Legislature(1993 - 1994)

05/03/1994 08:00 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                           May 3, 1994                                         
                            8:00 a.m.                                          
  MEMBERS PRESENT                                                              
  Representative Al Vezey, Chairman                                            
  Representative Pete Kott, Vice-Chairman                                      
  Representative Bettye Davis                                                  
  Representative Gary Davis                                                    
  Representative Harley Olberg                                                 
  Representative Jerry Sanders                                                 
  MEMBERS ABSENT                                                               
  Representative Fran Ulmer                                                    
  COMMITTEE CALENDAR                                                           
  SB 190:        "An Act relating to income withholding and                    
                 other methods of enforcement for orders of                    
                 support; relating to medical support orders;                  
                 amending Alaska Rule of Civil Procedure                       
                 90.3(d); and providing for an effective                       
                 HELD IN COMMITTEE                                             
  SB 333 :       "An Act relating to disclosure of close                       
                 economic associations by certain state                        
                 employees and to the prohibition against                      
                 nepotism in the executive branch of state                     
                 government; and providing for an effective                    
                 HELD IN COMMITTEE                                             
  WITNESS REGISTER                                                             
  PHILLIP PETRIE                                                               
  Child Support Enforcement Division                                           
  Department of Revenue                                                        
  550 W. 7th Ave.                                                              
  Anchorage, AK  99501                                                         
  Phone:  269-6803                                                             
  POSITION STATEMENT:  Addressed CSSB 190(FIN)am                               
  RANDY WELKER, Legislative Auditor                                            
  Legislative Audit                                                            
  P.O. Box 113300                                                              
  Juneau, AK  99811-3300                                                       
  Phone:  465-3830                                                             
  POSITION STATEMENT:  Addressed CSSB 333(FIN)am                               
  PREVIOUS ACTION                                                              
  BILL:  SB 190                                                                
  SHORT TITLE: ENFORCEMENT OF SUPPORT ORDERS                                   
  SPONSOR(S): JUDICIARY BY REQUEST                                             
  JRN-DATE     JRN-PG               ACTION                                     
  04/13/93      1336    (S)   READ THE FIRST TIME/REFERRAL(S)                  
  04/13/93      1336    (S)   JUDICIARY, FINANCE                               
  02/23/94              (S)   JUD AT 1:30 PM BELTZ RM 211                      
  02/28/94      2987    (S)   JUD RPT  CS 3DP SAME TITLE                       
  02/28/94      2987    (S)   FN TO SB & CS PUBLISHED (REV)                    
  03/15/94              (S)   FIN AT 08:30 AM SENATE FIN 518                   
  03/15/94              (S)   MINUTE(FIN)                                      
  03/15/94              (S)   MINUTE(FIN)                                      
  03/17/94              (S)   FIN AT 09:30 AM SENATE FIN 518                   
  04/06/94      3463    (S)   FIN RPT  CS 1DP 3NR SAME TITLE                   
  04/06/94      3463    (S)   LETTER OF INTENT WITH FIN                        
  04/06/94      3463    (S)   FN TO CS PUBLISHED(REV, COURT)                   
  04/06/94              (S)   FIN AT 08:00 AM SENATE FIN 518                   
  04/08/94              (S)   RLS AT 00:00 AM FAHRENKAMP                       
                              ROOM 203                                         
  04/08/94              (S)   MINUTE(RLS)                                      
  04/11/94      3555    (S)   RULES TO CALENDAR  4/11/94                       
  04/11/94      3558    (S)   READ THE SECOND TIME                             
  04/11/94      3558    (S)   FIN  CS ADOPTED UNAN CONSENT                     
  04/11/94      3558    (S)   ADVANCED TO THIRD READING UNAN                   
  04/11/94      3558    (S)   READ THE THIRD TIME                              
                              CSSB 190(FIN)                                    
  04/11/94      3558    (S)   (S) ADOPTED FIN  LETTER OF                       
  04/11/94      3559    (S)   PASSED Y17 N3                                    
  04/11/94      3559    (S)   EFFECTIVE DATE  SAME AS PASSAGE                  
  04/11/94      3559    (S)   Adams NOTICE OF RECONSIDERATION                  
  04/11/94      3567    (S)   ZERO FN TO FIN CS PUBLISHED                      
  04/12/94      3589    (S)   FN TO FIN CS PUBLISHED (REV)                     
