Legislature(2005 - 2006)SENATE FINANCE 532
02/23/2005 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB98 | |
| SB97 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 97 | TELECONFERENCED | |
| += | SB 98 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
February 23, 2005
9:02 a.m.
CALL TO ORDER
Co-Chair Green convened the meeting at approximately 9:02:49 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice-Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: JANET CLARKE, Director, Division of Administrative
Services, Department of Health and Social Services; STEVE ASHMAN,
Director, Division of Senior and Disabilities Services, Department
of Health and Social Services; ERIC SWANSON, Director, Division of
Administrative Services, Department of Administration; DUANE
BANNOCK, Director, Division of Motor Vehicles, Department of
Administration; JOSH FINK, Public Advocate, Office of Public
Advocacy, Department of Administration; BARBARA BRINK, Director,
Public Defender Agency, Department of Administration; STAN HERRERA,
Director, Enterprise Technology Services, Department of
Administration;
Attending via Teleconference: From Anchorage: DWAYNE PEEPLES,
Director, Division of Health Care Services, Department of Health
and Social Services;
SUMMARY INFORMATION
SB 98-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK
The Committee heard from the Department of Health and Social
Services. The bill was held in Committee.
SB 97-SUPPLEMENTAL APPROPRIATIONS/CBR
The Committee heard from the Department of Health and Social
Services and the Department of Administration. The bill was held in
Committee.
SENATE BILL NO. 98
"An Act making supplemental appropriations, capital
appropriations, other appropriations, and reappropriations;
amending appropriations; making appropriations to capitalize
funds; and providing for an effective date."
This was the third hearing for this bill in the Senate Finance
Committee.
The Committee concluded hearing presentations from State agencies
outlining the appropriation requests.
Department of Health and Social Services
Item: 34
Section: 9(a)
RDU: Alaskan Pioneer Homes: Pioneer Homes
Supplemental Need: replacing unrealizable federal Medicaid
funds with receipt supported services. Lower receipts is due
to the voluntary nature of residents signing up for Medicaid.
-$1,200,000 federal funds
$1,200,000 receipt supported services
$0 Total Funds
JANET CLARKE, Director, Division of Administrative Services,
Department of Health and Social Services, noted this item was
addressed at the previous hearing. This request would allow
services to be continued to residents of the Pioneers' Homes. The
residents have paid these monies and the legislature has
continually reappropriated the funds to the Homes.
Item: 35
Section: 9(b)
RDU: Behavioral Health: Behavioral Health Medicaid Svc
Supplemental Need: Medicaid caseload growth above FY 05 budget
projections. At current expenditure rate, the existing
appropriation will be gone in April or May.
$2,653,700 general funds
$3,517,700 federal funds
$6,171,400 Total Funds
Ms. Clarke explained this increased need is the result of
expenditure growth of the behavioral health program, particularly
the out of state placements of children. This program is the
fastest growing segment of the Department's budget. This request is
for those costs over the amount projected would be required.
Co-Chair Green asked if the increased costs of the out of state
placement program are the result of additional patients served or
longer stays by patients.
Ms. Clarke replied that the Department is reviewing all causes of
the increases, which includes the number of children in out of
state placement and the longer stays.
Co-Chair Green asked if the daily rate has stayed consistent.
Ms. Clarke answered that the rates have changed some, but the
amount is insignificant and not the cause of the large cost
increases to operate the program.
Item: 36
Section: 9(c)
RDU: Health Care Services: Women's and Adolescents Services
Supplemental Need: Feds reduced FFY05 funding in the Breast
and Cervical Cancer screening program. The fund source change
will allow services to 1600 enrolled women that otherwise
would not be served due to federal funding reductions. Funds
will be required by late March or early April to continue the
program.
