Legislature(1999 - 2000)
02/22/2000 03:36 PM House HES
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL
SERVICES STANDING COMMITTEE
February 22, 2000
3:36 p.m.
MEMBERS PRESENT
Representative Fred Dyson, Chairman
Representative Jim Whitaker
Representative Joe Green
Representative Carl Morgan
Representative Tom Brice
Representative Allen Kemplen
Representative John Coghill
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 302
"An Act relating to disclosure of public assistance information
to report suspected abuse or neglect of children or vulnerable
adults."
- MOVED CSHB 302(HES) OUT OF COMMITTEE
HOUSE BILL NO. 298
"An Act requiring that health care insurers provide coverage for
treatment of diabetes."
- MOVED CSHB 298(HES) OUT OF COMMITTEE
HOUSE BILL NO. 322
"An Act relating to the financing of construction and major
maintenance of public school facilities; authorizing the
commissioner of revenue to sell the right to receive a portion of
the anticipated revenue from a certain tobacco litigation
settlement to the Alaska Housing Finance Corporation; authorizing
the issuance of bonds by the Alaska Housing Finance Corporation
with proceeds to finance public school construction and major
maintenance grants; providing for the creation of subsidiary
corporations of the Alaska Housing Finance Corporation for the
purpose of financing or facilitating the financing of public
school construction and major maintenance grants; relating to the
annual public school construction and major maintenance grant
application and approval process; providing for allocation of
additional reimbursement of public school construction debt; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 375
"An Act relating to abuse of inhalants."
- ASSIGNED TO SUBCOMMITTEE
HOUSE BILL NO. 260
"An Act relating to coverage of children and pregnant women under
the medical assistance program; and providing for an effective
date."
- BILL HEARING CANCELED
PREVIOUS ACTION
BILL: HB 302
SHORT TITLE: DISCLOSURE OF PUBLIC ASSISTANCE INFO
Jrn-Date Jrn-Page Action
1/21/00 1965 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1966 (H) HES, JUD
1/21/00 1966 (H) INDETERMINATE FISCAL NOTE (ADM)
1/21/00 1966 (H) 2 ZERO FISCAL NOTES (ADM, DHSS)
1/21/00 1966 (H) GOVERNOR'S TRANSMITTAL LETTER
1/21/00 1966 (H) REFERRED TO HES
2/10/00 (H) HES AT 3:00 PM CAPITOL 106
2/10/00 (H) Scheduled But Not Heard
2/22/00 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 298
SHORT TITLE: REQUIRE HEALTH INS COVERAGE FOR DIABETES
Jrn-Date Jrn-Page Action
1/21/00 1961 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1961 (H) HES, L&C, FIN
1/24/00 1996 (H) COSPONSOR(S): PHILLIPS
2/22/00 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 322
SHORT TITLE: PUBLIC SCHOOL CONSTR/MAINTENANCE FUNDING
Jrn-Date Jrn-Page Action
1/28/00 2028 (H) READ THE FIRST TIME - REFERRALS
1/28/00 2028 (H) HES, FIN
1/28/00 2028 (H) 2 FISCAL NOTES (DOE, REV)
1/28/00 2029 (H) GOVERNOR'S TRANSMITTAL LETTER
1/28/00 2029 (H) REFERRED TO HES
2/22/00 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 375
SHORT TITLE: INHALANT ABUSE
Jrn-Date Jrn-Page Action
2/16/00 2209 (H) READ THE FIRST TIME - REFERRALS
2/16/00 2209 (H) HES, JUD, FIN
WITNESS REGISTER
ELMER LINDSTROM, Special Assistant
Office of the Commissioner
Department of Health & Social Service
PO Box 110601
Juneau, Alaska 99811
POSITION STATEMENT: Presented HB 302.
DWIGHT BECKER, Protective Services Coordinator
Division of Senior Services
Department of Administration
3601 C Street, Suite 310
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in support of HB 302.
REPRESENTATIVE LISA MURKOWSKI
Alaska State Legislature
Capitol Building, Room 406
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 298.
GLORIA TOKAR
2324 Hialeah Drive
Anchorage, Alaska 99517
POSITION STATEMENT: Testified on HB 298.
GORDON EVANS, Lobbyist
Health Insurance Association of America
211 Fourth Street, Suite 305
Juneau, Alaska 99801
POSITION STATEMENT: Testified against HB 298.
MARY LOU KELSEY
PO Box 894
Homer, Alaska 99603
POSITION STATEMENT: Testified in support of HB 298.
LAUREN BELL
PO Box 894
Homer, Alaska 99603
POSITION STATEMENT: Testified in support of HB 298.
MICHELLE CASSANO, Alaska Executive Director
American Diabetes Association
801 West Fireweed Lane, Number 103
Anchorage, Alaska 99508
POSITION STATEMENT: Testified in support of HB 298.
JANEL WRIGHT, Attorney
Disability Law Center of Alaska
2945 Emory Street
Anchorage, Alaska 99508
POSITION STATEMENT: Testified in support of HB 298.
DONALD NOVATNEY
1120 Timberline Court
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 298.
KAREN REHFELD, Director
Education Support Services
Department of Education & Early Development
801 West Tenth Street, Suite 200
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 322.
JAMES BALDWIN, Assistant Attorney General
Governmental Affairs Section
Civil Division (Juneau)
Department of Law
PO Box 110300
Juneau, Alaska 99811
POSITION STATEMENT: Testified on HB 322.
EDDY JEANS, Manager
School Finance and Facilities Section
Education Support Services
Department of Education & Early Development
801 West Tenth Street, Suite 200
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions on HB 322.
BRAD PIERCE, Senior Policy Analyst
Office of the Director
Office of Management & Budget
Office of the Governor
PO Box 110020
Juneau, Alaska 99811
POSITION STATEMENT: Answered questions on HB 322.
ACTION NARRATIVE
TAPE 00-19, SIDE A
Number 0001
CHAIRMAN FRED DYSON called the House Health, Education and Social
Services Standing Committee meeting to order at 3:36 p.m.
Members present at the call to order were Representatives Dyson,
Whitaker, Green, Morgan, Brice, Kemplen and Coghill.
HB 302 - DISCLOSURE OF PUBLIC ASSISTANCE INFO
Number 0008
CHAIRMAN DYSON announced the first order of business as House
Bill No. 302, "An Act relating to disclosure of public assistance
information to report suspected abuse or neglect of children or
vulnerable adults."
Number 0012
ELMER LINDSTROM, Special Assistant, Office of the Commissioner,
Department of Health & Social Services (DHSS), came forward to
present HB 302. He stated that HB 302 is a simple bill trying to
solve a simple problem. Prior to federal welfare reform, it was
clear under federal law that employees who do the eligibility
determinations in the Division of Public Assistance had to report
when they had probable cause or good reason to believe that there
had been abuse of either a child or a vulnerable adult.
MR. LINDSTROM said he doesn't believe that was a frequent
experience, but on occasion it would come up in the course of
their duties. The public assistance employees are not part of
the child protection system or the adult protective services
system. The language disappeared under federal law that replaced
the AFDC program. Because of confidentiality laws related to
their duties in public assistance, information about who is on
public assistance is not public information. In the absence of
that previous federal law, which said "you shall report if you
come to believe there has been abuse," public assistance
employees are getting a mixed message.