  04/12/94      3589    (S)   RECON TAKEN UP/IN THIRD READING                  
  04/12/94      3589    (S)   HELD ON RECONSIDERATION TO 4/13                  
  04/13/94      3642    (S)   HELD ON RECONSIDERATION TO 4/14                  
  04/14/94      3679    (S)   RETURN TO SECOND FOR AM 1                        
                              UNAN CONSENT                                     
  04/14/94      3682    (S)   AM NO  1  MOVED BY TAYLOR                        
  04/14/94      3682    (S)   AM NO  1  ADOPTED UNAN CONSENT                   
  04/14/94      3682    (S)   AUTOMATICALLY IN THIRD READING                   
  04/14/94      3682    (S)   MOTION TO RETURN TO 2ND FOR                      
                              AM 2                                             
  04/14/94      3682    (S)   RETURN TO 2ND FOR AM 2  UNAN                     
  04/14/94      3683    (S)   AM NO  2     MOVED BY TAYLOR                     
  04/14/94      3683    (S)   AM NO  2     FAILED  Y6 N13 E1                   
  04/14/94      3684    (S)   AUTOMATICALLY IN THIRD READING                   
  04/14/94      3684    (S)   MOTION TO RETURN TO 2ND FOR                      
                              AM 3                                             
  04/14/94      3684    (S)   RETURN TO 2ND FOR AM 3 Y12                       
                              N7 E1                                            
  04/14/94      3684    (S)   AM NO  3  MOVED AND WITHDRAWN                    
  04/14/94      3684    (S)   AUTOMATICALLY IN THIRD READING                   
  04/14/94      3685    (S)   (S) ADOPTED FIN LETTER OF                        
  04/14/94      3685    (S)   PASSED ON RECONSIDERATION Y19                    
                              N- E1                                            
  04/14/94      3685    (S)   EFFECTIVE DATE SAME AS PASSAGE                   
  04/15/94      3732    (S)   COURT RULE CHANGE VOTE SAME                      
                              AS PASSAGE                                       
  04/15/94      3734    (S)   TRANSMITTED TO (H)                               
  04/18/94      3540    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  04/18/94      3540    (H)   STATE AFFAIRS,JUDICIARY,FINANCE                  
  05/03/94              (H)   STA AT 09:00 AM CAPITOL 102                      
  BILL:  SB 333                                                                
  JRN-DATE     JRN-PG               ACTION                                     
  02/22/94      2912    (S)   READ THE FIRST TIME/REFERRAL(S)                  
  02/22/94      2912    (S)   STA, JUD                                         
  03/16/94              (S)   STA AT 9:00 AM BUTROVICH RM 205                  
  03/16/94              (S)   MINUTE(STA)                                      
  03/18/94      3266    (S)   STA RPT  3NR                                     
  03/18/94      3266    (S)   FISCAL NOTE PUBLISHED (ADM)                      
  03/18/94      3266    (S)   ZERO FNS PUBLISHED (LAW, GOV)                    
  02/22/94      3522    (S)   JUD RPT  5DP                                     
  04/06/94              (S)   JUD AT 01:30 PM BELTZ ROOM 211                   
  04/08/94      3523    (S)   PREVIOUS FN (ADM)                                
  04/08/94      3523    (S)   PREVIOUS ZERO FN (LAW, GOV)                      
  04/08/94      3523    (S)   ADDITIONAL REFERRAL TO FIN                       
  04/18/94              (S)   FIN AT 09:00 AM SENATE FIN 518                   
  04/19/94              (S)   FIN AT 08:15 AM SENATE FIN 518                   
  04/19/94              (S)   RLS AT 12:30 PM FAHRENKAMP                       
                              ROOM 203                                         
  04/19/94      3778    (S)   FIN RPT CS 5DP 1NR SAME TITLE                    
  04/20/94      3803    (S)   FN TO CS PUBLISHED (ADM)                         
  04/19/94      3778    (S)   PREVIOUS ZERO FNS APPLY                          
                              (GOV, LAW)                                       
  04/25/94      3971    (S)   RULES TO CALENDAR  4/25/94                       
  04/25/94      3973    (S)   READ THE SECOND TIME                             
  04/25/94      3973    (S)   FIN  CS ADOPTED UNAN CONSENT                     
  04/25/94      3973    (S)   ADVANCED TO THIRD READING UNAN                   
  04/25/94      3973    (S)   READ THE THIRD TIME                              
                              CSSB 333(FIN)                                    
  04/25/94      3974    (S)   RETURN TO SECOND FOR AM 1 UNAN                   
  04/25/94      3974    (S)   AM NO  1  MOVED BY LITTLE                        
  04/25/94      3974    (S)   AM NO  1  ADOPTED UNAN CONSENT                   
  04/25/94      3974    (S)   AUTOMATICALLY IN THIRD READING                   
  04/25/94      3974    (S)   PASSED Y19 N- A1                                 
  04/25/94      3975    (S)   EFFECTIVE DATE  SAME AS PASSAGE                  
  04/25/94      3986    (S)   TRANSMITTED TO (H)                               
  04/27/94      3745    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  04/27/94      3745    (H)   STATE AFFAIRS                                    
  05/03/94              (H)   STA AT 09:00 AM CAPITOL 102                      
  ACTION NARRATIVE                                                             
  TAPE 94-52, SIDE A                                                           
  Number 000                                                                   
  CHAIRMAN AL VEZEY called the meeting to order at 9:00 a.m.                   
