Legislature(2001 - 2002)

04/27/2002 10:05 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         April 27, 2002                                                                                         
                           10:05 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative John Coghill, Chair                                                                                              
Representative Jeannette James                                                                                                  
Representative Hugh Fate                                                                                                        
Representative Gary Stevens                                                                                                     
Representative Peggy Wilson                                                                                                     
Representative Harry Crawford                                                                                                   
Representative Joe Hayes                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 497                                                                                                              
"An Act  giving notice of and  approving the entry into,  and the                                                               
issuance  of,  certificates  of participation  for  the  upgrade,                                                               
expansion,  and replacement  of  certain correctional  facilities                                                               
and jails; giving notice of  and approving the entry into, lease-                                                               
financing  agreements   for  certain   of  those   projects;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED HB 497 OUT OF COMMITTEE                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 340(FIN)(efd fld)                                                                                        
"An  Act relating  to public  notice of  information relating  to                                                               
permanent  fund dividends,  and  to treatment  of permanent  fund                                                               
dividends  for purposes  of determining  eligibility for  certain                                                               
benefits."                                                                                                                      
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 327                                                                                                              
"An  Act relating  to state  employees who  are called  to active                                                               
duty as reserve  or auxiliary members of the armed  forces of the                                                               
United States; and providing for an effective date."                                                                            
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HB 497                                                                                                                  
SHORT TITLE:LEASE-PURCHASE CORRECTIONAL FACILITY                                                                                
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
02/20/02     2338       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
02/20/02     2338       (H)        CRA, STA, FIN                                                                                
02/20/02     2338       (H)        FN1: (REV)                                                                                   
02/20/02     2338       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
02/28/02                (H)        MINUTE(STA)                                                                                  
03/14/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
03/14/02                (H)        Moved Out of Committee                                                                       
03/14/02                (H)        MINUTE(CRA)                                                                                  
03/15/02     2545       (H)        CRA RPT 2DP 3NR                                                                              
03/15/02     2545       (H)        DP: GUESS, MORGAN; NR:                                                                       
                                   SCALZI,                                                                                      
03/15/02     2545       (H)        HALCRO, MEYER                                                                                
03/15/02     2545       (H)        FN1: (REV)                                                                                   
03/15/02     2545       (H)        FN2: (COR)                                                                                   
04/25/02                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
04/25/02                (H)        Scheduled But Not Heard                                                                      
04/27/02                (H)        STA AT 10:00 AM CAPITOL 102                                                                  
                                                                                                                                
BILL: SB 340                                                                                                                  
SHORT TITLE:HOLD HARMLESS PROVISIONS OF PFD PROGRAM                                                                             
SPONSOR(S): RLS                                                                                                                 
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
02/22/02     2284       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
02/22/02     2284       (S)        FIN                                                                                          
03/04/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/04/02                (S)        Heard & Held                                                                                 
03/04/02                (S)        MINUTE(FIN)                                                                                  
04/03/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
04/03/02                (S)        Moved CS(FIN) Out of                                                                         
                                   Committee -- Recessed to 4:00                                                                
                                   pm --                                                                                        
04/03/02                (S)        MINUTE(FIN)                                                                                  
04/03/02                (S)        MINUTE(FIN)                                                                                  
04/10/02     2708       (S)        FIN RPT CS 4DP 1DNP NEW TITLE                                                                
04/10/02     2708       (S)        DP: KELLY, GREEN, WILKEN,                                                                    
                                   WARD;                                                                                        
04/10/02     2708       (S)        DNP: HOFFMAN                                                                                 
04/10/02     2708       (S)        FN1: ZERO(REV); FN2: (REV)                                                                   
04/10/02     2708       (S)        FN3: (HSS); FN4: (HSS); FN5:                                                                 
                                   (HSS)                                                                                        
04/10/02     2708       (S)        FN6: (HSS); FN7: (HSS); FN8:                                                                 
                                   (HSS)                                                                                        
04/11/02                (S)        RLS AT 10:30 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/11/02                (S)        MINUTE(RLS)                                                                                  
04/15/02     2775       (S)        READ THE SECOND TIME                                                                         
04/15/02     2775       (S)        FIN CS ADOPTED UNAN CONSENT                                                                  
04/15/02     2775       (S)        ADVANCE TO 3RD READING FLD                                                                   
                                   Y12 N5 E1 A2                                                                                 
04/15/02     2775       (S)        ADVANCED TO THIRD READING                                                                    
                                   4/16 CALENDAR                                                                                
04/15/02     2774       (S)        RULES TO CALENDAR 1OR 4/15/02                                                                
04/16/02     2791       (S)        READ THE THIRD TIME CSSB
                                   340(FIN)                                                                                     
04/16/02     2791       (S)        PASSED Y12 N7 E1                                                                             
04/16/02     2792       (S)        EFFECTIVE DATE(S) FAILED Y13                                                                 
                                   N6 E1                                                                                        
04/16/02     2792       (S)        ELLIS NOTICE OF                                                                              
                                   RECONSIDERATION                                                                              
04/17/02     2814       (S)        RECONSIDERATION NOT TAKEN UP                                                                 
04/17/02     2815       (S)        TRANSMITTED TO (H)                                                                           
04/17/02     2815       (S)        VERSION: CSSB 340(FIN)(EFD                                                                   
                                   FLD)                                                                                         
04/18/02     2997       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/18/02     2997       (H)        STA, FIN                                                                                     
04/18/02     2997       (H)        REFERRED TO STATE AFFAIRS                                                                    
04/25/02                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
04/25/02                (H)        Heard & Held                                                                                 
04/25/02                (H)        MINUTE(STA)                                                                                  
04/27/02                (H)        STA AT 10:00 AM CAPITOL 102                                                                  
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MARGOT KNUTH, Strategic Planning Coordinator                                                                                    
Office of the Commissioner - Juneau                                                                                             
Department of Corrections                                                                                                       
431 North Franklin Street, Suite 400                                                                                            
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Presented HB 497.                                                                                          
                                                                                                                                
SENATOR RANDY PHILLIPS                                                                                                          
Alaska State Legislature                                                                                                        
Capitol Building, Room 103                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:   Presented SB 340 as sponsor.                                                                              
                                                                                                                                
TABER REHBAUM, Arctic Alliance for People                                                                                       
1401 Kellum Street                                                                                                              
Fairbanks, Alaska  99701                                                                                                        
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
STEVE CONN, Executive Director                                                                                                  
Alaska Public Interest Research Group (AkPIRG)                                                                                  
PO Box 101093                                                                                                                   
Anchorage, Alaska  99503                                                                                                        
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
BRUCE KOVARIK                                                                                                                   
National American Indian Housing Council                                                                                        
19600 Citation Road                                                                                                             
Eagle River, Alaska  99577                                                                                                      
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
PAULETTE ALDEN                                                                                                                  
895 West Twelfth Street, Number 212                                                                                             
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
KATHLEEN WARWICK                                                                                                                
895 West Twelfth Street, Number 104                                                                                             
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
EUGENE WARWICK                                                                                                                  
895 West Twelfth Street, Number 104                                                                                             
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
TONY LOMBARDO                                                                                                                   
Covenant House                                                                                                                  
609 F Street                                                                                                                    
Anchorage, Alaska  99501                                                                                                        
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
MARIE LAVIGNE, Executive Director                                                                                               
National Association of Social Workers                                                                                          
Alaska Chapter                                                                                                                  
4161 Patterson Circle                                                                                                           
Anchorage, Alaska  99504-4680                                                                                                   
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
MARSHALL HARRIS                                                                                                                 
895 West Twelfth Street, Number 309                                                                                             
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
WILLIAM CRAIG                                                                                                                   
Alaska Independent Blind                                                                                                        
613 Degroff Street                                                                                                              
Sitka, Alaska  99835                                                                                                            
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
JIM NORDLUND, Director                                                                                                          
Division of Public Assistance                                                                                                   
Department of Health & Social Services                                                                                          
PO Box 110640                                                                                                                   
Juneau, Alaska  99811-0640                                                                                                      
POSITION STATEMENT:  Testified against SB 340 and answered                                                                      
questions.                                                                                                                      
                                                                                                                                
JOHN SHERWOOD, Unit Manager                                                                                                     
Beneficiary Eligibility Policy                                                                                                  
Division of Medical Assistance                                                                                                  
Department of Health & Social Services                                                                                          
PO Box 110660                                                                                                                   
Juneau, Alaska  99811-0660                                                                                                      
POSITION STATEMENT:  Answered questions on SB 340.                                                                              
                                                                                                                                
NANCI JONES, Director                                                                                                           
Permanent Fund Dividend Division                                                                                                
Department of Revenue                                                                                                           
PO Box 110460                                                                                                                   
Juneau, Alaska  99811-0460                                                                                                      
POSITION STATEMENT:  Answered questions on SB 340.                                                                              
                                                                                                                                
CAREN ROBINSON, Lobbyist                                                                                                        
for Alaska Women's Lobby                                                                                                        
PO Box 33702                                                                                                                    
Juneau, Alaska  99803                                                                                                           
POSITION STATEMENT:  Testified against SB 340.                                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-48, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  JOHN  COGHILL  called the  House  State  Affairs  Standing                                                               
Committee  meeting  to  order  at  10:05  a.m.    Representatives                                                               
Coghill, Fate, Stevens, Wilson,  Crawford, and Hayes were present                                                               
at  the call  to  order.   Representative  James  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
HB 497 - LEASE-PURCHASE CORRECTIONAL FACILITY                                                                                 
                                                                                                                                
[Contains discussion of SB 231]                                                                                                 
                                                                                                                                
CHAIR COGHILL  announced that the  first order of  business would                                                               
be HOUSE  BILL NO. 497,  "An Act  giving notice of  and approving                                                               
the   entry  into,   and  the   issuance   of,  certificates   of                                                               
participation  for the  upgrade,  expansion,  and replacement  of                                                               
certain correctional  facilities and jails; giving  notice of and                                                               
approving the entry into,  lease-financing agreements for certain                                                               
of those projects; and providing for an effective date."                                                                        
                                                                                                                                
