Legislature(2003 - 2004)
02/05/2004 09:00 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 05, 2004
9:00 AM
TAPES
SFC-04 # 5, Side A
SFC 04 # 5, Side B
SFC 04 # 6, Side A
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:00 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Fred Dyson
Senator Ben Stevens
Senator Donny Olson
Senator Con Bunde
Also Attending: PHIL YOUNKER SR., Chair, Board of Trustees, The
Alaska Mental Health Trust Authority; STEVE PLANCHON, Executive
Director, Trust Land Office, The Alaska Mental Health Trust
Authority, Department of Revenue; JEFF JESSEE, Executive Director,
The Alaska Mental Health Trust Authority, Department of Revenue;
Alaska Mental Health Trust Authority Board of Trustees Members: TOM
HAWKINS, JOHN PUGH, SUSAN LABELLE, JOHN MALONE, and CAREN ROBINSON;
MILLIE RYAN, Executive Director, Governor's Council on Disabilities
& Special Education, Department of Health and Social Services;
DENNY DEWITT, Special Staff Assistant, Office of the Governor; JOHN
BELL, Director, Division of Alaska Longevity Programs, Department
of Administration; CHARLIE HUGGINS, State Veterans Affairs
Coordinator; Governor's Veteran's Home Advisory Council Members:
RONALD ELLER, JOSEPH FIELDS, JIM BRASELL, RONALD HUFFMAN, ROBERT
MURRAY, WEVLEY SHEA, TED TAYLOR, JOHN WILKENS, CLAY GLOVE, ROBERT
(BERT) HALL, SR., Chair
Attending via Teleconference: There were no teleconference
participants.
SUMMARY INFORMATION
THE ALASKA MENTAL HEALTH TRUST AUTHORITY PRESENTATION
VETERAN'S HOME: PROJECT UPDATE
The Committee heard presentations from the Alaska Mental health
Trust Authority and an update on the status of an Alaska Veteran's
Home in Palmer.
The Alaska Mental Health Trust Authority
Presentation
PHIL YOUNKER SR., Chair, Board of Trustees, The Alaska Mental
Health Trust Authority, introduced the attending members of the
Board of Trustees as follows: JOHN PUGH; TOM HAWKINS; JOHN MALONE;
and CAREN ROBINSON. Board members not in attendance, he continued
are Nelson Page and Susan LaBelle.
Mr. Younker noted that Members' packets contain "The Alaska Mental
Health Trust Authority (AMHTA) 2003 Annual Report [copy on file]
which, he noted, provides financial details; the AMHTA's Fall 2003
newsletter, "Trustworthy" [copy on file]; and a flowchart titled
"AMHTA FY 06/07 Budget Recommendation Planning Process - draft"
[copy on file]. He communicated that the flowchart portrays a new
budgetary process that the Trustees and AMHTA staff have developed
and that the newsletter contains an insert titled "inside
Trustworthy, Budget Recommendations - Fall 2003)" [copy on file]
which portrays the FY 05 Budget Recommendations. He read from the
"AMHTA Presentation to the Senate Finance Committee," report [copy
on file] dated February 5, 2004, as follows.
History of Trust Formation
*Litigation (related to breach of Mental Health
Enabling Act trust established by Congress in 1956)
ongoing for 13 years
*State would have been required to reconstitute
the old Trust
*Millions of dollars in litigation costs
*Millions in lost resource development opportunities
*Paralyzed and fractured mental health community
Key Terms of Settlement
*Trust Authority free to use Trust resources to
act as a catalyst for change
*Trust Authority funding recommendations considered
in a single appropriation bill
*Trust Authority to aid in comprehensive planning
for mental health program
*Mental Health Trust Lands and associated state
lands released for development
Mr. Younker stated that during the years that the State "ignored"
the fact that the Trust had been federally established, it disposed
of a lot of designated Trust land. However, he noted that as per
the 1995 settlement of the Trust's lawsuit against the State, Trust
land that had not been disposed of; $200,000; and the right to re-
select land to provide the Trust with a total of one million acres
of land, as per the original agreement, was awarded. He informed
the Committee that the State's thirteen-year action of denying the
Trust's rights was "very expensive" to the Trust as it was unable
to develop its resources during that time and, therefore, was
unable to provide for its beneficiaries.
Mr. Younker stated that AMHTA would prefer a single appropriations
bill because it would enable the Trust to track items.
The Trust Beneficiaries
*People with mental illness
*People with developmental disabilities
*People with Alcoholism/other addictions
*People with Alzheimer's disease & other dementia
Mr. Younker stated that the Trust serves these four groups of
beneficiaries, and he noted that, oftentimes, individuals being
served are "crossovers" from one group to another.
Four Boards Advise the Trust
*Alaska Mental Health Board
*Advisory Board on Alcoholism & Drug Abuse
*Governor's Council on Disabilities & Special
Education
*Alaska Commission on Aging
The Four Advisory Boards have been engaged in a
collaborative effort with the Division of Behavioral
Health to oversee a federal CMMS grant for planning
and implementation of a service delivery system for
individuals with a Traumatic Brain Injury.
Mr. Younker stated that these Boards were established upon the
State's settlement with the Trust. He identified Richard Rainery as
the Executive Director of Alaska Mental Health Board, and Millie
Ryan as the Executive Director of the Governor's Council on
Disabilities & Special Education. He noted that the Executive
Director positions of the Advisory Board on Alcoholism & Drug Abuse
and the Alaska Commission on Aging are currently vacant.
Mr. Younker shared that the AMHTA is participating in a new federal
Center for Medicaid and Medicare Services grant program in order to
address the needs of individuals with traumatic brain injuries, and
he noted, "that Alaska has a fairly high incidence of people" with
this condition. Furthermore, he shared that a large percentage of
these injuries are incurred by children below the age of three who
are injured as the result of being shaken "violently" by their
caregivers or as the result of a fall. Furthermore, he noted that
in Alaska, injuries of this type also result from such things as
motorcycle and snow-machine accidents.