  Members present were REPRESENTATIVES G. DAVIS, SANDERS and                   
  OLBERG.  CHAIRMAN VEZEY postponed the meeting to 9:00 a.m.                   
  due to a late session the previous night.  A quorum was                      
  HCSCSSB 190(STA) - ENFORCEMENT OF SUPPORT ORDERS                             
  CHAIRMAN VEZEY opened CSSB 190(FIN)am for discussion.  He                    
  recognized HCSCSSB 190(STA), version M, as a new committee                   
  substitute and asked if there was a motion to adopt it for                   
  the purpose of discussion.                                                   
  REPRESENTATIVE HARLEY OLBERG so moved.                                       
  (REPRESENTATIVE B. DAVIS joined the meeting at 9:01 a.m.)                    
  CHAIRMAN VEZEY adopted HCSCSSB 190(STA) for discussion.  He                  
  noted REPRESENTATIVE B. DAVIS's arrival.  He pointed out the                 
  differences in the committee substitute.  On page 6,                         
  beginning on line 11, wording was added that clarifies that                  
  withholding orders are not obligatory upon employers in                      
  perpetuity.  Withholding orders are valid for three years,                   
  which is concurrent with an employer's record keeping                        
  requirements for taxes.  He stated the rest of Section 11 is                 
  a slight rewording of existing statute for clarification.                    
  (REPRESENTATIVE KOTT joined the meeting at 9:03 a.m.)                        
  CHAIRMAN VEZEY noted REPRESENTATIVE KOTT's arrival.                          
  CHAIRMAN VEZEY pointed out the change under Section 30, page                 
  14, line 7, whereby the words "or" and "intentionally" have                  
  been added to qualify what would trigger a civil fine                        
  against an employer for failure to honor an assignment of                    
  CHAIRMAN VEZEY asked Phillip Petrie to join the table to                     
  give a sectional summary.  He noted most of the sections are                 
  attempts to comply with federal law and some are inclusions                  
  by the Senate for improving Alaska's Child Support                           
  Enforcement Division laws.                                                   
  (REPRESENTATIVE KOTT left the meeting at 9:05 a.m.)                          
  Number 109                                                                   
  190(STA).  He supported the passage of the committee                         
  substitute.  He stated both the Department of Revenue and                    
  CSED fully support the bill and the changes made in HCSCSSB
  MR. PETRIE explained Section 1 adds to the duties and titles                 
  of CSED considered under paragraph 9, provisions for Indian                  
  health care for families, if it is available.  Section 2                     
  adds the same provision.  Section 3 aligns the Alaska Court                  
  System with federal law and requirements for the state plan.                 
  Therefore, after January 1, 1995, the court system must                      
  issue a child support order with an immediate income                         
  withholding order in it.  Section 4 addresses the court                      
  issue of the order.                                                          
  Number 135                                                                   
  CHAIRMAN VEZEY asked for a more detailed explanation of                      
  Section 3.                                                                   
  MR. PETRIE referred to Section 3, page 3, beginning on line                  
  16, "Except as provided in (m) of this section..."  He                       
  explained the current change to the federal statute gives                    
  the court and the agency an opportunity to give an exception                 
  to immediate income withholding under limited circumstances.                 
  Section (m), found later in HCSCSSB 190(STA), addresses what                 
  those circumstances are and how an exception for an                          
  immediate income withholding is given.                                       
  MR. PETRIE stated there are two kinds of withholdings in a                   
  child support case:  1) An immediate withholding, which                      
  takes effect upon issuance of the order, or 2) an initiated                  
  withholding, which starts as soon as the agency receives it                  
  or as soon as the custodial parent serves it on an employer.                 
