Legislature(2003 - 2004)
02/24/2003 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
February 24, 2003
9:10 AM
TAPES
SFC-03 # 7, Side A
SFC-03 # 7, Side B
SFC-03 # 8, Side A
CALL TO ORDER
Co-chair Green convened the meeting at approximately 9:10 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Ben Stevens
Senator Con Bunde
Senator Lyman Hoffman
Senator Robin Taylor
Also Attending: NICO BUS, Acting Administrative Services Manager,
Division of Support Services, Department of Natural Resources;
JANET CLARKE, Director, Division of Administrative Services,
Department of Health and Social Services
Attending via Teleconference: From Anchorage: JEFF JAHNKE, State
Forester, Division of Forestry, Department of Natural Resources
SUMMARY INFORMATION:
SB 75-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK
SB 76-SUPPLEMENTAL APPROPRIATIONS
The Committee heard testimony from the Department of Natural
Resources and the Department of Health and Social Services. The
bills were held in Committee.
SENATE BILL NO. 75
"An Act making supplemental and other appropriations; amending
appropriations; and providing for an effective date."
SENATE BILL NO. 76
"An Act making supplemental and other appropriations; amending
appropriations; making appropriations to capitalize funds; and
providing for an effective date."
This was the second hearing for these bills in the Senate Finance
Committee.
Department of Natural Resources
SB 76
Section 7
Department of Natural Resources
Fire Suppression
Fixed costs and fire suppression costs incurred to date
$19,033.8 general fund
NICO BUS, Acting Administrative Services Manager, Division of
Support Services, Department of Natural Resources, informed the
Committee that the Department has provided a written response
titled "Questions raised at 2/21/03 Committee hearing re: Fire
Supplemental" [copy on file] that provides answers to the questions
that arose during the previous meeting.
Co-chair Green asked whether, in addition to the specified stand-by
status rates identified in equipment contracts, the State receives
special rates for personnel and other related fire suppression
associated costs. She stated that information pertaining to this
subject is included on page one of the Department's aforementioned
response, in the chart titled "Flight Time Breakdown PC-7s."
Mr. Bus responded that the contracts, which address discounted
stand-by rates, are finalized well in advance of an upcoming fire
season to assure that the State receives the best available rates.
Co-chair Green asked whether contracted aircraft are used for
purposes other than fire suppression; specifically whether they are
used to transport people to fire sites.
JEFF JAHNKE, State Forester, Division of Forestry, Department of
Natural Resources, testified via teleconference from Anchorage and
informed the Committee that aircraft are sometimes used for
administrative flights, but the majority of the usage is for direct
fire suppression or firefighter support.
Co-chair Green assumed, therefore, that the Department uses other
available aircraft to transport individuals.
Mr. Jahnke agreed that this would be the norm for non-fire
transportation needs.
Co-chair Green asked for further information regarding the $58,000
designated for Parts, Bench, Stock and Replacement as specified in
the Maintenance section of the Department's backup material.
Mr. Jahnke responded that the Division maintains an inventory of
parts in order to quickly repair aircraft during the fire season.
He noted that were this inventory not available, some of the
aircraft would not be operational during crucial times.
Co-chair Green asked why this item is included in the supplemental
request rather than in the annual budget.
Mr. Bus responded that this item is included in the section titled
"Fixed Costs."
Co-chair Green noted that oftentimes firefighters are called upon
to respond to fires outside of the area they reside. She asked how
this practice is coordinated to ensure economy of scale.
Mr. Bus responded that there are 72 established village response
crews that operate on a rotation basis beginning with Team One,
then Team Two, and so forth. He stated that a team could decline to
respond to a particular fire, and in that situation, the next team
would be called upon.
Co-chair Green asked whether this approach is the most efficient
way to respond, particularly when a team might be required to
travel from one area to another.
Mr. Jahnke replied that the process allows the Division's dispatch
office to contact "the closest, locally available crews" until that
resource is exhausted. He continued that, at that point, the
Division would resort to the rotation list.
Co-chair Green communicated the need to conduct a review on the
Division of Forestry with a focus on the fire suppression operation
and "those costs that have been fixed costs or well established as
recurring costs;" from whence, she stated it could be determined
which of those costs could be appropriately reflected in the annual
budget rather than in the supplemental budget.
Co-chair Green asked whether the Department excludes May and June
2003 fire suppression expenses in the supplemental because the
Department has "been told not to and that it is subject to
Ratification," or is the Department's approach to the "fire
suppression budget basically spend it and you will be refunded."
Mr. Bus commented that the potential cost of fires for the May and
June 2003 time periods is not included in the $19 million
supplemental request because of the unknown extent of those fires.
He explained that were an expense for large fires included, but
smaller "regular incidence" fires experienced, then the
supplemental request would have been significantly inflated.
Therefore, he explained, "the practice" for the past several years
has been "to just deal" with this expense through the Ratification
process.
Co-chair Green voiced her preference to address this "predictable"
expense as a fixed cost by "studying" the May and June expenses of
the previous five years.
Co-chair Wilken observed that the State annually expends $1 million
for year-round use of two PC-7 aircraft, which, he stated, equates
to $500,000 per craft on a ten-year lease. He surmised that the
State generates significant revenue from the 323 hours of flight
time charged to the federal government for use of these craft, as
depicted in the chart breakout provided on page one of the
aforementioned handout.
Mr. Bus concurred.
Co-chair Wilken continued, therefore, that the 117 hours charged to
the federal government in excess of the State's 206 hours of usage
could be considered as "a profit on those leases."
Mr. Bus responded that the Department regards this revenue as a
means of offsetting the cost to the State rather than as a profit.
Co-chair Wilken commented that the federal government, in essence,
is helping pay for the State's lease of these aircraft. He asked
whether the Department is concerned with the expense associated
with the leasing of these two-seat high performance aircraft, which
he calculated, cost approximately $2,000 per hour to operate. He
asked if a different aircraft could perform the required service at
a lesser cost.