$500,000 general funds
-500,000 federal funds
$0 Total Funds
Ms. Clarke informed that when the FY 05 operating budget was
adopted, the Department was not aware that the federal funding for
this program would be reduced. Reducing the program would have
resulted in fewer women being screened for the cancers. A chart
included in the back-up material for this request [copy on file]
shows the increased number of women served through this program.
This request would restore funds to the program to prevent any
women from being eliminated from the program.
Co-Chair Green asked what services besides cancer screening are
paid through this program.
Ms. Clarke indicated she would provide this information, noting
that mammograms and the diagnostic analysis of those mammograms are
included.
Co-Chair Green was unaware that the screening program was separate
from the free health care program.
Ms. Clarke affirmed it is a separate program and has been fully
funded by the federal government for many years. This program
serves as the "gate" to receive Medicaid-paid treatment for those
eligible to receive it.
Co-Chair Green asked where the shortfall is listed in this
legislation.
Ms. Clarke replied the next item reflects the growth in health care
services.
Ms. Clarke reported that the program includes a clinical breast
examination, a mammogram and a pap smear. If abnormalities in a
patient's screening appear, that patient is provided care within
that Medicaid enrollment year.
Co-Chair Green asked why the federal funding was reduced.
Ms. Clarke replied that the federal grant award was reduced, but
did not know the reason.
Senator Olson asked the plan for the following fiscal year if the
federal funding were not reinstated.
Ms. Clarke replied that the Governor's proposed FY 06 budget has
requested reinstatement of federal funds. Otherwise, the program
would restrict the screening procedures to women over the age of
55, the mandatory age. Currently, any qualified woman over the age
of 18 is eligible for the screening.
Senator Olson asked about women under the age of 55 with signs of
potential cancer, such as a suspicious breast lump.
Ms. Clarke was unsure how the program would address these women.
She would research the matter.
Item: 37
Section: 9(d)
RDU: Health Care Services: Medicaid Services
Supplemental Need: Unable to implement cost containment
measures as quickly or to the extent planned: e.g.,
Prescription Drug List delay, Transportation, Rate Setting,
Cost Avoidance of Medicare Covered Drugs. At current
expenditure rate, the existing appropriation will be gone in
April or May.
$13,821,400 general funds
$16,888,300 federal funds
$30,709,700 Total Funds
Ms. Clarke stated this funding request is due to the Department's
inability to accomplish its budget goals of the previous year. In
FY 05, the Department proposed a total of approximately $45 million
of cost containment items, but has been able to implement only
approximately $11 million. The backup documentation details those
areas where the reductions were unrealized [copy on file].
Ms. Clarke highlighted two components, which demonstrate the
majority of the unrealized savings. The first involves anticipated
reduced transportation costs of the Medicaid program through the
use of the newly created State travel office. The Medicaid program
did not get enrolled in the travel office to enable the Department
to purchase bulk tickets until later in the fiscal year and thus
the Department was unable to realize the full amount of anticipated
cost reductions. The Department had also projected changes to the
preferred drug list would save $20 million; however the adjusted
projection is $8.4 million. This is due to the decision to exempt
behavior drugs from the preferred drug list restrictions. Inclusion
of the behavior drugs proved to be controversial.
Ms. Clarke noted savings for several other components were less
than the amounts projected.
Senator Hoffman recalled that during discussions on the FY 05
budget during the previous session he asserted the cost
containments were aggressive and recommended revising the amounts.
Of the projected $45 million, $30 million was not achieved. This is
less than 25 percent and reflects a "Far cry from good management."
Senator Hoffman asked the current status of the Medicaid travel
component in securing cost containment.
Ms. Clarke replied that the Department joined the State travel
office as of January 1, 2005, although the savings of this
collaboration were less than anticipated.
Senator Hoffman asked if savings from the travel office over the
next four months would reduce the $30 million of unrealized cost
containment.
Ms. Clarke answered it would. She noted that at the time the
Governor's supplemental appropriation request was drafted, the
Department had realized no savings from participation with the
travel office. This supplemental request would be updated to
reflect savings realized since participation began as well as
anticipated savings through the end of the fiscal year.
