Legislature(2017 - 2018)HOUSE FINANCE 519

01/26/2018 01:30 PM FINANCE

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Audio Topic
01:34:11 PM Start
01:35:17 PM HB286
01:35:19 PM Fy 19 Budget Overview: Department of Military and Veterans Affairs
02:14:53 PM Fy 19 Budget Overview: Department of Health and Social Services
03:33:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ FY19 Dept. Budget Overviews: TELECONFERENCED
- Dept. of Military & Veterans' Affairs
- Dept. of Health & Social Services
+ Bills Previously Heard/Scheduled 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.                                                                                         
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                                                                   
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                                                                    
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                                                                     
     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                                                                     
     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                                                                    
     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                                                                    
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                                                                    
     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                                                                    
     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                                                                    
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                                                                    
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                                                                      
     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                                                                    
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                                                                    
     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                                                                    
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                                                                    
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                                                                    
     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                                                                    
2:12:28 PM                                                                                                                    
AT EASE                                                                                                                         
2:14:41 PM                                                                                                                    
^FY  19 BUDGET  OVERVIEW:  DEPARTMENT OF  HEALTH AND  SOCIAL                                                                  
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
3:15:31 PM                                                                                                                    
AT EASE                                                                                                                         
3:17:35 PM                                                                                                                    
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                                                                    
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                                                                    
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                                                                    
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)                                                                    
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                                                                    
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                                                                    
HB  286  was  HEARD  and   HELD  in  committee  for  further                                                                    
Co-Chair  Seaton addressed  the schedule  for the  following                                                                    
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