Mr. Bus noted that the Department has determined that the federal
government pays approximately half of the lease cost. He continued
that consideration should be given to the fact that, at the end of
the lease period, the State would own the aircraft as the result of
the lease/purchase agreement.
Co-chair Wilken asked whether $1900 an hour is an "excessive" price
to pay for a spotter aircraft.
Mr. Jahnke responded that the Division conducted "a very lengthy
analysis" on the type of aircraft required to conduct the necessary
missions. He continued that the high performance aircraft currently
under the lease/purchase agreement are the most efficient of the
aircraft options and are very maneuverable. He stated that this is
important, as these are high-risk missions.
Co-chair Wilken asked whether the cost per hour for these aircraft
is an acceptable cost.
Mr. Jahnke replied, "it is indeed" given the mission that the
aircraft fly.
Co-chair Wilken asked whether the calculation that the lease costs
$500,000 per year per plane is correct.
Mr. Jahnke clarified that the cost per plane is $250,000 and that
$500,000 is the cost for both planes.
Co-chair Wilken acknowledged the correction, and recalculated the
per hour cost to be approximately $900.
Co-chair Wilken supported Co-chair Green's position that a review
should be conducted on the fire suppression operation, and
suggested that the review be conducted in the interim between
Legislative sessions. He stressed that the cost of fire suppression
should be wrestled with "proactively rather than retroactively."
AT EASE 9:28 AM / 9:28 AM
Co-chair Green noted that some of the items identified in the FY 03
Fire Suppression Fixed Cost table in the backup material are paid
at the beginning of the fiscal year. She asked whether the numbers
reflect the full year or a six-month expense.
Mr. Bus stated that the pre-paid Fixed Cost expense reflects the
full year.
Co-chair Green asked whether the $600,000 equipment charges
identified in the Department's Supplemental backup information are
reoccurring expenses that could be included in the annual budget
request. She also asked the nature of the equipment in the request.
Mr. Bus responded that a list of the supplies purchased under this
request would be provided to the Committee.
Co-chair Green voiced that were this amount spent annually for new
equipment, she would consider the amount excessive.
Mr. Bus responded that the forthcoming list would provide
expenditure details.
AT EASE 9:31 AM / 9:31 AM
Co-chair Green asked how long fire suppression expenses have been
processed as a portion of the Supplemental Budget Request.
Mr. Bus responded that this has been the procedure for at least ten
years.
Co-chair Green asked whether the Department "adequately considered"
the removal of $85,000 of the Department's FY 03 unallocated budget
reduction "from the fire suppression line item."
Mr. Bus commented that when "percentage reductions" are discussed,
"the unfortunate situation at the Department of Natural Resources
is that the Division of Forestry's fire suppression portion is a
sizable chunk of our general funds," therefore, he continued, the
Department attempts to "find that money in our regular programs."
However, he concluded, this is "not fair" as the fire suppression's
unallocated percentage is then subtracted from the Department's
other programs.
Co-chair Green stated that this "is a really bad idea."
Mr. Bus agreed.
Co-chair Green recommended that the Department reconsider this
approach for future budgeting. She voiced that "since its funded
after the expense is incurred," she opined, the Department could
have submitted the entire unallocated cut in this section because
the Department is aware "that they are going to get it."
Mr. Bus stated that the Department carefully considered other
options, and he voiced that, "unallocated reductions are a bad idea
in the first place. He voiced support for assigning reductions to
specific programs, as, he continued, decisions regarding
unallocated reductions are difficult on a Department without
specific direction.
Co-chair Green restated her desire for the Department to assign
fixed costs to its annual budget.
Senator Taylor commented that the PC-7 aircraft "looks like a
hotrod." He asked why such a fast aircraft is required.
Mr. Bus expressed that the PC-7 serve as air traffic control and
that these planes are required to fly the fire zone and direct
other aircraft and equipment to locations as needed. He asserted
that wilderness area settings require a high performance plane.
Mr. Jahnke confirmed that the high performance PC-7 is the lead
plane. He continued that their ability to maneuver close to the
ground in smoky conditions provides the needed information
regarding a fire. He stated that the cost of operating these
aircraft is similar to costs incurred by other fire fighting
aircraft used in the Lower 48.
Senator Taylor asked the cost of fuel and maintenance for the PC-7
in addition to the lease/purchase agreement cost.
Mr. Jahnke stated that he would supply this information to the
Committee.
Senator Taylor stressed the need to know the inclusive actual cost
of operating the PC-7 on a per hour basis.
Mr. Jahnke assured the Committee that this information would be
forthcoming.
Department of Health and Social Services
SB 75
Section 3(1)
Department of Health and Social Services
General Relief Assistance
Caseload growth. Current funds projected to be fully spent by
mid-April
$271,000 general funds
JANET CLARKE, Director, Division of Administrative Services,
Department of Health and Social Services informed the Committee
that this program "was developed as a safety net program" in the
territorial days to pay for indigent burials and low income
individuals' emergency needs.
Ms. Clarke continued that indigent burials account for
approximately 81 percent of the program's funding with the
remaining 19 percent supporting the emergency needs program. She
stated that as a result of these unexpected FY 03 expenditures, the
Department developed the line chart that is included in the backup
information, to determine whether a trend was occurring. She stated
chart depicts the total cost, the burial costs, and the emergency
assistance costs. She explained that the emergency assistance costs
have lowered and remained constant over the past several years;
however, she noted, the indigent burial expenses have increased
substantially. She noted that an average of 42 indigent burials
have occurred per month in FY 03 compared to an average of 32 per
month in FY 02. She stated that this explains the increase in
program expenses.