Senator Hoffman had expected the Department would achieve at least
50 percent of the projected cost containment efforts proposed to
the legislature. He reminded that he sponsored amendments to reduce
the funding reductions, as he had predicted they were unrealistic
Senator Olson asked the percentage of Medicaid funds spent for
behavioral drugs.
Ms. Clarke estimated the cost of behavioral drugs comprise one-
third of the Medicaid funds expended for prescription medication.
DWAYNE PEEPLES, Director, Division of Health Care Services,
Department of Health and Social Services, testified via
teleconference from Anchorage that the expense of behavioral drugs
is between 25 and 30 percent of the total prescription drug cost.
Item: 38
Section: 9(e)
RDU: Senior/Disabilities Svcs: Senior/Disabilities Medicaid
Svc
Supplemental Need: Unable to implement cost containment
measures as quickly or to the extent planned: e.g., Contract
Waiver Assessments, Medicaid Waivers, Reducing Respite
Utilization, Nursing Homes Preadmission Care Plans, $7,084,400
general funds and $7,606,300 federal = $16,690,700. Formula
growth over budgeted amount will cost $15,487,800 general
funds and $20,930,200 federal = $36,418,100. Primary growth is
in Personal Care Attendant Services. At current expenditure
rate, the existing appropriation will be gone in March.
$22,572,200 general funds
$30,536,600 federal funds
$53,108,800 Total Funds
Ms. Clarke stated this request includes two items. She noted cost
containment efforts were more successful for these. The Department
had projected $48.5 million of cost containment and refinancing
savings for the Senior and Disability Services Medicaid program and
expects would realize approximately two-thirds, or $32 million of
the initial projected savings.
Ms. Clarke informed that the second portion of this request is for
funding to cover continued formula growth above projections,
particularly for the Personal Care Attendant program. This program
continues to expand above the Department's estimate, despite the
audits conducted. January incurred the highest costs to date of
$7.4 million. She anticipated extensive discussions would be held
in the budget subcommittee to reevaluate policy choices for this
program. Other states have addressed the issue in various ways,
which would be reviewed.
Senator Dyson recalled that Commissioner Gilbertson expressed
concerns a year ago about the growth of this program. Those
discussions established the significant advantage for senior
citizens to remain in their homes rather than be institutionalized.
Senator Dyson understood that criteria was implemented to require
that patients must be qualified to enter a care facility in order
to qualify for this program.
Ms. Clarke learned that one section of the Department's regulations
stipulate that clients must require an institutional level of care
to qualify for this program. However, other regulations stipulate
that patients demonstrate one deficiency.
STEVE ASHMAN, Director, Division of Senior and Disabilities
Services, Department of Health and Social Services, reiterated that
two regulations apply. One requires that an eligible recipient have
one or more deficiencies in an activity required for daily living,
such as meal preparation.
Senator Dyson pointed out that regulations could be changed without
legislative approval, and asked why the Department had not taken
steps to control the costs of this program.
Mr. Ashman replied that regulations adopted the previous year
resulted in substantial outcry from patients, their families and
service providers. The Department has also conducted audits of the
program to determine what changes should be implemented to contain
costs.
Senator Dyson clarified the Department is gathering information
necessary to make decisions regarding the program, but requires
additional data before decisions could be made.
Mr. Ashman answered this was correct.
Senator Dyson remarked that this program should not be abused.
Families have a duty to provide some services; however, some
subsidy is necessary in situations where family members must take
time away from paying jobs to provide care. He asked the timeframe
for making decisions regarding the future guidelines of the
program.
Mr. Ashman replied that the audits should be completed by mid-March
and that some preliminary data is already available.
Ms. Clarke stressed the Department's intent that changes made to
the program are acceptable to the legislature. This should be
determined before any changes are implemented to avoid complaints.