Number 0139                                                                                                                     
                                                                                                                                
MARGOT  KNUTH,  Strategic  Planning Coordinator,  Office  of  the                                                               
Commissioner  -  Juneau,  Department  of  Corrections,  told  the                                                               
committee  that  this legislature  is  one  of the  best-informed                                                               
legislatures on  the needs  of the  Department of  Corrections in                                                               
many   years.     She  explained   that  there   are  overcrowded                                                               
facilities,  and the  department  is relying  on  prison beds  in                                                               
Arizona to  house all of  the inmates.   There are  both regional                                                               
needs and  prison needs.  Both  prison beds and beds  in the jail                                                               
facilities around the state are  needed, because those facilities                                                               
are housing pretrial  inmates who need to be near  the court, and                                                               
they're housing people  with very short sentences  who will cycle                                                               
through the system in a few days.                                                                                               
                                                                                                                                
Number 0260                                                                                                                     
                                                                                                                                
MS. KNUTH said  it doesn't make economic sense  to transport them                                                               
to the  Palmer prison  that the  state now  has, or  the Whittier                                                               
prison  that has  been proposed,  or  Arizona.   The capacity  is                                                               
roughly 4,600  inmates and beds.   She informed the  members that                                                               
just on  any given day,  there are 30,000 people  cycling through                                                               
those beds.  There are  30,000 bookings and about 29,800 releases                                                               
each year.  Most  of those people spend a very  short time in the                                                               
system.  She  explained that HB 497 takes a  regional approach on                                                               
expanding  facilities  in  a  phased manner.    The  first  stage                                                               
authorizes expanding the Palmer  Correctional Center by 237 beds,                                                               
expanding the  jails in Bethel  and Fairbanks, and  expanding the                                                               
Spring  Creek Correctional  Center Youthful  Offender Program  in                                                               
Seward.                                                                                                                         
                                                                                                                                
MS.  KNUTH reported  that the  facility  in Seward  is a  special                                                               
needs  population.   In  the  last ten  years  there  has been  a                                                               
dramatic increase  in the number  of youthful offenders,  who are                                                               
being treated as  adults in the system, and  they present special                                                               
management problems  and have special  education needs.   Putting                                                               
them  in one  place and  running a  special program  for them  is                                                               
their  best  hope  for  rehabilitation  and  functioning  in  the                                                               
system, without causing  disruption to other inmates.   The other                                                               
part of  HB 497 addresses  the needs  in four community  jails in                                                               
Dillingham, Kodiak, Kotzebue, and the North Slope Borough.                                                                      
                                                                                                                                
Number 0436                                                                                                                     
                                                                                                                                
MS.  KNUTH admitted  that the  four  community jails  are in  bad                                                               
shape; they are overcrowded and rundown.   They are the four most                                                               
utilized jails of  the fifteen jails statewide.   All have fairly                                                               
urgent  needs, but  there  isn't  enough money  to  take care  of                                                               
everything all  at once, and  it would  be difficult in  terms of                                                               
project management to do everything at  once.  These are the four                                                               
most  urgent in  the  sense  that they  are  relied  upon by  the                                                               
communities and the department to the greatest degree.                                                                          
                                                                                                                                
MS. KNUTH indicated  that HB 497 recognizes that  there are other                                                               
expansion  needs  for  the  department.    It  authorizes  design                                                               
funding for  expanding the Mat-Su  Pretrial Facility.   She noted                                                               
that  the  Matanuska-Susitna  Valley   has  the  fastest  growing                                                               
population.   Unfortunately, that means  it also has  the fastest                                                               
growing  need  for additional  incarceration  space.   The  newly                                                               
opened Anchorage Jail  had been developed and  designed to expand                                                               
by 200  inmates within five  years, so  part of the  design costs                                                               
are for  that jail.   The Point  MacKenzie Farm is  an economical                                                               
placement  for inmates  who are  well  suited for  rehabilitation                                                               
projects and are expected to leave the system fairly soon.                                                                      
                                                                                                                                
Number 0573                                                                                                                     
                                                                                                                                
MS.  KNUTH  pointed   out  that  down  the   road,  the  Wildwood                                                               
Correctional  Center  in  Kenai,  the  Lemon  Creek  Correctional                                                               
Center  in Juneau,  and the  jail in  Ketchikan will  need to  be                                                               
expanded.  All of this comes  with a price tag, and the mechanism                                                               
used in  this legislation is  for the state  to issue bonds.   It                                                               
utilizes the  certification of participation method,  which means                                                               
that the department will pay back  the capital costs on an annual                                                               
basis, and the operating costs are set out in the bill.                                                                         
                                                                                                                                
MS. KNUTH  explained the  difference between  HB 497  and Senator                                                               
Green's bill, SB 231, is that  SB 231 targets the same facilities                                                               
in  the   same  areas,  but   authorizes  all  of   the  projects                                                               
simultaneously.   Although there isn't  a difference in  terms of                                                               
numbers  or  locations,  the  timetable is  opened  up,  and  the                                                               
funding  mechanism   is  different.     In  SB  231,   the  local                                                               
governments  would be  issuing  the bonds,  and  the state  would                                                               
enter into local  contracts with the local  governments and repay                                                               
them.   The two bills are  similar in terms of  the philosophical                                                               
approach using regional expansion.                                                                                              
                                                                                                                                
Number 0705                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS agreed  that the  Kodiak jail  is in  bad                                                               
shape.  He  asked for more detail on the  matching grants between                                                               
the four communities and the state.                                                                                             
                                                                                                                                
MS. KNUTH answered  that the state would pay $4  million, and the                                                               
four  communities need  to come  up with  a matching  $4 million.                                                               
Kotzebue already has a federal  grant that would cover its share.                                                               
The  North Slope  Borough  is  able to  fund  its portion  fairly                                                               
readily.  Dillingham  and Kodiak need to work a  little harder to                                                               
come up with  their part of it, but they  are very optimistic and                                                               
are very  committed.  This  is a priority for  their communities,                                                               
and they expect to match it.                                                                                                    
                                                                                                                                
REPRESENTATIVE  STEVENS  said  that  state  funds  would  not  be                                                               
expended unless the communities come up with the matching share.                                                                
                                                                                                                                
MS. KNUTH agreed and said it is a conditional grant.                                                                            
                                                                                                                                
Number 0900                                                                                                                     
                                                                                                                                
CHAIR  COGHILL  asked how  the  local  communities share  in  the                                                               
certificate  of participation.   He  wondered if  it is  a shared                                                               
bond.                                                                                                                           
                                                                                                                                
MS.  KNUTH  answered  that the  communities  actually  own  these                                                               
facilities,  and this  envisions that  they will  keep ownership.                                                               
The state would  grant the $4 million, and  the local communities                                                               
would retain  the title.   There is  an acknowledgement  that the                                                               
state  is  paying  the  operating  expenses  for  the  facilities                                                               
because the inmates are all  state inmates; none are housed there                                                               
on  local charges.   Increasing  the capacity  will increase  the                                                               
operating  expenses; that  increase  has been  identified in  the                                                               
bill, and the state would fund it.                                                                                              
                                                                                                                                
Number 0960                                                                                                                     
                                                                                                                                
CHAIR COGHILL  said the  difference in funding  the two  bills is                                                               
that HB  497 has  the state  as the  bonding source,  whereas the                                                               
Senate bill has the local governments  as the bonding source.  He                                                               
asked about the different bonding mechanisms.                                                                                   
                                                                                                                                
MS.  KNUTH said  that the  Department  of Revenue  can issue  the                                                               
bonds for  less than  the local  governments.   Local governments                                                               
had  talked   about  going   through  AIDEA   [Alaska  Industrial                                                               
Development and  Export Authority]  for funding assistance.   The                                                               
difference between the two is  not economically significant.  She                                                               
indicated that there  is a benefit in having  local commitment to                                                               
the  project.   There's a  little awkwardness  in that  the state                                                               
would have to  turn over title of part of  the facility, at least                                                               
for the  local governments to be  able to issue their  bonds, but                                                               
they  have  not  expressed  interest  in  keeping  title  to  the                                                               
facilities past the bonding period.   Even if they did, the state                                                               
would probably  be amenable to  that.  She predicted  that Alaska                                                               
eventually  will  go  the  way  of  locally  owned  and  operated                                                               
facilities.                                                                                                                     
                                                                                                                                
Number 1091                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES commented that  all the facilities for state                                                               
criminals will  have to be  addressed someday:  separate  what is                                                               
the state's  responsibility, and  what is the  local government's                                                               
responsibility.   She said  she is not  convinced that  the local                                                               
governments  have the  ability to  do  that yet.   She  expressed                                                               
concern  about  the  fiscal problems  and  "bonding  enthusiasm."                                                               
There is a limit to what can be  done.  She asked Ms. Knuth about                                                               
transferring ownership to the local facilities.                                                                                 
                                                                                                                                
MS. KNUTH  answered that  HB 497 does  not transfer  ownership to                                                               
the  local  governments;  that would  be  Senator  Green's  bill,                                                               
SB 231, which  has the local  governments issuing the bonds.   In                                                               
the governor's  bill, the state  issues the bonds, and  the state                                                               
retains ownership of the state jails  and prisons.  This bill has                                                               
two different  parts.  One  is the  state prisons and  jails, and                                                               
the  other is  the  community  jails.   The  community jails  are                                                               
locally owned  and are the  small 5-  to 10-bed facilities.   The                                                               
local governments would continue to  own them, and the $4 million                                                               
that  the state  would contribute  would be  a part  of the  bond                                                               
issuance for  the state projects.   There would be  an additional                                                               
$12 million  issued in bonds  for the state projects  which would                                                               
be  secured  by  the  state's  facilities and  would  go  to  the                                                               
community jails.                                                                                                                
                                                                                                                                