  He noted an exception is given, whereby no withholding is                    
  taking place, as long as they continue to pay in accordance                  
  with the court order.  If payments fall behind, or the                       
  custodial parent goes on Aid for Families with Dependent                     
  Children (AFDC) initiated income withholding is triggered.                   
  The obligor must be notified and have an opportunity to                      
  appeal before the withholding is initiated.                                  
  Number 181                                                                   
  REPRESENTATIVE JERRY SANDERS observed MR. PETRIE had been                    
  referring to "her" receiving support, and questioned if any                  
  men received support.                                                        
  MR. PETRIE apologized for the reference.  He clarified the                   
  proper terms were "obligor" and "obligee."  There is no                      
  gender basis.                                                                
  REPRESENTATIVE SANDERS inquired about the ratio between men                  
  and women receiving child support.                                           
  MR. PETRIE answered of the cases, approximately 21 percent                   
  are paid by females and 79 percent are paid by males.                        
  CHAIRMAN VEZEY added changes in federal law are pushing                      
  states toward a program where it is mandated that child                      
  support payments flow through the state agency.  It is not                   
  mandated at this time.                                                       
  REPRESENTATIVE SANDERS inquired what effect this would have                  
  on the money flowing through.  Would CSED take a portion of                  
  the money.  What is the purpose.                                             
  CHAIRMAN VEZEY answered the employer has an option of                        
  charging $5 for each payment it deducts from a person's                      
  paycheck.  This would not apply to those making voluntary                    
  payments.  The obligor, under HCSCSSB 190(STA), could be                     
  held obligated for all court costs related to the court                      
  action.  The state has to pay for the handling of the paper.                 
  REPRESENTATIVE SANDERS clarified the money received by the                   
  custodial parent does not decrease.                                          
  CHAIRMAN VEZEY affirmed REPRESENTATIVE SANDERS.                              
  Number 228                                                                   
  MR. PETRIE continued his sectional summary.  Section 4                       
  requires the CSED to be sent a copy of the support order by                  
  the court, as it will serve for accounting and records                       
  maintenance.  Section 5 sets up the provisions under which a                 
  person can have an exception.  He noted the federal                          
  regulation states the state must set some standards for                      
  initiating.  Those standards were already in existing                        
  statute and regulation; therefore, they were borrowed and                    
  put in this particular statute.  Section 6 explains appeal                   
  processes and states income withholding under support does                   
  not require immediate income withholdings not satisfied.                     
  Under Section 7, "under this chapter" and "the relevant                      
  provisions of" were added as housekeeping measures.  Section                 
  7 provides for those who are not applying for CSED services                  
  or AFDC support, and for those who go strictly through the                   
  court.  He expressed CSED functions only for record keeping                  
  and accounting for those people not under Title IV(d) of the                 
  Social Securities Act.  Serving orders will now be served                    
  under first class mail, which the court prefers, rather than                 
  certified mail.  However, if an employer does not respond to                 
  the notice by first class mail, a certified, registered                      
  notice will be sent out 30 days later.  Under Section 7,                     
  existing statute which reads "14 days" is changed to read                    
  "14 working days."  This will give the employer more time to                 
  respond.  Currently, weekends or holidays are not counted.                   
  He pointed out at the bottom of Section 7, the paragraph                     
  added by the Senate which allows the employer to deduct $5                   
  for every payment made to the CSED.  Currently, there is no                  
  provision for an employer to deduct any money from a                         
  withholding to pay for their withholding.                                    
  Number 228                                                                   
  CHAIRMAN VEZEY interjected he believed current statute                       
  allowed $1.                                                                  
  (REPRESENTATIVE OLBERG left the meeting at 9:15 a.m.)                        
  MR. PETRIE clarified $1 was allowed only in the employer                     
  reporting program, relating to new hires only, from three                    
  years ago.  The $5 which would be charged per HCSCSSB
  190(FIN) is in line with federal statute and other states.                   
  He noted Missouri allows the employer to charge $6 a month.                  
  MR. PETRIE stated Section 8, 9 & 10 have a section to                        
  chapter word change.                                                         
  CHAIRMAN VEZEY noted he had explained Section 11 earlier.                    