Therefore, the matter would be discussed in the budget subcommittee
meetings.
Senator Dyson commented that the chair of that budget subcommittee
is experienced on this issue. He requested that a copy of the audit
be forwarded to the chair of the Senate Health, Education and
Social Services Committee upon completion to allow a hearing on the
topic to be scheduled in that committee. The only manner to specify
legislative intent is through statutory changes, resolutions or
direction given through appropriations. He asked the Department to
relay direction to the legislature on how the legislature should
proceed.
Co-Chair Green asked if a change of statute would be appropriate.
Mr. Ashman responded that the language in statute only provides
that the service is an option.
Co-Chair Green surmised that the qualification requirements could
be changed without legislation.
Senator Bunde sympathized that complaints are made when difficult
decisions are made.
Senator Hoffman reiterated that the appropriations requested for
items #36 and #37 total almost $95 million, which demonstrate that
the Department "missed its target" for cost containment. The
documentation for these requests indicates the reductions were not
achieved because changes were not implemented in a timely manner.
He asked if the proposed enabling changes would be implemented by
the start of FY 06 and subsequently reflected in the FY 06
operating budget.
Ms. Clarke replied that some of the enabling changes would be
implemented before the start of FY 06 although others would not.
She exampled that the projected $4 million savings through a
nursing homes preadmission care plan would not be realized. This
plan was envisioned to prevent Medicaid expenditure related to
patients entering expensive nursing home facilities unnecessarily.
However, the plan failed to consider that other Medicaid eligible
patients would be admitted to those beds and that the only way to
eliminate that expense would be to eliminate those bed spaces.
Senator Hoffman asked the percentage of the targeted cost
containment would be realized for FY 06.
Ms. Clarke responded that the Department has achieved approximately
$41 million in savings.
Senator Hoffman remarked that the total projected cost containment
was $93 million.
Ms. Clarke clarified that a significant portion of the funding
requested for the Senior/Disabilities Services BRU is not related
to anticipated cost containment, but rather reflects the rate of
growth in the cost of the program.
Co-Chair Green ordered the bill HELD in Committee.
AT EASE 9:34:01 AM / 9:35:45 AM
Co-Chair Wilken chaired the remainder of the meeting.
SENATE BILL NO. 97
"An Act making supplemental, capital, and other
appropriations, and reappropriations; amending appropriations;
making appropriations to capitalize funds; making an
appropriation under art. IX, sec. 17(c), Constitution of the
State of Alaska, from the constitutional budget reserve fund;
and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
The Committee heard presentations from the State agencies outlining
the appropriation requests.
9:36:29 AM
Department of Health and Social Services
Item: 85
Section: 8(a)
RDU: Behavioral Health: Behavioral Health Grants
Supplemental Need: Substance abuse prevention initiative so
Alaska's kids are safe and healthy - Leadership initiatives to
Keep Children Alcohol-Free, Reach Out Now, Building Healthy
Futures, Statewide Multimedia Campaign; FY 06 lapse date
$4,000,000 general funds
Item: 86
Section: 8(b)
RDU: Behavioral Health: Behavioral Health Administration
Supplemental Need: Substance abuse prevention initiative so
Alaska's kids are safe and healthy - Alaska Local Options
Campaign Project Coordinator; FY 06 lapse date
$75,000 general funds
Item: 87
Section: 8(c)
RDU: Behavioral Health: Community Action Prevention and
Intervention Grants
Supplemental Need: Substance abuse prevention initiative so
Alaska's kids are safe and healthy - Alaska Local Options
Campaign; FY 06 lapse date
$425,000 general funds
Ms. Clarke explained these items are interrelated and pertain to
substance abuse prevention. The Governor is "expecting" to utilize
a portion of the "windfall", revenues in excess of amounts
projected for FY 05, for these new programs intended to promote
substance abuse prevention by children. In Alaska, appropriate
action has not been taken to address substance abuse in the age
group of 12 to 13 year-olds. The intent is to "get ahead of the
problem" rather than react to the "downstream costs" of substance
abuse. These prevention programs are supported by the federal
government and by other states.