Number 1263                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES noted  there have  been many  things before                                                               
the legislature for new construction  of various kinds of things,                                                               
and  unless there  is a  provision  for maintenance,  she is  not                                                               
interested  in  building   new  facilities.    She   said  it  is                                                               
embarrassing  to  have facilities  that  belong  either to  local                                                               
governments  or  the  state  which look  like  they  are  totally                                                               
deteriorated.    She  always  wants to  tie  something  to  these                                                               
construction issues  that provided  the maintenance, and  she has                                                               
never been able  to do that.  She commented  that nobody wants to                                                               
think about the fact that the facilities have to be kept up.                                                                    
                                                                                                                                
MS. KNUTH  agreed that was a  valid point.  She  said she thought                                                               
that it  would be possible for  the state to identify  what those                                                               
maintenance  costs  would  be,  and  they could  be  set  out  in                                                               
legislation.   Even  though a  bill  in 2002  cannot bind  future                                                               
legislatures for  appropriations, it could acknowledge  what that                                                               
responsibility is, and what the amount of money would be.                                                                       
                                                                                                                                
REPRESENTATIVE JAMES stated that she  would like to see funds set                                                               
aside for maintenance on every building in the state.                                                                           
                                                                                                                                
CHAIR  COGHILL  asked  if  lease  payments were  a  part  of  the                                                               
maintenance agreement.                                                                                                          
                                                                                                                                
MS.  KNUTH  said  the  traditional  funding  mechanism  does  not                                                               
function  that  way.   It  just  covers  the  cost of  the  debt.                                                               
Maintenance is  a part of  departmental annual budgets,  and that                                                               
separation creates the problem.                                                                                                 
                                                                                                                                
Number 1525                                                                                                                     
                                                                                                                                
MS. KNUTH  pointed out  that the department  has no  control over                                                               
the  number of  beds it  needs.   The department  makes decisions                                                               
about whether  to assign a prison  bed or a halfway  house or how                                                               
soon  to furlough  [an inmate],  while the  judge sends  down the                                                               
sentence as per the parameters set  by the legislature.  She told                                                               
the committee that there is a  trend in other states to reexamine                                                               
some of the  sentencing structures for felonies.  As  a matter of                                                               
economics, Alaska might need to go  that route.  For example, the                                                               
property offense  level is still  $500 for  a felony, and  it has                                                               
been that way  since statehood.  She commented  that bumping into                                                               
another car  would cause more  than $500  damage.  If  that level                                                               
were raised  to $1,000  or $2,000, maybe  the number  of felonies                                                               
and  the sentences  could be  reduced, and  maybe the  department                                                               
wouldn't need the capital money for new beds.                                                                                   
                                                                                                                                
Number 1598                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES commented that  there is good technology for                                                               
short  sentences,  whereby  people  can serve  time  at  home  if                                                               
someone watches  them if they  aren't dangerous to society.   She                                                               
said  she  hasn't seen  much  interest  in going  that  direction                                                               
either.   Certainly  it is  cheaper  to keep  them at  home on  a                                                               
monitoring system  than it  would be  to find  a bed  and provide                                                               
three  meals and  a cot.   She  noted that  some real  innovative                                                               
thinking needs to be done on  this issue; the state cannot afford                                                               
where it's going on this.                                                                                                       
                                                                                                                                
Number 1685                                                                                                                     
                                                                                                                                
CHAIR COGHILL asked  why there aren't more halfway  houses and if                                                               
it is because  of the sentencing.  He wondered  if there are ways                                                               
to have less expensive beds.                                                                                                    
                                                                                                                                
MS.  KNUTH  said  the  department actively  pursues  the  use  of                                                               
halfway house beds  whenever possible.  There used  to be minimum                                                               
security prisons,  and there is  no such thing anymore.   Anybody                                                               
who is a  minimum security risk is  now in a halfway  house or an                                                               
electronic  monitoring program.    So, incarceration  in a  "hard                                                               
bed" starts  at the  medium level.   She acknowledged  that there                                                               
are   limitations  from   the  sentencing   code  and   from  the                                                               
conviction.   She  pointed out  that there  are community  issues                                                               
too.  The  willingness to have someone [who's  been charged with]                                                               
domestic violence assault  out in the community is  not as great.                                                               
It is  a complicated area.   Ms.  Knuth said that  the department                                                               
has probably  gone as far  as it  can with the  existing criminal                                                               
sentencing code  structure in terms  of utilizing  halfway houses                                                               
and  is   getting  more  aggressive   about  home   furlough  and                                                               
electronic  monitoring.   In  the  abstract,  those things  sound                                                               
good, but then  when there are criminal inmates who  are known to                                                               
their neighbors, it's always, "but not him."                                                                                    
                                                                                                                                
Number 1808                                                                                                                     
                                                                                                                                
CHAIR COGHILL noted that the price  per bed in the Senate bill is                                                               
significantly lower  and wondered  what the  difference is.   The                                                               
Senate bill  averages $155,000 per  bed, and HB 497  runs between                                                               
$159,000 and $175,000.                                                                                                          
                                                                                                                                
MS.  KNUTH  replied that  all  the  identified projects  and  the                                                               
future ones  would average  $155,000.   The Point  MacKenzie Farm                                                               
beds  and the  Anchorage Jail  beds are  going to  come in  under                                                               
$155,000 in phase 2 of HB 497.   She acknowledged that there is a                                                               
regional problem.  Building in  Bethel and Fairbanks is certainly                                                               
more expensive than the Anchorage  bowl area, and Spring Creek is                                                               
more because it is a maximum security facility.                                                                                 
                                                                                                                                
Number 1878                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD said  he was shocked to  hear that 30,000                                                               
people cycle through  the system.  He asked how  many inmates are                                                               
maximum security who will be in the system forever.                                                                             
                                                                                                                                
MS. KNUTH answered that she didn't  have the exact number, but it                                                               
is a  relatively small number.   None of the  approximately 1,000                                                               
inmates sent to Arizona have  been maximum security.  She guessed                                                               
the  number would  be  around 500  or so.    Their sentences  are                                                               
between 40  and 150 years.   Even if  they served 20  years, they                                                               
are  not eligible  for  alternative placement.    She noted  that                                                               
geriatric prisoners  and their  medical costs  will be  a problem                                                               
that the  department will  face in  the near  future.   There are                                                               
people who  committed heinous offenses  40 years ago who  are now                                                               
having significant medical issues.   At some point the department                                                               
is going  to have to  balance what  it thinks is  appropriate for                                                               
them.  Most  offenders in Alaska are misdemeanants  in the system                                                               
a short period of time.                                                                                                         
                                                                                                                                
Number 2013                                                                                                                     
                                                                                                                                
CHAIR COGHILL asked why there is a need to move prisoners.                                                                      
                                                                                                                                
MS. KNUTH  replied that from the  time of the arrest,  there will                                                               
be arraignment, maybe  a trial, and a sentencing.   Each of those                                                               
three  proceedings needs  to occur  before a  judge in  the place                                                               
where  the  person  was  arrested.    Bethel  and  Fairbanks  are                                                               
overcrowded with  people who need  to be in  that area.   Once it                                                               
spills over,  those inmates are moved  to a place such  as Palmer                                                               
medium class  prison, which isn't  the right place for  them, but                                                               
it's the only  place with space.  They get  moved to Palmer after                                                               
arraignment, and they're there for  two weeks until it's time for                                                               
sentencing because  they changed their  plea and are ready  to go                                                               
before the court.   She explained that the new  Anchorage Jail is                                                               
a pilot project that has a  courtroom there, so people don't need                                                               
to be transported anywhere for arraignment or sentencing.                                                                       
                                                                                                                                
MS.  KNUTH   noted  that  as  the   electronic  capabilities  are                                                               
improved,  judges are  reluctant to  sentence a  person by  video                                                               
camera;  they  feel  a  need  for  face-to-face  appearances  for                                                               
sentencing.  But technology may  be relied on for arraignment and                                                               
other procedures.   Prisoners are moved because of  the number of                                                               
court appearances  and the fact  that they have  short sentences.                                                               
When people  plead out to  an offense  and serve time,  then they                                                               
need to  be transported  home.   The state  is obligated  to book                                                               
them  out of  the  facility  they were  booked  in.   Every  time                                                               
inmates are moved, they have to be moved back, and it adds up.                                                                  
                                                                                                                                
CHAIR  COGHILL commented  that it  is hard  on inmates  in court-                                                               
ordered programs who get moved.  He  said it would be good to see                                                               
the documented cost  compared to what it would cost  for a bed in                                                               
the community.                                                                                                                  
                                                                                                                                
Number 2179                                                                                                                     
                                                                                                                                
MS.  KNUTH said  people also  get transferred  within the  system                                                               
because space  opens up somewhere else  that has a program.   The                                                               
only way  that could  be addressed  is to  overbuild to  the peak                                                               
rather than to the median, and  Alaska doesn't have the funds for                                                               
that.  She  agreed with his concern on the  inmates finishing the                                                               
programs because the programs are the key to success.                                                                           
                                                                                                                                
Number 2219                                                                                                                     
                                                                                                                                
CHAIR COGHILL  asked Ms. Knuth  to explain the categories  of the                                                               
facilities.                                                                                                                     
                                                                                                                                
MS. KNUTH  explained that  at some  facilities, inmates  could be                                                               
arraigned, sentenced, and serve the  whole sentence there.  Those                                                               
places tend to  have names which include  the words "correctional                                                               
center."   The Mat-Su Pretrial  Facility was more  recently built                                                               
and by that time, the  department recognized that nobody was able                                                               
to serve  the whole  sentence in these  regional places,  so they                                                               
called  it  the  Mat-Su  Pretrial  Facility.   The  name  of  the                                                               
Anchorage  Jail acknowledges  that  it is  for misdemeanants  and                                                               
pretrial  people.   The three  prisons in  Alaska are  the Palmer                                                               
Correctional Center,  the Wildwood Correctional Center  in Kenai,                                                               
and the Spring Creek Correctional Center  in Seward.  There is no                                                               
booking  capability at  those  facilities, so  an  inmate has  to                                                               
start  somewhere  else.    She   noted  that  programs  are  most                                                               
productive  at  the  prisons because  the  inmates  usually  have                                                               
months to serve.                                                                                                                
                                                                                                                                
