Legislature(2001 - 2002)
03/04/2002 09:10 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 04, 2002
9:10 AM
TAPES
SFC-02 # 24, Side A
SFC 02 # 24, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:10 AM.
PRESENT
Senator Pete Kelly, Co-Chair
Co-Chair Dave Donley, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Senator Loren Leman
Also Attending: SENATOR BEN STEVENS; SENATOR RANDY PHILLIPS; PEGGY
BROWN, Public Policy Analyst, Alaska Network on Domestic Violence
and Sexual Assault; JIM NORDLUND, Director, Division of Public
Assistance, Department of Health and Social Services; SUE ASPELUND,
Executive Director, Cordova Fisherman United; JERRY MCCUNE, United
Fishermen of Alaska; KATHY HANSON, Executive Director, Southeast
Alaska Fishermen's Alliance; BARBARA BELKNAP, Executive Director,
Alaska Seafood Marketing Institute; JIM NORDLAND, Director,
Division of Public Assistance, Department of Health and Social
Services;
Attending via Teleconference: From Anchorage: BOB LABBE, Director,
Division of Medical Assistance, Department of Health and Social
Services; SUSAN SULLIVAN, Division of Child Support Enforcement,
Department of Revenue; JOHN MALLONEE, Division of Child Support
Enforcement, Department of Revenue; From Kodiak: BRUCE SCHACTLER,
Commercial salmon fisherman, At-Large Member, Board of Directors,
United Fishermen of Alaska, and President, United Salmon
Association
SUMMARY INFORMATION
SB 341-APPROP:STUDY WELFARE /MEDICAID RECIPIENTS
The Committee heard from the Department of Health and Social
Services and the Alaska Network on Domestic Violence and Sexual
Assault. The bill was held in Committee.
SCR 28-JOINT LEGIS SALMON INDUSTRY TASK FORCE
The Committee heard from the sponsor and representatives of the
fishing industry. The bill was held in Committee.
SB 282-ALASKA SEAFOOD MARKETING INSTITUTE/TAX
The Committee heard from the sponsor, the Alaska Seafood Marketing
Institute and representatives of the commercial fishing industry.
The bill was held in Committee.
SB 340-HOLD HARMLESS PROVISIONS OF PFD PROGRAM
The Committee heard from the sponsor, the Division of Legal and
Research Services, the Department of Health and Social Services and
the Department of Revenue. The bill was held in Committee.
SENATE BILL NO. 341
"An Act making a special appropriation for a study of
recipients of welfare and Medicaid; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Kelly spoke to the bill, relaying conversations held
during hearings on the FY 03 supplemental budget requests for
Medicaid funding, regarding the "root causes" of state welfare
dependency. He noted studies have been conducted to determine age,
income levels and other factors of welfare recipients. However, he
remarked there is no data reflecting, "exactly why it is that they
got there in the first place." He spoke to the correlation between
recipients and drug abuse, alcoholism, single parenthood and
limited education as found in national research, although no such
studies have been conducted in Alaska.
Co-Chair Kelly stated this legislation is "designed to find out
what kind of choices people are making in their lives that possibly
they have some control over that ultimately leads to being on
welfare."
Senator Ward asked if the proposed study would attempt to identify
why certain recipients relocated to this state and whether Alaska's
benefit programs are a "magnet".
Co-Chair Kelly responded it is his intention such questions would
be included in the survey.
BOB LABBE, Director, Division of Medical Assistance, Department of
Health and Social Services, testified via teleconference from
Anchorage and suggested conducting the study in conjunction with
the Division. He listed a cost-benefit of this option would be the
ability to receive 50-percent federal matching funds for the
project. He referenced a January 1996 Division of Medical
Assistance report prepared by the McDowell Group regarding the
characteristics of Alaska Medicaid recipients. He recalled this
report was undertaken to answer the question of whether people were
relocating to Alaska specifically to receive benefits, and more
generally, what factors were responsible for the increased caseload
at that time.
Co-Chair Kelly commented this is a good suggestion and worth
considering.
Co-Chair Kelly shared he had reviewed the 1996 report, which was
useful although it must be updated due to changes in demographics
in the age of the population. He repeated "consistent" testimony
relating to Medicaid indicates, "one of the biggest drivers is the
aging population."
PEGGY BROWN, Public Policy Analyst, Alaska Network on Domestic
Violence and Sexual Assault testified she was present to monitor
the legislation and welfare reform in general.
