Legislature(2017 - 2018)HOUSE FINANCE 519
01/24/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Alaska Mental Health Trust Authority | |
| Overview: Department of Revenue | |
| Overview: Department of Administration | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 286 | TELECONFERENCED | |
| += | HB 285 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 24, 2018
1:30 p.m.
1:30:29 PM
CALL TO ORDER
Co-Chair Seaton called the House Finance Committee meeting
to order at 1:30 p.m.
MEMBERS PRESENT
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 Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
Representative Neal Foster, Co-Chair
ALSO PRESENT
Mary Jane Michael, Chair, Alaska Mental Health Trust
Authority; Sheldon Fisher, Commissioner, Department of
Revenue; Leslie Ridle, Commissioner, Department of
Administration; Cheryl Lowenstein, Director, Division of
Administrative Services, Department of Administration;
Emily Ricci, Health Care Policy Administrator, Department
of Administration. Mike Abbott, Chief Executive Officer,
Alaska Mental Health Trust Authority.
SUMMARY
HB 285 APPROP: MENTAL HEALTH BUDGET
HB 285 was HEARD and HELD in committee for
further consideration.
HB 286 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 286 was HEARD and HELD in committee for
further consideration.
FY 19 BUDGET OVERVIEWS:
ALASKA MENTAL HEALTH TRUST AUTHORITY
DEPARTMENT OF REVENUE
DEPARTMENT OF ADMINISTRATION
Co-Chair Seaton reviewed the agenda for the day.
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."
^OVERVIEW: ALASKA MENTAL HEALTH TRUST AUTHORITY
1:31:25 PM
MARY JANE MICHAEL, CHAIR, ALASKA MENTAL HEALTH TRUST
AUTHORITY, introduced herself and the other members of the
board: Chris Cooke, vice chair; Laraine Derr, secretary;
Paula Easley; Greg Jones; Jerome Selby; and Carlton Smith.
She highlighted that the Alaska Mental Health Trust
Authority (AMHTA) was established as a "perpetual trust" to
improve the lives of beneficiaries. She recognized the
trust's "partnership with the state" considering the
changed fiscal "landscape" of the state. The authority
wanted to implement broader systemic changes to create a
"progressive and sustainable" structure. She listed the
trust's investments in criminal justice reform and Medicaid
expansion as examples of systemic change efforts. She
acknowledged the departure of the long-term Chief Executive
Officer (CEO), Jeff Jesse. She reported that the trust
examined its internal governance structure and operating
procedures and hired an organizational management
consultant, Catherine Wood, Raven Management Consultants.
She believed the process lead to a "good foundation for
moving forward." She spoke of internal organizational
changes and announced that "the organization was
financially and organizationally healthy."
1:35:34 PM
MIKE ABBOTT, CHIEF EXECUTIVE OFFICER, ALASKA MENTAL HEALTH
TRUST AUTHORITY, introduced himself and reviewed the
PowerPoint presentation: "Legislative Presentation: House
Finance Committee." He moved to slide 3 titled "FY19
Anticipated Available Funding" that contained a table
titled "Distributable Funds Based on 4-year averages for
stability."
Payout $21,137,000
Prior Years Carried Forward $3,042,000
Land Office Average Spendable Income $4,974,000
Interest Average $285,000
Total $29,438,000
Mr. Abbott noted that in FY 2019 the trust would expend
$29.5 million for trust beneficiaries. He indicated that
the payout was derived from its invested resources totaling
$550 million; $500 million of those funds were invested in
the Alaska Permanent Fund Corporation (APFC) and the
remainder managed by the Department of Revenue (DOR). He
explained that the trust used a 4-year average payout of
4.25 percent from its investments. The trust's
distributable funds increased approximately 1 to 4 percent
per year and the upward trend was anticipated to continue.
Mr. Abbott discussed slide 4: "Trust Land Office Annual
Revenue." The slide contained a graph that depicted the
trust land revenue stream. He noted the 5 categories that
comprised the trust land revenue: minerals, oil and gas,
land's activity, timber, and real estate. He cautioned that
not all the revenue was expendable, some of the land trust
revenue was required to be invested via statute. He
continued to slide 5 titled: "Trust Land Office Principal
and Income Revenue" depicted as bars on the graph. He
indicated that the value of the investments exceeded
"spendable" revenues.