Number 2324                                                                                                                     
                                                                                                                                
CHAIR  COGHILL noticed  that the  Anchorage Jail  is planned  for                                                               
another 192 beds  and wondered if that plan was  with the initial                                                               
construction.                                                                                                                   
                                                                                                                                
MS.  KNUTH said  it was  designed for  that expansion  because it                                                               
would be needed  in the future.  It can  be done cost effectively                                                               
because of that.                                                                                                                
                                                                                                                                
CHAIR COGHILL said he couldn't argue  with the number of beds but                                                               
struggled if this was the best  way to handle the population.  He                                                               
asked  about  the  youthful  offenders,  and  how  they're  being                                                               
handled.                                                                                                                        
                                                                                                                                
Number 2396                                                                                                                     
                                                                                                                                
MS.  KNUTH replied  that if  they're  in Palmer,  Wildwood, or  a                                                               
regional facility,  they are  intermingled with  the rest  of the                                                               
population, but they do have special  needs.  There is a youthful                                                               
offender program at Spring Creek that  has about 70 beds, but the                                                               
number of  offenders under the  age of 25  has grown in  the last                                                               
five or six years.                                                                                                              
                                                                                                                                
MS.  KNUTH explained  that the  youthful  offenders have  special                                                               
impulse-control problems.  Not only  do they have a problem being                                                               
law-abiding,  but  they  also bring  impetuousness  and  juvenile                                                               
development  issues.   A  lot  of  druggies use  marijuana  which                                                               
arrests  development.    A  lot  of  these  offenders  have  used                                                               
marijuana for a  long time, so even at age  25, the adjustment or                                                               
socialization level is about the level  of someone 15 or 16 years                                                               
old.   The Spring  Creek program puts  them together  with people                                                               
who are  specially trained  in dealing  with adolescents  with an                                                               
emphasis  on education  and other  chemical dependency  programs.                                                               
The  program at  Spring  Creek tries  to spare  the  rest of  the                                                               
inmate population from  the youthful offenders who  often are the                                                               
ones causing  assaults in  the facilities.   People in  their 30s                                                               
and 40s  have figured out how  to live there, and  the young kids                                                               
don't  have that  wisdom.   The  Spring  Creek Youthful  Offender                                                               
Program gives  the kids  the opportunity to  work on  their needs                                                               
and improve their chance for rehabilitation.                                                                                    
                                                                                                                                
Number 2502                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON  asked  what   percentage  of  the  inmate                                                               
population is female and how the facilities cope with that.                                                                     
                                                                                                                                
MS. KNUTH  answered that Hiland  Mountain Correctional  Center in                                                               
Eagle  River  is  exclusively  for  women.    Unfortunately,  the                                                               
percentages  of females  being incarcerated  is increasing.   The                                                               
percentage isn't even 10 percent.   There are 250 women in Hiland                                                               
out of  a total  population of  5,000.   Ms. Knuth  reported that                                                               
there have to be separate  facilities in regional jails, and each                                                               
institution has a way to deal  with that.  At the Anchorage Jail,                                                               
there  is a  place where  a wall  can be  put up  in the  dorm to                                                               
separate the women from  the men.  It is a  given that there will                                                               
be  separation.    The  department  tries  to  have  parity  with                                                               
programs,  but   that  is  difficult   because  of   the  smaller                                                               
population of women.                                                                                                            
                                                                                                                                
Number 2634                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES  commented  that if  a  more  proportionate                                                               
amount of  money could be  spent on  creating a climate  for more                                                               
industry  and   good-paying  jobs,  history  shows   that  crime,                                                               
domestic  violence, and  sex  abuse  go down.    All the  various                                                               
issues  that cost  so  much  to take  care  of  these people  are                                                               
reduced simply by having opportunities  for people to find a job.                                                               
It distresses her that some of  the money can't be used to create                                                               
some sort of  activity that keeps this from growing.   In her ten                                                               
years in  the legislature, that  issue has not been  addressed or                                                               
agreed on.  It pains her to  be in this position when she doesn't                                                               
see  where the  money is  going to  come from  to do  this unless                                                               
there is more economic activity in the state, she commented.                                                                    
                                                                                                                                
MS.  KNUTH agreed  with  Representative James  and  is glad  that                                                               
people recognize the  problem.  The single  greatest predictor of                                                               
whether someone will be in  prison in his/her lifetime is whether                                                               
he/she gets a high  school diploma.  A real focus  ought to be to                                                               
get all the kids through high school.                                                                                           
                                                                                                                                
Number 2727                                                                                                                     
                                                                                                                                
CHAIR COGHILL  agreed with Representative  James that there  is a                                                               
need but disagreed that nothing has  been done.  He's been on the                                                               
House Health,  Education and  Social Services  Standing Committee                                                               
the  past four  years, and  they've  grappled with  where to  put                                                               
resources.   He  refuses to  believe they  haven't addressed  the                                                               
problem; it  is just that  the problem  grows as rapidly  as it's                                                               
worked on.                                                                                                                      
                                                                                                                                
REPRESENTATIVE JAMES  retorted that it  can be said  that getting                                                               
education  for these  children is  the most  important thing  but                                                               
said she thinks that the  most important thing for these children                                                               
is for their parents to have a job.                                                                                             
                                                                                                                                
Number 2780                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE  asked if  there were  any statistics  on not                                                               
getting a high school diploma and criminal activity.                                                                            
                                                                                                                                
MS. KNUTH said she will get those for him.                                                                                      
                                                                                                                                
CHAIR COGHILL commented  that HB 497 will have a  struggle in the                                                               
finance area because it is a tough budget year.                                                                                 
                                                                                                                                
Number 2826                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HAYES moved  to report  HB 497  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection,  HB 497 was reported out of the                                                               
House State Affairs Standing Committee.                                                                                         
                                                                                                                                
SB 340 - HOLD HARMLESS PROVISIONS OF PFD PROGRAM                                                                              
                                                                                                                                
CHAIR COGHILL announced that the  next order of business would be                                                               
CS FOR  SENATE BILL  NO. 340(FIN)(efd fld),  "An Act  relating to                                                               
public  notice   of  information   relating  to   permanent  fund                                                               
dividends,  and  to treatment  of  permanent  fund dividends  for                                                               
purposes of determining eligibility for certain benefits."                                                                      
                                                                                                                                
The committee took an at-ease from 10:54 a.m. to 10:57 a.m.                                                                     
                                                                                                                                
Number 2880                                                                                                                     
                                                                                                                                
SENATOR  RANDY  PHILLIPS,   Alaska  State  Legislature,  sponsor,                                                               
presented CSSB 340(FIN)(efd fld).                                                                                               
                                                                                                                                
Number 2899                                                                                                                     
                                                                                                                                
CHAIR  COGHILL  made  a  motion   to  adopt  the  proposed  House                                                               
committee  substitute  (HCS)  for SB  340,  version  22-LS1361\P,                                                               
Cook,  4/24/02, as  a  work  draft.   There  being no  objection,                                                               
Version P was before the committee.                                                                                             
                                                                                                                                
SENATOR  PHILLIPS  explained  that the  difference  between  this                                                               
version  and what  was  passed in  the Senate  is  the P  version                                                               
exempts the longevity bonus by adding the following:                                                                            
                                                                                                                                
    Page   3,   lines   3-4,   "Except   as   provided   in                                                                     
     AS 47.55.020(e)(3), a".                                                                                                    
                                                                                                                                
SENATOR  PHILLIPS explained  that  SB 340  deals  with the  "hold                                                               
harmless" clause.  There is  about $27.35 taken out of everyone's                                                               
PFD  [permanent fund  dividend] to  hold harmless  the people  on                                                               
welfare.                                                                                                                        
                                                                                                                                
TAPE 02-48, SIDE B                                                                                                              
Number 2918                                                                                                                     
                                                                                                                                
SENATOR  PHILLIPS  explained  that people  on  SSI  [Supplemental                                                               
Security  Income]  and APA  [Adult  Public  Assistance] would  be                                                               
exempted from this bill and  will receive both their benefits and                                                               
their PFD.   People  on the  Alaska Temporary  Assistance Program                                                               
[ATAP] and those  people receiving food stamps will  have to make                                                               
a decision  the month of  October whether to receive  the welfare                                                               
assistance,  amounting  to  about   $1,240,  or  the  PFD,  worth                                                               
approximately  $7,000, but  not both.   This  money saved,  which                                                               
amounts to over  $4.5 million as proposed by the  Senate, will go                                                               
in the front  section of the budget to deal  with the increase in                                                               
Medicaid.  He added that those  folks on food stamps and ATAP are                                                               
100  percent qualified  for Medicaid,  of which  only 80  percent                                                               
take advantage of  the Medicaid services.  The  money being taken                                                               
away from  them will  go back  to them in  the form  of Medicaid.                                                               
The governor's  projections for Medicaid  is about  $193 million,                                                               
which is  about a  $37 million increase  over the  current fiscal                                                               
year.                                                                                                                           
                                                                                                                                
Number 2898                                                                                                                     
                                                                                                                                
SENATOR  PHILLIPS  said  there  are   more  and  more  people  on                                                               
Medicaid,  and that  problem  has to  be  resolved; it's  growing                                                               
about  15 to  20 percent  a year.   The  governor asked  for $193                                                               
million; the  House passed $187  million; the Senate  passed $173                                                               
million.   Obviously, the problem  still needs to be  dealt with,                                                               
he said.                                                                                                                        
                                                                                                                                