Senator Hoffman asked if the witness supports the legislation.
Ms. Brown supported the knowledge of why recipients are dependant
upon welfare, as it would assist agencies in providing aide.
However, she did not think such a study would benefits recipients.
She understood the purpose of identifying those recipients from out
of state given the increased costs in Medicaid, but her concern is
for those who already live in Alaska.
Co-Chair Kelly asked if the Department would be subject to any
restrictions on the perimeters of such a study.
Mr. Labbe surmised it would not, so long as the study focused on
the factors influencing the cost of the Medicaid program, or had
another Medicaid-related purpose.
Co-Chair Kelly asked if such a study could address other public
assistance programs as well.
Mr. Labbe answered the study could be "constructed" to include
other state public assistance programs as well and still meet
federal standards. He explained this is because many participants
of other public assistance programs also receive Medicaid benefits.
Co-Chair Kelly asked if there would be restrictions on the kind of
information a study could collect if federal funding was involved.
Mr. Labbe was unaware of any restrictions imposed with the use of
this federal funding. He noted the Division has undertaken "a
number of activities over the years" utilizing federal Medicaid
matching funds. "Sometimes the relationships are very direct and
some are a little less direct," he stated with regard to the
correlation between the projects and the Medicaid program. He
suggested the proposed survey questions should be reviewed to
determine any conflict with receipt of the federal funding.
Co-Chair Kelly had concern "that we couldn't get the scope of what
we need if we're attached to federal dollars and any of the
requirements they might have." He appreciated the suggestion and
stated the Committee would discuss the option. He encouraged the
Division to update the 1996 McDowell study.
JIM NORDLUND, Director, Division of Public Assistance, Department
of Health and Social Services, testified in Juneau that he did not
foresee any difficulty in utilizing federal funding for the
proposed study. He noted, "there is a great deal of overlap between
those people" who receive temporary public assistance and Medicaid
benefits.
Co-Chair Kelly ordered the bill HELD in Committee.
CS FOR SENATE CONCURRENT RESOLUTION NO. 28(RES)
Establishing the Joint Legislative Salmon Industry Task Force.
This was the first hearing for this bill in the Senate Finance
Committee.
Senator Austerman, sponsor, testified this resolution was proposed
to address the "evolution" in the salmon industry, which would
continue for several years.
Senator Austerman detailed that meetings would be held before the
2001 salmon fishing season begins, and again after the season
concludes. The purpose of the task force, he said, would be to
identify solutions, including finding methods in which the
legislature could assist in "resolving some of the problems that
are in this industry". Just as important, he stressed, the task
force would identify efforts that could be undertaken within the
industry.
SUE ASPELUND, Executive Director, Cordova Fisherman United
testified in Juneau in support of the bill on behalf of the fishing
fleets in the Copper River and Prince William Sound represented by
the organization. She asserted the fishing industry is "in crisis"
and there is a need to "comprehensively evaluate where we are and
how we can move forward into the future." She emphasized a
successful approach to a solution would include three components:
the issue must be addressed on a statewide basis, in Alaska and by
Alaskans; fishing industry representatives, including fisherman,
tenders, and processors, must be involved in the evaluation at the
"very basic level and throughout the process" and; a funding method
is required because the industry does not have the resources to
address all the impacts to stakeholders in the state. She expressed
that commercial fishing is the "lifeblood" of many communities in
coastal Alaska.
Senator Ward remarked, "Clearly, this is something that needs to be
done." However, he questioned the limited panel membership of nine
public members, as he identified more than nine user groups.
Ms. Aspelund responded that "the fishing industry in Alaska is
extremely complex" and there are many user groups involved. She
relayed discussions on the issue, which determined that the task
force is the "starting point" to address the problems. She asserted
the public members would need to "leave their peer group at the
door". She stated the resolution allows "plenty of opportunity" for
discussions involving the impacts to all stakeholders and
communities. Therefore, she said, it is anticipated the nine public
members of the task force would serve as representatives of the
balance of the stakeholders in the area they represented and would
be responsible for consulting and obtaining input from their
respective communities.
Senator Ward clarified the task force would be comprised of a 13-
member panel with subcommittees operating within the group.
Senator Austerman affirmed and detailed the intent to utilize
subcommittees to take up "specific issues in specific areas". He
stressed the intent to address the salmon industry as a statewide
industry, while recognizing there are regions in the state with
different problems.