  MR. PETRIE continued Section 12, inserted by the Senate,                     
  states any time CSED over collects they will return the                      
  money immediately or pay interest to the obligor.  He felt                   
  this was fair even though it will cause the agency more                      
  work.  Section 13, section m,  outlines the exceptions for                   
  immediate income withholding for both the agency and the                     
  court.  The agency has restrictions as to when it can issue                  
  exceptions; however, the court does not.  He stated in                       
  conversations with the federal government they specifically                  
  said "that they were allowing a great deal more latitude for                 
  those cases that are not enforced by the agency."  The judge                 
  can grant an exception based on his interpretation of what                   
  he believes is fair.                                                         
  CHAIRMAN VEZEY questioned if the court has considerably more                 
  leeway in dealing with the federal government.                               
  MR. PETRIE affirmed CHAIRMAN VEZEY.  He referred to                          
  paragraph 3, Section 13, inserted as a Senate amendment,                     
  which is supposed to be considered as an exception for                       
  disability payments the children are receiving directly.  He                 
  referred to section (n) which calculates the amount of child                 
  support and credits the obligor for medical and dental                       
  insurance, and educational payments.  He explained this                      
  provision is already contained in Alaska Rule of Civil                       
  Procedure 90.3, however, he believed the intent was to put                   
  it in statute.                                                               
  MR. PETRIE explained Section 15 states, to the extent                        
  allowed by federal law, CSED is to deduct $5.                                
  CHAIRMAN VEZEY questioned what the Code of Federal                           
  Regulations (CFR) allowed in this case.                                      
  MR. PETRIE answered the CFR allows fees to be charged to                     
  either party or split equally.  An amount is not specified.                  
  He pointed out CSED is not allowed by CFR to deduct them                     
  from a custodial parent's payment, if that parent has                        
  assigned their rights to the state.  In this case, the                       
  custodial parent would be on some form of public assistance                  
  (e.g., Medicaid, AFDC, etc.).  CSED enforces on behalf of                    
  the public assistance agency.                                                
  Number 378                                                                   
  CHAIRMAN VEZEY tried to recall the federal statute which he                  
  believed limited the deduction to $25 a year.                                
  MR. PETRIE corrected the limit was for a fee CSED may charge                 
  to maintain and enforce a case.  Currently, the state does                   
  not opt to do this.  He stated Alaska designated $1 in its                   
  state plan.  He explained $1 is paid out of general funds                    
  for every case per year the CSED enforces.                                   
  CHAIRMAN VEZEY asked what percentage of cases the $5 would                   
  apply to.                                                                    
  MR. PETRIE responded CSED is estimating, based on                            
  information from the courts and vital statistics, of the                     
  average 1,600 cases per year of court child support orders,                  
  CSED is "picking up" 1,200.  He explained 400-600 cases per                  
  year will be categorized as not being enforced by the agency                 
  and in the "non-IV(d)" program.                                              
  CHAIRMAN VEZEY inquired how many cases CSED does per year.                   
  MR. PETRIE answered CSED has 24,000+ with orders and another                 
  16,000 they are trying to get orders for.                                    
  Number 412                                                                   
  MR. PETRIE continued with reference to Section 16 in which                   
  statute numbers were added.  He explained Section 17 was a                   
  rewrite of the "notice of liability" statute.  Under the new                 
  federal guidelines the state is supposed to have immediate                   
  income withholding, as opposed to noticing.  The notice is                   
  given through the court proceedings or they receive a notice                 
  of findings and financial responsibility from the agency.                    
  He noted they have 30 days to appeal the notice by going to                  
  informal conference, formal hearing and judicial appeal.                     
  Due process rights are followed at the time the order is                     
  issued.  Section 17 has been rewritten to cover initiated                    
  income withholding aspects.  He pointed out the federal                      
  government gives the individual 15 days to notify CSED, 15                   
  days for CSED to hold a hearing, and 15 days for CSED to                     
  issue the decision.  He continued in Section 18, the                         
  misstatement of "130" was corrected to read "120."  Section                  
  19 adds a formal hearing for clarification and mentions                      
  posting bond of security due under financial responsibility,                 
  if a person requests that formal hearing.  He explained                      
  currently, it is known that CSED is not establishing child                   
  support as fast as the federal government requires.  The                     
  requirements, however, are constantly changing.  CSED needs                  
  to cut down the time of a formal hearing process from the                    
  current 270 days, in regulation and statute, to                              
  approximately  75 days in order to ever reach compliance.                    