Co-chair Green noted that this program's FY 03 budgeted funding
level was at the level requested by Governor Tony Knowles.
Ms. Clarke concurred.
Co-chair Green summarized that this increase is a result of an
increase in the number of indigent burials.
SB 75
Section 3(2)
Department of Health and Social Services
Foster Care Special Needs
Formula program shortfunding $445.3 and caseload growth
$170.0. Current funds projected to be fully expended in May
$615,300 general funds
Ms. Clarke stated that this program provides funding for special
one-time items such as "extraordinary" clothing for "fragile"
children or food for children with special dietary needs in the
foster care program. She noted that this program could also provide
for special dental care that is not covered through Medicaid. She
characterized these expenses are non-reoccurring items.
Co-chair Green noted that the Foster Care program consists of three
components: base; Augmented Care; and Special Needs. She asked for
the definition of these three components.
Ms. Clarke explained that federal regulations and Title 4E
primarily establish the definitions for these components. She
stated that the definitions would be forthcoming.
Co-chair Green asked whether individuals could transfer from one
program to another.
Ms. Clarke replied that the base rate, which is the monthly rate
paid to Foster Care providers, applies to all Foster Parent
participants. She stated that the other two components are "add-
ons."
Co-chair Green asked for the definition of the augmented program.
Ms. Clarke explained that this program provides for an increase in
monthly payments to Foster Parents to provide for the reoccurring
needs of a special needs child. She continued that this differs
from special needs payments, which are for a one-time non-
reoccurring item.
Co-chair Green summarized, therefore, that augmented payments are
for long-term situations. She asked how the decision to grant
augmented payments is determined.
Ms. Clarke responded that an extensive review is conducted.
Co-chair Green observed that the level of this request is higher
than the amount requested in FY 01 and FY 02.
Ms. Clarke agreed.
SB 75
Section 3(3)
Department of Health and Social Services
Subsidized Adoptions & Guard
Formula program shortfunding $2,000.0 and caseload growth
$833.3. Current funds projected to be fully expended in April.
$2,833.3 general funds
Ms. Clarke informed the Committee that this request is in
anticipation of program funding being depleted in April. She stated
that this program provides for the cost of special needs for
children and the families who adopt them until the child reaches
the age of eighteen. She shared that the needs of approximately
1,961 children would be provided for through this program. She
stated that this amount is in excess of the FY 03 Governor's
proposed budget allocation, and that the program request was short
funded by the Legislature in FY 03. She additionally noted that the
number of special needs children has increased.
Co-chair Green asked whether the expenses of this program have been
affected by changes in other programs.
Ms. Clarke referred the Committee to the line chart, titled
attachment B in the backup material, which depicts the growth of
the subsidized adoption and guardianship program as well as the
foster care base rate. She pointed out that while the subsidized
adoption and guardianship program has been growing, the base rate
has remained constant. She stated that being able to move special
needs children into permanent homes has offset the need to increase
funding for the foster care program.
Co-chair Green questioned why, if this were the situation, there is
a request for increased funds for the foster care program.
Ms. Clarke clarified that the request for the foster care program
involves funds to support the special needs portion of the program
which provides for "the one-time, extraordinarily high" items not
provided for in the monthly base rate.
Ms. Clarke expressed that the chart reflects the "good news" that
the growth of the foster care program has slowed because the
Department has been able to place more children into permanent
homes. She stated that this placement has been accelerated by
recently adopted legislation that established program timelines.
Co-chair Green asked whether the legislation being referred to was
"the balloon project."
Ms. Clarke responded that in addition to the balloon project other
legislation as well as "congressional mandates for timeliness to
move children who had been in the foster care program for more than
22 months into permanent homes." She stated that the Department has
accomplished these directives by moving more children into
permanent homes. She voiced that while the number of children
coming into the foster care program is still large, it is "not
overwhelming" the program as the Department has been able to move a
corresponding number of children into permanent homes.
Senator Taylor commented that a "policy shift" occurred during the
first years of Governor Tony Knowles' administration "where we, as
a State, went from being comparable to all other states on a per
capita basis for the number of children we had placed in foster
care, to within about a year and a half after that policy change
occurred, we were running the highest in the nation, at almost
double the nearest state to us on a per capita basis." He stated
that this policy shift created the need for a large increase in the
budget of this Department, as well as increasing the need for more
foster homes. He recalled there "being perhaps three child deaths"
resulting from the State removing a child from one home due to a
perceived threat to the child's safety and placing that child in a
foster home that had not been sufficiently investigated and at
which the child died. He asked whether the Department continues to
abide by the same guidelines that created the rapid growth in the
program.
Ms. Clarke responded that she could not verify that Alaska has the
highest per capita number of children in the foster care program;
however, she voiced that the Department would investigate this. She
stressed that Governor Murkowski's administration is committed to
solving issues that were identified in a recent federal review of
the Department. She stated that these issues include "serious"
concerns regarding the child protection system. She continued that
Commissioner Joe Gilbertson "is committed to hiring the best
manager for the child protection division." She stated that, "there
is an attitudinal shift" in addressing this problem within the
Department and that the Department's findings would be shared with
the Legislature.
Senator Taylor continued to voice his concern, and urged the
Committee to not only discuss the situation with the Commissioner,
but additionally to request a statistical analysis be conducted to
compare the cost of specialized childcare, general foster care, and
general relief care prior to and after the aforementioned policy
shift. He stressed that additional research should be conducted to
determine the "cost of keeping children in their home rather than
removing them and placing them in foster care" He declared that
involving parents in the latter project would be beneficial in
developing the "baseline parameters," and he pointed out that the
answer to this question should be reviewed and discussed by this
Committee as well as the Senate Health & Social Services Committee
as it "could have major ramifications on how we focus" the budget
for the Department.