1:39:56 PM
Mr. Abbott explained slide 6 titled "FY19 Budget":
Administrative Operations, $8,703.7
Inclusive of Trust Authority and Land Office
Authority Grants, $9,895.5
Designated to community providers, nonprofits, local
governments and Tribal organizations
MHTAAR, $10,838.4
Designated to state agencies and approved by the
Legislature
Mr. Abbott stressed that the trust's funds required trustee
authorization for spending and some categories of spending
also required legislative approval. He explained that the
pie chart on the slide was roughly proportioned into thirds
representing the three categories of AMHTA spending. He
related that two agencies serviced the Trust; the
Department of Natural Resources (DNR) and DOR.
Mr. Abbott continued to slide 7 titled " Current
Priorities":
Current Priorities
? Medicaid Reform
? Criminal Justice Reform & Reinvestment
Established Focus Areas
? Disability Justice
? Substance Abuse Prevention & Treatment
? Beneficiary Employment & Engagement
? Housing and Long-term Services & Supports
Mr. Abbott discussed the current priorities of the Trust.
The Trust had been the key investor in the reform and
expansion of Medicaid and invested over $10 million for a
multi-year program. He offered that many new Medicaid
beneficiaries covered under expansion were also trust
beneficiaries. Mr. Abbott reported that the second priority
of AMHTA was the criminal justice reform and reinvestment.
He mentioned the trust's investment in the criminal justice
program and reforms and noted the "over-representation" of
trust beneficiaries within the criminal justice system. He
stated the trust's strong support and continued commitment
to criminal justice reform and reinvestment. He commented
that the trust was required to operate under a two-year
budget cycle and FY 19 was the second of the two-year
cycle.
1:46:26 PM
Mr. Abbott advanced to slide 8 titled "Operating Budget":
Operating Budget
? Governor's budget is very similar to trustee-
approved budget, with one exception
? Governor's budget includes $18 million increase in
GF/MH for comprehensive continuum of care for
substance use disorder services
Mr. Abbott reported that the governor's budget was "almost
identical" to the trustee's recommended budget and he
supported the increase for substance use disorder services.
1:48:26 PM
Mr. Abbott detailed slide 9 titled " Capital Budget":
? Homeless Assistance Project and Special Needs Grant
Trustees recognize the housing and homelessness
crisis in the state
Trustees respectfully requested an increase of
$5.3 million in state funds to address this issue
Mr. Abbott reported that the trust had hoped for an
increase to help the homeless in the amount of $5 million
and provide increased access to housing. He reported that
statistics have proven that permanent supportive housing
made a significant difference to the homeless addressing
addiction; substance abusers were unable to deal with
addiction issues while homeless. He pointed out that the
funding would support two areas of housing; increase the
number of permanent supportive housing and/or increase
rapid rehousing funding. He noted that rent support through
rapid rehousing was one way of helping to secure housing
for the homeless. He reiterated that data was available
showing the success in combating addition with permanent
housing, which reduced other state spending attributed to
addiction. He offered that the trust was fully engaged in
investing in permanent supportive housing.
1:51:59 PM
Mr. Abbott turned to slide 10 titled " Administrative
Budgets":
Trust Authority
? Trustees approved: $4,135.3
? Governor's proposed budget: $3,867.4
Trust Land Office
? Trustees approved: $4,568.4
? Governor's proposed budget: $4,213.2
Total difference: $623.1
Impacts our ability to generate revenue and provide
grants and oversight of existing programs for
beneficiaries.
Mr. Abbott identified the trust's administrative budget as
one area the Board of Trustees did not agree with the
governor's recommended budget. The shortfall would affect
the Trust's ability to "make smart decision" when deploying
resources and managing the assets to gain maximum value. He
reiterated that the funds requested were exclusively AMHTA
funds and could not be used for other expenditures.
1:54:10 PM
Mr. Abbott scrolled to slide 11 titled " Legislative
Priorities":
? Protect Criminal Justice Reform
? Pass SB 76, Title 4 Revisions
? Pass Trust Investment Legislation
Mr. Abbott reviewed the legislative priorities. He
reiterated the trust's "ardent" support for criminal
justice reform. He shared that the University of Alaska
(UA) was measuring the impacts of 10 key elements of
criminal justice reform. The recent findings indicated that
8 elements were found to reduce criminal activity and state
costs. The UA project was funded by the trust and focused
on criminal activity, recidivism, and state expenditures.
The study would be ongoing. He remarked that SB 76 -
Alcoholic Beverage Control; Alcohol Reg, sponsored by
Senator Micciche, represented a cooperative effort between
the alcohol industry and other stakeholders to address
"long needed reform" in alcohol related statutes. Finally,
he remarked that a special legislative audit related to the
investments the trust made over the prior 5 to 8 years,
initiated in December 2016 was in progress. The findings
would be available to the legislature in March 2018. The
trust recommended the legislature introduce a bill prior to
the completion of the audit due in the following month. He
hoped clarifying legislation would be offered soon.