  Since 1986, he noted, there has been a requirement for                       
  posting a bond in regulation and Alaska has never passed                     
  that statute.  The auditors from the 1992 audit strongly                     
  suggested that requirement be put into statute in 1994 as                    
  part of SB 190.  He further stated the 1986 state plan                       
  stated Alaska already had this provision.                                    
  Number 459                                                                   
  CHAIRMAN VEZEY clarified  Section 19 brings Alaska into                      
  compliance with a federal requirement of ten years ago.                      
  MR. PETRIE answered the basic requirements dealing with SB
  190 were passed in the federal Family Support Recovery Act                   
  of 1988 (FSRA), with a final implementation date of January                  
  1, 1994, for the court ordered income withholding.  CSED has                 
  been required to do income withholding since October 1,                      
  1990, and has done so.  Section 19 brings the court system                   
  into compliance and is the last aspect of the FSRA.  He said                 
  the bonding provision was passed as amendments to the Social                 
  Security Act of 1984 with an implementation date of 1985.                    
  In 1986, the CSED director certified to the federal                          
  government that Alaska had this bonding statute in place.                    
  He expressed CSED will write regulations for implementation.                 
  Public hearings will occur.                                                  
  MR. PETRIE continued his sectional analysis with Section 20.                 
  Section 20 is a "clean up of the number."  Section 21 & 22                   
  have small wording changes and statute number changes.                       
  Section 23 deals with the service notice of findings of                      
  financial responsibility and when CSED can insert a lien.                    
  He noted ".062 changes" are added.                                           
  MR. PETRIE explained he added Section 24 to SB 190 through                   
  consultation with Bruce Twomley, Chairman, Commercial                        
  Fisheries Entry Commission.  He gave an example of a                         
  controversy CSED had with the Internal Revenue Service                       
  regarding the seizure of moneys from commercial fishers with                 
  CSED liens against them.  CSED files every place an obligor                  
  resides; however, the IRS interpretation of state statute                    
  concluded that for the lien to be valid it had to be filed                   
  wherever the individual fished.  He expressed IRS's                          
  complaints that no place in the statute did it state that a                  
  lien filed at Commercial Fisheries Entry Commission had any                  
  validity.  Section 24 provides this validity and gives CSED                  
  leverage against the IRS.  He noted the bureaucracy to find                  
  out where everyone fished would be cumbersome.                               
  Number 514                                                                   
  MR. PETRIE continued with Section 25.  Section 25 gets CSED                  
  down to the 15 days required for the initiated income                        
  withholding.  He noted the 30 days included in the section                   
  is for the notice of finding of financial responsibility                     
  order.  Section 26 is an amendment inserted by the Senate                    
  which is in line with Civil Rule 90.3(d).  He emphasized                     
  Section 26 does no harm to the statute.  Section 27 has                      
  minor wording changes.  Section 28 reasserts the authority                   
  of an employer to deduct from other wages and salary owed to                 
  the obligor.  Section 29 is required language, by the                        
  federal government, that states CSED will not take more than                 
  what is required under the Consumer Credit Protection Act, a                 
  sliding scale between 50-65 percent.  CSED does not often                    
  ask for more than 50 percent.  There is a small wording                      
  change on service of process, whereby CSED will serve                        
  penalties by certified mail rather than by first class mail.                 
  Section 31 is a provision requested by the court system and                  
  inserted by the Senate.                                                      
  CHAIRMAN VEZEY interjected it is therefore not required by                   
  federal law.                                                                 
  MR. PETRIE answered it is not.  Federal law requires if an                   
  employer fails to respond to a withholding order that the                    
  state have a mechanism to enforce it with penalties                          
  established.  He stated currently, when CSED uses the                        
  enforcement process the money does not go to the child                       
  support case.  The money is a fine and penalty going to the                  
  general fund.  The employer does not pay the obligor's child                 
  support if they fail to honor the withholding order.  The                    
  courts felt it was unfair if CSED was not enforcing the                      
  withholding order, but an individual was through private                     
  parties.  They wanted an obligee, who had served the                         
  withholding order themselves, could exercise the penalty                     
  aspects, thereby making it payable to them, not the state.                   