Co-chair Wilken characterized the 47 percent growth of subsidized
adoption and guardianship depicted on the aforementioned graph "B"
to reflect "an alarming rate" of increase. He asked how this graph
would have looked in the mid 1990's. He reiterated Senator Taylor's
concern regarding the Department's policy for placing children in
foster care.
Ms. Clarke stated that the Department would provide the requested
statistical information about the Foster Care program.
SB 75
Section 3(4)
Department of Health and Social Services
Old Age Asst/ALB Hold Harmless
Caseload growth. Current funds projected to be fully spent by
the end of May.
$110.0 general funds
Ms. Clarke commented that this request for Old Age Assistance and
the Alaska Longevity Bonus (ALB) Hold Harmless program is the
result of "an error" in Department calculations regarding the
number of participants in the program. She explained that the
Department should have requested a decrement of $122,100 rather
than its "aggressive" requested decrement of $232,100. She stated
that while this program, "mirrors the Longevity Bonus program," it
has experienced more delays in its participant reduction levels.
Co-chair Green clarified that this request concerns the Hold
Harmless program.
Ms. Clarke concurred.
Co-chair Green understood the request to be based on the number of
people in the system requiring payment resulting from the Hold
Harmless provision. She inquired as to whether receiving a
permanent fund dividend could disqualify an individual.
Ms. Clarke responded that the longevity program is based on Alaska
statute that "requires that any benefits from federal SSI
[Supplemental Security Income] or State Adult Public Assistance
that are reduced or terminated because of the receipt of the ALB
payment shall be replaced with State general funds." Therefore, she
continued, individuals are held harmless from losing these funds.
Co-chair Green asked whether individuals could receive two hold
harmless provisions: one resulting from the Old Age Assistance
program and one from the Permanent Fund program.
Ms. Clarke responded in the affirmative.
Co-chair Green asked the average age of the participants in the Old
Age Assistance Program.
SFC 03 # 7, Side B 10:02 AM
Ms. Clarke responded that she did not have that information. She
stated the Hold Harmless program participants must be over 65 years
of age, which is the same age required to participate in the Alaska
Longevity Bonus Program.
Co-chair Green asked how the current number of program participants
compares to the prior year. She noted that every year the number of
people qualifying for the program should be deceasing as the
population ages.
Ms. Clarke informed the Committee that the program expenditures for
FY 03 are less than the amount spent in FY 02. She reiterated that
this request is the result of the Department "missing the mark" in
its projections.
SB 75
Section 3(5)
Department of Health and Social Services
Kenai Peninsula Youth Facility
Funds to hire superintendent and unit leader and provide other
operating funds needed to open the facility that will be
completed April 15, 2003.
$155.2 general funds
Ms. Clarke informed the Committee that, when completed in mid-
April 2003, this facility would be the newest youth facility in the
State. She reminded the Committee that the Department received
authorization from the Legislature to build several youth detention
facilities with the intent of housing youth within their
communities or local regions. She explained that this request would
provide funding for utilities and facility management staff in
preparation of housing youth as of July 2003.
Co-chair Green asked the reason for including this funding in the
supplemental budget request since of the opening of the facility
was anticipated.
Ms. Clarke agreed that this is not an unexpected event. She stated
that the decision was made the previous year not to request the
funds in the regular budget; however, she stressed that funding the
facility's utility costs is necessary. She reported that partial
funding has been requested in the past for facilities that opened
in the spring; however, she stated, the reason for presenting the
request in the supplemental budget is not known.
Co-chair Green asked the number of youth currently housed at the
McLaughlin Youth Center, and whether the opening of the new
facility would alleviate any overcrowding that McLaughlin might be
experiencing.
Ms. Clarke responded that the opening of the facility would assist
in relieving overcrowding at McLaughlin. She noted that additional
information would be presented in other supplemental requests.
Co-chair Green asked whether the start-up costs associated with the
new facility are comparable to the start-up costs of other youth
facilities.
Ms. Clarke believed the costs to be comparable, but stated that a
cost comparison with the facilities in Ketchikan and Mat-Su would
be provided to the Committee.
Senator Taylor opined that the Legislature could request that the
opening of the facility be delayed until July.
SB 76
Section 8(a)(1)
Department of Health and Social Services
Adult Public Assistance
Program shortfunding was estimated to be $1,750.0 GF in May.
Caseload growth has added an additional $333.0 GF and $285.0
Fed. Average projected monthly caseload is 4.3% higher than
the 1% caseload growth level funded last session.
$2,368.0 total funds
$2,083.0 general funds
$ 285.0 federal funds
Ms. Clarke stated that this request would provide funds for a
projected average of 15,390 individuals in the Adult Public
Assistance program. She stated that this number is approximately
4.3% higher than projected. She mentioned that eligibility
requirements include being elderly or being at least 18 years of
age and blind, or a person diagnosed by a physician as permanently
disabled. She noted that this program supplements the federal
Supplemental Security Income (SSI) program by providing cash
assistance to individuals to help them remain independent and in
their own homes for longer periods of time.
Co-chair Green asked whether the requirements for the program are
stringent.
Ms. Clarke responded in the affirmative and mentioned that the
people in the program must qualify for the federal definition of
disabled in addition to meeting the income eligibility
requirements. She stated the average supplement is $162 per month,
which, when combined with the SSI payment, amounts to approximately
$900 per month.
Co-chair Green asked the number of individuals being served by this
program.
Ms. Clarke stated that of the projected average of 15,390
individuals being served in this program per month, 10,614 are
disabled and 4,776 are elderly. She mentioned that this program has
been growing approximately 4.5 to 5.5 percent per year.
SB 76
Section 8(a)(2)
Department of Health and Social Services
Family Preservation
Unanticipated federal grant award to fund Child Abuse
Treatment Plans for Alaska Native Children and Parents
project.