STEVE PLANCHON, Executive Director, Trust Land Office, The Alaska
Mental Health Trust Authority, Department of Revenue, shared with
the Committee that the mission of the Trust Land Office "is to
protect and enhance the value of Trust lands, and… to maximize the
revenue from Trust lands over time." He shared that the Trust Land
Office's ten person staff is charged with operating and adhering to
Trust specific regulations; a long-term asset management strategy;
and "a prioritized annual work plan," all of which were developed
in consultation with the Board of Trustees. He stated that the
Trust Land Office generates "spendable income" by establishing such
things as land leases and licenses, and that the Trustees could use
this spendable income to support the following year's Mental Health
services. He noted that the Land Trust generates revenues exceeding
$2.4 million annually in this manner. He stated that further
information regarding the Land Trust Office's operations are
depicted in charts located on page three and four of the
aforementioned handout.
Mr. Planchon noted that, in addition, the Trust Land Office
"converts land corpus to cash corpus via such things as land and
timber sales as well its recent undertakings to develop revenue
from mineral and gas royalties." He stated that, to date, the Trust
Land Office has generated approximately $25 million by the
conversion of land corpus to cash, and he noted that this money is
deposited into the Trust Fund, which is the principle account of
the AMHTA. He voiced pride in the fact that the operational
expenses of the Trust Land Office average less than 15 percent of
the budget, annually. He stated that the Trust Land Office operates
efficiently with minimal staffing because it "makes strategic use
of public and private contractors," who are experts in their field,
to provide project resources.
Mr. Planchon stated that during the past nine years, the Trust Land
Office has generated revenue from the entirety of its resource
categories including the sale of 200 million board feet of timber
and the leasing of one tenth, or 100,000 acres, of the Trust's land
for oil and gas development.
Senator Bunde observed that according to the information provided
in the chart on page three, titled "Spendable Income from Trust
Land," the Trust's FY 03 projected income was less than its actual
income.
Mr. Planchon clarified that the chart is limited to depicting the
revenue generated each year that is classified as spendable income.
He communicated that because this is the category of revenue upon
which AMHTA primarily bases the following year's budget, it is
important to project it "very tight" as the budget for the
following year is often established before the current year's total
revenue is realized. He noted that the chart titled "Trust Land
Office Operating & Capital Expenditures VS. Revenue Earned,"
located at the top of page four, depicts the total revenue earned.
Therefore, he noted that while the FY 03 spendable income was lower
than expected, the overall funding revenue in FY 03 was sufficient
due to several multi-year real estate transactions being solidified
and producing cash in FY 03 with additional assistance by an
accelerated timber harvest in Thorne Bay, which generated more
money than anticipated. However, he cautioned that even though
revenue projections are tightly monitored and forecast, the
unexpected spikes, such as occurred in FY 03, and should not be
expected, as they are unpredictable. He communicated that the
monies above the projections are deposited into the Trust fund
principle.
Senator Bunde voiced appreciation for the conservative approach the
AMHTA undertakes in regard to its budget.
Mr. Planchon compared the Trust Land Office operations to that of a
small Alaska Native corporation with a million acres that has a
goal of utilizing all its resources over time. He noted that in
regard to mineral development, the Trust has supported such things
as improvements at the Fairbanks' Fort Knox Mine mill site to
convert it into a regional rather than a local processor of ore.
Other noteworthy things, he shared, include the mineral leasing of
approximately 11,000 acres in the Livengood area for drilling which
would subsequently generate royalties; land sales; coal leases; and
being involved in "numerous community enhancement projects" wherein
AMHTA owns a significant amount of land in a community and of which
the development would benefit both the AMHTA and the community. He
noted that the Sub-port area in the City & Borough of Juneau is an
example of this endeavor.
Co-Chair Wilken asked the level of funding that the Fort Knox
facility might provide, annually, to the Trust.
Mr. Planchon responded that annually, the Trust receives
approximately "$160,000 in distributable income in the form of
rents." He noted that once the mine returns a net profit, the
State, who has an operating lease with the mine, and the Trust
would begin to receive royalty monies. He noted that continuing
elevated gold prices would benefit the situation.
Co-Chair Wilken asked whether the True North Project mining
operation involves Trust Land.
Mr. Planchon replied that the True North Project is operating on
State land.
Co-Chair Wilken asked the potential monetary impact to the Trust
were the Fort Knox mine to become profitable.
Mr. Planchon estimated that, on an annual basis, "no more than
$50,000" would be generated through the three percent of net profit
arrangement between the Trust and Fort Knox.
Mr. Younker noted that the Trust's more recent leases are
calculated on gross revenue rather than a net profit basis. He
stated that this method assures that some royalty would be
generated.
Trust FY05
TRUST Distributable Income
Land Office Income $ 2,400,000
Trust Fund Payout 3.5% $10,858,800
Prior Year Lapse $ 2,317,400
Interest $ 900,000
Trust Projected Payout $16,476,200
MHTAAR Expenditure
Recommendations $11,986,900 Operating
$ 3,730,000 Capital
Total MHTAAR Recommendations $15,698,900
MH Budget Base FY 04 $136,372,000
MH Budget Base FY 05 $125,788,000
FY 04 GF/MH 99,774,200/Alcohol Tax 21,400,000/AHFC 1,700,000
FY 05 GF/MH 93,172,500/Alcohol Tax 17,925,000/AHFC 1,800,000
Mr. Younker informed the Committee that the information contained
in the chart titled "Trust FY05," which is located at the top of
page five in the handout, provides the Trustees with the
information upon which the budget is determined each year. He
reiterated that the Land Trust Income specified on the chart is the
spendable income rather than the Land Trust's total income. He also
noted that even though the total income is projected to be
$16,476,200, FY 05 expenditures would amount to $15,698,900 because
the Trustees retain some monies to provide for emergencies that
might occur during the year. Furthermore, he stated that the total
Mental Health Trust Fund FY 05 budget "is a dramatic drop" from the
FY 04 budget, and he pointed out that the primary causes of the
reduction are a decline in State general funds and a decline in
alcohol tax revenue as a result of the FY 04 alcohol tax funds
containing unallocated FY 03 program funds. He noted that this was
because the program operated for only a portion of FY 03.