Ms. Aspelund added to her testimony that government involvement is
required to enable the seafood processing sector to participate in
this effort, to protect them from anti-trust violations. She noted
the inability to gather with this group, because of anti-trust
issues, has hindered earlier efforts at identifying possible
solutions for the fishing industry.
JERRY MCCUNE, United Fishermen of Alaska testified in Juneau in
support of the proposed task force. He stated that the organization
anticipates the task force would "answer a lot of the questions we
haven't been able to answer in the past" due to the inability to
gather the harvesters, processors, hatcheries and the public. He
expressed the pink salmon fishery is of particular concern given
competition with farmed fish.
KATHY HANSON, Executive Director, Southeast Alaska Fishermen's
Alliance, testified in Juneau and described the organization that
represents salmon, crab, shrimp and long-line fishermen. She stated
the organization supports the proposed task force. She further
described the anti-trust issue and the need for government
involvement to allow meetings between the harvesters and
processors.
Ms. Hanson stressed that although salmon is the primary focus of
the task force, other fisheries and "gear groups" must be
considered as well as they could be impacted either positively or
negatively.
BRUCE SCHACTLER, Commercial salmon fisherman, At-Large Member,
Board of Directors, United Fishermen of Alaska, and, President,
United Salmon Association, testified via teleconference from Kodiak
that this resolution is "a wonderful piece of leadership". He
approved of the public participation on the taskforce membership,
noting it gives latitude to appoint the most qualified people. He
stressed the salmon fishery is "tremendously complicated" and is
specifically designed to be such.
Co-Chair Kelly commented that his only disagreement with the
witness' statement is that this action is "timely" as it should
have been addressed sooner.
AT EASE 9:34 AM / 9:37 AM
Senator Ward thanked Senator Austerman for sponsoring this
resolution. He referenced US Senator Frank Murkowski's address to
the Legislature where he called for a task force consisting of
federal and state officials. He asked if Senator Austerman had
discussed the matter with the Congressman.
Senator Austerman replied he had not spoken to Senator Murkowski
directly about this although he had discussions with Senator Ted
Stevens on the matter.
SENATOR BEN STEVENS shared he had conversations with Dave Russell,
staff to US Senator Ted Stevens, with regards to coordinating these
efforts. Senator Ben Stevens noted Alaska's congressional
delegation supports SCR 28. He said the understanding is that most
of the changes must be made at the state level, but that federal
resources could assist in the process.
Senator Ward pointed out that federal assistance would be
necessary, for instance in relation to the Canadian government.
Co-Chair Kelly surmised the task force would not be restricted from
addressing matters not specifically listed in this resolution.
Senator Green questioned the change made in the Senate Resources
committee substitute with regards to the public membership on the
task force. This change stipulated the public members would be
representatives of the commercial salmon fishing industry. She did
not support the restriction to commercial fishing representatives
when decisions made by this body could impact the sport fishing
industry.
Senator Austerman explained the change was made to avoid a region
sending a representative that is not "in tune" with the situation.
He assured the intent to involve people who want to resolve the
issue and for the process to be "industry driven" rather than
bureaucratic.
Co-Chair Kelly opined the intent of the task force is not to
address the relationship between commercial fishing and sport
fishing, but rather to identify ways the commercial fishing
industry could adapt to a changing world market and technologies.
Senator Austerman agreed, but stressed this discussion must take
place as sport fishing activities do impact commercial fishing.
Senator Olson asked for assurances that the proposed task force
would not adversely impact other "harvesters of the sea".
Senator Austerman agreed all uses must be considered and stressed
the primary intent of the task force is to consider the issues
related to salmon.
Senator Austerman mentioned the rising mari-culture industry and
the impacts it would have on salmon. He warned that as the
aquaculture industry evolves, "it will have some real impacts on
the salmon industry."
Co-Chair Kelly requested Senator Austerman work with Senator Green
and Senator Ward to address their concerns.
Co-Chair Kelly ordered this bill HELD in Committee.
CS FOR SENATE BILL NO. 282(L&C)
"An Act extending the termination dates of certain activities
and salmon marketing programs of the Alaska Seafood Marketing
Institute and of the salmon marketing tax; expanding the
allowable use of that tax for the salmon marketing programs of
the Alaska Seafood Marketing Institute; relating to the Alaska
Seafood Marketing Institute's salmon marketing committee; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR BEN STEVENS, sponsor, testified this legislation extends
the termination date of the one-percent salmon tax to the year 2008
and permits the revenue to be used in current Alaska Seafood
Marketing Institute (ASMI) programs. He informed this would be the
second extension of this tax since its enactment in 1993.