MR. LINDSTROM explained that HB 302 removes that ambiguity and
makes it clear that public assistance employees should, if they
have good cause to suspect abuse, report that abuse both to the
child protection system and to adult protective services. He
stated the DHSS provided a zero fiscal note, and there is either
a zero or indeterminate fiscal note from adult protective
services.
Number 0205
REPRESENTATIVE GREEN asked Mr. Lindstrom if it would accomplish
the same thing to put the public assistance employees with all
the other persons required to report in AS 47.17.020 or AS
47.17.010.
MR. LINDSTROM agreed that would be possible, but the DHSS prefers
this approach. He noted that most of the people on the list are
external to state government. It is more appropriate to make
that exemption to the public assistance confidentiality rule
right within the public assistance statute.
MR. LINDSTROM mentioned he did meet with Representative Green's
staff and understands there was a concern about the mandatory
aspect. He believes that could be accomplished simply on page 1,
line 5 of the bill. The suggested change would read:
(d) Notwithstanding (a) of this section, the
department, an employee of the department, or a staff
employee of a departmental contractor or grantee shall
disclose information concerning ...
MR. LINDSTROM acknowledged that the Department of Law agrees that
is superior language.
Number 0589
DWIGHT BECKER, Protective Services Coordinator, Division of
Senior Services, Department of Administration, testified via
teleconference from Anchorage. He expressed support for HB 320.
It may bring more reports of harm to the division. Many of the
people who are vulnerable are on public assistance. Public
assistance is one way he feels the division would be able to
reach that vulnerable population.
REPRESENTATIVE WHITAKER asked Mr. Lindstrom what are the fail-
safes for possible abuse between the public assistance employee
and the person applying for assistance. He wondered what would
protect that individual from false allegations.
Number 0754
MR. LINDSTROM stated in this case, the best assurance he can give
is simply the fact prior to 1995, when federal welfare reform
passed, this in fact was the law of the land. There was a
requirement on the public assistance employees to report. In his
seven years plus with DHSS, he has never seen or heard of a
complaint where the genesis of it was the public assistance
employee. He believes the track record speaks for itself. He
has never heard of that being an issue. These employees are
subject to the department's rules and policies and discipline.
REPRESENTATIVE WHITAKER asked for an estimate of the number of
appropriate actions of those who are going to report incidents of
this nature.
MR. LINDSTROM mentioned he thought there might need to be a
fiscal note on the bill in case reports had to be made, but he
heard back from the Division of Public Assistance that while this
is not unheard of, it is insignificant and the division has not
even kept statistics on the number of times it has occurred.
CHAIRMAN DYSON asked if there is a report of neglect or harm on a
vulnerable adult, does that follow the pattern of a child who
goes before a magistrate or court to take custody of that adult.
MR. BECKER confirmed that Adult Protective Services would conduct
an investigation at a preliminary assessment of the situation to
see if in fact the adult was in need of a guardian. They would
assess if the adult was deficient in mental capacity to make
his/her own decision. If that were the case, they would make a
recommendation that a neurological examination be conducted. The
most important thing is they want to protect the individuals
rights to remain in the community to remain free and make their
own decisions. They take a very conservative approach to this
and only recommend that the petition be filed when it is
absolutely necessary for the individual's own protection.
CHAIRMAN DYSON asked Mr. Becker at what point to they have to go
before a judge to proceed in this process.
MR. BECKER said they work with the attorney general first in
preparing the petition. Once a petition is filed, a hearing is
set and that is when they would go before a judge. If it is an
emergency hearing, they would go before the judge within 72
hours, otherwise it is usually about two month.
CHAIRMAN DYSON said he assumed that vulnerable adults are
provided with representation.
MR. BECKER replied absolutely. They are provided with an
attorney to represent them.
Number 1060
REPRESENTATIVE BRICE asked Mr. Lindstrom if it was a concern that
parents might not file for public assistance if they thought they
would be reported for abuse.
MR. LINDSTROM noted that wasn't something that came up.
REPRESENTATIVE COGHILL asked what is the accountability if there
is a misuse of the reporting.
MR. LINDSTROM indicated that the report of harms goes to the
agency that is then charged with the investigation. The public
assistance employee is simply making a report of suspected harm.
The accountability historically lies with the agency doing the
investigation.
Number 1175
REPRESENTATIVE BRICE made a motion to adopt Amendment 1 which
read:
(d) Notwithstanding (a) of this section, the
department, an employee of the department, or a staff
employee of a departmental contractor or grantee shall
...
CHAIRMAN DYSON asked whether there was any objection. There
being none, Amendment 1 was adopted.
Number 1216
REPRESENTATIVE BRICE made a motion to move HB 302, as amended,
out of committee with individual recommendations and accompanying
fiscal note. There being no objection, CSHB 302(HES) moved from
the House Health, Education and Social Services Committee.
The committee took an at-ease from 3:56-3:59 p.m.
HB 298 - REQUIRE HEALTH INSURANCE COVERAGE FOR DIABETES
Number 1241
CHAIRMAN DYSON announced the next order of business as House Bill
No. 298, "An Act requiring that health care insurers provide
coverage for treatment of diabetes."
Number 1250
REPRESENTATIVE LISA MURKOWSKI, Alaska State Legislature, came
forward to present HB 298 as the sponsor. She informed the
committee that diabetes affects over 30,000 Alaskans. She has
willingly brought forward this legislation that would require
insurance carriers to provide for diabetes coverage for diabetes
equipment which would include things such as pumps and meters,
supplies such as test strips, medication and insulin, and
training and education. It has become apparent that the training
and education aspect of diabetes is the key. Diabetes is a
disease without a cure, but it can be controlled and maintained
through proper education by training people how to deal with
their disease on a daily basis.
REPRESENTATIVE MURKOWSKI noted the controversy surrounding this
bill is that insurance is being mandated. If the disease is
treated and dealt with on a daily basis, the long-term insurance
costs will be reduced by education and preventive maintenance.
Similar legislation has been passed in 37 states; 35 of those
have passed legislation that would require the coverage as
opposed to just offering the coverage. Studies were done in
those states looking at whether or not the cost of insurance is
increasing or in the long run reducing health care costs; those
studies are coming back very heartening and supporting the
position that the American Diabetes Association has taken.
Number 1462
REPRESENTATIVE GREEN commented that he is reluctant to force an
industry to do something that the industry should see is to their
benefit anyway.
REPRESENTATIVE MURKOWSKI replied she doesn't disagree with him.
However, many insurance companies have chosen not to follow the
good advice, and sometimes they just need to be encouraged a
little bit more. Many of the major insurance carriers do provide
for the education, equipment and supplies. This coverage is
addressed under the state's insurance program, but about 30
percent of the insurers in the state do not provide for this kind
of coverage. There is discussion at the federal level that would
require the coverage as well. She admitted she sponsored this
bill with trepidation because it goes against the grain of doing
the right thing because it is the right thing, rather than having
the government direct people to do it; however, she was moved by
the statistics that maybe the insurance carriers need just a bit
of a kick.