Mr. Younker declared that while the Trust's $12 million
contribution to its total operating budget is a "small drop in the
bucket," the Trust's role as "a catalyst for change…makes a
tremendous difference." He declared that the Trust's programs were
never intended to "supplant the State's general funds contribution
to AMHTA budget. As an example of the Trust being a catalyst for
change, he reminded the Committee of its involvement in the effort
to allow persons with disabilities to live in their own communities
rather than being cared for in institutions such as the State-run
Harborview Psychiatric Institute. He declared that without Trust
funding support during the transition period, the effort would have
been unsuccessful.
Senator Bunde pointed out that "traditionally," Trusts return five
percent as opposed to the AMHTA's 3.5 percent.
Mr. Younker responded that the Trust's operation model differs from
traditional operation models. Continuing, he reminded that the
Trust's operation model was originally based on a three percent
payout level, which he noted has been, over time, increased to 3.5
percent "as assets developed." He stated that the objective is to
maintain a level of income to assure a continuity of services, as
most of the programs operated by the Trust are three to five year
programs as opposed to being one-year programs. Therefore, he
declared that a level and continuous income model is preferred to a
more volatile model.
Mr. Younker detailed the current operations model as one based on
the establishment of two principal funds: the first being a
principal fund from which the Trust is limited to spending the
income generated from it; and the second being a principal reserve
fund. He stated that the principal reserve fund is regulated to
equate to 400-percent of the year's payout; therefore, he noted
that the amount required in the principal reserve fund changes in
relation to each budget, and that when the specified principal
reserve fund level is reached, any excess funds flow into the other
fund. He noted that there have been years when the balance of the
principal reserve fund was 50-percent of the obligated level, and
in that case, he continued, continuing efforts are made to reach
the appropriate level. He also noted that while no inflation
appropriation is required, the flexible model allows for that and
other considerations to be addressed. He noted that while the
payout level evolving from this model was questioned by current
Governor Frank Murkowski's Administration, the Office of Management
and Budget analysis [copy not provided] determined that the Trust
"actually paid out more" over the long term than were the standard
five-percent payout model in effect. He assured that two things are
in place to maintain program continuity: the first being that were
the principal reserve fund account to shrink to 200-percent of its
allotted amount, consideration would be given to lowering the 3.5
percent payout level; and the second action that has been
implemented to protect the Trust is that a specified percentage of
money has been transferred from the Trust's Permanent Fund to the
Department of Revenue and placed into "an intermediary account" in
order to protect the fund from stock market volatility. He stated
that this intermediary account is a more stable earning account
than a traditional "full growth account."
Senator Bunde stated that AMHTA has established an account akin to
the State's Constitutional Budget Reserve (CBR) and that perhaps
the State would benefit from studying this model.
Co-Chair Wilken complimented the AMHTA on its financial model. He
concluded that the amount of money specified for the principal
reserve fund is equal to four times the Trust's annual expenditure
amount. He also asked Mr. Younker for his professional background.
Mr. Younker stated that he is a finance business professional; and
he credited his son with developing the Trust's financial model.
New Trust Budget Recommendation
Planning Process for FY 06/07
•Collaborative planning process with four Trust advisory
groups, state agencies and major partners.
•Limited number of focus areas targeting system change +
Partnerships, mini-grants and other ongoing projects.
•Emphasis on partnering to maximize and coordinate funding
goals across systems serving beneficiaries.
Mr. Younker informed that rather than funding and tracking a
multitude of small projects, AMHTA is developing a new budgetary
process that would concentrate on "four major work projects" with a
fifth work project capturing miscellaneous small projects. In
addition, he noted that another budget component would address the
Trust's partnership programs with other entities.
Mr. Younker informed the Committee that in addition to the four
aforementioned advisory boards, the Trust would further seek to
develop four working groups consisting of individuals from the four
advisory boards, the Trustees, Alaskan Native groups, State
employees from departments that would be involved in a particular
project, as well as other individuals to assist in the development
of a plan. He noted that as this effort is formalized, and a budget
that would be presented to the Board of Trustees for approval. He
noted that further information regarding this process is outlined
in a handout titled "Proposed New Trust Budget Recommendations
Planning Process (BRPP)" [copy on file], dated January 23, 2004. He
noted that these groups would continue to oversee their project
during its three to five year duration, and he continued, were a
project determined to be "off track," action would be taken to
revise it before it might be eliminated.
Mr. Younker stated that in addition to program development, these
work groups would provide an opportunity through which AMHTA could
develop partnership opportunities "on this level, too." He exampled
therefore, that as a program is developed, partnerships could
include the Trustees, departments, private organizations, Native
organizations, so that, for instance, the $5 million contributed by
the Trust could be leveraged, through these partnerships, into a
$25 million project. He assured that while the Trust would be
furthering partnerships to enhance its endeavors, the consideration
of providing Trust beneficiaries with programs that provide quality
benefits would be a foremost priority.
Co-Chair Wilken interjected to note that a forthcoming Senate bill,
SB 258 contains the proposed AMHTA's budget, including language
pertaining to the biennial budget process that has presented here.
Mr. Younker asserted that the development of multi-year projects
via the working and advisory group process would align well with a
biennial budget approach.
JEFF JESSEE, Executive Director, The Alaska Mental Health Trust
Authority, Department of Revenue, explained that the Trust does not
"budget toward specific results" such as the Mission & Measures
exercise. Instead, he stated, the Trust has begun "budgeting toward
target numbers for specific areas of the budget and then trying to
figure out, within those boxes, how we can to best serve people,
mitigate any damage that people might suffer" by a reduction in
such things as services. He characterized the current budgeting
approach as a paradigm in that it switches the process "from aiming
at a result and then budgeting to get there to aiming at a number
and figuring out how to mitigate the damage that's caused usually
because the number requires reductions someplace in the budget." He
shared that while the Trust does "a pretty good job" of identifying
new things and what they might accomplish and concentrating on
measurable outcomes and results; it is now, he conveyed, taking
into consideration the base, which "is the big chunk of the money
that is spent on the mental health program." Continuing, he stated
that the focus now "is to look at how this base impacts" program
beneficiaries. He stated that the Trust is currently gathering
information about how the FY 04 budget affected the base and would
use that information to determine the state of the base during FY
05.