Mr. Abbott thanked the committee for the opportunity to
testify.
2:00:27 PM
Co-Chair Seaton asked about the total difference of $623.1
thousand in the budget on slide 10. He wondered where the
difference came from. Mr. Abbott responded that the
administrative budget was short funded in the prior year
while experiencing some increased expenditures. He
elaborated that the trust land office anticipated an
"aggressive year" with the Southeast land exchange and a
large mineral project in the Icy Cape region of the Gulf of
Alaska. In addition, the Trust Authority office was
attempting to shift to a "fund and measure approach" to
spending that impacted personnel and contract services.
Co-Chair Seaton indicated that Representative Grenn joined
the meeting.
Representative Ortiz returned to slide 9 and cited the $5.3
million increase request for homelessness. He wondered how
funding for the homeless would be distributed. Mr. Abbott
responded that the money would fund community based grants
that would be allocated via a merit based process in
concert with Alaska Housing Finance Corporation (AHFC). He
mentioned the brick and mortar and rapid rehousing grant
types and noted the possibility of other housing related
grants as well.
2:03:19 PM
Representative Wilson asked about the 40 thousand Alaskans
that were served resulting from Medicaid expansion. She
asked whether Mr. Abbott knew how many more services were
available to the expanded population with substance abuse
or behavioral health. Mr. Abbott replied in the negative.
He relayed that the Department of Health and Social
Services (DHSS) had informed him that an additional $50
million in claims for behavioral health were funded since
expansion. Representative Wilson offered that the
Department of Corrections (DOC) was considering opening the
Palmer facility. She heard of conversations underway
regarding use of the facility for behavioral health and
substance abuse in concert with Medicaid. She asked whether
the trust had had conversations with DOC regarding the
issue. She preferred a treatment facility versus
incarceration. Mr. Abbott was unaware of the specific
proposal. He voiced that if offered a similar proposal the
trust would consider supporting the initiative.
2:05:22 PM
Representative Grenn referenced the last slide related to
criminal justice reform and the measured 8 of 10
benchmarks. He asked for more information. Mr. Abbott
reiterated the information concerning the trust funded UA
study measuring criminal justice reform impacts that
discovered 8 of 10 positive results. Representative Grenn
would like to see the information.
Co-Chair Seaton directed Mr. Abbott to send the information
to his office for distribution to committee members.
Vice-Chair Gara sympathized with projects for the homeless.
He asked for details regarding the effective use of the
funds. He wondered why the governor's inclusion of $18
million for substance use disorder services for a four year
program was not included in the capital budget instead of
the operating budget. Mr. Abbott was unsure and concurred
with the later statement.
Representative Guttenberg asked how Medicaid expansion
impacted the trust's budget. He wondered how the governor's
proposed $18 million budget increase affected the trust's
two-year budget cycle. Mr. Abbott replied that the trust
facilitated services for beneficiaries and did not fund
direct services; consequently, Medicaid expansion did not
impact trust funding. The governor's proposed increase was
in general funds (GF) and was not expending trust dollars.
2:08:14 PM
Representative Tilton inquired whether the trust was
applying "some sort of metrics" to determine the impact of
the grant dollars in each of the communities. Mr. Abbott
responded in the affirmative. He added that the trust
employed an "aggressive evaluation process" associated with
the grants. He offered to provide further information to
the committee.
Co-Chair Seaton referred to slide 7 regarding substance
abuse prevention and treatment priorities. He relayed that
whether the AMHTA could use its funding on prevention was
in question. He wondered how the AMHTA was endeavoring to
reduce its number of beneficiaries. Mr. Abbott responded
that in previous times the Trust had not invested in
prevention activities but currently the trust was funding
prevention in targeted activities, which the Trust would
continue to fund.
Co-Chair Seaton thanked Mr. Abbott for his presentation.
2:11:47 PM
AT EASE
2:14:11 PM
RECONVENED
^OVERVIEW: DEPARTMENT OF REVENUE
2:14:26 PM
SHELDON FISHER, COMMISSIONER, DEPARTMENT OF REVENUE,
introduced himself and introduced the PowerPoint
presentation: "Department of Revenue Overview."
2:15:05 PM
Commissioner Fisher turned to slide 2 titled "Department of
Revenue - The mission of the Department of Revenue is to
collect, distribute and invest funds for public purposes"
He reported that the department had 4 primary divisions:
the Tax Division, Treasury Division, Permanent Fund
Dividend Division, and the Child Support Services Division.