Number 1631
REPRESENTATIVE BRICE made a motion to adopt the proposed
committee substitute (CS) for HB 298, version 1-LS1218\D, Ford,
2/17/00, as a work draft. There being no objection, that
proposed CS was before the committee.
REPRESENTATIVE BRICE commented that he is also uncomfortable
about a mandate, but sometimes the insurance company just needs a
nudge. He asked Representative Murkowski what kind of general
ailments and sicknesses are associated with diabetes when it is
not addressed.
Number 1740
REPRESENTATIVE MURKOWSKI answered that it is blindness, renal
failure, amputation and all the bad and ugly things people don't
want to happen to themselves or their loved ones.
Number 1788
GLORIA TOKAR testified via teleconference from Anchorage. She
told the committee that she has her diabetes covered, but there
are many people with diabetes who are not as fortunate to have
insurance coverage. There are people who don't have the
professional help she enjoys through her insurance carrier. She
doesn't want people to die for a lack of education. The help is
available in the community, but people need to be able to afford
it. She shared experiences from her personal life. She is a
Type 2 diabetic. She does not have to be on insulin but does
have to monitor her glucose three times a day, and that gets to
be costly.
Number 1924
GORDON EVANS, Lobbyist, Health Insurance Association of America
(HIAA), came forward to testify. He read the following
testimony:
[Health Insurance Association of America] HIAA is a
national trade association of commercial health
insurance companies which provide health insurance for
approximately 55 million Americans.
I would like to preface my remarks on House Bill 298 by
saying that when Representative Brice introduced a
similar bill, HB 420, two years ago, I told him my
client could support the bill so long as it called for
a mandated offering and did not mandate that the
benefit had to be included in all health insurance
policies issued in the state. [House Bill] HB 420 at
that time did indeed call for a mandated offering --
that is, all insurers at least had to offer
policyholders the opportunity to purchase coverage for
the particular need. Unfortunately, HB 420 was not
considered.
As I have noted on previous occasions in testimony
before this committee, HIAA favors the preservation of
a system that allows the prospective purchaser of
health insurance free choice of which risks he or she
wishes to cover from among the various coverages
offered by competing insurance carriers. [Health
Insurance Association of America] HIAA also believes
that the choice of how the policyholder spends funds
available for health insurance should be free of
government decree, and we continue to adamantly oppose
the proliferation of benefits through government
mandates.
Anytime the government requires or mandates certain
coverage, that mandate becomes one of the rating
factors which insurance companies use in making their
underwriting decisions. Mandated benefits can impose
significant burdens on health insurance carriers and
drive up premium costs for consumers. Studies have
shown that mandated benefits discourage small employers
from offering health benefits to their employees. The
result is a large and more costly uninsured population.
One recent study indicates that with each 1 percent
increase in premiums, small business sponsorship of
health insurance drops by 2.6 percent. People can find
studies to support whatever position they advocate.
Mandates also affect the cost of, and therefore, the
number of individual health insurance policies as well
as group policies.
Finally, on that topic, just for your information, a
1999 study ... showed that nationwide the number of
state mandates has increased dramatically, almost 25-
fold, during the last two decades, making health
insurance disproportionately more expensive for small
companies and causing as many as one in four Americans
now to be uninsured. In Alaska, we currently have, to
my knowledge, seven mandated benefits ... mental
health, 48-hour hospitalization after birth, nurse
midwife, alcohol/drug abuse, mammograms, PKU
[phenylketonuria], and prostate and cervical cancer
detection. We also have two mandated offerings ...
acupuncture and dental, vision and hearing.
Number 2096
MR. EVANS continued by saying his client would like to support
this legislation, but unfortunately HIAA can't because of the
mandate. The mandate would not affect all self-insured employers
or others that are covered by ERISA [Employee Retirement and
Income Security Act]. In Alaska that could include
Safeway/Carrs, BP {British Petroleum] Amoco, the Municipality of
Anchorage and other municipalities around the state. The state
has covered most of the mandates in its policy. It is hard to
know how many of the 30,000 Alaskans with diabetes are under
ERISA regulations. The cost of dialysis is one of the most
expensive procedures, so the savings of $917 dollars pointed out
in the sponsor statement, while it affects those that do have the
coverage, can raise the premiums considerably for those that
don't have it.
MR. EVANS noted one of the good things about this bill is that it
does provide that the diabetes treatment can only be covered if
it is recommended by a health care provider. Because of the
status of the proposed CS as a mandated coverage, his client must
oppose the bill.
Number 2188
REPRESENTATIVE COGHILL asked Mr. Evans why don't the insurance
companies already offer coverage at a premium rate if it will
reduce costs.
MR. EVANS answered that he assumed that the insurance companies
have studies that show there isn't a reduction in costs.
REPRESENTATIVE COGHILL commented he is reluctant on mandates as
well. He asked Mr. Evans if page 1, line 11 would give enough
room to adjust the deductible and co-pay to make it compatible to
those who might have various needs. He asked if this bill would
give the industry enough room to say under certain conditions a
co-pay is better, and the company can decide what the scale is
even though it is mandated insurance.
MR. EVANS said he would have to ask his client about that. It is
his understanding that the deductible and co-pay apply to the
entire policy and not to a specific coverage.
REPRESENTATIVE COGHILL mentioned he would like to see some of the
competing studies.
TAPE 00-19, SIDE B
Number 2344
REPRESENTATIVE GREEN asked Mr. Evans if there are insurance
companies operating in the state now that cover this; has he
checked the competition to see how much higher the premiums are
for the coverage. Representative Green wondered if it is a minor
or fairly significant difference.
MR. EVANS indicated he had not checked with other companies.
There are not many companies that offer health insurance in
Alaska as compared to other states. At one time there were 10-12
other companies that provided health insurance in Alaska. He
noted that Blue Cross is not a member of HIAA, so he cannot speak
for them, and most individual policies in the state are issued by
Blue Cross. He is not sure there is any way to find out because
the companies do not report to HIAA. The companies do report
their charges to the Division of Insurance. Alaska is lucky
because Wisconsin has 47 mandates, and the premiums there are out
of sight; Alaska is on the low end right now.
REPRESENTATIVE GREEN said it would be interesting to know if by
mandating this, they are creating either a general increase to
all those insured by companies who don't presently offer this
service, or if those who are offering it now are doing so at an
elevated premium.
MR. EVANS agreed to try to find out that information.
Number 2234
REPRESENTATIVE BRICE asked Mr. Evans how many companies are
selling policies in Wisconsin. It sounds like there shouldn't be
but one or two if the idea is the more mandates put in, the more
it drives people out.
MR. EVANS answered he didn't know how many. He has seen a list
of what mandates various states do have. The membership of HIAA
consists of all these companies.
REPRESENTATIVE BRICE asked Mr. Evans what was the difference in
the mandates he could support and HB 298.
Number 2192
MR. EVANS said he couldn't give an answer for what the official
line would be, but his personal feeling is that those mandates
were so popular and so heavily wanted by the public that the
public was willing to pay.