Senator Stevens told how ASMI uses the funds to promote the quality
and "superiority" of Alaskan seafood products and to increase world
consumption. He emphasized this is the only generic program in
Alaska to promote all Alaska's seafood products in the global
protein market.
Senator Ward asked if "niche" marketing is necessary to focus on
certain fisheries, such as the Copper River sockeye salmon.
Senator Stevens replied the "brand marketing program" debate has
been ongoing in ASMI but that the organization continues to operate
as a generic marketing program. He expressed that to allocate
funding to regional efforts would dilute the overall efforts.
Senator Ward stated this legislation may not be the entity to begin
these efforts, but shared that Cook Inlet fisherman have requested
a portion of the salmon tax be utilized to market their catch.
Senator Olson asked about the opinions from within the industry
regarding continuation of the one-percent tax.
Senator Stevens relayed the ASMI Board favors the extension and
that no testimony heard on this bill in the Senate Labor and
Commerce Committee opposed elimination of ASMI. He qualified there
are some concerns that have always been present.
Senator Green noted the sponsor statement references the One-
Percent Domestic Salmon Marketing Tax and asked if this is the
official name.
Senator Stevens affirmed this is the official name although this
legislation would change the name to the Salmon Marketing Tax.
BRUCE SCHACTLER, Commercial salmon fisherman, At-Large Member,
Board of Directors, United Fishermen of Alaska, and President,
United Salmon Association, testified via teleconference from Kodiak
about a perceived rush to pass this legislation. He stated he does
not oppose using a portion of the tax revenue for foreign marketing
efforts; however, the tax originally gained approval in part from a
promise that the funds would be expended solely to develop the
domestic market and the matter should be discussed before such
changes are made. He also encouraged further consideration of
expending funds for lobbying efforts in Washington DC to address
farmed salmon and foreign competition.
CHRIS BERNS testified via teleconference from Kodiak that he has
fished since 1970 and he supported the one-percent industry tax and
had lobbied for its implementation in 1993 based on the assumption
that it would be used for domestic marketing. He stated that the
United States is the primary market for farmed salmon. While he did
not oppose "giving flexibility" to the ASMI marketing committee to
expend funds for foreign marketing, he asserted, "foreign markets
are just a big giant hole" and past efforts have been ineffective.
He suggested giving this legislation further consideration as the
current extension does not expire until the following year.
SFC 02 # 24, Side B 10:00 AM
Mr. Berns continued that the salmon industry is the only seafood
producer in the state to pay a tax for the marketing efforts. He
did not see any benefit for himself from this tax.
Co-Chair Kelly asked Senator Stevens to address the comments.
Senator Stevens addressed Mr. Schactler's comments regarding
utilizing funds to lobby in the nation's capital. Senator Stevens
noted this was discussed but not incorporated in the legislation,
as the United Salmon Association was the only organization in
support of the plan and because it was determined this was not the
best use of the funds given the limited amount available. He also
noted this legislation is not being rushed and that most of Mr.
Schactler's concerns were addressed at the Senate Labor and
Commerce Committee. He stated the extension date is being
implemented one year earlier to allow ASMI to make long-term plans.
Senator Ward understood one witness suggested that a subcommittee
of the proposed salmon task could address the concerns raised. He
asked the sponsor's opinion.
Senator Stevens responded ASMI needs stability to allow it to plan
for the future. He expressed there is uncertainty as to the results
of the task force and therefore ASMI should not be dependant on its
outcome.
Senator Stevens referenced the statement that the salmon industry
is the only seafood industry paying a tax. He pointed out that
processors pay a .3 percent tax for all seafood products.
Senator Austerman supported reauthorizing ASMI during this
legislative session because of the time lapse involved in planning
efforts. He suggested the task force could review the issues and if
it recommended, the extension could be repealed.
SUE ASPELUND, Executive Director, Cordova Fisherman United, spoke
to the knowledge of the organization and the full support of
continuation of the one-percent tax. She relayed support for
lifting the restrictions against foreign marketing. She stressed
the importance of seafood marketing and preferred funding marketing
versus lobbying efforts.