DIANE CASTO, Section Manager, Prevention and Early Intervention
Section, Division of Behavioral Health, Department of Health and
Social Services, testified that substance abuse is a "huge problem"
for the State and impacts other social services. She listed child
abuse, domestic violence, and school dropout as examples. The
intent is to review substance abuse issues in a comprehensive and
holistic way to determine how to help children and families and
communities to earlier address substance abuse in those
communities. Substances abused include alcohol, drugs, tobacco, and
prescription drugs. The goal is to build self-esteem and resiliency
in children to assist them in resisting abusive behavior.
Ms. Casto informed that the age in which children first try these
substances is continually younger, and reportedly ages 12 and 13
for some. Therefore prevention must be addressed at an earlier age.
Research demonstrates that the earlier first time use occurs, the
more likely the youth is to have addiction problems later in life.
The target ages for the proposed programs are 10 to 12 years.
Ms. Casto explained the plan to utilize adolescents, high school
and college students, as mentors to speak to the children. Youths
listens to their peers more than they listen to adults and it is
important that adults do not make all the decisions in
administering these prevention initiatives.
Ms. Casto spoke to the identification of high-risk populations.
Most abusers in treatment programs are parents. Research shows that
drug and alcohol abuse is often generational. The program must work
with children to "break that cycle."
Ms. Casto furthered that the proposed program would also undertake
a comprehensive, multi-strategy media approach to change
perceptions about alcohol and drug use. It is important to change
the "norm" about alcohol. Some parents of teens express relief that
their children are "only drinking alcohol" and not using drugs. The
perception that alcohol is better than other substances must be
altered.
Ms. Casto stated these proposals would fund local Alaskan programs.
The Murkowski Administration is determining how to better support
communities and their choices for local options regarding the use
and sale of alcohol. The legislature has provided assistance for
communities to become dry or damp or to implement other
restrictions. The intent is to assist communities to determine the
best choice for that community. The Department of Public Safety,
the Department of Commerce, Community and Economic Development, the
Department of Law and the Department of Health and Social Services
are involved in the process to develop a more comprehensive
approach to the local option issue.
Senator Bunde thanked the witness for her efforts in the prevention
of substance abuse. He noted the reference to the safety and health
of Alaska's children. With the reported age of substance abusers
becoming younger, he asked how the success of the proposed programs
would be assessed. He also questioned the inclusion of this request
in the supplemental appropriation.
Ms. Casto replied that the programs would be based on a number of
other programs that have undergone thorough evaluation and that
meet certain criterion to demonstrate their effectiveness. These
programs have been certified by the federal Department of Education
and other federal programs. The State Department of Health and
Social Services would provide assistance to grantees to ensure all
programs include evaluation components.
Ms. Casto cited a survey on youth risk behavior, which indicates a
decrease in the use of various drugs and alcohol. This is not a
large increase, but represents a trend. Efforts should be made to
ensure this continues.
Senator Bunde remarked that missions and measures of programs would
continue to be addressed in budget subcommittees.
Co-Chair Wilken noted the funding for these proposed programs for
FY 05 would be "windfall" money that otherwise would be included in
the FY 06 budget. He asked if this would be a one-time expenditure,
or if the expectation would be that funding would continue to be
appropriated.
Ms. Clarke expected the appropriations would be ongoing.
Senator Olson indicated support for the proposed programs, but
asked why the program could not wait until FY 06.
Senator Stedman agreed, noting the testimony did not address a need
for this funding immediately rather than July 1, 2005. The previous
items were of significant amounts and any new programs should be
considered as a part of the FY 06 budgetary process.
Co-Chair Wilken anticipated this "funding mechanism" of the
windfall revenues would be reflected in many items included in this
supplemental appropriation request.