CHAIRMAN DYSON asked Mr. Evans if the industry didn't oppose the
mandate of cervical cancer and prostate cancer, why didn't the
insurance companies get ahead of the curve and start offering it.
MR. EVANS said he couldn't answer that question.
CHAIRMAN DYSON asked Mr. Evans if he heard correctly that the
Municipality of Anchorage insurance carrier doesn't cover
diabetes.
MR. EVANS clarified that the Municipality of Anchorage and other
municipalities are self-insured so they do not necessarily have
to follow mandates. They can, but they don't have to. He
doesn't know whether or not the Municipality of Anchorage
insurance carrier covers diabetes.
Number 2108
CHAIRMAN DYSON told Mr. Evans his client needs to answer the
question and refute the presupposition that good education, well-
equipped and well-trained self-care is a financial bargain for
the insurance companies, the society and the patient. Those
people who are well trained and educated to take care of
themselves can continue to work and avoid costly disabilities and
hospitalizations and care. Money is saved for the individuals,
the carrier and society.
MR. EVANS said he would contact his client and tell them the
committee's concern and see what HIAA can do.
REPRESENTATIVE COGHILL noted that the pool of people in ERISA
should be known.
Number 2022
MR. EVANS indicated that someone from the Division of Insurance
could best speak to that.
REPRESENTATIVE COGHILL asked if there were more than two types of
diabetes.
Number 1954
MARY LOU KELSEY came forward to testify. She and her daughter,
Lauren Bell, came for "show and tell" of what people with
diabetes have to deal with on a daily basis. She explained there
are two types of diabetes. Childhood diabetes, Type 1, is
insulin dependent where the person must either inject shots or
use an insulin pump on a daily basis because the pancreas no
longer functions. Characteristically, Type 1 is a juvenile
disease through life, although a few adults get Type 1. Type 2
is insulin-resistance or adult onset diabetes. There can be a
combination of those two types.
Number 1893
LAUREN BELL came forward to testify. She is 11 years old and has
had Type 1 diabetes for about three years. She has been on an
insulin pump for about two years. She showed the committee her
supplies that she uses about six times per day. She said it
would be very helpful if insurance would cover those products.
Those products are the only way to keep her blood sugar under
control.
MS. KELSEY had Lauren show the committee her insulin pump which
provides continuous infusion. She indicated that their family
has insurance coverage, but it is difficult to find out answers
about how much premiums cost when shopping for insurance. All
the data needs to be submitted through the employer, or
personally, to find out anything about premium numbers. She
fears for her daughter coming of age to buy her own insurance and
not having insurance available that covers diabetes. They have
had difficulty under their family coverage: the insurance
company eliminated the prescription coverage and arbitrarily
decided it cost too much and, that ended the coverage of supplies
and medicines. Their family can afford the $300-$500 per month
for supplies and medicines, but Ms. Kelsey wants to focus on
diabetes being a self-managed disease. If people can pay for
supplies and want to buy private insurance that has that option
available, it makes sense to standardize coverage.
MS. KELSEY referred to Representative Coghill's question about
why diabetes wouldn't be covered. It seems like the focus has
changed from coverage for hospitalization and inpatient care.
Now they would like it to focus on outpatient self-care because
that is what people with diabetes do on a daily basis.
REPRESENTATIVE COGHILL asked if it would be helpful to Ms. Kelsey
to understand there was a co-pay provision on a particular item
for diabetes, not on the whole policy. He asked that so the
insurance companies get the message that that kind of information
is better.
Number 1729
MS. KELSEY agreed that would be helpful. She pointed out there
is still language in the bill that says "subject to standard
policy provisions," so the insurance company could still say to
her that her policy does not cover insulin, but it will cover the
test strips. If that were outlined in the policy she bought, it
would allow differences in policies in terms of the standard
policy provision.
REPRESENTATIVE COGHILL asked Ms. Kelsey if her insurance carrier
gives her any description of what equipment, supplies, self-
management or training would be covered. He asked her how she
deals with her insurance company on those issues now.
MS. KELSEY said she basically submits her claims and waits to see
what is accepted and what isn't. When they got the insulin pump,
they were denied twice and had to go back to the insurance
company and inform the company about a study out of England that
shows people who have good control will not have complications of
pregnancy, blindness and kidney failure. Ms. Kelsey had to write
the letter twice to say "please help pay for this insulin pump
now." The difficulty seems to be getting the insurance company
to pay now instead of paying for more expensive care later.
REPRESENTATIVE COGHILL asked Ms. Kelsey if education is something
a health care provider can say is necessary.
MS. KELSEY answered yes.
MICHELLE CASSANO, Alaska Executive Director, American Diabetes
Association (ADA), came forward to testify. She is a nurse and
has been with ADA since 1984. She pointed out that many other
states have gone with this coverage, and the majority are
mandates. In regard to the insurance industry, it is not being
said that the premiums might not go up. The Wisconsin study,
mentioned earlier by Mr. Evans, says it goes up .1 percent.
Another study was done three years after the mandate, and it says
of all the insurance money spent in Wisconsin over those three
years, the money spent for diabetes was less than 1 percent. As
the states have mandated coverage for diabetes, she has gone back
and talked to numerous colleagues to ask if their legislators or
their insurance industry were asking for those studies. The
savings on the back end are so dramatic that Maine is just now
doing a study.
MS. CASSANO pointed out that a lot of the mandates have come
forth with technology. She would like to say that diabetes is a
well understood disease, but it is very serious; untreated
diabetes ultimately ends in death.
MS. CASSANO noted that in her 16 years, the number one advocacy
issue with her constituents has been insurance, even for well-
developed procedures. In the fall the federal government picks a
carrier, and January 1 the carriers that covered certain items
for federal employees start denying those claims. The insurance
companies just need to be nudged to get back into the coverage
mode. Insulin, except for one very new kind, is a non-
prescription item which companies don't cover. Insulin is life-
sustaining; there is no issue. Medicare and Medicaid have
increased what they cover in diabetes care over the past few
years. Medicare now covers testing supplies, meters, education
and has just added pumps. The public sector people are being
taken care of for diabetes. There is just a wedge of private
sector people who aren't getting consistent care.
MS. CASSANO indicated that the American Diabetes Association has
generally been accepted as leaders in providing standards of
care. They have a huge research division, second only to the
National Institute of Health. She also noted that those
standards are a very integral part of the state diabetes plan.
This legislation is necessary to protect a large portion of
people. The insurance companies have not kept up with the
technology. Self-management are very key words in this bill;
that is what keeps people working and producing. She asked the
committee to support this bill.
Number 1357
JANEL WRIGHT, Attorney, Disability Law Center of Alaska, came
forward to testify. She has had diabetes for 25 years. She
passed out a quiz to committee members which tells if they are at
risk of having diabetes. She reiterated that there are over
30,000 Alaskans diagnosed with diabetes, but that number does not
include the people who have not been diagnosed. One in seven
health care dollars in the United States are spent on treatment
of diabetes and its complications. The importance of this bill
is it will reduce the complications for people who have been
diagnosed with diabetes because diabetics will be able to manage
their own care.