Mr. Jessee stated that with the support of the Governor Murkowski
Administration, "many very positive" Mental Health program
initiatives such as the reorganization of the Department of Health
and Social Services and the consolidation of the Division of
Alcohol and Drug Abuse with a section of the Division of Mental
Health were positive steps forward. These initiatives, he
continued, would result in better, more comprehensive and more
integrated services to Trust beneficiaries. In addition, he stated
that, in some instances, cost efficiencies would occur and thereby
more funds would be available for services.
Mr. Jessee voiced that the partnership model as explained by Mr.
Younker would benefit the Trust and the State by allowing the
maximum support of programs from external entities such as tribal
organizations as opposed to using additional Trust or State funds
to support the program. He asserted, therefore, that "the less
pressure there is on the budget," the more available funds there
are for such things as grant programs and other mental health
programs to which the partnership method might not apply.
Mr. Jessee stated that the Administration's efforts to further
efficiencies have also produced positive impacts as the result of
shared services and administration consolidation of multiple non-
profits that provide similar services. He commented that in
addition to saving money, consolidation efforts also result in
better services being provided.
Mr. Jessee informed the Committee that rather than being
apprehensive about the concepts or ideas that are being furthered,
the concern arises from "the aggressiveness and the risk levels
that are being undertaken in the budget." He stated that the
assumption that all the programs would meet their expected outcome
"and predicting that in advance" affects the entire savings and
efficiencies in the budget as time advances. He stated that this
concern is beginning to appear in the FY 04 budget as outlined on
page 6 of the handout as follows.
FY 04 Budget
•Infrastructure cuts - will impact direct services to
beneficiaries.
•Cuts to MH Budget Base + current DHSS FY 04 restrictions
(belt tightening) = Service Cuts (examples)
-1.3 million in DD grants
-Reduction in legal support for DD in Bethel, Fairbanks
and Juneau offices of DLC.
-Hope Community Resources - closed apartment for
emergency rural housing.
-Quality Assurance funds (GF/MH) for DD cut.
-Care Coordination grants for seniors reduced by 20%.
FY 04 Impacts
•Tribal substance abuse program cuts 977.3 - 35% of all ADA
cuts while AK Natives are 20% of population (and 40% of
treatment population)
•Rural ASAP programs cut $908.0 - 70-90% no show rates thus
far in FY 04 for those programs that have tried self-pay.
•10% to 25% match on alcohol grants
Mr. Jessee stated that the Trust is very supportive of saving
administrative and staffing funds. However, he noted that as staff
reductions are being implemented, impacts of that downsizing are
beginning to surface in that such things as grant awards and
quarterly reports are being delayed. This, he continued could
negatively affect local non-profits. In addition, he stated that
reduced staffing is resulting in such things as project delays,
lapsed funds, and a lesser degree of program auditing.
Co-Chair Wilken asked that an example be provided.
Mr. Jessee exampled that a partnership had been developed between
the Divisions of Mental Health, the Developmentally Disabled (DD),
the Infant Learning Program, and the Trust wherein the Trust's
contribution of fifty percent of the program's funds was matched by
the three divisions. He stated that teams of subject matter experts
developed program expectation standards and results, and then the
teams met with program managers and consumers to review and issue a
report that rated the agency on a number of the performance
measures. He stated that the review provided a qualitative analysis
that could be compared to different program standards. Furthermore,
he stated that the reports were available on the Internet and
interested individuals could compare one program to another or
gauge the effective of a program in a community. However, he noted,
the general fund match for this quality assurance program has been
eliminated in the budget and renegotiations have had to occur with
the Department and the Division regarding how this resource could
be maintained. He opined that quality assurance of a program "is
tricky as there is a temptation to make a program look like it is
working." Therefore, he asserted that when two different entities
are responsible for a program, it is more difficult "to spin"
program results. While supportive of restructuring and other cost
saving efforts, he stated that efforts are continuing to determine
how to reinstate such things as the quality assurance measures.
Mr. Jessee stated that another impact to the FY 04 Mental Health
base budget was the removal of $1.3 million in State funds from the
DD grant program. He explained that while this money lapsed with no
affect on services, it did result in a reduction in such things as
legal service support to persons recently released from the
Department of Corrections' who need supportive housing and
assistance in establishing Medicaid eligibility. He noted that many
of these individuals had been receiving "serious treatments" while
incarcerated, and that these people, without legal assistance, have
been repeatedly denied services following their release.
Co-Chair Green clarified that inmates are not eligible for such
things as Medicare while in State incarceration, and that upon
their release they must reestablish their eligibility. She asked
whether support could be provided by caseworkers rather than by
legal staff.
Mr. Jessee stated that assistance from caseworkers would suffice
were back-up legal assistance available as he declared that the
eligibility re-determination process for social security is "very
challenging."
Co-Chair Wilken noted that further and more in-depth discussion in
this regard would occur when SB 258 comes before the Committee.
Senator B. Stevens asked whether the Mental Health Trust Authority
budget or the State budget is being referenced in this discussion.
SFC 04 # 5, Side B 09:47 AM
Mr. Jessee responded that the State settlement with the Trust
established a system whereby the Trustees recommend to the
Legislature the level of State funding required for AMHTA services.
He continued, that were general funds not appropriated at that
requested level, the Legislature would be required to provide a
letter of explanation. He noted that the purpose of this
presentation is to communicate to the Legislature how Trust funds
have been spent as well as to explain the process regarding the
general fund level requested by the Trustees and the consequences
that would occur were the requested funding level unmet.
Co-Chair Wilken stated that, in order to more thoroughly answer
Senator B. Stevens's question, this subject could be further
discussed when the operating budget legislation comes before the
Committee.
Senator Olson asked whether the State could be penalized were the
requested appropriation level not allotted.
Mr. Jessee responded that rather than a penalty being imposed when
either the Legislature or the Governor does not support the AMHTA
general funds request, the purpose of the provision in the
AMHTA/State settlement that requires a written explanation of the
denial, is to encourage "policy and budget dialogue between the
Trust and the Administration and the Trust and the Legislature." He
stated that in addition to identifying areas of priority
misalignment, the process has identified areas of common interest
such as the desire to reduce program wait lists.