Number 2862                                                                                                                     
                                                                                                                                
SENATOR  PHILLIPS  informed the  members  that  the whole  intent                                                               
behind  this bill  is to  figure out  how to  fill the  gap.   He                                                               
pointed  out that  the $37  million  is the  largest increase  of                                                               
anything  in the  budget.   Other  parts of  the  budget will  be                                                               
affected  by this,  so  there has  to  be a  way  to balance  the                                                               
increasing costs in Medicaid.                                                                                                   
                                                                                                                                
Number 2832                                                                                                                     
                                                                                                                                
SENATOR  PHILLIPS noted  that many  constituents  over the  years                                                               
have wondered  why the $27.35 is  taken out of their  PFDs.  When                                                               
he explains it to them, they  wonder why this is being taken out,                                                               
since  they've  already paid  federal  income  tax that  goes  to                                                               
welfare.  His main motivation  is to resolve the increasing costs                                                               
of Medicaid,  and this is  the intent of  the Senate to  figure a                                                               
way of reducing that increase.                                                                                                  
                                                                                                                                
Number 2636                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS asked  if  implementing  this bill  would                                                               
eliminate the $27.35 deduction from everyone's PFD.                                                                             
                                                                                                                                
SENATOR PHILLIPS answered it would  reduce the deduction to about                                                               
$16.  The  $16 would cover the people  receiving social security,                                                               
adult   public  assistance,   and  the   longevity  bonus.     He                                                               
acknowledged that some people say this  is a tax on the poor, and                                                               
he understands how they view it  in that manner, but on the other                                                               
hand the very same group of people are eligible for Medicaid.                                                                   
                                                                                                                                
Number 2563                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON asked:   If  the people  on ATAP  and food                                                               
stamps qualify  for Medicaid but  don't take advantage of  it and                                                               
then go on Medicaid, will that make the Medicaid bill go up?                                                                    
                                                                                                                                
SENATOR PHILLIPS said he didn't have that answer.                                                                               
                                                                                                                                
Number 2522                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES  indicated  that she  has  heard  anecdotal                                                               
stories which show  that people are coming to  Alaska because the                                                               
programs  are  so  good.   These  programs  are  increasing,  and                                                               
there's  good evidence  that  some recipients  have  not been  in                                                               
Alaska all of their lives.  She  said she thinks that needs to be                                                               
addressed, and this is the way to do it.                                                                                        
                                                                                                                                
SENATOR PHILLIPS reported that one  of his constituents who works                                                               
in  public  assistance has  seen  a  lot  of abuses  within  that                                                               
division as far  as the public taking advantage  of the programs.                                                               
He took his constituent's word for  it because he doesn't work in                                                               
that  office;  he  did  not  solicit  that  phone  call  and  was                                                               
surprised by it.  The constituent  seemed to know what he/she was                                                               
doing and seemed concerned about the abuses.                                                                                    
                                                                                                                                
Number 2402                                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES asked if the  $193 million that the governor                                                               
proposed in  his budget is  to address the maintenance  of effort                                                               
or  is  above  and  beyond the  maintenance-of-effort  issue  for                                                               
Medicaid.                                                                                                                       
                                                                                                                                
SENATOR  PHILLIPS said  he didn't  know.   He  commented that  it                                                               
doesn't matter what  figure is used; the problem  is still there.                                                               
The  Medicaid situation  needs to  be taken  care of  as soon  as                                                               
possible, and this is one way to do it.                                                                                         
                                                                                                                                
Number 2351                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HAYES  said  that   about  three  years  ago  the                                                               
legislature went  into an agreement  with the  federal government                                                               
to use  some of the  additional monies  from Medicaid to  pay for                                                               
some of the  programs.  United States Senator Murkowski  put in a                                                               
provision to  increase the  amount of  Medicaid payments  for the                                                               
state of  Alaska from  50-50 percent.   When the  legislature was                                                               
working on the five-year plan, this  was a way to address some of                                                               
the  issues.   Since the  federal government  switched how  it is                                                               
doing Medicaid, he argued, the state knew this was coming.                                                                      
                                                                                                                                
SENATOR PHILLIPS said  he thought it was 58-42, and  now it's 52-                                                               
48 or  53-47.   The point is  that the state  funds to  match the                                                               
federal   funds  are   increasing  because   the  percentage   is                                                               
increasing.   Alaska may not be  able to have that  luxury in the                                                               
next few years.  The fact that it  was known it was coming is the                                                               
whole point of this bill.                                                                                                       
                                                                                                                                
Number 2172                                                                                                                     
                                                                                                                                
TABER  REHBAUM,   Arctic  Alliance  for  People,   testified  via                                                               
teleconference.   She  asked the  committee not  to pass  SB 340.                                                               
She  indicated  that Alaskans  on  temporary  assistance are  not                                                               
getting a  free ride.  She  understands that ATAP brings  them up                                                               
to only 67 percent of the  poverty level.  The successful welfare                                                               
reform initiative  and case management system  are really helping                                                               
more  people toward  self-sufficiency and  off state  assistance.                                                               
The  hold  harmless provision  for  ATAP  recipients is  also  an                                                               
important element  in Alaska's welfare reform  success in helping                                                               
people  make  important  investments  toward  self-sufficiency  -                                                               
buying or repairing a car,  purchasing work clothes or equipment,                                                               
getting dental  needs addressed, becoming more  hirable - without                                                               
having to  lose critical  benefits for  that month  or subsequent                                                               
months.  This  bill would yet place another  hurdle before people                                                               
who are struggling  to try to become independent.   She urged the                                                               
committee to not promote this bill.                                                                                             
                                                                                                                                
Number 2087                                                                                                                     
                                                                                                                                
STEVE CONN,  Executive Director, Alaska Public  Interest Research                                                               
Group (AkPIRG), testified via teleconference.   He noted that the                                                               
Alaska  Injured Workers  Alliance and  the Nubian  Sisterhood are                                                               
also in AkPIRG.   The Alaska Injured Workers  Alliance deals with                                                               
the  needs of  injured workers  who fall  between the  cracks for                                                               
social services.  He expressed opposition  to SB 340.  He pointed                                                               
out  that somebody  pays in  the end.   The  amount gotten  for a                                                               
custodial   parent   by   garnishing  the   PFD   will   diminish                                                               
substantially  if this  bill passes.   Small-business  owners who                                                               
deal productively with a low-income  person will eat those debts,                                                               
so they  will pay.   The  Alaska Native  family grants  will lose                                                               
money.   He stated that the  costs are borne by  charities and by                                                               
other people.                                                                                                                   
                                                                                                                                
MR. CONN  concluded that a study  reported in The New  York Times                                                             
last Wednesday  showed that  only one state  of the  fifty states                                                               
from  the 1970s  to 1990s  has  actually reduced  its income  gap                                                               
between the  richest 20 percent  and the poorest 20  percent, and                                                               
that's Alaska.  This is a  positive thing that the permanent fund                                                               
has done.  He told the committee that this is a despicable bill.                                                                
                                                                                                                                
Number 1815                                                                                                                     
                                                                                                                                
BRUCE   KOVARIK,  National   American  Indian   Housing  Council,                                                               
testified via teleconference.  He  told the committee that SB 340                                                               
is misguided,  divisive, and  just plain wrong.   To  repeal hold                                                               
harmless  causes  harm,   he  said.    This  is   a  reversal  in                                                               
established  public policy,  and there  is no  reason to  reverse                                                               
this public  policy.   He said  there has been  talk of  a fiscal                                                               
crisis in Alaska for the past 20 years.                                                                                         
                                                                                                                                
Number 1750                                                                                                                     
                                                                                                                                
MR.  KOVARIK  commented  that   this  bill  creates  uncertainty.                                                               
Health and  Social Services  estimates that  about 37  percent of                                                               
the families  that receive  their PFDs  in October  actually have                                                               
them garnished.   There are many families  who voluntarily assign                                                               
their PFDs  to pay  for affordable housing  and other  costs, and                                                               
most  families  probably  use  their   PFDs  to  either  pay  off                                                               
accumulated  debt during  the year  or to  advance payment  other                                                               
family  expenses.   They annualize  their PFDs,  and for  them to                                                               
suffer  the loss  of ATAP,  food  stamps, and  general relief  in                                                               
October, November, or  December, depending upon how  they use the                                                               
funds, is  counterproductive.  The  brunt of that  uncertainty is                                                               
borne by  poor and  low-income families.   He restated  that this                                                               
bill is divisive.                                                                                                               
                                                                                                                                
Number 1614                                                                                                                     
                                                                                                                                
PAULETTE  ALDEN  testified  that  SB  340 will  be  hard  on  the                                                               
families who  won't get both the  welfare and the PFD.   She said                                                               
that it is  wrong to attack the people who  don't have the money.                                                               
People who  do have  money to  live off get  to keep  their PFDs.                                                               
She  commented that  if it  is going  to be  taken away  from one                                                               
person, it should be taken away from everyone.                                                                                  
                                                                                                                                
Number 1446                                                                                                                     
                                                                                                                                
KATHLEEN WARWICK  told the committee how  hard it is for  her and                                                               
her husband  to live  on welfare  and food  stamps with  the high                                                               
cost of groceries and rent.                                                                                                     
                                                                                                                                
Number 1151                                                                                                                     
                                                                                                                                
EUGENE WARWICK  testified about how  hard it  is to live  on only                                                               
$10 a month for food stamps.                                                                                                    
                                                                                                                                