MS. WRIGHT told the committee that before she moved to Alaska,
her insurance policy did not cover a blood test machine or test
strips or syringes; her parents basically funded her care. She
didn't use a blood machine or the test strips because the cost
for her family was prohibitive. Her blood sugar was so out of
control when she went to college, she almost got sent home. She
begged her parents to let her stay to get her education. She
went to law school but couldn't see the blackboard. She had no
idea her eyes were failing because of her diabetes; she had never
been educated and didn't have a way to monitor her blood sugar.
She moved to Alaska and her life changed. She got health
insurance and got a blood test machine, test strips, an insulin
pump and attended diabetes education.
MS. WRIGHT reported when she had her first hemoglobin A1C (HA1C),
which is the test that shows control over the previous three
months, her HA1C was 8.5, which meant her average blood sugar was
probably over 250. That was in February 1988. She just got a
report from her doctor on February 8, 2000, and her HA1C was 5.4
which means her blood sugar is on the average, 94. Good control
is between 90 and 120.
MS. WRIGHT spoke not only from her personal perspective, but as a
staff attorney with the Disability Law Center of Alaska. Through
her job she meets a lot of people with diabetes. Her office
assists people with disabilities to get benefits and entitlements
if they have been denied. A lot of people with diabetes have
been denied social security, and they are no longer able to work
because their diabetes is so out of control, and they can't
afford to take care of themselves.
MS. WRIGHT sees this bill as something that will enable not only
those with diabetes who can't afford to maintain their control,
but it will also enable others to gain control and go back to
work.
Number 1156
MS. WRIGHT referred to the concern about forcing insurance
companies to do something that they should see the value in doing
anyway. Unfortunately the insurance companies are not seeing the
value; they need that extra push. This bill should be passed to
help the constituents with diabetes. It is impossible for anyone
to control diabetes without access to blood test machines,
syringes, insulin and test strips. Once diabetes is under
control, there is a significant reduction in the cost of health
care utilization and fewer individuals will be in need of public
benefits.
MS. WRIGHT referred to the concern about increased insurance
premiums. The studies that have been done have shown that there
is no appreciable impact on the cost of health insurance and it
has only gone up about .01 percent. New Mexico and Maine
reported no increase in health insurance premiums. After the
legislation was passed in Maine, there were 32 percent fewer
hospitalizations due to complications from diabetes. In Maryland
there were 50 percent fewer visits to the emergency room, and in
Rhode Island there were 60 percent fewer visits to the emergency
room. That shows that the cost of insurance is going to decrease
once diabetes is under control. Ms. Wright noted that the
American Diabetes Association has a goal for all 50 states to
pass legislation such as this.
Number 1007
DONALD NOVATNEY came forward to testify. He spent ten years in
the Army but was kicked out when he was diagnosed with diabetes.
He has had diabetes for 22 years and works as a registered nurse.
He has not had the complications because he had good control.
Ten percent of Alaska Natives, 10 percent of the Hispanic
population, and 10 percent of Blacks will have diabetes in their
lifetime. For the 80 percent of the people with Type 2 diabetes
in their lifetime, 58 percent of them will need insulin. Many
people are not doing the minimum amount to prevent complications.
The standards of practice need to be checked. He would like to
see everyone have the opportunity to have insurance that is
reimbursed.
Number 0838
REPRESENTATIVE COGHILL asked Mr. Novatney if his insurance covers
the diabetes education and training.
MR. NOVATNEY answered it was covered for the first time. As time
goes on, things have improved and the insurance won't pay for a
second time for his self-management classes.
REPRESENTATIVE COGHILL asked if there was some way Mr. Novatney
can suggest to the insurance company that under a mandate it is
going to be paying a substantial amount and wondered if this
would be heading in the direction of creating a roadblock.
Number 0763
MR. NOVATNEY said he would hope that the insurance companies
would provide the same coverage, 80 percent, for his medicines
like other prescriptions. There shouldn't be a distinction. It
should be fair across the board for everyone.
The committee took an at-ease from 5:03 p.m. to 5:05 p.m.
Number 0716
REPRESENTATIVE BRICE made a motion to move CSHB 298, version 1-
LS1218\D, Ford, 2/17/00, out of committee with individual
recommendations.
Number 0702
REPRESENTATIVE COGHILL objected.
CHAIRMAN DYSON distributed the written testimony from Rick
Mystrom to the committee. Mr. Mystrom wasn't able to call in to
testify.
Number 0661
REPRESENTATIVE WHITAKER wished to make a statement:
I too am a Republican and a proud Republican. I don't
particularly like the notion of mandates, but that
seems to be the hinge point that we're concerned with.
We live under a lot of mandates. Many of us choose to
live under the mandates, or try to anyway, of the Ten
Commandments, and we do that by our choice, but it is
nonetheless a mandate. There's another pesky little
book full of mandates that occasionally we have to deal
with. This is called the Constitution of the State of
Alaska, Article VII, Section 4, Public Health. "The
legislature shall provide for the promotion and
protection of public health." That's easy; that's a
mandate. We swore an oath to uphold that mandate, and
I'm going to do that. I'm going to vote in favor of
this.
Number 0580
A roll call vote was taken. Representatives Brice, Kemplen,
Whitaker, Green, Morgan and Dyson voted in favor of moving the
bill. Representative Coghill voted against it. Therefore, CSHB
298(HES) moved from the House Health, Education and Social
Services Committee by a vote of 6-1.
The committee took an at-ease from 5:07 p.m. to 5:11 p.m.
HB 322 - PUBLIC SCHOOL CONSTR/MAINTENANCE FUNDING
Number 0556
CHAIRMAN DYSON announced the next order of business as House Bill
No. 322, "An Act relating to the financing of construction and
major maintenance of public school facilities; authorizing the
commissioner of revenue to sell the right to receive a portion of
the anticipated revenue from a certain tobacco litigation
settlement to the Alaska Housing Finance Corporation; authorizing
the issuance of bonds by the Alaska Housing Finance Corporation
with proceeds to finance public school construction and major
maintenance grants; providing for the creation of subsidiary
corporations of the Alaska Housing Finance Corporation for the
purpose of financing or facilitating the financing of public
school construction and major maintenance grants; relating to the
annual public school construction and major maintenance grant
application and approval process; providing for allocation of
additional reimbursement of public school construction debt; and
providing for an effective date."
Number 0537
KAREN REHFELD, Director, Education Support Services, Department
of Education & Early Development (EED), came forward to present
HB 322. She explained that HB 322 provides a mechanism for
funding for school construction and major maintenance projects
over the next three years. She provided the following testimony:
With over a billion dollar investment in school
facilities in this state, we cannot afford to neglect
the major maintenance needs or replacement of schools
when necessary. The Department of Education & Early
Development has consistently advocated for a long-term
stable source of funding for school construction and
major maintenance projects. We think this legislation
goes a long ways to accomplishing that. The
legislation is designed to address three major goals:
first, to provide adequate, safe places for children to
learn by clearing up the backlog of statewide major
maintenance and school construction projects; second,
to address needs in both urban and rural school
districts with an emphasis on addressing major
maintenance projects quickly to avoid more costly
future capital construction costs; and third, to
address concerns that were raised in the Kasayulie
lawsuit.