Co-Chair Green asked if any funds had been expended on these
proposed programs to date.
Ms. Clarke answered no.
Co-Chair Green clarified the proposal to implement three new
programs.
Ms. Clarke affirmed.
Senator Bunde remarked upon the reference to the additional as
windfalls at a time when the State has a $5.5 billion debt to the
Constitutional Budget Reserve fund.
Co-Chair Wilken expressed concerns with this request and the
practice of instituting new programs in years of higher revenues.
He asked how the proposed programs differ from current programs. He
also asked the amount of funding expended in FY 05 for alcohol-
related programs. He questioned whether funding for this program
could be sustained in the future and the anticipated impact of the
programs.
Ms. Clarke stated she would provide the requested information. She
estimated the FY 05 expenditures for substance abuse prevention is
less than $1 million.
Co-Chair Wilken questioned the accuracy of that estimate.
Senator Stedman pointed out the descriptions for the items indicate
a FY 06 lapse date. The expenditures should correctly be reported
as ongoing.
Item: 88
Section: 8(d)
RDU: Juvenile Justice: Probation Services
Supplemental Need: Court-ordered special needs services for
children in juvenile facilities. Last session the Legislature
asked that these costs be brought forward as supplementals.
$194,100 general funds
Ms. Clarke stated this request is for costs expected would be
incurred in FY 05. At the time the FY 05 budget was adopted, the
legislature requested that actual costs be addressed as
supplemental appropriation requests.
Co-Chair Wilken noted this process is similar to ratification.
Item: 89
Section: 8(e)
RDU: Public Assistance: Adult Public Assistance
Supplemental Need: Savings due to caseload reduction and
programmatic changes, particularly last year's changes to
interim assistance
-$2,038,800 general funds
Item: 90
Section: 8(e)
RDU: Public Assistance: General Relief Assistance
Supplemental Need: Projected FY 05 lapse. Approximately 80% of
funds are used to pay for funeral and burial expenses of
indigent deceased persons; the remainder is used to assist
low-income individuals and families who are facing eviction.
-$185,000 general funds
Ms. Clarke explained these items propose reappropriating general
funds to offset other supplemental appropriations. Both items were
"over budgeted" in the initial FY 05 appropriation.
Item: 91
Section: 8(f)
RDU: Departmental Support Services: BASIC Grants
Supplemental Need: Provides vital social service program
support to entities directly serving needy Alaskans across the
state. Funding will be used on collaborative, community-based
activities addressing basic needs such as food, shelter and
health care. With FY 06 lapse date.
$1,000,000 general funds
Ms. Clarke stated this request would fund a new program utilizing
FY 05 windfall revenues. This is not a normal supplemental item,
but rather would implement a new grant program. BASIC is an acronym
of: Building Alaska through Successful Initiatives in Communities.
The grants would be awarded to community organizations for special
needs. She told of the shortage experienced by the Anchorage food
bank of turkeys for Thanksgiving. These grants would be available
for these types of expenditures.
Co-Chair Wilken asked if this grant program would be expected to
continue to FY 06.
Ms. Clarke affirmed.
Senator Bunde commented that Alaska currently has a substantial
welfare system. He opined that these additional revenues should be
allocated to the existing programs and subsequently avoid the
administrative expenses related to a separate program.
Ms. Clarke responded that the need for additional funding for local
food banks has been identified. The Adult Temporary Assistance
program benefits are distributed to recipients for a limited time
and are then discontinued; however, the need for some assistance
continues.
Item: 92
Section: 8(g)
RDU: Boards and Commissions: Governor's Advisory Council on
Faith-Based and Community Initiatives
Supplemental Need: FY 05 costs for Office established by
Administrative Order 221.
$122,100 general funds
Ms. Clarke informed that Governor Murkowski established this
advisory council to facilitate the start of the faith-based
program. The Department of Military and Veterans Affairs, the
Department of Corrections and the Department of Labor and Workforce
Development are participating in the Council. The funds requested
in this item would repay those departments for expenses already
incurred. The Department of Health and Social Services would not be
reimbursed for its contributions.
