided over 52 weeks (15 hours per week) to 600 hours
divided by 52 weeks (12 hours per week). He appreciated the
ability to appeal the reduction, which some individuals had
done. He requested information on the number of people
utilizing day-hab services (whether it had increased or
decreased) and whether there was additional money available
to increase the hours.
Commissioner Davidson replied that the department would
follow up with the information.
Co-Chair Seaton thanked the department for its
presentation.
3:15:31 PM
AT EASE
3:17:35 PM
RECONVENED
Co-Chair Seaton referred to work drafts for the budget
bills that he referenced as Committee Substitute (CS) zero,
which included technical corrections.
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
addressed HB 286 Work Draft 30-GH2564\D and referred to it
as CS zero. The bill version used the same fund sources in
the same amounts, in the same places, for the same purposes
as the governor's bill.
3:19:15 PM
Co-Chair Seaton explained that the budgets would be
introduced. He explained that like the previous year he
would introduce the CS with technical corrections for each
budget bill to begin with clean versions.
Co-Chair Foster MOVED to ADOPT the proposed committee
substitute for HB 286, Work Draft 30-GH2564\D
(Bruce/Wallace, 1/23/18).
Co-Chair Seaton OBJECTED for discussion.
Mr. Teal explained there were a few exceptions to his prior
statement about the bills. He elaborated that the
exceptions were minor and pertained to contingency
language. The difference between the Legislative Finance
Division (LFD) and the governor's budget was LFD counted
contingencies as the maximum the contingency could be,
while the Office of Management and Budget (OMB) counted it
as the minimum; therefore, LFD's budget report was slightly
higher than the governor's. The bill was supposed to be the
same - for all practical purposes it was the same. The
point of creating version D instead of using the governor's
bill was for the ease of Legislative Legal Services and LFD
- it meant the legislature had a bill that was ready to
amend without dealing with format changes, section
references, section locations, and technical and conforming
language.
Mr. Teal referenced a two-page document summarizing the
changes between the governor's bill and version D ["Summary
of Changes from the Governor's Operating Bill and CSHB
286(FIN) Work Draft 30-GH2564\D, Bruce/Wallace, 1/23/18"
(copy on file)]. He noted that the document did not list
every change and he did not intend to read the document.
The committee had also received a [redlined] comparison
document highlighting the changes between the two versions,
which began on page 98 of the bill (copy on file). He
explained the document verified the CS was the governor's
bill put into a Legislative Legal Services form. The
numbers were the same and the arrangement was slightly
different.
3:22:50 PM
Representative Pruitt referenced the removal of contingency
language for a three-quarter [vote] pertaining to the use
of the Constitutional Budget Reserve (CBR). He asked why
the language had been removed.
Mr. Teal replied that the language was duplicative. The CBR
section of the bill already included supermajority vote
requirement.
Representative Pruitt referenced a section related to
school funding. He asked about the semantics. He referenced
page 116 of the redlined bill document (corresponding with
changes 15 and 16 on the two-page explanation of changes
document). He asked why the language "for the fiscal year
ending June 30, 2019" had been removed from the bill
section pertaining to Base Student Allocation (BSA)
funding.
Mr. Teal answered that for the deposits for the K-12
foundation formula and transportation costs, the deposit to
the fund could be used in multiple years. He explained it
was a fund cap that should not be limited to a specific
year. He elaborated that the date had been removed for FY
19 because they did not want to limit the use of the school
fund to 2019. He noted the language removal occurred a
couple of times in the CS.
3:25:06 PM
Representative Pruitt asked whether the same language had
been removed from subsection (f) on page 116 related to the
Power Cost Equalization (PCE) Fund for the same reason.
Mr. Teal replied in the affirmative. He detailed that for a
fund capitalization the language pertaining to a specific
year had been removed because it was not for a specific
year. He pointed to subsection (j) on page 116 and
explained that the date language had been added when
pertaining to taking the necessary funding out for pupil
transportation for a specific year (FY 19). Legislative
Legal Services would call the language technical and
conforming. It accomplished the same thing but did not
place a date limit. He did not know why the governor's
office had included the dates.
3:26:34 PM
Representative Wilson assumed the sections related to
education would be removed from the budget if a separate
education funding bill passed [HB 287] before the budget
was complete.