The package totals $510 million including $360 million
in grants for school construction and major
maintenance, and $150 million for school debt
retirement. The projects included in the Governor's
package are funded in the order in which they are
ranked on the department's priority list. As proposed,
all 86 projects on the current major maintenance list
and 40 of the 69 new construction projects would be
funded. The current list then would be frozen over the
next three years to allow these projects to be funded.
The rationale behind the legislation is based on
meeting the goals that I've outlined, sticking to the
priority list and completing as many of the projects as
possible over the three-year period. Adjustments to
the amount of funding for particular projects and the
final projects in the bill will need to be made as a
result of appeals on the priority ranking that are
being addressed right now and any other issues related
to the Kasayulie settlement.
CHAIRMAN DYSON asked about the appeals.
MS. REHFELD explained that every year the department annually
prepares a listing of school construction and major maintenance
projects which is released on December 15. School districts who
have issues with the ranking of their projects on those lists can
appeal those decisions. A hearing officer is appointed and is
addressing those appeals at this time. The State Board of
Education & Early Development will meet in March and consider any
of the decisions by the hearing officer, so the list will be
final following the March meeting.
MS. REHFELD continued her testimony:
As the state continues to work on addressing the issues
raised in the Kasayulie case, the legislation may need
further modification. Mr. Baldwin, the Assistant Attorney
General who is with me today, has been working on the
Kasayulie case and is here to discuss not only the mechanics
of the bill, but where we are with the plaintiffs at this
time. Funding for school construction and major maintenance
projects is critical in both rural and urban Alaska. This
bill goes a long way towards addressing these needs, and we
ask for your favorable consideration of this bill.
Number 0240
JAMES BALDWIN, Assistant Attorney General, Governmental Affairs
Section, Civil Division (Juneau), Department of Law, came forward
to testify. He explained the idea of the bill is to authorize
the sale of a part of the stream of revenue that is coming in
from the tobacco settlement. Based on the best estimates of the
value of that revenue stream, it is expected to raise
approximately $260 million on the sale of that asset. There is a
section in HB 322 that authorizes the sale through Alaska Housing
Finance Corporation (AHFC). There are other sections in the bill
that reaffirm the arrangement that the state has with Alaska
Housing Finance Corporation which allows the corporation to use
its general obligation debt capacity to issue another $100
million in bond proceeds for the purpose of constructing the
facilities. The amount of bonds that are authorized to be sold
is somewhat higher than that to cover for reserve funds and other
financing requirements that could be imposed by the bond market
in order to make the bonds marketable. The actual amount that
can be raised is subject to the bond market, so the precise
amount available for projects won't be known until the actual
sale. There is sufficient authority built in to be able to do
the projects that are set out in the bill.
MR. BALDWIN noted that the bill also lists the projects that
would be funded according to priorities listed in AS 14.11.
"Construction, Rehabilitation, and Improvement of Schools and
Education-Related Facilities." This bill was constructed largely
in mind with resolving some of the claims that were faced in the
Kasayulie lawsuit. That lawsuit was brought alleging
discrimination in the way the state has funded certain rural
schools in the state, and there are also claims in the case
involving the administration of the Public School Trust Fund. He
explained where the state is in the Kasayulie case. There have
been discussions with the plaintiffs to determine what would
resolve their claims.
TAPE 00-20, SIDE A
Number 0001
MR. BALDWIN said if the legislature agrees that this is something
that is in the public interest to do, this case can be settled
and resolved and the claims can be withdrawn, at least on the
public facilities part of the case. He explained there are two
parts of the case: the trust administration side and the public
facilities side. The ability to resolve all of the claims in the
case, in a global way, is difficult to do. They are not able to
get there at this point in time so their discussions have
centered on focusing on the public facilities side of the case,
the ability to fund what had been identified as the needs in the
rural school districts.
Number 0100
REPRESENTATIVE KEMPLEN referred to page 13, lines 9-14. He asked
about the reimbursement and if it would apply to the current
school bonds that will go before the Anchorage voters in April.
Number 0222
EDDY JEANS, Manager, School Finance and Facilities Section,
Education Support Services, Department of Education & Early
Development, came forward to answer that the majority of the
Anchorage projects that will be before the voters in April will
be covered under the allocation in SB 11, so this would be an
additional allocation over and above that.
REPRESENTATIVE KEMPLEN asked Mr. Jeans for more definitive
information on the majority of the projects on the April ballot.
Number 0280
REPRESENTATIVE COGHILL asked if taking the settlement monies
through AHFC sidesteps general bonding practices.
MR. BALDWIN replied that in other jurisdictions, it is becoming
an accepted bonding technique to attempt to secure ties to the
tobacco settlement for various reasons. Alaska would not be the
first state in the nation to do that. There is an advantage to
fixing the amount that can be derived from the settlement because
there are certain variables that lead to the uncertainty of the
amount of revenue the state might derive from this revenue stream
over a period of time in the future. Other jurisdictions are
doing this to eliminate the risk associated with waiting for that
money to come in over the term of years that the settlement is
going to provide it.
REPRESENTATIVE COGHILL commented it seems to him that this should
happen through the legislative process rather than AHFC. He
wondered if that is going to create some trouble.
MR. BALDWIN answered that this bill will use a revenue bonding
approach to funding these facilities rather than some other
approach. Some of the general obligation assets of the Alaska
Housing Finance Corporation will be pledged rather than the full
faith and credit of the state.
REPRESENTATIVE COGHILL said he wanted to land on the policy call
of the pledge of the assets. Obviously the Governor wants to put
them in this particular setting, and it does keep the state from
getting into a further bind through the Kasayulie case. There
are a lot of health needs out there that the tobacco settlement
was designed for. He suggested the health obligation of the
tobacco settlement needs to be debated.
REPRESENTATIVE KEMPLEN asked if using the revenue stream from the
tobacco settlement was really dedicating that revenue stream to
this indebtedness.
MR. BALDWIN replied that he didn't believe so. He explained that
the asset is being sold. Things like this have been done in the
past where notes and mortgages have been sold to public
corporations so the corporations could have the revenue streams.
In some cases, the legislature has just given them away in order
to capitalize the public corporations, but this would be an
instance where the state would be getting value for the revenue
stream. The state would be selling the revenue stream to AHFC
and getting the proceeds that could then be spent on public
schools. This bill is proposing to allow the legislature to cash
in those future revenues now and then appropriate the funds; the
legislature retains the power of appropriation. There is not a
problem with dedicated fund prohibition.
REPRESENTATIVE KEMPLEN asked if future legislatures were being
precluded from using those revenues.
MR. BALDWIN answered not all of them. This bill is not proposing
to use all of the revenues. There will come a time when revenues
are no longer needed to retire this particular indebtedness.
REPRESENTATIVE WHITAKER asked about the dedicated funding.