Number 0954                                                                                                                     
                                                                                                                                
TONY   LOMBARDO,    Covenant   House   Alaska,    testified   via                                                               
teleconference.  He explained that  Covenant House is a privately                                                               
funded,  nonprofit agency  which cares  for homeless  and at-risk                                                               
youth.   There  is also  a  program in  Anchorage called  Passage                                                               
House,  which helps  teen moms  transition off  public assistance                                                               
and into self-sufficiency,  and he speaks today  on their behalf.                                                               
Most Passage  House moms come  just barely surviving on  ATAP and                                                               
WIC [Special  Supplemental Nutrition Program for  Women, Infants,                                                               
and Children], even  with the PFD to help  stabilize their lives,                                                               
find  affordable  daycare,  learn  life  skills,  such  as  money                                                               
management, and  find a job over  the course of 12  months to try                                                               
to transition  off public  assistance.   They come  there because                                                               
they are barely  making it on the street and  often fear that one                                                               
false  step will  result in  literally living  on the  street and                                                               
possibly losing their child to state protective custody.                                                                        
                                                                                                                                
MR.  LOMBARDO  indicated that  this  bill  would cut  the  meager                                                               
budgets of  these teen moms  too much,  and they might  resort to                                                               
crime.    When poor  women  are  faced with  bleak  alternatives,                                                               
shoplifting,  drug  dealing,  and prostitution  seem  like  quick                                                               
fixes.   He  sees women  every day  who have  fallen prey  to the                                                               
street culture where crime is a part  of life.  He said that they                                                               
try to  get these  moms out  of that culture  and into  a healthy                                                               
lifestyle.   The state needs  fewer babies in its  custody, fewer                                                               
women  living on  the  streets, and  more  programs like  Passage                                                               
House helping  young ladies into self-sufficiency  and off public                                                               
assistance.    These poor  moms  do  not need  anymore  financial                                                               
crisis or  poverty in their lives.   He stated that  reducing the                                                               
income of  families already at the  poverty level is not  part of                                                               
the solution to dependency on public assistance in Alaska.                                                                      
                                                                                                                                
Number 0830                                                                                                                     
                                                                                                                                
MR. LOMBARDO stated that Covenant  House is opposed to the intent                                                               
of SB 340.   It strives for self-sufficiency for  its clients who                                                               
are  already struggling  at the  barest level  of necessity.   It                                                               
would  be unreasonable  to  compromise the  income  level of  the                                                               
poorest families.                                                                                                               
                                                                                                                                
Number 0768                                                                                                                     
                                                                                                                                
MARIE  LAVIGNE,  Executive   Director,  National  Association  of                                                               
Social  Workers, Alaska  Chapter,  testified via  teleconference.                                                               
She  explained that  they are  a membership  organization of  500                                                               
professional  social workers  across  Alaska and  oppose SB  340.                                                               
Recognizing  the other  testimony this  morning, she  pointed out                                                               
that SB  340 will  impact 5,100 families,  who are  recipients of                                                               
ATAP,  general relief,  and food  stamps, by  making them  choose                                                               
between  receiving their  benefits or  permanent fund  dividends.                                                               
The permanent fund dividend is  a benefit enjoyed by all eligible                                                               
Alaskans.   Why should  recipients of  public benefits  for basic                                                               
support lose this money in order to receive their dividend?                                                                     
                                                                                                                                
MS. LAVIGNE  said, heralded as a  cost savings to fix  the fiscal                                                               
gap  and Medicaid  payments for  the state,  this is  yet another                                                               
attack  on the  poor.    There are  no  savings  for the  state's                                                               
general  fund as  funding  for the  hold  harmless program  comes                                                               
directly from the  earnings of the permanent fund.   On behalf of                                                               
the  professional social  workers  who serve  many  of the  5,100                                                               
families who receive  ATAP, general relief, and  food stamps, she                                                               
stated that  the ripple  effect this  will cause  is significant,                                                               
both to the quality of life  and the resources that are available                                                               
to these recipients.  Most  importantly, it reverses the progress                                                               
that has been made on  welfare reform toward self-sufficiency for                                                               
these families and getting them off public assistance.                                                                          
                                                                                                                                
Number 0667                                                                                                                     
                                                                                                                                
MS.  LAVIGNE noted  that the  impact  on 5,100  poor families  in                                                               
Alaska is  going to be  felt in a number  of ways.   Families use                                                               
their permanent funds to buy  the things they can't afford during                                                               
the rest  of the year.   Most low income families  use their PFDs                                                               
to  purchase  things  that  will  help  them  become  more  self-                                                               
sufficient:   rent  deposits,  needed  vehicle repairs,  heating,                                                               
clothing,  shoes for  the children,  dental  care, or  eyeglasses                                                               
that are not  otherwise paid for.  Why penalize  them in October,                                                               
November, and  December when they  are eligible to receive  a PFD                                                               
like other  Alaskans?  In  reality, these families are  not using                                                               
their  PFDs for  trips to  Hawaii or  investment plans  for their                                                               
children's  college fund  or other  luxuries  that many  Alaskans                                                               
have come  to expect each October.   Rather, they are  waiting to                                                               
buy  the necessities  they  cannot afford  on  a limited  monthly                                                               
income.    According  to  her,  this bill  is  unfair  and  mean-                                                               
spirited,  and it  will not  accomplish anything  except singling                                                               
out  the poor  for their  benefits.   On behalf  of the  National                                                               
Association of  Social Workers, Alaska Chapter,  and the children                                                               
and families it serves, Ms.  Lavigne urged the committee to table                                                               
this bill and  go back to work on addressing  the fiscal gap with                                                               
new revenues.  No  more budget cuts on the back  of the poor, she                                                               
said.                                                                                                                           
                                                                                                                                
Number 0529                                                                                                                     
                                                                                                                                
MARSHALL HARRIS told the committee how  hard it is to live on $10                                                               
for food stamps.  Since he is  legally blind, he can't go out and                                                               
get a job.  He expressed opposition to SB 340.                                                                                  
                                                                                                                                
Number 0347                                                                                                                     
                                                                                                                                
WILLIAM CRAIG, Alaska Independent  Blind, told the committee that                                                               
there  is a  small group  of  people not  defined in  SB 340  who                                                               
collect Social Security  Disability Income (SSDI).   They have to                                                               
meet  a  tight  income  guideline to  get  this  assistance,  and                                                               
currently, they  would probably  be left  out.   There is  also a                                                               
group of  people waiting to  collect SSI  or SSDI, who  collect a                                                               
form  of  adult  public  assistance   while  waiting  for  social                                                               
security to make the decision.   Those people possibly would also                                                               
be left out in the current structure of the bill.                                                                               
                                                                                                                                
Number 0240                                                                                                                     
                                                                                                                                
JIM   NORDLUND,   Director,   Division  of   Public   Assistance,                                                               
Department of Health  & Social Services, told  the committee that                                                               
back  in 1982  when  the  permanent fund  was  created, the  hold                                                               
harmless program  was also created.   For the past 20  years, the                                                               
hold harmless  provision in  law has  ensured that  poor Alaskans                                                               
are given the  full benefit of the PFD.   The principals by which                                                               
the  hold harmless  program was  created  are just  as valid  and                                                               
important today.   This bill changes the law 180  degrees.  Under                                                               
current law, the PFD can't  be counted as earnings concerning the                                                               
eligibility   for  ATAP,   food   stamps,   and  general   relief                                                               
assistance.   This bill says  that the  PFD must be  counted, and                                                               
the  effect  would be  that  for  the  recipients of  ATAP,  food                                                               
stamps,  and  general relief  assistance,  they  will lose  their                                                               
eligibility for benefits for October when the PFD is received.                                                                  
                                                                                                                                
MR.  NORDLUND referred  to the  handout he  passed around.   Even                                                               
with the receipt  of the PFD and  given the fact that  the PFD is                                                               
much  larger than  it  has been  in the  past,  people on  public                                                               
assistance, particularly on  ATAP, are still just  at the federal                                                               
poverty level.   The handout shows  that a family of  three would                                                               
receive  about  $18,700 a  year  from  ATAP,  the PFD,  and  food                                                               
stamps.  Most of the  people on temporary assistance are working,                                                               
but just  to maximize the  full temporary assistance  benefit, he                                                               
noted  that the  calculation shows  a family  of three  who isn't                                                               
working.                                                                                                                        
                                                                                                                                
TAPE 02-49, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
MR. NORDLUND said that based upon  the market survey on the cost-                                                               
of-living  in Alaska,  the  cost-of-living  difference for  basic                                                               
expenses is about  $18,300, so it's a difference of  only $400 on                                                               
an annual  basis.  In receiving  full ATAP benefits and  the full                                                               
PFD, this  family of three is  still just at the  federal poverty                                                               
level.   His point  is even  with the receipt  of the  PFD, these                                                               
families are still poor by anybody's definition.                                                                                
                                                                                                                                
MR. NORDLUND  pointed out that the  temporary assistance caseload                                                               
has  declined by  40 percent  since welfare  reform took  effect.                                                               
There  has been  success in  moving people  into self-sufficiency                                                               
and employment and  off of temporary assistance.   He referred to                                                               
the other  chart in the  handout that shows the  percentage taken                                                               
out of the PFD  for the hold harmless program.   It went from 3.5                                                               
percent in 1996  to 1.5 percent in  2001.  Due to  the success of                                                               
welfare reform  and the  growth of  the permanent  fund dividend,                                                               
there's a much lower percentage  coming out of the individual PFD                                                               
checks to pay for the hold harmless program.                                                                                    
                                                                                                                                
Number 0201                                                                                                                     
                                                                                                                                
MR.  NORDLUND said  the general  relief assistance  program is  a                                                               
program  for the  poorest of  the poor.   It  predates statehood.                                                               
This program  pays for indigent  burials when there is  no family                                                               
or no  other means to  pay for those burials.   Administratively,                                                               
SB 340  is going to cause  the division more work  to take people                                                               
off  the program  for the  month of  October and  then make  them                                                               
eligible again in November.                                                                                                     
                                                                                                                                
MR.  NORDLUND said  that 40  percent  of ATAP  recipients do  get                                                               
their  PFD check  garnished, and  some people's  entire check  is                                                               
garnished.   So, there will be  some individuals on ATAP  for the                                                               
month of  October that  will not  get a welfare  check or  a PFD.                                                               
They will have no income to support their family for that month.                                                                
                                                                                                                                