$450.0 federal funds
Ms. Clark stated that this request would authorize the receipt of
$450,000 in federal Indian Child Welfare Act funds. She stated
that, although the Department applied for the grant in May 2002,
the awarding of this federal grant in October 2002 dictated its
being submitted in the supplemental budget request rather than as a
revised program request through the Legislative Budget and Audit
Committee. She stated that the Child in Need of Aid program would
use these funds to work on such issues as Native child welfare
concerns, Native foster homes, and implementation of policy
procedures for Native children in foster care.
SB 76
Section 8(a)(3)
Department of Health and Social Services
McLaughlin Youth Facility
Population increase of 18.9% has resulted in increased
overtime of $16.7 and laundry, food, and clothing costs of
$9.1. FY2002 average population was 179.6 while FY2003 has
averaged 198.3
$25.8 general funds
Ms. Clarke referred the Committee to the chart in the backup
material that denotes the capacity levels of the Facility. She
shared with the Committee that cost containment efforts have
concentrated on keeping staffing levels to a minimum and curbing
expenses by delaying the purchasing of items; however, she
continued, the overtime demanded of staff to oversee the growing
youth population at the facility, combined with the increase in
costs for such things as laundry, prompted the need for this
request.
Ms. Clark added that the opening of the new youth facility in Kenai
is welcome as the youth population at McLaughlin is reaching
capacity.
Co-chair Green voiced that the staff at McLaughlin should have
better addressed this situation.
Senator Taylor asked how an increase of 19 youth caused this level
of expense.
Ms. Clark responded that the numbers projected are not a daily
count but rather depict the average of the number of youth in the
facility. She continued that, at times, there could be a large
number of youth or a lesser number of youth. She stated that
another factor is that situations arise that create an over-
capacity situation in one unit, particularly the detention unit,
thereby concentrating the numbers in one area rather than spreading
them throughout the overall bed count.
SB 76
Section 8(a)(4)
Department of Health and Social Services
Fairbanks Youth Facility
Extraordinary medical costs including MRI, extensive brain
testing, weekly allergy shots, and surgery.
$20.0 general funds
Ms. Clarke conveyed that the extent of these medical costs could
not be covered through the regular budget. She stated that, similar
to adult correction facilities, juveniles in State institutions are
not eligible for Medicaid. She furthered that if a juvenile has
other insurance in effect, that insurance would be billed as
primary; however, she explained, in these situations, no other
coverage was available and there was no other payment "source."
Co-chair Green voiced that juveniles in correction faculties are
classified as adults according to federal law. She voiced being
unaware that Medicaid coverage is not available for correctional
facility inmates.
Ms. Clarke identified this exemption "as a big barrier that the
feds put up; they will not pay for those medical costs to Medicaid
even if the individuals are eligible if they're in a correctional
facility."
SB 76
Section 8(a)(5)
Department of Health and Social Services
Nome Youth Facility
Staff for population increase. Average daily population has
increased 36% over FY2002. Facility capacity is 6. Average
population is FY2002 was 6.9 while FY2003 average population
has been 9.3.
$100.8 general funds
Ms. Clarke responded that the Nome facility is one of the State's
smallest youth facilities. She stated that it was reopened in the
mid 1990's with the intention of being staffed as a community
detention facility. She continued that the increase in the number
of youth entering the Nome facility, primarily from the Kotzebue
area, has required the staffing of the facility "to be increased by
one on every shift to deal with these kids who come in to our
facility." She stated that some of these children have serious
offenses and require twenty-four hour supervision. She explained
that the "original plan" for this facility included one staff
person for each evening and graveyard shift; however, she stated,
"that was not a safe assumption for the number of children coming
into the Nome facility," and additional staff was required "to keep
that facility safe."
Co-chair Green asked whether Nome is a lockdown facility.
Ms. Clarke responded that it could be a locked facility.
Co-chair Green noted that the facility is not very large.
Ms. Clarke stated that it is not large "and is very cramped."
Co-chair Green commented that the request appears to be "an
excessive amount" for 2.4 extra occupants.
SB 76
Section 8(a)(6)
Department of Health and Social Services
Johnson Youth Facility
Medical costs for physical therapy for 1 youth
$11.5 general funds
Ms. Clarke stated that this facility, much like the Fairbanks Youth
Facility, experienced additional medical expenses for a youth
needing braces for which the Shriners Club could not fully provide
coverage. She stated that physical therapy needs also exceeded the
budgeted amount.
Co-chair Green asked whether this addressed a pre-existing
condition.
Ms. Clarke stated that this information would be provided.
SB 76
Section 8(a)(7)
Department of Health and Social Services
Bethel Youth Facility
Population increased 34.7% over FY2002 and extraordinary
medical costs estimated at $35.0
$66.1 general fund
Co-chair Green asked whether a medical review group could address
changes to State policy to clarify the level of coverage the State
would be responsible for individuals in State custody.
Ms. Clarke responded that multiple issues, including the growth in
the number of youth in State facilities, have created the increase
in medical expenses being experienced. She stated that while the
Department does budget for medical expenses, the "increased
pressure" placed on this budget by a growing population, combined
with increased medical expenses, have "outstripped" the
Department's ability to cover the expenses.
Co-chair Green asked whether the Department attempts to recoup the
medical expenses.
Ms. Clarke assured the Committee that attempts are made; however,
she communicated, the findings reveal that many of these children
to not have medical coverage.
Co-chair Green asked whether any of the children at the Bethel
facility, for instance, qualify for Indian Health Services.
Ms. Clarke stated that this would be investigated.
Co-chair Green stated that children qualifying for Indian Health
Services should be 100 percent covered for medical expenses.
Co-chair Green voiced that children who qualify for Indian Health
Services should be treated at an Alaska Native Hospital rather than
at a non-Native hospital where expenses would be totally charged to
the State.
Ms. Clarke concurred.