MR. BALDWIN explained typically the way a dedication works is
that there is a revenue source that may only be used for a
specific purpose. It comes in, and the legislature has no power
or ability to use it for any other purpose. That is the invalid
dedicated fund scenario. Here they are taking an asset, the
right to receive money in the future, and they are selling those
rights to the AHFC and the state is receiving back money for
those rights. Those dollars are here in the present, and the
legislature then would be appropriating those dollars for the
projects in the bill. In that instance, the legislature is not
deprived of its power of appropriation whatsoever; it has merely
brought forward those revenues to the present and is exercising
its powers.
MR. BALDWIN clarified that what goes along with this bill would
be appropriations set out in the capital budget which would be
the way the legislature would be appropriating these dollars.
REPRESENTATIVE COGHILL asked Mr. Baldwin to explain the
subsidiary corporation structures.
MR. BALDWIN explained that the various governments have secure
ties, the tobacco revenue, and they have set up a separate entity
or corporation that would actually be the issuer of the bonds
that would be sold to raise the bond proceeds to buy the rights
to receive the tobacco revenues. The idea of doing that is that
it is recognized as a transaction that has some degree of risk.
How the settlement is set up depends on some variables as to what
amount of revenue can be received. The state would be gaining
certainty by getting a set amount of money instead of the
possibly fluctuating revenue stream. In order to make sure that
the state and AHFC are insulated from the risk, a separate
corporation is created for the issuance of the debt. The idea is
to make it a less risky transaction for the state and AHFC to
guard against what could happen in the future if there were some
drastic reductions in the revenues that come in under the
settlement.
REPRESENTATIVE WHITAKER asked if the purchaser of the bonds were
essentially under the onus of "buyer beware."
MR. BALDWIN answered that is correct, but there will be very
sophisticated investors who will understand the risks and the
advantages of the transaction.
REPRESENTATIVE WHITAKER asked if the revenue stream is somewhat
erratic, would there be a higher interest rate associated with
these bonds.
MR. BALDWIN said there would be a certain rating, but he is not
the person to talk to about that. He further explained that a
separate corporate entity created specifically to deal with the
funding mechanism will be the issuer of the bonds.
REPRESENTATIVE WHITAKER asked if there would not be any incumbent
or inherent liability for the state and/or AHFC.
MR. BALDWIN said that is what they are striving for.
Number 1095
CHAIRMAN DYSON expressed concern about the court case. He asked
Mr. Baldwin what data the state presented to the court to show
what the funding had been for construction.
MR. BALDWIN said there was limited data presented. There was
some data that showed there had been about $110 million
appropriated. (He admitted he might not have the right dollar
amount.) He further answered that there is not a lot stated in
the opinion about what data the court did use to come it its
decision. There was some limited information in the briefs, but
it is not evident what the judge relied on in the opinion.
CHAIRMAN DYSON asked Mr. Baldwin what years of the record of the
money the state spent were given to the court by the state.
MR. BALDWIN said he would have to check on that. He noted that
the plaintiff concentrated on four or five fiscal years; he
believed it was 1994-1998.
CHAIRMAN DYSON said it is his understanding that the court
literally relied upon the data that was supplied by the
plaintiff, not by the state.
Number 1196
MR. BALDWIN agreed that was accurate.
CHAIRMAN DYSON asked Mr. Baldwin if the data supplied by the
plaintiff was accurate.
MR. BALDWIN answered he didn't believe it was complete.
CHAIRMAN DYSON asked Mr. Baldwin if the state did a good job of
putting on that case.
Number 1217
MR. BALDWIN said he believed the state did a good job. He noted
the state focused on some things that maybe other people wouldn't
agree should have been focused on. The strategy at that point
was to deal with the question about whether the constitution
provides a fundamental right to education. He believes that is
an unsettled area of the law in Alaska and other states. That
strategy did not work with the trial judge. If it could be done
over again, it might have been done differently. He can't say
that those issues were handled badly.
CHAIRMAN DYSON commented in layman's terms "we argued the law and
not the facts."
MR. BALDWIN agreed that was the strategy that was followed. It
was a motion for partial summary judgment; it did not resolve the
entire case. It was directed towards the law, and the strategy
was to present it in a way that would indicate there were no
genuine issues as to material facts.
CHAIRMAN DYSON asked Mr. Baldwin if the state is going to appeal.
Number 1293
MR. BALDWIN indicated that is a decision that hasn't had to be
made yet because of the posture of the case. Appeal can only be
done if there is a final judgment in a case. In this case there
is a judgment on partial summary judgment which means there is
not a total final judgment in the case. The plaintiff has moved
to a procedure which is known as Rule 54(b) to certify that part
of the case as being final. Since that motion was made, the
state has not had a requirement to respond to the motion as yet,
so the decision about appealing is not ripe. When the judgment
has been made final, there is a 30 day window for appealing.
There have been discussions to see if there is something that can
be done to take the "wind out of the sails" of the plaintiff's
claims. If there were substantial funding of public school
projects by this legislature, he believes the state would have a
better chance with this case than if there were not. Since there
is a perceived willingness on the part of this legislature to
fund a substantial amount of public school construction, it would
be best to try to take advantage of that from the state's side of
things.
CHAIRMAN DYSON asked if the plaintiffs are going to proceed like
that is the final decision on that portion that the judge
decided.
MR. BALDWIN explained that the plaintiffs have to convince the
judge, that in the interest of justice, that decision on a part
of the case should be certified as a final judgment.
CHAIRMAN DYSON asked if that's what the plaintiffs have asked for
and does the state have an opportunity to appeal.
MR. BALDWIN noted the state has an opportunity to argue about
that. He further explained that there is a stipulation with the
other side that as long as they are talking about ways to work
out the differences, the state needn't respond to that.
CHAIRMAN DYSON asked if the portion of the decision that the
plaintiffs have appealed to be final is some set of dollars or
some number of buildings or what.
Number 1435
MR. BALDWIN said it is just a decision on the principles of law
concerning the discrimination claims as to whether or not the
villages were discriminated against in the way the REAAs [Rural
Education Attendance Area] and the state appropriated the
dollars. There is also the Title VI claim as to whether or not
it involves racial discrimination.
CHAIRMAN DYSON said it seems to him that the facts did come into
the case because the facts of the supposed discrimination in the
dissemination of funds was a defacto discrimination. He asked
how much money that was spent in the different years was a part
of the evidence to prove the discrimination.
MR. BALDWIN replied that the allegation had to do with whether or
not the process in AS 14.11, amounted to discrimination or the
failure to fund the projects that were set out on the list. The
question was did they or did they not do that; that is the
difficult part of the case. That is what carried the judge more
than whether there was some parity provided over the past 10-20
years. The plaintiffs pressed the issue of was the statutory
process followed for funding rural and urban schools. They
argued very strongly and persuasively that it was not followed,
and those are the arguments that the judge accepted. It was
definitely a question of mixed law and fact. People might
disagree as to what kind of facts bear on that: whether you can
go back 20 years and make a case for parity based on that time
period or whether you should only focus on the four or five
fiscal years that were raised by the plaintiff.