Number 0332                                                                                                                     
                                                                                                                                
CHAIR COGHILL asked  if that would hold true if  it were a court-                                                               
ordered garnishment.                                                                                                            
                                                                                                                                
MR. NORDLUND said he believed so.                                                                                               
                                                                                                                                
MR. NORDLUND  noted another  problem for  families in  October is                                                               
that  they will  not  receive a  welfare check  on  the first  of                                                               
October,  and  the  PFD  does  not arrive  until  the  middle  of                                                               
October, so  for the  first two  weeks of  October, they  will be                                                               
unable to  pay their rent.   That impact has to  be considered in                                                               
this legislation.                                                                                                               
                                                                                                                                
Number 0379                                                                                                                     
                                                                                                                                
MR. NORDLUND  commented that Senator  Phillips' reasons  for this                                                               
bill - wanting  to plug the hole  in the Medicaid budget  - are a                                                               
bit like "robbing Peter to pay  Paul."  That isn't proper in this                                                               
regard.     The  fund  source   can  be  switched   without  this                                                               
legislation.   He pointed  out that in  the Senate  budget, funds                                                               
have  been backed  out  in  the same  amount  of  money that  the                                                               
permanent  fund earnings  had been  put in.   He  maintained that                                                               
there is  no net increase in  the Medicaid budget because  of the                                                               
provisions of this legislation.                                                                                                 
                                                                                                                                
Number 0489                                                                                                                     
                                                                                                                                
MR. NORDLUND emphasized that this  fund source switch can be done                                                               
in the budget  without this bill.  If this  bill doesn't pass and                                                               
the  Medicaid budget  was partially  funded  with permanent  fund                                                               
earnings, then it would be up  to the department.  It would still                                                               
lose  the  fund source  out  of  the  department's pay  for  hold                                                               
harmless, but  at least it  would be  up to the  department, with                                                               
other earnings, to  pay for the hold harmless  programs, which is                                                               
something it  would do.   He added  that that would  impact other                                                               
services  under  the  ATAP program,  particularly  childcare  and                                                               
other work services.  It  would be the department's position that                                                               
it would continue to pay the hold harmless program.                                                                             
                                                                                                                                
MR. NORDLUND  recognized that the  fiscal gap is a  real problem,                                                               
but in  the end if  something isn't  passed that really  helps to                                                               
solve the  gap -  any broad-based  tax - it  would be  a shameful                                                               
thing to  be left  with making cuts  to the poor.   He  urged the                                                               
committee not to pass SB 340.                                                                                                   
                                                                                                                                
Number 0760                                                                                                                     
                                                                                                                                
MR. NORDLUND  replied to a  question from Chair Coghill  that for                                                               
individuals on SSI  and APA who also receive food  stamps, he did                                                               
believe that SB 340 would reduce those food stamps benefits.                                                                    
                                                                                                                                
Number 0804                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES  said she doesn't  know what is going  to be                                                               
done to solve the fiscal issue,  but there is a good reality that                                                               
the permanent  fund dividend will be  reduced in the future.   It                                                               
has to be  realized that Alaska cannot tax itself  enough to fill                                                               
the gap; it  has to grow itself  out.  She asked  what these same                                                               
poor people are  going to do if  the PFD is reduced  to a smaller                                                               
amount.  She wondered if they  are still going to be in desperate                                                               
situations, or if they can provide for themselves in other ways.                                                                
                                                                                                                                
MR. NORDLUND said  that he suspected that the poor  will face the                                                               
same loss of  income to their family as more  fortunate people if                                                               
the  PFD  goes down.    He  maintained  that  the poor  would  be                                                               
suffering  at least  equally with  those more  fortunate if  that                                                               
were the situation.                                                                                                             
                                                                                                                                
REPRESENTATIVE  JAMES asked  if  Mr. Nordlund  knew  how many  of                                                               
these  people  don't  get  their  PFD  checks  because  they  are                                                               
garnished.                                                                                                                      
                                                                                                                                
MR.  NORDLUND replied  that the  only figure  he has  is that  40                                                               
percent  of the  caseload  get  their PFD  garnished.   Some  are                                                               
garnished  the   whole  amount  and   some  are   garnished  only                                                               
partially.                                                                                                                      
                                                                                                                                
Number 1026                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES  asked if  there are  any statistics  in the                                                               
increase in APA and SSDI recipients.                                                                                            
                                                                                                                                
MR. NORDLUND  answered there are.   The APA program has  grown at                                                               
about 3 percent the past ten years.                                                                                             
                                                                                                                                
REPRESENTATIVE JAMES  reiterated that there is  no empirical data                                                               
on the growth,  but there is anecdotal evidence  that people have                                                               
moved to  Alaska because of the  programs.  She said  she doesn't                                                               
mind helping  the poor  and disabled in  Alaska, but  wasn't sure                                                               
she  wanted to  take  care  of those  from  other states  because                                                               
Alaska is so generous.                                                                                                          
                                                                                                                                
Number 1128                                                                                                                     
                                                                                                                                
MR. NORDLUND  agreed that  for the last  eight years  the comment                                                               
that people are  coming to Alaska for the good  benefits has come                                                               
up.  All  the empirical evidence his department has  been able to                                                               
discover finds that is not true.   The biggest reason people come                                                               
to Alaska  is because  their families  are up  here.   The second                                                               
reason  is because  of  the impression,  from  the pipeline  days                                                               
perhaps,  that there's  still a  lot of  employment and  economic                                                               
opportunities  in Alaska.   There  could  be people  who come  to                                                               
Alaska  because  they  think the  welfare  benefits  are  better,                                                               
however, he said the PFD is  probably the main reason many people                                                               
move to Alaska and not  necessarily because of the higher welfare                                                               
benefits.                                                                                                                       
                                                                                                                                
Number 1299                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES expressed concern  about Alaska's becoming a                                                               
magnet state.   She asked  if there was a  way to tell  if people                                                               
come from other states when they apply for benefits.                                                                            
                                                                                                                                
MR. NORDLUND  said there was  a place  on the application  to say                                                               
whether they  had received  benefits in another  state.   If they                                                               
don't tell the truth, it's fraud.                                                                                               
                                                                                                                                
Number 1374                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE asked if anyone  has ever done an analysis of                                                               
either disposable or discretionary income  of the people who fall                                                               
below the poverty line.                                                                                                         
                                                                                                                                
MR. NORDLUND answered not that he is aware.                                                                                     
                                                                                                                                
Number 1460                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEVENS  asked how the Native  assistance programs                                                               
fit with Senator Phillips' chart.                                                                                               
                                                                                                                                
MR. NORDLUND said Senator Phillips  doesn't have it on his chart.                                                               
He  explained  that  under federal  welfare  reform  law,  Native                                                               
organizations  are  allowed  to  run their  own  TANF  [Temporary                                                               
Assistance to Needy  Families] program.  The TANF  program is the                                                               
federal  welfare program,  and Alaska's  state version  is Alaska                                                               
Temporary   Assistance  Program.      There   are  three   Native                                                               
organizations in  Alaska that run the  TANF program.  There  is a                                                               
line item  in the  budget, Tribal Assistance,  and that  is where                                                               
the state grants money to  those Native organizations to run that                                                               
program.    The effect  of  this  bill  would also  affect  those                                                               
programs.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  STEVENS  asked  if  the Native  families  are  an                                                               
addition  to Senator  Phillips' list  who would  be affected,  or                                                               
would those families be under another category.                                                                                 
                                                                                                                                
MR. NORDLUND  said this  bill causes  a fund  source loss  to the                                                               
temporary assistance  program of  about $3.2  million.   If those                                                               
funds  are taken  out of  the temporary  assistance program,  the                                                               
Native family assistance  program would also be  docked the same.                                                               
The Native family assistance program  is equitable with the state                                                               
program.   If  the state  programs loses  funds, then  the Native                                                               
program would lose funds too.                                                                                                   
                                                                                                                                
Number 1640                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HAYES asked  about the  maintenance of  effort in                                                               
the Medicaid budget from the Senate numbers.                                                                                    
                                                                                                                                
MR.  NORDLUND  answered that  the  Medicaid  budget isn't  funded                                                               
through a  maintenance of  effort.   It's the  traditional 50-50.                                                               
For every dollar of general fund  put into the Medicaid budget, a                                                               
dollar of  federal money is earned.   When general funds  are cut                                                               
back, the federal funds are cut back.                                                                                           
                                                                                                                                
Number 1698                                                                                                                     
                                                                                                                                
JOHN  SHERWOOD,  Unit  Manager, Beneficiary  Eligibility  Policy,                                                               
Division  of Medical  Assistance, Department  of Health  & Social                                                               
Services, explained  that the maintenance of  effort requirements                                                               
in the  Medicaid budget  don't have to  be worried  about because                                                               
the  state is  spending well  above that  level.   In the  larger                                                               
budget,  the  state  budget   represents  basic  program  growth,                                                               
increase  in  eligible  people  and  is  required  to  pay  rates                                                               
sufficient to have  adequate providers.  The  only other increase                                                               
that would be included in the  budget would be things in terms of                                                               
financing where  more total  dollars are spent  to bring  in more                                                               
federal revenue.                                                                                                                
                                                                                                                                
REPRESENTATIVE  HAYES  reiterated that  80  percent  of the  100-                                                               
percent-eligible people currently use Medicaid.   He wondered how                                                               
much it would cost the state  if that 20 percent went on Medicaid                                                               
because  they wouldn't  have their  permanent fund  checks during                                                               
that month.   He thought it would cost more  than the fiscal note                                                               
of SB 340.                                                                                                                      
                                                                                                                                