Co-Chair Green understood the administrative order had a zero
fiscal note.
Ms. Clarke was unsure.
Co-Chair Green asked the number of positions created for this
council.
Ms. Clarke answered that three new positions have been added.
Co-Chair Green asked the amount that would be requested for this
program in FY 06.
Ms. Clarke replied that the Governor is proposing $400,000 for this
item.
Co-Chair Green asked the cost of this program the previous year.
Ms. Clarke clarified the Council is newly created and therefore no
funding was allocated to it in the past.
Co-Chair Green recalled people in her community working for over
year on these efforts.
Ms. Clarke surmised this must be a different organization.
Co-Chair Green asked the provisions of the administrative order.
Ms. Clarke would provide a copy of the order to the Committee.
Co-Chair Wilken noted the Governor's FY 06 request for this program
is over $300,000.
Senator Bunde compared this to item #91 and questioned at what
point these activities become State-funding rather than community
and organization funded.
Co-Chair Wilken asked the consequences if this item were not
funded.
Ms. Clarke replied that the aforementioned departments would be
required to absorb the expenses.
Co-Chair Wilken noted the Department of Health and Social Services
has utilized federal Temporary Assistance for Needy Families (TANF)
funds for its portion of the expenses.
Co-Chair Green asked if a direct appropriation could be made to the
other departments for reimbursement.
Co-Chair Wilken answered this could be done.
Senator Dyson asked if any federal funding is available for these
efforts.
Ms. Clarke affirmed the Department has been expending TANF funds,
but was unaware of any other federal funds available to subsidize
these activities.
Co-Chair Wilken asked if any of the three new positions have been
filled.
Ms. Clarke informed that the lead position of the Council has been
filled.
Co-Chair Wilken clarified that two additional staff would be hired
if this funding were provided.
Ms. Clarke affirmed.
Item: 39
Section: 8(h)
RDU: Public Health: Vital Statistics
Supplemental Need: Full funding for lease costs for Juneau
office.
$150,000 Receipt Supported Services funds
Ms. Clarke informed that these lease costs have been subsidized
within the Department's budget for several years, but the
Department is not longer able to absorb the expense. The Bureau of
Vital Statistics has generated more revenue than anticipated in the
current year. She noted a similar appropriation would be requested
in FY 06.
Item: 151
Section: 19(a)
RDU: Ratifications - Health and Social Services
Supplemental Need: AR22520-03 Medical Assistance
$13,390,029.73 general funds
Ms. Clarke stated this item is ratification for FY 03. She noted no
ratification would be required for FY 04, demonstrating progress.
10:07:03 AM
Department of Administration
Item: 68
Section: 1(a)
RDU: Finance
Supplemental Need: First National Bank of Alaska credit card
rebates - These funds are received from the bank based on
state credit card purchases. Growth of the credit card
program, combined with more favorable rebate terms has
resulted in rebates in excess of budgeted authority. Allowing
receipt and expenditure of these funds will allow the
department to meet the vacancy factor in this component where
health insurance and retirement cost increases were not
funded.
$76,100 Statutory Designated Program Receipts funds
ERIC SWANSON, Director, Division of Administrative Services,
Department of Administration, reported that receipt authority is
currently budgeted at $112,500, but because of growth in the credit
card program and more favorable rebate terms, the State has
realized a larger rebate. The intent is to utilize these funds for
staffing the credit card program.
Co-Chair Green asked if any understanding exists dictating that
rebates must be returned to the original funding source,
particularly federal receipts.
Mr. Swanson replied that the rebates are generated from all funding
sources. The Department has been notified that the federal
government could impose a penalty if rebates generated from the
expenditure of federal funds were not utilized to offset the costs
of operating the credit card program.