He listed the basic responsibilities of each division.
Commissioner Fisher turned to the chart on slide 3 titled
"Authorities, Corporations, and Boards" and listed the
following:
Alaska Housing Finance Corporation (AHFC) Invest and
Distribute
Alaska Permanent Fund Corporation (APFC) Invest
Alaska Retirement Management Board (ARMB) Invest
Alaska Mental Health Trust Authority (AMHTA)
Distribute
Alaska Municipal Bond Bank Authority (AMBBA)
Distribute
2:17:03 PM
Commissioner Fisher advanced to slide 4 titled "DOR Budget
Compared to All Agencies." He indicated that the graph
depicted the GF portion of DOR's budget and how it compared
to other agencies. The department's budget declined both in
terms of absolute dollars and in terms of a percentage of
agency operations. He reported that the FY 19 budget
declined by $640 thousand from FY 18. A large portion of
the decline, $525 thousand, reflected a shift in allocation
from the Treasury Division to the ARMB budget associated
with a decline in state assets and a reallocation of the
cost of managing the assets. He noted a reduction in the
Child Support Services Division in the amount of $425
thousand, which $145 thousand was GF. He noted an increase
of $31 thousand in the AMHTA budget associated with the
long-term care ombudsmen.
Commissioner Fisher continued to slide 5 titled "DOR Budget
Line Items All Funds" He pointed out that the chart
represented the entire DOR budget. He noted that the green
portion of the bar graphs were associated with AHFC grants.
The red portion of the bars that represented services was
the cost of managing the state's assets. The costs were
growing, which meant the assets were growing. He pointed to
the blue portion of the bars that depicted personal
services, which were growing. He qualified that the growth
was beneficial because the increase was due to bringing
more asset management in-house in Juneau at a reduced rate.
2:20:20 PM
Commissioner Fisher advanced to slide 6 titled "DOR
AppropriationsGF Only" He relayed that the graph provided
the same information that had been presented in a prior
slide but showed a view over time. He remarked that the
blue line at the top portrayed the taxation and treasury
functions. He pointed to the steep decline between FY 15
and FY 16 when significant reductions were made. He noted
generally declining budgets in other areas of the
department over the prior few years. He moved to slide 7
titled "DOR AppropriationsAll Funds." He highlighted that
the APFC budget increased primarily as a result of
increased asset management fees as a result of a rise in
Permanent Fund asset values. The remainder of the
department maintained a flat budget with a modest decrease
in AHFC.
2:22:36 PM
Representative Grenn cited the sharp increase in the AMHTA
budget. He asked for further information. Commissioner
Fisher replied that the increase occurred between FY 14 to
FY 15 from $410 thousand to $911 thousand. The increase
was associated with a fetal alcohol syndrome awareness
campaign.
Representative Ortiz asked about the significant reduction
in the taxation and treasury line from FY 15 through FY 19.
He wondered if the decline reflected a reduction in
auditing staff. Commissioner Fisher responded that the
reductions resulted from 2 issues. The first was due to
automating the financial system. The change allowed a
reduction of 19 positions, mostly through attrition.
Representative Ortiz asked whether the reductions
interfered with the ability of the auditing staff to keep
up with oil tax audits. Commissioner Fisher answered in the
negative. He admitted that oil tax audits were experiencing
a "significant delay" but did not attribute the delay to
staff reduction.
2:25:21 PM
Commissioner Fisher turned to slide 8, slide 9, and slide
10 that provided information related to DOR's core
divisions and corporations. The information showed the same
information for each division in a table format. He drew
attention to slide 8 relating to the number of positions in
the Tax Division. He highlighted that 107 positions existed
and 91 were full, with a number of the vacant positions
recently being filled. He noted the complexity of certain
jobs within the Tax Division made the jobs more difficult
to fill. He mentioned the same issue with the Treasury
Division and noted that the vacant positions were mostly
investment officers and noted that recently 3 were hired.
He also called attention to the effectiveness ratings that
were ranked as follows: exceptional, highly effective,
effective, moderately effective, and low effective. He
strongly endorsed the ranking system that established
standards and measured performance against the standards.
2:28:26 PM
Representative Guttenberg referred to the increase in the
AMHTA budget and wondered why the media campaign was not a
capital budget item. Commissioner Fisher was not sure of
the details but guessed the operating budget was the
appropriate budget for the type of expenditure.
Co-Chair Seaton had a question concerning tax auditors. He
did not see the additional positions in the governor's
budget. He asked if DOR would be hiring the 2 tax auditors.