CHAIRMAN DYSON asked Mr. Baldwin if anyone brought up 1994 when
the rural schools received $580 million.
MR. BALDWIN replied he was not sure what numbers Chairman Dyson
was using but he has done that analysis. He can say that the
legislature has been very good in funding the major maintenance
list. The proof gets more difficult in the construction list.
CHAIRMAN DYSON asked if the state has the option of introducing
any more evidence in the case.
Number 1594
MR. BALDWIN replied he believes it is possible, but it is only at
the discretion of the court. In his view, it would have to be
done by asking the judge to open up the judgment under the
theory that there has been a mistake, either in fact or law. It
is difficult to do because the judge has to be convinced that he
made a mistake on the law or the facts; there are lots of factors
involved. It is not impossible, but it is not something to
invest the family's money in. There may be possibilities: if on
appeal, the Supreme Court has the power to suspend the rules and
to permit supplementation of the record, but that is at the
discretion of the Supreme Court, and the Supreme Court likes to
consider itself as being a court that decides cases on the record
that has been established in the lower courts.
CHAIRMAN DYSON asked if the tobacco revenues were spent last year
or haven't they been allocated in the Governor's budget this
year.
MS. REHFELD referred that question to Elmer Lindstrom from the
Department of Health & Social Services. She explained that debt-
service costs would come into play. There is some material on
the financing mechanism on the fiscal notes having to do with the
debt retirement program that could be a couple of years out. She
said those costs are shown in general funds; the tobacco
settlement stream that's been appropriated to this point is not
considered in this packet.
CHAIRMAN DYSON asked who was the judge in the case.
MR. BALDWIN answered Judge Reese. He also answered Chairman
Dyson that he has heard rumor that Judge Reese was with Alaska
Legal Services and pled the Molly Hootch case, but he hasn't
confirmed that. He further noted that Assistant Attorney General
Tom Dahl presented the state's case.
CHAIRMAN DYSON said it seems that the plaintiff is saying that
the state needs to provide enough resources for the students to
get a well-rounded education. He asked what the cutoff number
should be of what provides a well-rounded education.
MS. REHFELD noted she can't answer that question but understands
where he is going. She further explained to Chairman Dyson that
in those rural areas where there are children that require
educational services, they should have adequate, safe facilities.
CHAIRMAN DYSON asked if there was anything in this decision that
indicates that a building is not enough, that there has to be a
broader education program.
MR. BALDWIN indicated the decision is dealing with concrete and
steel. The judge is indicating that having appropriate
facilities bears on the learning process and directly bears on
the right to education.
CHAIRMAN DYSON asked Mr. Baldwin if making this a general
obligation bond was considered to give the people in the state a
chance to vote on it.
Number 1864
MR. BALDWIN answered if this were to be funded by a general
obligation bond approach, that would be an acceptable approach,
but there are certain advantages to this approach that would
better allow the money that is raised to be focused on resolving
problems in the rural school districts. It presents
opportunities for "securitizing" an uncertain revenue source in
the future. It allows a device used in the past which is the
general obligation bonding capacity of AHFC.
CHAIRMAN DYSON referred to the Kasayulie case and asked what is
the criterion, and what did the judge find wrong with it that he
would have the state do differently.
MS. REHFELD answered that she doesn't believe that the judge
found that there were any particular issues with the evaluation
or prioritization of projects the department does in generating
those lists. She believed that the question the judge raised was
whether or not the department, in seeking and securing
appropriations, had followed the list in actually doing that.
MR. BALDWIN added the fact that the department had provided a
reimbursement program for organized municipalities that was not
available to the REAAs. In other words, the REAAs were required
to go through the list and were required to rely on front-end
appropriations from the legislature, which in the words of the
court "didn't materialize in a general way or a uniform way."
During this same period, there were substantial amounts of money
that were made available under the bond reimbursement program for
organized municipalities, and the plaintiffs felt there was a
disparity in that treatment between the organized areas and the
unorganized areas of the state.
Number 2001
REPRESENTATIVE KEMPLEN referred to the fiscal note where it
speaks about debt service. He asked: Why not use AHFC transfer
payments to retire all of the debt? Why mix it up with the
tobacco settlement money?
Number 2029
BRAD PIERCE, Senior Policy Analyst, Office of the Director,
Office of Management & Budget, Office of the Governor, came
forward to answer questions. He informed Representative Kemplen
that there isn't enough money. Somewhere around $360 million is
needed for funding the list; about $260 million can be leveraged
out the tobacco settlement, there is another $100 million in
general obligation (GO) capacity in AHFC.
REPRESENTATIVE KEMPLEN asked if that untapped capacity equals
$100 million.
MR. BALDWIN answered approximately, yes.
REPRESENTATIVE KEMPLEN asked if AHFC pays the legislature a
dividend.
MR. BALDWIN agreed and noted that the amount is $103 million a
year. About $53 million goes to AHFC capital projects and about
$50 million goes to the general fund or to debt service. Right
now about $34 million is being spent on debt service from the
1998 package which was $200 million dollars worth of bonds. Over
the next five years about $100 million worth of projects will be
financed. Mr. Baldwin further explained that about $260 million
would be raised from the tobacco settlement, and that would be
through 2021. It generates about $24 million a year. About $1.4
million will be taken off the top for anti-tobacco efforts.
REPRESENTATIVE KEMPLEN asked when is a "right to receive" not an
appropriation.
Number 2181
MR. BALDWIN answered that an appropriation is when the
legislature authorizes the expenditure of money from some funding
source for a specific purpose. The right to receive is like a
mortgage in the eyes of a lender. The lender has the right to
receive the payments of principal and interest over a period of
time. That particular right, that mortgage, can be sold to
another investor or another lender. So there is quite a bit of
difference between the concept of an appropriation and the right
to receive. One is the right to expend money the other one is a
right to receive it, to earn it.
REPRESENTATIVE KEMPLEN commented, "It certainly appears that
we're obligating and precluding future legislatures from spending
the tobacco settlement revenue stream on health issues. That
seems to be the relevant question for this committee."
CHAIRMAN DYSON responded, "Only if you think that the tobacco
settlement things ought to go to tobacco and health-related
issues, which has a certain logic to it.
REPRESENTATIVE KEMPLEN said it seems to him that the committee
might want to get an interpretation or opinion from Legislative
Legal and Research Services about the concepts of the right to
receive and appropriation.
CHAIRMAN DYSON said Representative Kemplen has raised an
interesting question: Are judges' decisions going to usurp the
role of the legislature in making appropriations and withdrawals
of funds from the public accounts?
CHAIRMAN DYSON suspended the hearing on HB 322. [HB 322 was
heard and held.]
HB 375 - INHALANT ABUSE
TAPE 00-20, SIDE B
Number 2274
CHAIRMAN DYSON appointed a subcommittee to work on House Bill No.
375, "An Act relating to abuse of inhalants." He announced that
the subcommittee would consist of Representatives Green, Dyson
and Brice. [End of action relating to HB 375.]
ADJOURNMENT
Number 2217
There being no further business before the committee, the House
Health, Education and Social Services Committee meeting was
adjourned at 6:05 p.m.
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