Senator B. Stevens noted that language on page eight of the 2003
Annual Report states that, "The total funding available for the
mental health trust budget in FY 2004 is $18,636,800 for an
increase of 6.37 percent over FY 2003."
Senator B. Stevens questioned whether the FY 04 percentage rate of
change increases are accurate as, according to his FY 05 verses FY
04 calculations, the proposed FY 05 Land Office Income of
$2,400,000 "is down 8.5 percent, Trust Office Payout is down 1.6
percent; Prior Year Lapse is down 28 percent." He continued that
the FY 05 Total Trust Projected Payout of $16,476,200 is down 11.6
percent. Continuing, he stated that the total FY 04 Mental Health
Budget Base of $136,372,000 as compared to the projected FY 05 Base
of $125,788,000 "is down 7.7 percent with the Trust payout down
11.8 percent."
Trust FY05
TRUST Distributable Income
Land Office Income $ 2,400,000
Trust Fund Payout 3.5% $10,858,800
Prior Year Lapse $ 2,317,400
Interest $ 900,000
Trust Projected Payout $16,476,200
Senator B. Stevens reiterated that the projected FY 05 Trust Payout
of $16,476,200 as compared to the FY 04 Trust Payout of
$18,636,8006 reflects a downturn of 11.8 percent.
Mr. Jessee responded that one million dollars of the difference is
the result of a change in the lapsed amount.
Senator B. Stevens agreed; however he pointed out that the Trust FY
05 chart depicts the FY 04 General Funds/Mental Health funds total
to be $99,774,200 as compared to the FY 05 General funds/Mental
Health funds total of $93,172,500. He calculated this to be a 6.6
percent reduction. Therefore, he stated that the percentage rate of
change of the Mental Trust's contribution to the total fund "is a
greater negative rate of change" than the general funds rate of
change. He surmised therefore that the State general funds
contribution "is expected to make up that difference in the
percentage rate of change."
Mr. Jessee stated that the reduction in the total market value of
the Fund during recent years combined with the change in the Lapse
has negatively affected the Trust's total available payout. He
further acknowledged that the Trust' rate of reduction exceeds that
of the State's general fund contribution to the Mental Health
program. However, he communicated that from the Trust's
perspective, rather than there being the expectation that the State
should "make up" the AMHTA contribution decrease, it is the AMHTA's
"job to work with the Legislature to meet the needs of the
beneficiaries," as "it is a joint problem," regardless of whose
contribution has decreased.
Senator B. Stevens concurred; however, he declared that the State's
contribution is experiencing a lesser percentage rate of change
reduction than that of AMHTA. He stressed that this should be
reviewed when the FY 05 budget is being considered.
Co-Chair Wilken agreed that this would be discussed when SB 258-
APPROP:MENTAL HEALTH BUDGET is presented to the Committee.
FY 05 Budget
•Medicaid - Federal Control and Support concerns
•Budget built on assumptions
-Refinancing
-Litigation around Medicaid
-Proshare viability
-Tribal agenda
-Catchment area consolidation
-ASAP program self-pay
-Restructuring of service waivers
-Cost containment (really service cuts)
•Continued infrastructure cuts/Reorganization impacts
Mr. Jessee informed the Committee that in the proposed FY 05
budget, the Trust is continuing its ongoing efforts to refinance
its public health programs by maximizing the use of federal
Medicaid funds. However, he continued, the consequence of this
action is that the State is becoming more reliant on the federal
Medicaid program and must adhere to federal specifications. He
compared the process of the State becoming less dependent on the
federal Medicaid program as a youth trying to become less dependent
on his or her parents by moving out and getting a job "in order to
provide the environment," or in the case of the State, the
services, that are required.
Mr. Jessee also characterized the public health programs supported
by Medicaid as "swiss cheese" in that sometimes a single medical
condition, such as Alzheimers, would not qualify someone for
Medicaid; however, Alzheimers combined with another factor, might.
He clarified that State funds, in the forms of grants, would be
necessary to support those individuals with Alzheimers who do not
qualify for Medicaid. He cautioned that as State grant program
funding for services is reduced, the ability to provide services to
these individuals is reduced. He stated that the State's "working
poor "are also often ineligible for Medicaid, and were medical
benefits unavailable at their place of employment, additional
burden would be placed on the Trust services.
Mr. Jessee noted that, "the FY 05 budget … has significantly
increased the tolerance for risk in developing strategies to reduce
the general funds." However, he stated that in developing the FY 05
budget, the Trust has relied upon and proceeded under the
assumption that many factors such as the level of savings from
various economic efforts would be realized. Continuing, he voiced
that while some of the assumptions would work as planned, others
might not work to the extent of the expectations or within the
projected timeline. Therefore, he noted, when those deficits occur,
either impacts would occur in other areas of the budget or a
supplemental request would be forthcoming. He stated that the
tolerance of the risk is increased when such things as
consolidation of services occur. He reminded the Committee of the
negative effects incurred by a reduction in the infrastructure
where less staff is available to write regulations, administer, or
monitor programs. Nonetheless, he stated that the Trust is very
excited about working with the Administration to develop
partnerships to deal with issues such as waitlist reductions and
other areas. In summary, he communicated that while the Trust is
optimistic about the positive outcomes that might occur by
partnering with the Administration and Legislature to address
issues, the fact is that the Trust's beneficiaries are already
being impacted and would continue to be impacted by infrastructure
changes.
Senator Olson asked for a brief synopsis of how the Trust would be
operating two years into the future.
Mr. Jessee responded that were the State's fiscal gap remedied, the
Trust would be rebuilding its mental health program and progressing
to serve its beneficiaries appropriately. Were the fiscal gap not
remedied, he stated, "that despite the best efforts" of the Trust,
people would be dying or receiving institutional care and costs
would continue to spiral upwards.
Senator Bunde commented that the organization, "Psych Rights," had,
earlier in this Legislative session, distributed information to
Legislators pertaining to a lawsuit they might further regarding
inadequate funding of programs. He asked the Trust's relationship
with this group as well as the Trust's position regarding the
merits of the lawsuit.
Mr. Jessee stated that Psych Rights is a mental illness advocacy
association comprised of members who have mental illnesses. He
stated that while the Trust has provided a grant to the group, that
funding would not be used to support the group's litigation.