Co-chair Green requested a review be conducted regarding where
services are being provided.
SB 76
Section 8(a)(8)
Department of Health and Social Services
Vital Statistics
Operating costs driven by increased number of licenses and
certificates, including non-permanent positions to deal with
backlogs. Also covers rent as were able to move into new
facility earlier than anticipated.
$195.0 Receipt Supported Services
Ms. Clarke informed the Committee that the Division of Vital
Statistics charges fees for the issuance of certificates for such
things as births and deaths. She shared that the Division
experienced a significant increase in the number of certificates
being requested, which resulted in an "unacceptable backlog" of
requests. She continued that a portion of this supplemental request
would pay for the expense of hiring non-permanent staff to address
the backlog and bring the requests current. She stated that another
portion of the request provides for non-budgeted lease payments and
associated costs of moving the Juneau facility to a larger,
competitively bid location in the Lemon Creek area. She explained
that the expense of moving the vital statistic records to the new
facility exceeded the Division's estimates.
Co-chair Green asked whether "glamour certificates," which
designate a portion of the fee to such things as a non-profit
organization, are included in these requests.
Ms. Clark responded that the bulk of the backlogged requests are
regular certificates required for legal purposes.
Senator Taylor expressed disbelief that the majority of the
increase is for death certificates.
Ms. Clarke responded that the percentage of certificates being
requested for death certificates is not defined; however, she
continued, in the last several years, the overall number of
requests has increased significantly.
Senator Taylor inquired whether the increase in requests for
certificates required the move to the new facility.
Ms. Clarke responded that rather than the move to the new facility
resulting from an increase in the number of certificates being
requested, the move was approved by the Legislature to provide more
space for vital statistics records. She shared that these records
were overcrowded and that inadequate space was available for
individuals doing research on family history or other private
matters. In addition, she noted, the Division recently absorbed the
responsibility of housing both medical marijuana and abortion
records, as well as records that were once the responsibility of
the Court System.
Co-chair Green asked whether such things as moving and increased
lease payment expenses "are typically" included in a supplemental
budget request.
Ms. Clarke responded that it is not typical, unless it is something
that "is extraordinary" and was not budgeted.
Co-chair Green asked for verification that the moving expenses
amounted to $75,000.
Ms. Clarke specified that the request includes $120,000 to cover
the expense of hiring non-permanent employees to address the
backlog and $75,000 in moving and increased lease payment expenses.
Senator Taylor interjected that this Division generates money from
the fees charged for certificates.
Co-chair Green clarified that the funding for this request is
generated from the fees charged for the certificates.
Co-chair Wilken asked, were this receipt expenditure authority
request approved, whether the current five-dollar fee being charged
for certificates would be sufficient to address the current backlog
of requests.
Ms. Clarke stated that a fee increase is not anticipated.
SB 76
Section 8(b)
Department of Health and Social Services
Medicaid Services
Claims growth and match rate adjustment
$10,991.3 total funds
$28,055.8 general funds
($16,064.5) federal funds
($ 1,000.0) statutory designated program
Ms. Clarke stated that this request results from a combination of
an FY 03 federal match adjustment and a decline in Native Medicaid
participants.
Ms. Clarke shared that, historically, the authorized federal
Medicaid match was 50 percent; however, she noted that when
recently-elected Governor Frank Murkowski was a Congressional
Senator, he was instrumental in raising Alaska's authorized match
rate to 59.8 percent for a four-year period. She continued that
Alaska's match level has "floated" according to the national
formula level since the time the elevated rate expired. She
explained that Alaska's per capita income level, which is a factor
in determining the federal Medicaid contribution to a state,
increased as a result of a federal calculation adjustment that
began factoring in 401K or federal contributions to federal
employees in the State. She noted that the high percent of federal
employees in the Alaska resulted in increasing the State's per
capita income level and consequently, lowering the federal Medicaid
percent contributed to the State.
Ms. Clarke stressed that for a variety of reasons, the State's
Medicaid reimbursement rates have fluctuated, making it difficult
to budget. She stated that the Department must adjust to working
within the floating rate structure.
Ms. Clarke continued that another factor determining this request
is that the number of Tribal Native participants, whose Medicaid
expenses are reimbursed at 100 percent rather than at the floating
rate, has, "unexpectantly," declined this past year.
Co-chair Green asked for further information regarding Native
Medicaid reimbursements.
Ms. Clarke responded that the Medicaid program has a variety of
Medicaid match rates, and that were a Native Alaskan to receive
treatment in a Tribal facility, the State would receive 100 percent
federal Medicaid reimbursement. She stated that the number of 100
percent reimbursements "dropped" this past year.
Co-chair Green asked whether this resulted from individuals
choosing to go to non-Native hospitals.
Ms. Clarke responded that this might be possible; however, she
noted that a change in the Alaska Native Medical Center claim
process might have delayed receipt of some of the billings. She
stated that, due to the importance of this issue, an investigation
is being conducted by the Department to determine why there has
been a decline in Native billings.
Co-chair Green asked for further information regarding the Alaska
Native Medical Center billing process.
Ms. Clark responded that the Center bills the Department for
services rendered, on an individual basis. She continued that the
Department pays the bill at 100 percent using money from the
federal 100 percent Tribal Medicaid program.
Ms. Clarke communicated that $3.9 million of the $28 million
general fund request is for unanticipated growth in the Medicaid
program in FY 03 as a result of a growth in children's expenses.
Co-chair Green interjected that the limits for children medical
expenses are established by the State.
Ms. Clarke clarified that rather than individual children's
expenses increasing, the number of children served is increasing.
Co-chair Green concluded that the increase is, therefore, the
result of caseload growth.
Ms. Clarke informed the Committee that there has also been an
increase in the number of pregnant women in the Medicaid program.
Co-chair Green asked whether these expenses include the Denali
KidCare program.