Commissioner Fisher replied that the tax auditors had been
hired and were performing their duties. Co-Chair Seaton
asked whether DOR had a policy regarding the number of days
positions would remain open before a new hire was brought
on in order to fund the positions. Commissioner Fisher
pointed to the vacancies in the Tax Division and noted that
the number was higher than the departments overall vacancy
factor. He reported that the vacancies were less by design
and due to the nature of filling technical jobs. He was
uncertain whether a delay in hiring was necessary and would
follow up with answers. Co-Chair Seaton asked for a written
or generalized policy regarding a length of time a vacancy
needed to remain open. Commissioner Fisher replied that
none of the divisions had a policy regarding delaying
hiring or a vacancy factor.
2:33:29 PM
Representative Kawasaki asked if the committee would hear
from Alaska Housing Finance Corporation (AHFC). Co-Chair
Seaton replied in the negative.
Representative Kawasaki requested further information
regarding AHFC grant funding for specific grants to be
distributed to different agencies. He was trying to
determine how the grants worked together. Commissioner
Fisher responded that he would follow up.
2:35:09 PM
AT EASE
2:36:46 PM
RECONVENED
^OVERVIEW: DEPARTMENT OF ADMINISTRATION
2:36:49 PM
LESLIE RIDLE, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,
introduced herself. She introduced the PowerPoint
presentation: "Department of Administration Overview." She
began with slide 2 titled " Department of Administration":
The mission of the Department of Administration is to
provide consistent and efficient support services to
state agencies so that they may better serve Alaskans.
Ms. Ridle moved to the Department of Administration (DOA)
flow chart on slide 3. She mentioned that DOA directly
served the public through the Division of Motor Vehicles
(DMV), Office of Public Advocacy (OPA), and the Public
Defender Agency (PDA).
2:38:56 PM
CHERYL LOWENSTEIN, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ADMINISTRATION, reported that the
first 4 slides were supplied by the Legislative Finance
Division (LFD). She reviewed slide 4 that depicted a chart
representing the DOA Share of Total Agency Operations
(General Fund (GF) only). She delineated that the
department's budget peaked at $111 million in FY 15 then
steadily declined. The FY 19 budget contained a $1 million
increase each for OPA and PDA.
2:40:12 PM
Ms. Lowenstein reviewed the chart on slide 5 that
represented DOA's line items in all funds. She reported
that the bulk of DOA's budget was in Services and Personal
Services. She continued to slide 6 that contained a graph
portraying "Appropriations within the Department of
Administration (GF Only)." She highlighted that Legal and
Advocacy Services comprised 50 percent of the budget or 60
percent counting Undesignated General Funds (DGF) only; DMV
was the second largest budget component and was 100 percent
receipt driven; it returned money to GF. The third highest
budget component was Centralized Administrative Services
that was comprised of four areas: Division of Finance,
Division of Personnel and Labor Relations, Division of
Retirement and Benefits, and HPA Health Plans
Administration. She reported that slide 7 showed "All
Funds." She elucidated that the agency budget was comprised
of 31 percent UGF and Designated General Funds (DGF) and 69
percent other funds, which was primarily interagency
receipts.
2:42:27 PM
Ms. Lowenstein moved to slide 8 depicting a chart titled
"DOA Budget by Division GF Only." She reported that in
all the divisions that provided services to the agencies
DOA continued to find efficiencies and reduced GF without
raising rates.
{Secretary Note: The remainder of the slides were presented
in chart form containing information regarding each
division or area of the agency.]
Ms. Ridle reviewed slide 9 titled "Division of Finance."
She reported that the division launched the new accounting
system, Integrated Resource Information System (IRIS). She
moved to slide 10 titled " Division of Personnel and Labor
Relations." She noted that the division was negotiating 7
public employee contracts. She pointed out that the agency
did not have a policy to hold vacant positions open before
hiring.
2:44:39 PM
Ms. Ridle continued to slide 12 titled "Division of
Retirement & Benefits." She mentioned that the division was
engaged in a new effort, the AK Reform Group, to discuss
health care in the state; the appropriation for the group
was $250 thousand. She hoped to produce a "blueprint" for
health care in Alaska by the year's end. She pointed to the
$750 thousand appropriation to continue to study the
consolidation of state and school district health care
plans. She cited the $3.7 million appropriation for the
implementation of an enhanced Employee Group Waiver Plan
(EGWP), which was a federal subsidy for the retiree health
prescription drug benefit. The agency was typically
reimbursed at the end of the year ($10 million in the prior
year), but the new plan would reimburse the state as funds
were expended. She expected $30 million to $40 million in
reimbursements.