BARBARA BELKNAP, Executive Director, Alaska Seafood Marketing
Institute, testified in Juneau to respond to witness statements.
She told of the history and diversity of representation on the
board. She stated that the board of directors supports removal of
the domestic marketing limitation, and that the issue of lobbying
was not addressed during the previous board meeting. She stressed
ASMI is not a trade organization. She spoke to the disadvantages of
lobbying, as any standpoint the agency lobbies in support of would
meet opposition from other entities the agency represents. She told
of the Salmon Marketing Committee that oversees the expenditure of
the marketing funds. She mentioned difficulties incurred the
previous time ASMI was due for reauthorization as commitments could
not be made until continuance of the program was guaranteed.
JERRY MCCUNE, United Fishermen of Alaska, testified in Juneau,
about the 29 groups represented by the organization, which supports
the committee substitute and international marketing. He noted the
original intent of the tax was to focus marketing on the domestic
market, which he stated has occurred. However, he noted new
international markets are emerging for generic salmon.
KATHY HANSON, Executive Director, Southeast Alaska Fishermen's
Alliance testified in Juneau in support of the renewal of ASMI and
the importance of renewing this year rather then waiting until the
term expires. She stated that removing the restrictions related to
international marketing would be beneficial, noting that most of
the funds would continued to be used for domestic marketing
although ASMI should have flexibility to take advantage of the
international market. She spoke of ASMI successes in using funds to
leverage additional funds.
Ms. Hanson addressed changing the number of members on the ASMI
board. She stated the organization was unable to reach consensus.
She relayed some of the arguments in favor and opposition.
AT EASE 10:17 AM / 10:19 AM
Senator Austerman emphasized this bill must be adopted this year.
He informed that the original version of the bill maintained the
domestic marketing restrictions and it reduced the number of
members on the board. He relayed that productive debate occurred in
the Senate Labor and Commerce Committee about these issues as well
as the potential for utilizing a portion of the tax revenues for
lobbying efforts. He stated his opinion is that the domestic
marketing restriction should remain as it weakens the program. He
shared that he had made the suggestion to expend some of the tax
revenues for lobbying efforts, but withdrew after hearing arguments
against the proposal. He expressed he would not offer an amendment
to the committee substitute, citing that "the industry has spoken".
Co-Chair Kelly noted Co-Chair Donley had questions regarding the
fiscal note and requested he consult with the sponsor.
Co-Chair Kelly ordered the bill HELD in Committee.
AT EASE 10:21 AM / 10:32 AM
SENATE BILL NO. 340
"An Act relating to treatment of permanent fund dividends for
purposes of determining eligibility for certain benefits; and
providing for an effective date."
SENATOR RANDY PHILLIPS, sponsor, testified that the hold harmless
clause has been a "spur under the saddle" for some of his
constituents. He noted a predicted increase of $37 million over FY
02 Medicaid expenditures and stated this bill attempts to
"alleviate some of that burden." He explained this bill eliminates
the hold harmless provision for all but Social Security Insurance
(SSI) and Adult Public Assistance (APA) recipients. The remaining
recipients of public assistance would decide whether to receive an
Alaska permanent fund dividend or public assistance payments.
Senator Phillips noted this bill would generate approximately $6
million, which he pointed out would offset the state's revenue
shortfall.
TAMARA COOK, Director, Division of Legal and Research Services,
Legislative Affairs Agency, testified in Juneau that all Alaskans
qualify for public assistance, although some programs are based on
need. She stated that current statute provides that a person
receiving a permanent fund dividend is not disqualified from also
receiving public assistance benefits in the event the dividend
increases the person's income above that allowed for the program.
She noted statute directs state agencies to disregard dividend
income when calculating eligibility for state-operated programs.
She said in cases involving federal programs that require dividends
to be included as income, current state statute provides that the
state "make up the difference" so the recipient does not experience
a decrease in the amount of aide under these programs.
Ms. Cook explained this bill repeals the broad provision that
authorizes the state to hold harmless any program administered by
the Department of Health and Social Services. She stated the bill
provides that the state would continue to hold harmless only those
individuals who receive benefits from two programs: supplemental
security income from the federal Social Security Administration and
the state-operated APA program. She noted these programs primarily
serve physically disabled, mentally disabled, the blind and certain
seniors. With these exceptions, she continued, recipients of public
assistance under other eligibility criteria and who do receive a
permanent fund dividend would "suffer the consequences" of an
increase of their economic ability as a result of the dividend. She
stated the recipient could make the choice, and noted the programs
provide counseling for recipients regarding the affects of applying
for a dividend.