Ms. Clarke responded yes.
Co-chair Green asked whether there has been a change in the
Medicaid rate for the Denali KidCare program.
Ms. Clarke responded that the match rate for the Denali KidCare
program has been reduced.
Co-chair Green asked whether the Medicaid rate for cervical and
breast cancer has been reduced.
Ms. Clarke responded that the rate for this program "floats" with
the federal Medicaid formula; therefore, she stated, this match
rate has also been lowered.
Co-chair Green asserted that this has resulted in an increased
demand on State general funds.
Ms. Clarke estimated that the current cervical and breast cancer
match rate is 70.79 percent.
Ms. Clarke stated that elderly caseloads are projected to rise
slightly; however, she noted, disabled caseloads and costs are
projected to rise approximately, 2 percent and 4 percent,
respectfully more than anticipated in the FY 03 budget.
Co-chair Green asked whether any of the program's qualifiers have
changed or broadened.
Ms. Clarke responded no. She noted that a regulation package to
clarify eligibility was introduced in the fall of 2002 regarding
the waiver program; however, she noted that the previous
Administration removed the package from consideration. She stated
that Governor Murkowski's Administration recently adopted a
separate general cost containment package.
Co-chair Green voiced that the savings resulting from this recently
enacted legislation would be forthcoming.
Ms. Clarke clarified that this legislation is effective as of now,
and that some cost savings are anticipated.
Co-chair Green distributed a packet of material and from the
packet; she read language located on line 32, page 3 of CCS HB 404,
Sec.1 [copy on file] as follows.
"This statement is a statement of the purpose of the
appropriation for Medical Assistance and is neither merely
descriptive language nor a statement of legislative intent. It
the intent of the legislature that the amount appropriated in
this appropriation is the full amount that will be
appropriated for Medical Assistance for the fiscal year ending
June 30, 2003. If the amount appropriated in this
appropriation is not sufficient to cover the costs of Medical
Assistance for all eligible persons, the department shall
eliminate coverage for optional medical services that have a
federal match and optionally eligible groups of individuals in
accordance with AS 47.07.035. It is the intent of the
Legislature that requests for supplemental appropriations for
Medical Assistance for the fiscal year ending June 30, 2003
will not be approved. This intent covers the budgeted
reductions to Medicaid, but does not apply to any loss of
funds that may occur if the department's "Fair Share" funding
mechanism is not approved by the federal government."
Co-chair Green continued that the aforementioned package includes a
Medicaid Services- Component memo, dated December 14, 2001 [copy on
file] from the Department of Health and Social Services that
contains information about the Federal Medical Assistance
Percentage (FMAP) that reads as follows.
"Alaska's federal FY 02 FMAP rate was decreased to 57.38
percent for Title XIX and 70.17 percent for Title XXI. This is
a significant drop from FY 01 that carries with it a potential
loss of federal funds for Alaska of more than $10 million. On
November 6, 2001, U.S. Senator Mac Baucus introduced the
"Economic Recovery and Assistance for American Workers Act of
2001" that includes FMAP relief. The Act holds harmless states
with 02 FMAP rates that were reduced, provides an across-the-
board 1 percent increase and an additional 1 percent increase
to states with a higher than average unemployment rate over
the previous 3 months.
In anticipation of the enactment of the Economic Recovery and
Assistance for American Workers Act of 2001, the department is
not asking for additional general funds to replace potentially
lost federal dollars at this time."
Co-chair Green referenced the letter she authored to Commissioner
Jay Levy of the Department of Health and Social Services, dated
August 5, 2002, [copy on file] that requested, among other things,
the Department's plans for implementing the FY 03 budget and cost
cutting strategies. She noted that she has not received a response
from the Department.
Co-chair Green expressed that this is very disturbing. She noted
that the Legislature "will be going on the record again this year"
that there would be "a very tight ship" on supplemental and budget
requests. She voiced support for the implementation of cost cutting
strategic programs; programs to attract federal dollars; and
possible re-organization as determined to be necessary. She
asserted that "for reasons that are not clear, items that could
have been anticipated, end up on the supplemental request, without
any information being provided that indicates that any options were
considered to produce cost saving measures or to stop funding
things when money was limited."
Ms. Clarke responded that the Department, under the management of
its new commissioner, Joel Gilbertson, is focusing on cost
containment and alternatives. She noted that Commissioner
Gilbertson brings a breath of experience on the federal level. She
stated that the Department has been reviewing cost containment in
the Medicaid program, and she distributed a cost containment
options list to the Committee titled "FY 02 Optional Expenditures
and Recipients" [copy on file] that contains each item's associated
dollar amounts.
Co-chair Green interjected that this list is not the only variable
being discussed, "as the cuts were supposed to be very broad based,
and if the money is not there, the message was do not come back
this year with a supplemental like this, and now you're here."
Senator Bunde asked which item on the optional services list would
allow schools to submit claims for Medicaid eligible students.
Ms. Clark noted that FY 02 legislation allowing school districts to
bill Medicaid for student services in not a component of the
optional services list.
Co-chair Green concurred.
Ms. Clark described the elements of the optional service list and
the costs expended per item. She explained that using the optional
services list to generate savings in the Medicaid program is
difficult because the order of services performed "must match the
list order as presented in the bill," however, she noted that were
these services not part of the optional services list, the
Department would be required to pay more to supply those services
through mandatory coverage provisions.
Co-chair Green voiced appreciation for being provided the list as
well as the understanding of its implication; however, she stated,
"it does not disallow other cost cutting and saving" measures being
implemented. She stated that cost costing measures have not
occurred, and that she would be expecting them to occur in FY 04.
Ms. Clarke agreed. However, she asserted that cost containment
efforts in Medicaid or any other regulated program must be
implemented early in a fiscal year to reflect significant savings.