Mr. Jessee stated that one member of the Mental Health Board of
Trustees has been participating in the development of a resolution
to stabilize general fund funding and to provide sufficient
resources for the Boards to conduct their missions as specified in
the Settlement. He informed the Committee that the Board of
Trustees recently approved the plan and, furthermore, the Board
authorized Mr. Jessee to work with the Administration to determine
whether the resolution would be acceptable to them. He stated that
even though the Psych Rights group's litigation has been filed,
were a consensus reached, the expectation is that the litigation
would be terminated.
Senator Dyson spoke to the danger of litigation of this nature as
it could serve to supplant the Legislature's "power of
appropriation." He stated that the preferred avenue would be for
the individuals furthering these types of endeavors to instead run
for political office.
Senator Dyson asked whether the Trust views "soft brain injuries
from prenatal alcohol poisoning as a mental illness."
Mr. Jessee stated that the Trust "considers those people our
beneficiaries because they have a mental health disability, broadly
defined."
Senator Dyson opined that treating this condition through "the
mental health model" is "absolutely off-base" because he continued,
this condition is "non- treatable." He further questioned whether
the Trust is recommending that the current level of fetal alcohol
disorder treatment is adequate.
Mr. Jessee responded that the treatment is inadequate.
Senator Dyson asked whether efforts are being taken to encourage
people to refrain from drinking when they are pregnant.
Mr. Jessee responded in the affirmative.
Co-Chair Green complimented the Trust on the quality of the Annual
Report.
Mr. Jessee introduced Trustee SUSAN LABELLE to the Committee and
noted that her involvement on the Board has assisted the Board in
its endeavors on rural and Native issues.
Co-Chair Wilken asked how the Trust is addressing Autism.
MILLIE RYAN, Executive Director, Governor's Council on Disabilities
& Special Education, Department of Health and Social Services
stated that the Council has furthered programs to address the needs
of Autistic people and their support groups. She stated that the
most common request was for the development of an information and
resource center to enable Autistic individuals to live at home and
receive the help they need. She stated that both the Trust and the
Department of Education and Early Development have provided funds
to provide a grant to the Special Education Service Agency (SESA)
to provide this service on a Statewide basis. She stated that while
this is the beginning step and that further program assistance
would be required, the response to this resource has been positive.
Co-Chair Wilken noted that an acquaintance of his who has a family
member with Autism has affirmed that the SESA program is helpful to
the family.
There being no further discussion, Co-Chair Wilken concluded the
presentation on the Alaska Mental Health Trust Authority.
AT EASE 10:09 AM/ 10:10 AM
AT EASE 10:10 AM/ 10:11 AM
Veteran's Home: Project Update
DENNY DEWITT, Special Staff Assistant, Office of the Governor,
informed the Committee that were the Palmer Pioneers Home converted
into the State's Veteran's Home, it would culminate a minimum of
twelve years of his and many other people's efforts to establish a
Veteran's Home in Alaska. He declared that a Veteran's Home would
provide a multitude of positive opportunities to the Pioneer Home
system, to the State's veterans, and to the State's pioneers. He
shared that Governor Murkowski has "directed staff to get this
done."
Mr. Dewitt communicated that as part of the on-going discussions
regarding the establishment of an Alaska Veteran's Home, the
Legislative Budget and Audit Committee conducted a study from which
three Veteran's Home options were developed. He communicated that
the Administration considered the most do-able of the three to be
to convert the Palmer Pioneer Home into a Veteran's Home.
Mr. DeWitt noted that Alaska is one of three states, the other two
being Delaware and Hawaii, that does not currently have a Veteran's
Home; however, he noted that all three of these states have
submitted applications to develop a Veteran's Homes.
Mr. DeWitt noted that, in the year 2003, there were 96 veterans
living in the State's Pioneer Homes and this number provides the
State with a good base upon which to project the program. He shared
that the Palmer Pioneer Home currently has 17 resident veterans and
22 open beds. He stated that this situation would allow the State
to make the transition without displacing very many pioneers. He
stated that currently the federal Veteran's Home formula for Alaska
specifies 79 beds be available for veterans; however, due to the
fact that the proposed Veteran's Home would use an existing
facility which has 82 beds, the State would be submitting an
application to increase the State's allotment by three beds. He
voiced confidence that the increase to a total of 82 beds would be
approved. He stated that the establishment of a Veteran's Home
would be a phased process with the first step of the process having
been the submittal of the application to the federal Veterans
Administration (VA). He noted that this application was positively
received. He commented that continuing discussions between the
State and the VA are occurring, and he shared that the VA is
anxious that the State secure its' funding of the project so that
the VA could match it.
Mr. DeWitt stated that the concept of transitioning the current
Palmer Pioneer Home into a Veteran's Home is based upon the
commitment to assure that no pioneer in a Pioneer's home would be
displaced and that were a veteran living in another Pioneer Home to
desire to move to the Palmer Veteran's Home, the accommodation
would occur on a space available basis. He assured that no resident
living at the Palmer Pioneer Home would be asked to relocate, and
he noted that Governor Murkowski is upholding the State's current
policy in that no pioneer would be moved unless they initiated the
request.
Mr. DeWitt mentioned that a request has been submitted to the VA to
allow for an adequate transition period, and that request is moving
forward. Continuing, he shared that the State would establish the
admission criteria for the Palmer Veteran's Home, and that
criteria, he continued, would be similar to the current Pioneer
Home admission policies with the additional requirement being that
the person must be a veteran.
Mr. DeWitt specified that 75 percent, or 62 beds, of the Veteran's
Home would be reserved for veterans, and he noted that the balance
of the beds would be available for individuals meeting the criteria
currently in place for admission to the State's Pioneer Homes. He
summarized the facility as "a home that will be focused towards
veterans but will also have a substantial number of beds available
for pioneers," with the expectation that the majority of those
individuals would be from the Matanuska-Susitna (Mat-Su) area.