  He did not foresee anyone allowing or attempting to exercise                 
  "both paragraphs" concurrently.                                              
  MR. PETRIE stated Section 32 was inserted by the Senate and                  
  he believed it appeared to be doing something for the                        
  Department of Corrections (DOC).                                             
  CHAIRMAN VEZEY clarified HCSCSSB 190(STA) jumped from Alaska                 
  Statute Title 25 to Title 33.  He noted the only change in                   
  existing Title 33 is found on page 15, line 6, whereby "AS                   
  25.27.062" is deleted and the whole chapter "AS 25.27" is                    
  MR. PETRIE expressed he had no objections to the change.  He                 
  stated CSED sends withholding orders to DOC for any prisoner                 
  in custody, thereby receiving a portion of whatever the                      
  facility pays them while incarcerated.  Section 33 amends                    
  Civil Rule 90.3(d), considering the Indian Health Service                    
  provision.  He noted the federal government does not want to                 
  recognize medical services provided by the Indian Health                     
  Service as "adequate medical insurance."  CSED could not get                 
  them to solidify their opinion, therefore a year-and-a-half                  
  ago CSED made it policy to recognize the Indian Health                       
  Service.  He pointed out this was a specific concern of                      
  Senator Al Adams.  He emphasized military personnel are not                  
  required to find another insurance policy if their                           
  dependents have military medical care.  He continued with                    
  Section 34 which deletes two provisions in existing statute                  
  that are in contravention with current withholding statutes                  
  and the process to get a withholding order lifted.  He                       
  pointed out sections 2 & 5, Chapter 75, SLA 1991, regarding                  
  the employer reporting program, are repealed.  He strongly                   
  urged the reporting program be left in statute even though                   
  it is not a federal requirement.  The employer must have 20+                 
  employees and must be designated by CSED.  He estimated 190                  
  employers in the state are now designated.                                   
  CHAIRMAN VEZEY interjected the committee is familiar with                    
  those sections.                                                              
  Number 641                                                                   
  MR. PETRIE continued with Section 35, a transitional                         
  provision, which the court subsystem wanted to insert to                     
  give them the opportunity to "work in" all orders they had                   
  issued between January 1 and when HCSCSSB 190(STA) becomes                   
  effective.  He urged the committee to pass HCSCSSB 190(STA)                  
  from committee.                                                              
  CHAIRMAN VEZEY called for an at ease at 9:42 a.m. so as the                  
  committee could review their paperwork.  He resumed the                      
  meeting at 9:47 a.m.                                                         
  REPRESENTATIVE G. DAVIS, in reading the letters from the                     
  Federal Department of Health and Human Services, questioned                  
  their threat of withholding certain funds from the state                     
  should the state not come into compliance.  What would the                   
  fiscal ramifications be.                                                     
  MR. PETRIE answered "in round numbers" $10 million of direct                 
  funding from the federal government to CSED, essentially all                 
  of their operating money and incentives and federal matching                 
  funds will be forfeited.  The federal government will also                   
  take an appropriate penalty against an approximate $70                       
  million a year in AFDC money.  He noted the worst case would                 
  be a loss of $80 million and the very least would be $10                     
  million.  The loss would be almost immediately because they                  
  gave Alaska almost two years leeway to get this legislation                  
  Number 667                                                                   
  REPRESENTATIVE BETTYE DAVIS stated she wanted to move                        
  HCSCSSB 190(STA).                                                            
  CHAIRMAN VEZEY responded he would like to hold on the                        
  motion.  He recognized two fiscal notes for HCSCSSB
  190(STA).  He prepared a new fiscal note for the CSED which                  
  now read zero.  The other zero fiscal note dated 4-11-94,                    
  was from the Alaska Court System.  He moved to adopt these                   
  two accompanying fiscal notes.                                               
  CHAIRMAN VEZEY, hearing no objection, adopted the new fiscal                 
  notes.  He stated he wanted to hold HCSCSSB 190(STA) in                      
  committee for further review.                                                
  REPRESENTATIVE B. DAVIS asked to find out if the committee                   
  had a need to further review the bill.  She expressed                        
  concern that it pertained to a federal mandate.                              
  CHAIRMAN VEZEY responded he wanted to hold the bill in                       
  (REPRESENTATIVE B. DAVIS left the meeting at 9:52 a.m.)                      