Senator Phillips referenced a chart titled "Hold Harmless" [copy on
file] that outlines the $5,953,800 total estimated savings of this
legislation. He suggested this could be applied to the $37 million
Medicaid increase and subsequently for, "the very people who have
been benefiting" from the Medicaid program.
Co-Chair Kelly informed the Committee that the "transfer mechanism"
necessary for this application is not included in this bill;
however an amendment would be drafted to include it.
Senator Olson asked how recipients would know whether they are
"borderline" for discontinued benefits if they accept a dividend.
Ms. Cook responded that program administrators would review
recipients' finances and provide counseling on the matter. She was
unaware of the details of this counseling, but assured that it does
occur. She agreed a recipient must make the decision whether to
file for a dividend early in the year.
Senator Olson predicted this would be cumbersome.
Ms. Cook responded the Department would have to address this. She
reiterated this exercise is already undertaken, although it would
have to occur more often and for more programs.
Senator Hoffman requested the witness expand upon the impact this
would have for recipients of Temporary Assistance for Needy
Families (TANF) services.
Ms. Cook did not know and deferred to the Department of Health and
Social Services. She emphasized the hold harmless provision is
"drafted with a very broad brush," in that it could be applied to
any existing and future program. This bill, she noted, limits the
provision to the two aforementioned programs. She suggested other,
yet unidentified programs, could be added if desired.
Senator Hoffman referenced the Hold Harmless chart and asked about
the Contractual Services program that is indicated would remain
covered under the hold harmless provision.
JIM NORDLAND, Director, Division of Public Assistance, Department
of Health and Social Services, testified the Division has questions
as to what programs would be affected by this legislation. He
presumed that the Alaska Temporary Assistance Program (ATAP), food
stamps and possibly Medicaid would be affected. He was unsure about
the reference to contractual services.
Senator Austerman asked if children's permanent funds would be
included in the calculation of a parent's income.
Ms. Cook answered yes; the major programs calculate total household
income in determining eligibility.
Senator Olson asked about the $4.1 million expenditure for ATAP
referenced on the chart and asked what specific services would be
affected by this legislation.
Mr. Nordland explained ATAP is the "basic cash welfare program" for
poor families with children in Alaska.
Senator Ward expressed that this bill would not affect the actual
programs. It would not eliminate any services; rather it would
require recipients to choose between receiving a dividend or the
services.
Mr. Nordland understood that is the intention of the bill.
Mr. Nordland next gave testimony on the bill, which he
characterized as seemingly simple, but actually complicated. He
stated that currently, the department is not allowed to consider
permanent fund dividend income against eligibility for public
assistance programs. This bill, he understood, removes this
restriction and gives an option, but does not require, the
Department to consider the dividend as income.
Mr. Nordland stated the Department would therefore choose to
continue to utilize the hold harmless provision; because of this, a
fiscal note has not been prepared. He said that because this
legislation would no longer allow use of the permanent fund
earnings reserve fund to offset the hold harmless provision, the
Department would utilize general funds to cover the $3.1 million
cost. He continued that if the bill were amended to require the
Department to consider permanent fund dividends as income, the
fiscal note would be zero, as those recipients would not receive
benefits during the month that the dividend was received. He added
that the recipients would regain eligibility the following month
and benefits would resume.
Mr. Nordland stated the hold harmless provision was originally
implemented so poor families in Alaska would receive the same
benefits from the permanent fund dividend as all Alaskans. He
informed that the total annual income, including permanent fund
dividends, of the average family served by public assistance
programs is still below the federal poverty level. He granted that
the amount of the dividends are increasing, but stressed these
funds are often used for such modest purchases as clothing,
educational opportunities, eyeglasses and dental care, and beds for
children.
Mr. Nordland reminded that this issue has been considered in the
past. He pointed out the provision would not increase the general
fund, but rather would withdraw less from the permanent fund
dividend program. He calculated this would result in an increase of
approximately $13 to each dividend. He predicted most Alaskans
would defer that amount to poor families.
Co-Chair Kelly informed that the intent of the sponsor is to
transfer the savings of this legislation from the permanent fund to
the general fund.