Co-Chair Seaton pointed to Health Plans Administration that
designated zero employees and asked for clarity. Ms.
Lowenstein responded that the Health Plans Administration
was paid to the third party administrator (AETNA) that
received an additional $3.7 million to manage EGWP. Co-
Chair Seaton deduced that the state contracted out all the
work and did not utilize state employees. Ms. Lowenstein
responded affirmatively.
Representative Guttenberg asked about the healthcare spend
noted on the chart and read the following:
$700M health care spend; new cost share & plan design
provisions reduce employee health plan cost trend less
than 4%, below nat'l avg.
Representative Guttenberg wondered how the state could
manage an "out of control" system. Ms. Ridle deferred to a
later slide that contained more detail.
2:49:51 PM
Representative Kawasaki cited a one-time increment in the
Comprehensive Health Insurance Fund that might be an
inappropriate use of the fund. He asked Ms. Ridle to
address the issue. Ms. Ridle responded that a bill would be
introduced to correct the fund source. Representative
Kawasaki mentioned the Alaska Mental Health Trust Authority
(AMHTA) feasibility studies that were contained in SB 74 -
Medicaid Reform;Telemedicine;Drug Database [CHAPTER 25 SLA
16 - 06/21/2016] that were utilized as part of the
consolidation study Ms. Ridle cited. He remembered that the
study was funded in a fiscal note as part of HB 74. He
asked for clarity. Ms. Lowenstein replied that the study
had been completed and the non-perm position had been
fulfilled. Representative Kawasaki asked about the report
and whether it had been completed. Ms. Ridle indicated that
3 reports were generated and were available on DOA's
website. The appropriation she referred to was for
implementation.
2:52:12 PM
Ms. Ridle briefly mentioned slide 13 titled "Division of
Risk Management." She discussed "Shared Services of Alaska"
on slide 14. She noted the $500 thousand appropriation for
the Business Transformation Office, which was funded
through a 1.5 percent vendor fee. The office helped other
agencies create more efficient processes and was a
successful effort. She mentioned the increase of $138
thousand for state surplus for staff due to increased
online sales. The department acted aggressively to
consolidate space and negotiate leases and had saved $1
million.
Representative Wilson noticed that three positions that
were part of Shared Services had returned to the Governor's
office and wondered why. Ms. Ridle did not know and would
provide the information.
Ms. Ridle scrolled to slide 15 titled "Office of
Information Technology" (OIT). She spoke to the first phase
of consolidating technology as mandated by the governor the
prior year. Seven agencies had been rolled in and the
remainder would be added by the end of the fiscal year. The
second phase would begin next year.
2:56:40 PM
Representative Guttenberg declared that he had a
significant issue around the state's broadband services. He
thought it was very costly for the state to operate and
conduct business in areas of the state lacking broadband.
He voiced that the private sector was not providing service
and the state lacked a plan. He favored the consolidation
of services, but the lack of broadband was very expensive
to the state. He noted every department would benefit from
better broadband. He wanted to see a breakdown of broadband
costs. He mentioned several communities and the need for
broadband. He asked what the administration was doing to
enhance the ability of the state to function in places
without broadband. He opined that Alaska was operating as a
third world country. He believed that the state was not
dealing with a vital issue. Ms. Ridle responded that the
Office of Information Technology's consolidation plan
consolidated the work of the 17 state agencies and did not
involve broadband. She indicated that broadband delivery
was not in DOA's budget. She was not an expert in broadband
and was unaware of a plan. She offered to provide further
information. Representative Guttenberg stated that "if not
you who" regarding Ms. Ridle's response. He pointed out
that DOA was charging departments for computer use across
the state and should create efficiencies for use instead of
maintaining the "status quo," which was very expensive. He
noted that all departments were advancing various distance
delivery services for services like telehealth, education,
and court hearings. He countered that the state was unable
to deliver the services. Ms. Lowenstein was aware of
several things OIT was working on. She admitted that the
network was old and OIT was undertaking a network refresh
and was installing devices in rural areas to increase the
speed and availability of the network. In addition,
circuits were being consolidated. Representative Guttenberg
believed the old network should be completely scrapped.
3:02:27 PM
Ms. Ridle scrolled through slide 16 titled "SATS and ALMR"
and slide 17 titled " Administrative Services Division."
She moved to slide 18 titled "Division of Motor Vehicles."