  CSSB 333(FIN)am - DISCLOSURE OF EXECUTIVE BRANCH CLOSE                       
  CHAIRMAN VEZEY opened CSSB 333, by request of Legislative                    
  Budget & Audit, for discussion.                                              
  TAPE 94-52, SIDE B                                                           
  Number 016                                                                   
  RANDY WELKER, LEGISLATIVE AUDITOR, addressed CSSB 333.  He                   
  began CSSB 333 was introduced as a result of an audit                        
  Legislative Budget & Audit (LB&A) conducted on the Division                  
  of Fish & Wildlife (F&W), Department of Public Safety.  He                   
  noted a couple years ago the legislature passed legislation,                 
  as a result of a prior audit, that prohibited F&W protection                 
  officers from being employed also as assistant guides.  LB&A                 
  felt this was a direct conflict of interest and the                          
  legislature agreed.                                                          
  MR. WELKER explained CSSB 333 is focused on the aspect of                    
  close economic association between people who regulate                       
  industries and have the ability to exercise discretion, over                 
  people whom they may have economic associations with.  He                    
  commented in the F&W audit they found officers, or spouses                   
  of officers, who held commercial fishing licenses or owned                   
  commercial fishing vessels.  They found indications of                       
  significant property transactions between F&W protection                     
  officers and the industry they regulate.  Presently, there                   
  is nothing in law requiring those associations to be                         
  disclosed to anyone.                                                         
  MR. WELKER emphasized this problem does not only relate to                   
  F&W.  He gave a hypothetical example, whereby there is                       
  nothing in law that requires an alcoholic beverage control                   
  board inspector to inform anyone if he/she has an interest                   
  in a liquor license.  The intent of CSSB 333, he stated, is                  
  to put a disclosure requirement in law, in the executive                     
  branch ethics act, similar to that which exists in the                       
  legislative ethics act.  They are required to refrain from                   
  taking a withholding action that may be questioned because                   
  of their economic association.  CSSB 333 further provides                    
  the supervisor "can or should" either reassign functions, or                 
  direct the divestiture of the interest if it is in the best                  
  interest of the state.                                                       
  MR. WELKER commented the other section of CSSB 333 is an                     
  expansion of the nepotism prohibition in statute.                            
  Currently, the only relationship prohibited by state law is                  
  an employee cannot be related to the commissioner of the                     
  department in which they work.  LB&A does not believe it is                  
  appropriate for there to be any supervisor/subordinate                       
  relationships in state employment.  The amendment prohibits                  
  relationships of a supervisor position for anyone in the                     
  employee's immediate family.  This problem was noticed by                    
  the LB&A in an audit of the Alaska Psychiatric Institute                     
  where they found a supervisor had provided for the promotion                 
  and salary advancement of a member in their immediate                        
  family.  The addition of this section, he believed, would                    
  improve public perception and remove any possible direct                     
  conflicts that might exist.                                                  
  (REPRESENTATIVE KOTT entered the meeting at 9:55 a.m.)                       
  CHAIRMAN VEZEY observed the current nepotism statute has                     
  been in place without amendment since 1959.  He believed                     
  regulations also existed within agencies regarding nepotism.                 
  MR. WELKER replied there are some nepotism regulations in                    
  place, however, he was not sure they were solidly based in                   
  statute.  He felt the reading of the nepotism statute was                    
  very clear as to what it covered.                                            
  CHAIRMAN VEZEY interjected it read "department or agency,"                   
  therefore the definition was a little broader.                               
  MR. WELKER further stated if there are any regulations that                  
  try to prohibit lower level relationships they "may be                       
  CHAIRMAN VEZEY replied they may be suspect in terms of their                 
  impact of law, but they are policy.  He noted the problem of                 
  nepotism arises particularly in rural areas.  Hiring of                      
  local people is often limited because of nepotism                            
  MR. WELKER clarified the intent of LB&A is to place it                       
  permanently is statute so it applies equally to all                          
  departments and agencies.                                                    
  Number 164                                                                   
  CHAIRMAN VEZEY commented CSSB 333 may be wise for Anchorage                  
  and Fairbanks, but he questioned the impact on rural areas                   
  where the populations are significantly smaller.  He                         
  inquired to what degree CSSB 333 went.                                       
  MR. WELKER answered spouse, parent, children, grandparent,                   
  and regular members of the person's household.                               
  Number 190                                                                   
  CHAIRMAN VEZEY stated he did not intend to move CSSB 333 at                  
  this meeting, however, it was an interesting subject.  He                    
  was surprised to see the nepotism statute had not been                       
  amended since 1959 considering the changes in the ethics                     
  which took place in the 1970s and 1980s.  CHAIRMAN VEZEY                     
  held CSSB 333 in committee.                                                  
  CHAIRMAN VEZEY, having no more business before the                           
  committee, adjourned the meeting at 10:00 a.m.                               

Document Name Date/Time Subjects