Mr. DeWitt stated that the numbers have been reviewed and the
belief is that the home could be transitioned into a Veteran's
Home, "without disrupting anyone," in approximately five years. He
noted that during a recent inspection of the facility, the VA
"cautioned us that that might be too quick a transition period." He
understood that, while a formal response to the State's question
regarding an acceptable transition timeframe has not yet been
received, efforts are in play at the federal level to allow for an
open-ended transition period. He commented that the transition
would require approximately $3.5 million in facility upgrades to
address such concerns as fire safety, heating, and ventilation. He
noted that of the upgrade estimation, 65-percent would be paid with
federal funds with the State being responsible for the 35-percent
balance. He stated that this funding request has been included in
the Department of Health and Social Services section of the FY 05
Capital Budget Request. He stated that upon the State's action in
this regard, the VA would be able to award the balance. He stated
that the VA has also informed the State that efforts are being made
to accelerate the federal funding prior to the federal FY 05 budget
being formalized.
Mr. DeWitt declared that a tremendous amount of activity is
occurring to further the establishment of a Veteran's Home in the
State. He shared that during an August 2003 visit to the facility,
the VA was "extremely impressed" with the State's senior care
social model that provides seniors with a wide ranges of services,
from assisted living services to comprehensive care services. He
stated that this care model differs from the "traditional medical
model" currently in effect in VA homes, and he shared that the VA
is contemplating the incorporation of some of the State's care
model into its care model.
Mr. DeWitt voiced the hope that the Legislature would authorize the
conversion of the Palmer Pioneer Home into a State Veteran's Home.
He informed that in addition to the budgetary request, the Governor
would be requesting some additional legislative changes. He stated
that the transition could be completed by the summer or fall of
2005. He stated that the establishment of a Veteran's Home in the
State would provide a great opportunity to veterans as it would
enable them to receive the federal VA services to which they are
entitled, and he continued the establishment of a Veteran's Home
would be combined in a context which would continue to serve the
State's pioneers. He also noted that a Veteran's Home would also
provide an additional revenue stream to the Pioneer Home system
that would strengthen the system on a statewide basis. He
characterized this as "a win/win" situation.
Senator Dyson voiced appreciation for the efforts that have been
exerted in this endeavor. He asked whether a veteran's spouse would
be allowed to reside in the Home with his/her spouse.
Mr. DeWitt responded that the system "envisioned" by the State
would allow a spouse to reside at the Home, as he reminded, the
proposed admission policy would allocate 25-percent of the beds in
the Home to non-veterans. He further noted that the spousal
situation would be similar to that currently in place in the
Pioneer Home regulations. However, he cautioned that while there
might be a case where an appropriate bed is unavailable or another
"abnormality" existed, efforts would be undertaken to accommodate
the spouse.
Senator Bunde understood that the monthly fee for resident care in
the Pioneers Home is determined on a sliding scale of ability to
pay, and that the average expense is approximately $6,000 per
month. He asked for an estimate of the expected monthly charge for
the Veterans Home.
JOHN BELL, Director, Division of Alaska Longevity Programs,
Department of Administration, explained that currently five levels
of care programs are available to Pioneer Home residents, and he
noted that these programs would be available to both veterans and
pioneers in the Veteran's Home. He specified that a specific fee is
in place for each level of care.
Senator Bunde asked for examples of the costs of those programs.
Mr. Bell responded that the average cost ranges from $2,000 to
$6,000 per month.
Senator Bunde asked whether veterans would qualify for the sliding
fee scale for services that applies to pioneer residents.
Mr. Bell clarified that a veteran would pay "the same rate as
anyone else in the facility." However, he explained that the VA
would be responsible for a daily contracted per diem rate of
approximately $26.95 per day. He stated that the VA would be
billed, and that the VA payment would offset the amount that the
individual would be responsible for.
Senator Bunde asked for verification that the VA payment would be
deducted from the individual veteran's sliding scale fee.
Mr. Bell qualified that rather than characterizing the fee as a
sliding fee, it should more correctly be referred to an ability to
pay schedule. He reiterated that the resident would be responsible
for the entire fee; however, the per diem amount paid by the VA
would reduce the amount owed by the individual.
Senator Bunde understood therefore, that an impoverished non-
veteran who requires care amounting to $6,000 per month would pay
based on their ability to pay.
Mr. Bell concurred.
Senator Bunde asked, therefore, how the fee for an impoverished
veteran would be determined.
Mr. Bell stated that the fee for a veteran would also be based on
the individual's ability to pay.
Mr. Dewitt informed the Committee that the State has agreed with
the VA to "initially begin billing at a domiciliary rate, which is
the lower rate." He clarified that while rate negotiations would
continue, the current objective is to get the Veteran's Home
operational.
Senator Olson asked whether any private funds could be used toward
the improvements that the Veteran's Home would be required to
conduct.
Mr. DeWitt stated that no private funding is included at this time.
However, he noted that among the requests that the Governor would
be presenting for consideration would be one to allow the State to
receive private funds for the Home.
Co-Chair Green mentioned that she had attended some of the initial
meetings that were conducted in Palmer regarding transitioning the
Palmer Pioneer Home into a Veteran's Home. She noted that a
depressing tone was evident at the beginning of those meetings;
however, she continued, as questions concerning such things as
whether current and new pioneers would be allowed to live in the
home and how would the Veteran's Home affect other Pioneer Homes in
the State were answered, the tone changed from negative to
accepting. She thanked everyone involved for the effort to further
this endeavor.
CHARLIE HUGGINS, State Veterans Affairs Coordinator, informed the
Committee that the Governor's Veteran's Home Advisory Council had
just met for the first time as a group to discuss some areas of
concern.
JIM BRASELL, a World War II Veteran, was recognized for being
selected to represent the State at the upcoming May 2004 dedication
of the World War II Memorial in Washington, D.C.
ROBERT (BERT) HALL introduced himself as Chair of the Governor's
Veteran's Home Advisory Council.
WEVLEY SHEA, Member, The Governor's Veteran's Home Advisory
Council, informed the Committee that his service consisted of
combat missions in Vietnam from 1965 to 1970. He stated that it is
a privilege to serve on the Veteran's Home Advisory Council and to
appear before the Committee.
RONALD ELLER, Member, The Governor's Veteran's Home Advisory
Council, noted that he was from Kodiak and had served in the
military from 1966 to 2000. He assured the Committee that this is a
"good council" of veterans.