Mr. Teal replied, "I'm assuming it would, but I..."
Representative Wilson interjected that she wanted to make
certain because she knew people had talked about the
separate bill as forward funding. She clarified that the
education legislation was not forward funding; it would
fund education and transportation early for the current
year in order to avoid teacher pink slips.
Co-Chair Seaton clarified that the legislation pertained to
early funding for education for FY 19 only.
Representative Wilson surmised the language pertaining to
education would be removed from the budget bill.
Co-Chair Seaton replied that it was his intent. He was not
familiar with how the process would ultimately go. He
explained that some language may be included in the budget
if LFD informed the legislature it was needed. He clarified
that under no circumstance would the money be appropriated
twice.
Mr. Teal noted that LFD did not know what legislation would
pass. The purpose of the CS was to mirror the governor's
legislation. The governor's bill included GF funding for
schools. If and when a separate bill passed funding
education with the CBR, he assumed there would be an
amendment to remove the GF deposits.
3:28:58 PM
Co-Chair Seaton WITHDREW his OBJECTION. There being NO
further OBJECTION, Work Draft 30-GH2564\D was ADOPTED.
Co-Chair Foster MOVED to ADOPT the proposed committee
substitute for HB 285, Work Draft 30-GH2566\J
(Bruce/Wallace, 1/23/18).
Co-Chair Seaton OBJECTED for discussion.
Mr. Teal explained that the reason for the work draft were
the same as those for HB 286 with one exception. There was
language in the mental health budget that referred to the
ability of the department to move money across
appropriation lines. He detailed that LFD would prefer the
removal of the language. He elaborated that IT staff was
still working on removing the language in the mental health
bill. He explained that the language did print in the
operating budget bill. It would have to come out with an
amendment. He expounded if each bill included the language
allowing a department to move $25 million, LFD was unclear
on whether it would mean a department could move $50
million instead of the intended $25 million total. He
stated that it may not be a problem, but it was not the
same as the governor's bill.
Representative Pruitt asked when LFD may fix the issue.
Mr. Teal answered that the only way to currently fix the
issue was with an amendment. He did not believe there would
be a problem with the next version of the bill; there had
not been time to fix it for the current bill version.
Representative Pruitt was trying to ascertain whether
holding off on the adoption of the work draft would give
LFD time to fix the issue and come back with an updated
bill version. He surmised the committee should move forward
with the adoption of the current version and would need to
make an amendment later.
3:32:37 PM
Co-Chair Seaton WITHDREW his OBJECTION. There being NO
further OBJECTION, Work Draft 30-GH2566\J was ADOPTED.
HB 285 was HEARD and HELD in committee for further
consideration.
HB 286 was HEARD and HELD in committee for further
consideration.
Co-Chair Seaton addressed the schedule for the following
week.
ADJOURNMENT
3:33:28 PM
The meeting was adjourned at 3:33 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Department of Health Social Services for House Finance FINAL 01 26 18.pdf |
HFIN 1/26/2018 1:30:00 PM |
HFIN - DHSS Budget Overview |
| HB 285 CS WORKDRAFT MH vJ 1-23-18.pdf |
HFIN 1/26/2018 1:30:00 PM |
HB 285 |
| HB 286 CS WORKDRAFT OPvD 1-23-18.pdf |
HFIN 1/26/2018 1:30:00 PM |
HB 286 |
| Summary of Changes from the Gov to CSHB 285(FIN).pdf |
HFIN 1/26/2018 1:30:00 PM |
HB 285 |
| Summary of Changes from the Gov to CSHB 286(FIN).pdf |
HFIN 1/26/2018 1:30:00 PM |
HB 286 |
| HB 285 ver A to J Compare 1 23 18 CS .pdf |
HFIN 1/26/2018 1:30:00 PM |
HB 285 |
| HB286 ver A to D compare from Leg Legal 1 23 18 CS Zero.pdf |
HFIN 1/26/2018 1:30:00 PM |
HB 286 |
| FY19 DMVA Department OverviewA - 26 Jan 18 (Final).pdf |
HFIN 1/26/2018 1:30:00 PM |
HFIN - DMVA Budget Overview |