She reported that DMV returned $39 to $42 million per year
to state government. She offered that DOA was utilizing
public and private partnership to deliver services and
collected and distributed over $18 million in motor vehicle
registration tax changes to communities. The wait time at
DMV was reduced from 40 minutes to 8 minutes. She declared
that the improvements were accomplished through
reorganization and process efficiencies.
Representative Guttenberg agreed that DMV had been turned
around. He thanked the department for their effort.
3:04:09 PM
Ms. Ridle continued to slide 19 titled "Office of Public
Advocacy." She related that OPA received $86.7 thousand
from AMHTA to hire one public guardian. The department was
requesting $1 million to hire 9 more public guardians and
one guardian ad litem. She elaborated that the courts send
over 100 wards to OPA, which burdened the staff with the
high volume of caseloads. The division had raised its fees
and had collected more funding than expected. She added
that the OPA had a 40 percent criminal and 60 percent civil
case load.
Vice-Chair Gara spoke of the guardian ad litems and stated
that they carry the highest caseloads in the country. He
asked the commissioner to talk to the administration about
doing something different or adding funding to the
supplemental budget.
Representative Wilson asked about the "Parent CINA
Representation/Civil" listed under the "Allocation or
Service" grid on slide 19. Ms. Ridle replied that OPA
represented both children and parents in Children In Need
of AID (CINA) cases. Representative Wilson deduced that OPA
and PDA were involved on both sides of some cases. She
asked for the budget breakdown for guardian ad litems.
3:08:15 PM
Ms. Ridle reviewed slide 20 titled "Public Defender
Agency." She noted the amount of $193.8 from AMHTA for a
project in Bethel for a wholistic defense model study. In
addition, $453 thousand was appropriated for Rule 39 to
supplement prior underfunding based on faulty estimates.
Co-Chair Seaton asked her to define Rule 39. Ms. Ridle
explained that Rule 39 was the payment the department
received from the Permanent Fund Dividend.
Ms. Ridle reviewed slide 21 titled "Office of
Administrative Hearings." She highlighted that the office
was highly effective and had eliminated its backlog via a
new caseload management system that was cost efficient. She
turned to slide 22 titled " Violent Crimes Compensation
Board." She commented that the Violent Crimes Compensation
Board (VCCB) budget was derived from federal funds and DOA
merely administered its budget. She advanced to slide 23
titled "Alaska Public Offices Commission." She offered that
Alaska Public Offices Commission (APOC) budget was cut in
half recently and that DOA only administered its budget.
Representative Kawasaki asked how many vacant positions
were within the commission. Ms. Ridle replied that two out
of the 8 positions were vacant. Representative Kawasaki
suggested that other boards and commissions were funded
through fee collection. He suggested that APOC could be
funded similarly and wondered why it was not. He asked
where the fines and judgments administered by APOC were
deposited. Ms. Ridle responded that a part of APOC's budget
was supported by fee collection. She agreed with
Representative Kawasaki and would be happy to work with
someone on legislation to restructure or increase APOC
fees.
3:12:48 PM
Ms. Ridle reported that the "Alaska Oil and Gas
Conservation Commission" on slide 24 was basically its own
commission funded by industry and chaired by Hollis French.
She reviewed slide 25 titled "Public Communication
Services." She reported that the Public Broadcasting
Commission (PBC) administered its grants.
Representative Ortiz noted the reduction of $902 thousand
since FY 2009 in funding for Public Radio. He asked how the
decrease impacted public radio. Ms. Ridle was unable to
answer the question and would follow up. Representative
Ortiz asked whether it was possible for someone from PBC to
advocate for its funding. Ms. Ridle answered in the
affirmative.
Representative Wilson asked whether the PBC grants had
parameters it had to follow for expenditure of the funds.
Ms. Ridle replied that the commission administered and
directed its grants. She addressed the Satellite
Infrastructure allocation and informed the committee that
the infrastructure was a critical piece and backbone of the
Emergency Broadcasting System (EMS).
3:16:02 PM
Representative Guttenberg was aware that Senator Ted
Stevens had been a strong supporter of Satellite
Infrastructure. He asked what part the infrastructure
funding played in the early warning and EMS system. Ms.
Lowenstein reported that the funding was for the entirety
of the satellite system and was imperative for the EMS
system.
Ms. Ridle moved to slide 26 titled "Miscellaneous".
relating to several miscellaneous services and allocation
within the agency. Ms. Ridle continued to slide 27 titled "
DOA Health Care Costs." She deferred to Ms. Lowenstein.