RONALD HUFFMAN, Member, The Governor's Veteran's Home Advisory
Council, informed the Committee that he had served in the United
States Air Force from 1961 to 1993.
Mr. Brasell informed the Committee that he had served in the United
States Marine Corps during World War II, from December 8,1941 -
1945, in the South Pacific.
Senator Dyson pointed out that the Battle of Coral Sea saved
Australia and was the "turning point in the Pacific" as it
curtailed the Japanese expansion and set the stage for "the huge
victory" over Japan at the Battle of Midway.
JOHN WILKENS, Member, The Governor's Veteran's Home Advisory
Council, informed the Committee that he had served in the military
from 1964 through 1984 and had conducted two tours in Vietnam.
CLAY GLOVE, Member, The Governor's Veteran's Home Advisory Council,
informed the Committee that he had served in the military from
1972-90.
TED TAYLOR, Member, The Governor's Veteran's Home Advisory Council,
informed the Committee that he had served in numerous capacities in
the military from 1973 through 1976 including tours in Vietnam and
Cambodia.
JOESPH FIELDS Member, The Governor's Veteran's Home Advisory
Council, informed the Committee that he had served as a helicopter
gunner from 1965 to 1968.
ROBERT MURRAY Member, The Governor's Veteran's Home Advisory
Council, informed the Committee that he had served as a member of a
fighter squadron.
Mr. Huggins stated that his military experience includes 25 years
in the Army.
Mr. Hall stated that when he was in the service, he was an Army
Medic. He shared that another member of the Council is Nona
Johnson.
Mr. Huggins stated that other members of the Council include Victor
Karmun, Richard Franks, and George Gaguzis.
Mr. Huggins stated that in his capacity as State Veterans Affairs
Coordinator, he is proud to represent the 71,000 veterans in the
State of Alaska. He noted that in addition to personal health
issues, the most talked about issue and the thing that brings "the
biggest glee" to a veteran is the prospect of having a Veteran's
Home in the State. He noted that every veteran's organization in
the State supports the Palmer Veteran's Home concept.
SFC 04 # 6, Side A 10:36 AM
Mr. Huggins also informed that efforts are underway to recognize
the 6,000 Alaskans who served in the Alaska Territorial Guard and
helped protect the State between 1941 and 1947, before Statehood.
He stated that these great Alaskans have never been recognized nor
received honorable discharge certificates. He continued that the
recognition of these individuals' service would also allow the 300
living Guard veterans to receive VA assistance, including residency
in the Veteran's Home. He stated that the ages of these individuals
range between 70 and 104 years of age.
Mr. Huggins next attested to the tremendous return on investment
that the State receives by the Department of Military and Veterans
Affairs' hiring of three Veterans Service Officers. He stated that
because of these Veterans Service Officers' efforts on behalf of
the State's veterans, $27 million of VA benefits are pumped into
the State's economy. He urged the Committee to continue to support
the funding of these three positions.
Mr. Huggins also noted that there is a national Veteran's cemetery
in Anchorage and one in Sitka; the first having a projected 40-year
life and the latter having a ten-year life. He noted that
discussions to address long-term demand are taking place and that a
variety of concepts have been identified. He stressed that while no
money is being requested; setting aside land in such places as
Fairbanks, which has the third largest concentration of veterans in
the State, could be a consideration. He stated that the Council
would continue to provide information in this regard. He noted that
were a State Veteran's Cemetery built, the federal government would
fund "everything up to opening the gates."
Mr. Huggins informed that the State's Veterans Memorial Endowment
is now operational, and that the Council would be distributing the
grant application guidelines to communities in the State. He noted
that the Council would be awarding up to $10,000 grants to be used
for the maintenance and preservation of war memorials. He thanked
the Committee for establishing the program and he noted that the
monies in the endowment are the result of private contributions.
Senator Dyson opined that the federal VA "often takes an
adversarial role or posture in addressing combat related injuries
and diseases for veterans" such as Agent Orange. However, he noted
that in most cases, over time, evidence in support of the Veteran's
position that they were wronged is being provided. He asked the
Council's position on this issue, and also asked whether any action
by the Legislature could assist the situation.
Mr. Huggins responded that while the situation was once abysmal,
the situation has tremendously improved in recent years. He noted
that "where the VA is headed and what it is doing is very
positive." He attested that while the treatment of Gulf War
veterans is still being tested, the VA treatment of Vietnam
veterans is encouraging. He noted that in addition to resource
shortages, another issue of concern is concurrent receipts in that
those people, who are retired and have a disability, get a
disability payment that offsets retirement pay. He stated however,
that this issue is being remedied via a ten-year phase out program.
Senator Dyson asked whether the Legislature could do anything to
further the veterans' cause.
Mr. Huggins responded that the veterans realize that transitioning
the Palmer Pioneer Home into a Veteran's Home is the most cost
effective and deliverable option. However, he asked that, in the
future, veterans be provided an opportunity to present their
position when things concerning them arise in the future.
Mr. Hall added that at the Council's meeting, "the common thread"
between the members was their "passion" to act on the behalf of
other veterans. He stated that the Council is receiving widespread
support that could serve to benefit the State's veterans.
Co-Chair Wilken recognized the efforts exerted by citizens of the
State to further veteran's needs, and also acknowledged the efforts
exerted by US Congressman, Senator Ted Stevens in support of
veterans.
Mr. Huggins informed the Committee that the Council voted in
support of the continuance of the Veterans Service Officers'
contract. He noted that the funds to continue this contract are not
included in the State budget, and he urged the Committee to provide
the required funding.
Senator Olson inquired as to whether a 79 to 82-bed Veteran's Home
facility would be adequate in ten years.
Mr. Huggins responded that the VA has dictated that the number of
beds be 79. He noted that the State has petitioned the VA to
increase that number to 82 beds, which is the capacity of the Home.
He acknowledged that the veterans' population in the State would be
growing; however, he noted that veterans have the choice of living
in the Palmer home or other Pioneers homes in the State. He voiced
doubt that the VA would authorize a larger number of beds.
Co-Chair Wilken thanked the veterans for their participation in the
discussion, and concluded the presentation.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 10:53 AM
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