Mr. Nordland noted a "dramatic decline" in the caseload of public
assistance programs and subsequent reduction of the amount taken
from the permanent fund to offset the hold harmless provision. At
the same time, he pointed out the dividend payments have increased.
Mr. Nordland added that the permanent fund dividends of 37 percent
of TANF clients are garnished. He warned that some families would
therefore receive neither public assistance benefits for one month
nor a dividend. He spoke to "timing", pointing out that public
assistance payments are mailed on the first of each month, while
permanent fund dividends are issued on the fifteenth; those
families would be without any income for two weeks.
Mr. Nordland mentioned the "administrative hassle" of removing a
recipient from public assistance programs for one month only to re-
enlist them the following month.
Mr. Nordland concluded the Department "stands by" the hold harmless
provision and opposes this bill.
Co-Chair Kelly understood that Denali KidCare provides dental and
eye care services.
Mr. Nordland affirmed these services are provided for children but
not for their parents.
Senator Ward asked how many recipients of public assistance do not
qualify for a permanent fund dividend. He also asked what form of
counseling the Department provides to recipients to inform them
that applying for a dividend would disqualify them from receiving
public assistance benefits.
Mr. Nordland was unsure of the answer to the first question. He
responded that because of the hold harmless provision, such
counseling is unnecessary and therefore not provided.
Senator Ward asked if the Department informs recipients that they
are eligible to receive both a dividend and benefits, or if the
Department "is silent" on the matter.
Mr. Nordland responded the Department essentially "is silent". He
stated if the legislation stipulated the recipient had to make a
choice, the Department would have to consider the matter. He
expressed it is hard for him to conceive of an instance where the
Department would counsel a family to forgo the dividend in favor of
continuing to receive public assistance benefits because of the
amount of money involved. He qualified this matter has not been
determined yet and his answer is unofficial.
Senator Green asked why dividends were subject to a hold harmless
provision, as she considered dividends income.
Mr. Nordland replied this issue has been discussed in the context
of, "at what time is a poor person not poor any more." He suggested
the distinction be made at the point where additional income raises
a person's total income above the federal poverty level, or the
amount determined to be "what it takes for a family to live".
Co-Chair Kelly referenced a $50,000 dividend paid to shareholders
of the CIRI Native Corporation. He wanted to know how those
shareholders who continued receiving public assistance spent those
funds. He also wanted to know how other shareholders used that
dividend to "improve themselves" to become "productive members of
our state."
Mr. Nordland relayed that the Cook Inlet Tribal Council provided
counseling to shareholders to help them utilize the dividend in
such a way as to remain self-sufficient.
Senator Green asked if this legislation would apply to non-cash
benefits available to public assistance recipients, such as work
services, food stamps and Medicaid.
Mr. Nordland was unsure. He added childcare support as another
work-related benefit and stated the Department supports continuing
to provide these services regardless of permanent fund dividend
income.
Senator Green referenced other proposed federal legislation and
asked if it would allow a dividend recipient to continue receiving
work-related services.
Mr. Nordland replied that bill would give the Department "more
flexibility in that regard".
SUSAN SULLIVAN, Division of Child Support Enforcement, Department
of Revenue, testified via teleconference from Anchorage that during
the time a custodial parent receives public assistance, the
Division retains any child support collected on behalf of that
payment. She stated this amounted to $1.9 million in October of the
previous year. She pointed out that under SB 340, the state would
not retain any until the custodial parent has been paid in full for
current support in arrears. She informed the average arrear owned
to custodial parents is approximately $15,000.
JOHN MALLONEE, Division of Child Support Enforcement, Department of
Revenue, testified via teleconference from Anchorage to reiterate
Ms. Sullivan's testimony
Co-Chair Kelly informed that Senator Phillips working with the
Division of Legal and Research Services to address the fund
transfer issue.
Senator Phillips replied an amendment would be available later in
the day.
Senator Ward asked about the $455,000 Contractual Services program
listed on the aforementioned chart.
Senator Phillips explained this is a reimbursable services
agreement (RSA) between the Department of Health and Social
Services and the Department of Administration for the day-to-day
operations of the hold harmless provision.
Senator Ward asked if the amount of this RSA could be reduced given
that the workload would decrease.
Senator Phillips deferred to the Departments.
Co-Chair Kelly asked Senator Phillips to research the matter.
Co-Chair Kelly ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 11:01 AM
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