Ms. Lowenstein reported that the slide was a look back at
health care cost trends; the amount DOA paid per PCN
(Position Control Number) for health care contribution and
workers compensation. In FY 19 the amount was $764.8 and
was based on 1,224 PCN's at the time the information was
provided. She added that the total DOA health care amounted
to $341,218.4 thousand and was 6.2 percent of the budget.
3:18:57 PM
Ms. Ridle addressed slide 28 titled "AlaskaCare Annual
Savings." She relayed that the slide showed the changes to
Alaska Care that would bring down costs to the state. In
addition to items listed on the chart, the department was
constantly attempting to find ways to bring down costs. She
commented that the department recently issued RFP's for
travel, pharmacy, and a best value RFP for a third party
plan administrator. She reiterated that the department was
working on implementing the EGWP to save $40 to $60 million
in savings. The department was working diligently to save
health care costs.
Co-Chair Seaton referenced an individual bid system and
asked whether the state was engaged in the system. Ms.
Ridle replied that the department did obtain as many
providers under contract as possible to offer employees a
better price. She added that the third party administer
also tried to bring in as many providers as possible under
the network. Co-Chair Seaton restated that he referred to a
bid within the network that included travel. Ms. Ridle
responded that the travel RFP addressed travel to a doctor
outside the network. The RFP allowed the travel and made
the arrangements for the patient. The travel RFP would save
the state money by allowing and arranging travel to a
doctor that provided less expensive services. Co-Chair
Seaton understood the process was left to the employee. He
mentioned a bid process that offered less expensive
services including travel. He asked whether the state was
considering the bid based service. Ms. Ridle deferred to
the health care policy administrator.
3:25:48 PM
EMILY RICCI, HEALTH CARE POLICY ADMINISTRATOR, DEPARTMENT
OF ADMINISTRATION, responded that she understood the Co-
Chair's description was that if someone required a specific
specialty procedure a bid process existed among network
providers and the patient would travel to receive the
lowest bided service. She answered that the scenario was
not an idea contemplated before, but she would follow up.
Representative Guttenberg mentioned speaking to a plan
administrator who sent everyone out of state for a hip
replacement. The plan covered travel for the patient and
spouse hotel and for the procedure. He reported that the
plan was saving a lot of money.
Representative Kawasaki referenced the Department of
Education and Early Development (DEED) health care totals
and noted its health care totals were one-quarter of DOA's.
He wondered why. Ms. Ridle was unable to answer the
question and would follow up.
Co-Chair Seaton mentioned DOA's percent of health care
costs at 5.9 percent in FY 18 going to 6.2 percent in FY
19. He asked what drove the increase. Ms. Ridle responded
that the largest change was the employee count rising due
to the increase in shared services employees moving into
the department from other agencies.
3:29:57 PM
Representative Wilson asked why Medicaid was separate and
part of the Department of Health and Social Services (DHSS)
budget. Ms. Ricci responded that both Medicaid and the
public employer health plans functioned in different
regulatory environments. In addition, types of service
utilization differed. She delineated that long-term care
services and behavioral health services were much higher
with Medicaid compared to the commercial plans while the
medical care services were essentially the same. However,
how the plans were reimbursed were different; fee for
service versus a strict regulatory system. She declared
that it was not as easy to compare the two systems as it
seemed. Representative Wilson opined that pooling services
or administration between the plans would save money.
Co-Chair Seaton responded that he read studies that
concluded that pooling employee plans and Medicaid was
unworkable due to the federal regulations and prohibitions.
He deduced that pooling would probably prove to be costlier
to the state.
Representative Wilson was suggesting that services such as
travel could be shared and believed that cost savings in
health care should be able to cross over plans. Ms. Ricci
reported that the two departments had been communicating
over the last year about how to share some of the services
such as a medical director or some pharmacy services.
Co-Chair Seaton reviewed the agenda for the following day.
ADJOURNMENT
3:35:57 PM
The meeting was adjourned at 3:35 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2018 Leg PowerPoint HFIN FINAL.pdf |
HFIN 1/24/2018 1:30:00 PM |
HFIN - AMHTA Budget Overview |
| DOR Budget Overview for HFC 1-24-18.pdf |
HFIN 1/24/2018 1:30:00 PM |
HFIN-DOR Budget Overview |
| Department of Administration HFIN 2018 Overview FINAL.pdf |
HFIN 1/24/2018 1:30:00 PM |
HFIN - DOA Budget Overview |
| AMHT Response HFIN AJIC ACJP cost analysis .pdf |
HFIN 1/24/2018 1:30:00 PM |
|
| AMHT Response HFIN ajic.2017-10-02.ajic-results-first.media.pdf |
HFIN 1/24/2018 1:30:00 PM |