Co-chair Wilken, referring to page 13 of the backup material, asked
whether the federally formulated Medicaid match rate for Title XIX
is usually a 60/40 match percent.
Ms. Clarke concurred.
Co-chair Wilken asked for an explanation of Tile XXI, which is
referred to having a federally formulated enhanced rate.
Ms. Clarke responded that the federally formulated enhanced rate is
a better rate that is allowed for Denali KidCare. She stated that
it is approximately 71 percent compared to the 58 percent of the
Title XIX formula.
Co-chair Green reminded the Department to provide the Committee
with information regarding detention facility occupants who might
qualify for Indian Health Services.
Senator Hoffman asked whether the $53.1 million identified for
long-term care on the optional services list is the total expense.
He additionally asked the portion of the medical fee that is the
patient's responsibility.
Ms. Clarke responded that this is the total expenditure amount. She
stated that the federal government remits approximately 58 to 60
percent of the services expense to the State. She explained that
this category provides for the home and community based waiver
program for elderly and disabled individuals.
Senator Hoffman asked whether the recipients are responsible for
any of the expense of this service.
Ms. Clarke understood that recipients are not responsible for any
of the cost; however, she continued, the federal government
specifies a small co-payment fee for some services.
Co-chair Green asked which institutions are involved in this
service.
Ms. Clarke clarified that this program involves non-institutional
services. She stated that these services could be provided to
people in assisted living homes or to people in their own homes who
receive Medicaid services.
Senator Hoffman asked what organizations would be providing these
services.
Ms. Clarke responded that personal care attendants could provide
these services.
Co-chair Green asked if food and medications are included in this
category.
Ms. Clarke voiced that Medicaid does not provide for room and board
services unless the service is conducted in a nursing home. She
clarified that these are non-nursing home services.
Co-chair Green concluded that the distinction in these services
could be characterized as nursing home service verses non-nursing
home service.
Ms. Clarke stated that a broader definition of the services would
be provided.
Senator Hoffman voiced that the cost of the service equates to
approximately $24,000 per recipient. He understood that assisted
living would be a less expensive alternative to nursing home care.
Ms. Clarke asserted that, when compared to the cost of Alaska's
nursing home care, the cost "is significantly less." She continued
that the "home and community based waiver program is one of the
fastest growing programs in the Medicaid program as it serves a
number of people who, without this service, might end up in a
nursing home" at a per person annual cost of approximately $80,000.
Senator Bunde asked for further distinction between an
institutional and non-institutional home.
Ms. Clarke responded that clarifying material would be supplied to
the Committee.
Co-chair Wilken asked the Department to supply a breakout of the
entities that would receive $300,000 of the total $450,000
allotment of the federal Family Preservation Grant detailed in
8(a)(2).
Ms. Clarke answered that the $300,000 grant would be allocated to
the Alaska Native Health Board.
Co-chair Wilken asked the Department to provide a breakout of how
the Alaska Native Health Board grant would be spent, particularly
the portion of it allocated to rural Alaska non-profit entities.
Senator B. Stevens asked for a breakout detailing the amount spent
by the State, the federal government, and the recipients of the
items on the optional services list.
Ms. Clarke stated that this information would be provided.
SB 76
Ratifications: Section 17(a)(3)(A)
Department of Health and Social Services
AR 22520-01 (Medicaid Services)
$2,753,274.86 general funds
Ms. Clarke informed the Committee that FY 2001 Medicaid expenses
generated this ratification expense. She explained that the
Department claimed some family planning services at the allowed 90
percent rate; however, she noted, $4.3 million of that claim was
disallowed by the federal agency administering the program. She
stated that the federal determination specified that the State
supplied inadequate documentation and consequently disallowed a
portion of the claim. She stated that this ratification would
provide funding to cover those expenses, which, she attested, the
State believed to be legitimate at the time.
Co-chair Green asked whether there is a challenge process whereby
the State could have contested the federal ruling.
Ms. Clarke responded that the State has challenged the federal
determination of the "Fair Share" program.
SB 76
Ratifications: Section 17(a)(3)(B)
Department of Health and Social Services
AR 22553-01 (Family and Youth Services Staff Training)
$54,910.55 general funds
Ms. Clarke this ratification request was generated by a claiming
error in the Federal Title IV-E program wherein the Department
submitted legitimate direct charge claims, which were subsequently
reviewed and disallowed by the federal government.
Senator Hoffman asked why the State misinterpreted the eligibility
of these charges for services.
Ms. Clarke commented that these claims were understood to be
eligible; "but the determination was that the State did not supply
adequate documentation to prove" their eligibility to the federal
reviewers.
Senator Hoffman voiced the hope that the Department "is providing
adequate documentation now, and in the future."
Ms. Clarke stated yes, the Department believes it is.
SB 76
Miscellaneous Claims
Section 16(6)
Department of Health and Social Services
Admin Support
Miscellaneous Claims and State-dated warrants $42,267.93
$42.3 general funds
Ms. Clarke informed the Committee that this claim consists of a
series of individual miscellaneous invoices.
Co-chair Green asked whether these invoices were processed late.
Ms. Clark stated that these claims consist of such things as an
invoice that was misplaced by a vendor, then found and submitted
two years later. She noted that State law obligates the Department
to obtain authorization to pay late expenses under these
circumstances. She then exampled a situation where a child in
custody of the Division of Family and Youth Services, and whom the
Department believes is Medicaid eligible, would receive Medicaid
funded treatment. However, she continued, it would be determined
that the child is not covered. She characterized these charges as
resulting from a wide variety of situations.
Co-chair Green observed that the Department of Health and Social
Service's miscellaneous charges "are about ten times higher the
rest of the entire State."
Co-chair Green announced that the Departments' projected expenses
must be addressed in order to mitigate next year's supplement
request.
The bills were HELD in Committee.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 10:54 AM.
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