MR. SHERWOOD  said that has not  been analyzed.  These  costs are                                                               
difficult  to  analyze  because  some  medical  expenses  can  be                                                               
deferred.   If  somebody was  short  of funds  one month,  he/she                                                               
might  not necessarily  seek Medicaid  that  month; he/she  might                                                               
just defer the  cost until another time.  For  the most part, the                                                               
people with high medical need  will have the Medicaid coverage if                                                               
they are  on these other programs.   At any given  time, the vast                                                               
majority of dollars  spent are on the relatively  small number of                                                               
people  receiving  Medicaid who  were  actually  sick or  have  a                                                               
healthcare  need  in   that  month.    Most   people  don't  have                                                               
healthcare needs  that need to  receive on-going care.   Some do,                                                               
but most of  those people would probably fall  into the exemption                                                               
for people receiving  APA and SSI.  There could  be some problems                                                               
as people have  less disposable income available to  pay for some                                                               
of the  services not  covered or  covered in  a limited  way like                                                               
dental care.                                                                                                                    
                                                                                                                                
Number 1909                                                                                                                     
                                                                                                                                
CHAIR  COGHILL   asked  how  the  childcare   assistance,  rental                                                               
assistance, and  those types of  things are accounted for  as far                                                               
as the hold harmless issue goes.                                                                                                
                                                                                                                                
MR.  SHERWOOD  answered  that   medical  assistance  provided  to                                                               
individuals, either through Denali  KidCare or through the family                                                               
Medicaid  program, would  fall under  Medicaid,  but he  believes                                                               
that a  lot of support  that's been  provided to the  family does                                                               
fall under adult temporary assistance.                                                                                          
                                                                                                                                
Number 2036                                                                                                                     
                                                                                                                                
MR. NORDLUND said  there is a different set of  dynamics going on                                                               
with the temporary assistance program  and its attendant programs                                                               
such as  childcare, work services,  Medicaid, and those  kinds of                                                               
things.   The cost drivers of  Medicaid and the reason  why there                                                               
is such  a large  deficit in  the state  are really  unrelated to                                                               
what's  going  on with  temporary  assistance  program.   On  the                                                               
temporary  side, the  caseload has  gone down  40 percent  so the                                                               
money that  used to be paid  to those families in  benefits, some                                                               
of those funds  have been reinvested into  childcare and services                                                               
that  do help  social  workers  at DFYS.    There  has been  some                                                               
reprogramming  of  those funds.    Mr.  Nordlund emphasized  that                                                               
there still has been a net  savings to the general fund, that has                                                               
grown to about  $50 million annually, due to welfare  reform.  It                                                               
is not entirely  correct to say that money has  just been shifted                                                               
from welfare payments  over to other services.  There  has been a                                                               
net  savings  to the  general  fund.    He  said that  there  are                                                               
separate  issues on  the Medicaid  side  that drive  the cost  of                                                               
Medicaid [up].                                                                                                                  
                                                                                                                                
Number 2121                                                                                                                     
                                                                                                                                
CHAIR COGHILL agreed they are  talking about two different things                                                               
although  they  convert.   For  example,  the daycare  assistance                                                               
dollars that  are significantly  federal are  in fact  taking the                                                               
place of what  would normally have been paid under  ATAP, so that                                                               
isn't seen  in the  general fund, but  it's still  dollars there.                                                               
The  dollars are  equal;  they're just  coming  out of  different                                                               
pots.   Welfare is not  reduced; it  just changes how  it's done.                                                               
In many  cases, it is  making people  more productive, but  it is                                                               
still getting welfare from the government.                                                                                      
                                                                                                                                
MR. NORDLUND said Chair Coghill  was basically correct in what he                                                               
said.    Instead of  spending  money  on welfare  payments,  it's                                                               
helping  with childcare  payments,  and  that's certainly  better                                                               
because childcare  is much closer  to getting that person  on the                                                               
road   to  total   self-sufficiency   because  they're   working.                                                               
However, it's  not a  one-to-one relationship.   The  money taken                                                               
from  welfare payments  and put  into childcare  is not  equal to                                                               
that  savings.   There are  families who  have entirely  gone off                                                               
public  assistance and  don't receive  childcare  because of  the                                                               
effects of  welfare reform.   He reiterated  that there is  a net                                                               
savings.                                                                                                                        
                                                                                                                                
Number 2250                                                                                                                     
                                                                                                                                
CHAIR  COGHILL noted  that the  whole  human services  area is  a                                                               
significant portion of Alaska's budget,  and Alaska has been good                                                               
to  people.   He doesn't  want people  to characterize  this hold                                                               
harmless thing as pulling the rug  out from under them; it isn't.                                                               
In the whole context of issues,  certainly it is robbing Peter to                                                               
pay  Paul,  but so  are  taxes,  whether  it's federal  taxes  or                                                               
whatever else is done at  the community level on matching grants,                                                               
et cetera.  He agreed this is a complex issue.                                                                                  
                                                                                                                                
REPRESENTATIVE HAYES  asked if  SB 340 would  have any  effect on                                                               
HB 402.                                                                                                                         
                                                                                                                                
Number 2365                                                                                                                     
                                                                                                                                
MR. NORDLUND said there isn't a  direct effect except to say that                                                               
HB 402 will  give the department more tools to  help people reach                                                               
self-sufficiency.   The more  people who  reach self-sufficiency,                                                               
the less  draw there will  be on  the permanent fund  earnings to                                                               
pay for this program.                                                                                                           
                                                                                                                                
CHAIR COGHILL asked if recipients are helped with budgeting.                                                                    
                                                                                                                                
MR. NORDLUND  said that  case management  is provided  to clients                                                               
and  case  managers   do  work  with  clients   on  their  family                                                               
budgeting.   Unfortunately, on  the APA  side, the  APA caseloads                                                               
are  very high  for individual  workers, so  they don't  have the                                                               
time to spend with clients that they would like.                                                                                
                                                                                                                                
MR. NORDLUND replied to a question  from Senator Phillips.  As he                                                               
remembers the history of this,  originally when the hold harmless                                                               
program was  created, it was  paid for with  unrestricted general                                                               
funds.    The funding  source  changed  some  time ago  when  the                                                               
legislature  changed  it to  come  out  of  the earnings  of  the                                                               
permanent fund, which is also general fund [money].                                                                             
                                                                                                                                
SENATOR PHILLIPS  disputed that because  the $27.34 comes  out of                                                               
Alaskans' PFDs.                                                                                                                 
                                                                                                                                
CHAIR  COGHILL asked  what  the  actual fund  source  is for  the                                                               
dollars withheld  from the permanent  fund dividend for  the hold                                                               
harmless provision.                                                                                                             
                                                                                                                                
Number 2621                                                                                                                     
                                                                                                                                
NANCI JONES,  Director, Central  Office, Permanent  Fund Dividend                                                               
Division,  Department of  Revenue,  answered that  it  is in  the                                                               
formula for the dividend calculation.   The departments get their                                                               
appropriation  from   the  average  five-year  earnings   of  the                                                               
permanent fund.   That's  the source  of all  the appropriations.                                                               
The Department of Health &  Social Service has allowances whereby                                                               
it estimates how much it will  need for its various programs, and                                                               
[those monies] are appropriated annually by the legislature.                                                                    
                                                                                                                                
SENATOR PHILLIPS  explained that the  $27.34 would be  reduced to                                                               
around $16, which would take care of APA and SSI recipients.                                                                    
                                                                                                                                
Number 2915                                                                                                                     
                                                                                                                                
CAREN  ROBINSON, Lobbyist  for  Alaska  Women's Lobby,  testified                                                               
that she hoped  this bill will be tabled in  this committee.  She                                                               
told the  members that  most of  the areas  of concern  have been                                                               
spoken to.   She  expressed concern on  the designation  of funds                                                               
that  could not  be guaranteed  that next  year or  the following                                                               
year that  the money  taken from these  recipients would  then go                                                               
into  Medicaid,   which  is  the  intent   of  this  legislation.                                                               
Secondly, she  stated her hope  that the committee  clearly knows                                                               
whom this would  hurt.  Many of  the adults who will  be hurt are                                                               
lifelong  Alaskans.    Possibly  through death  of  a  spouse  or                                                               
because  of  illness,  people  could  fall  under  the  temporary                                                               
assistance   program  and   would  lose   their  permanent   fund                                                               
dividends.  She  said the Alaska Women's Lobby  is also concerned                                                               
about  the women  who are  victims of  violent crimes.   A  large                                                               
number of recipients are women  who are domestic violence victims                                                               
or  sexual assault  victims,  or their  children  are victims  of                                                               
sexual assault.                                                                                                                 
                                                                                                                                
TAPE 02-49, SIDE B                                                                                                              
Number 2965                                                                                                                     
                                                                                                                                
MS.  ROBINSON said  they  shouldn't be  punished  and lose  their                                                               
permanent fund dividend  because of a situation  in which they've                                                               
had to get assistance from law  enforcement and have had to leave                                                               
their homes, and possibility leave  their communities and jobs to                                                               
get away  from a very  violent situation.   She said  [the Alaska                                                               
Women's Lobby]  is concerned about what  SB 340 will do  to those                                                               
women and children.  She encouraged  the committee to ask all the                                                               
questions.  She has talked to a  lot of people and found out that                                                               
the PFD has become a necessity whether they have money or not.                                                                  
                                                                                                                                
Number 2886                                                                                                                     
                                                                                                                                
CHAIR COGHILL said  he doesn't see this as  punishing people when                                                               
society  has been  very benevolent  in  many ways.   Society  has                                                               
agreed to help the less fortunate and  has done a good job.  When                                                               
it comes  to this type of  income, he struggles with  being asked                                                               
to accept it and  say it's not income for these  services.  It is                                                               
a priority choice.                                                                                                              
                                                                                                                                
CHAIR COGHILL closed public testimony and announced that SB 340                                                                 
will be held over.                                                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 2818                                                                                                                     
                                                                                                                                
There being no further business before the committee, the House                                                                 
State Affairs Standing Committee meeting was adjourned at                                                                       
12:40 p.m.                                                                                                                      

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