Co-Chair Green wanted to ensure that no consequences would result
from this practice identified in future audits.
Mr. Swanson reminded that a similar appropriation of these rebates
occurred in the FY 04 supplemental budget.
Co-Chair Green pointed out that statutory designated program
receipt monies are actually general funds.
Mr. Swanson affirmed that if these rebates were not appropriated
for this item, the funds would revert to the general fund. However,
he reiterated that penalties could result if the rebates generated
from the use of federal funds were not allocated to the credit card
program.
Co-Chair Wilken asked what the rebate funds would be expended for.
Mr. Swanson replied the monies would fund a portion of the salaries
for credit card services' staff.
Co-Chair Wilken asked if the funds could be expended for the State
travel office.
Mr. Swanson responded that these funds were expended for the
purchase of software for the travel office in the previous year.
Similar appropriations to the travel office are not proposed for FY
06.
Co-Chair Wilken commented to the amount expended for the travel
office.
Item: 69
Section: 1(b)
RDU: Motor Vehicles
Supplemental Need: Digital drivers license supplies - Funding
is needed to cover the additional costs of deploying the
digital drivers license system and increased demand for the
new licenses. Consumable costs are higher due to volume of
first-year purchases and underestimating cost of consumables.
$125,000 Receipt Supported Services
Mr. Swanson explained that the costs of deploying the new digital
driver's license system and the cost of the consumables necessary
to produce these driver's licenses were higher than anticipated.
The demand for the new licenses was higher than expected.
Senator Bunde noted the intention that many new programs should be
self-supportive. He asked if the new digital system is self-
supportive.
Mr. Swanson qualified that the first year costs were higher than
average. However, the program would operate in future years with no
additional funding required.
DUANE BANNOCK, Director, Division of Motor Vehicles, Department of
Administration, testified to the production costs of the new
driver's license system. At the time the project was proposed,
several security deficiencies were discovered. The additional
security features added cost to the implementation of the system.
Also, inventory costs increased as a result of the need to stock
all offices and warehouses. Allowing supply stocks to be depleted
before ordering replacement supplies is not an option.
Co-Chair Green asked if the Division has the ability to increase
the fees for driver's licenses without legislative action
Mr. Bannock replied that statutory changes would be required.
Co-Chair Wilken noted the Division generates $40 million more than
the operating costs.
Mr. Bannock affirmed the Division generates revenue.
Mr. Swanson corrected the net amount is $30 million.
Item: 70
Section: 1(c)
RDU: Office of Public Advocacy
Supplemental Need: Projected annual caseload increase -
Because of the difficulty in projecting case types and costs
18 months in advance, OPA has historically funded the workload
and caseload increases through supplemental appropriations.
Funding of $25,000 in general fund/program receipts is from
the Department of Law from collections under Criminal Rule 39
and Appellate Rule 209.
$600,000 general funds
Mr. Swanson stated the requested amount is the projected difference
between the initial FY 05 appropriation and the amount necessary to
fund the Office for the remainder of the fiscal year. Including
this supplemental appropriation, the Office would expend
approximately the same as was expended in FY 04, despite an
increased caseload.
Co-Chair Green asked if funds appropriated in FY 04 had lapsed.
Mr. Swanson explained that the total FY 05 appropriation would be
approximately $100,000 more than the previous year.
Co-Chair Wilken recalled the legislature appropriated 100 percent
of the requested amount for FY 05.
Mr. Swanson agreed the entire request was granted, but pointed out
the amount that was requested was less than the actual expenditures
of FY 04.
Co-Chair Green asked consequences if this appropriation were not
approved.
JOSH FINK, Public Advocate, Office of Public Advocacy, Department
of Administration, testified that if the request were not funded,
the Office would be required to cease operations for the month of
July.
Item: 71
Section: 1(d)
RDU: Public Defender Agency
Supplemental Need: Projected annual caseload increase - Ms.
Davidson was reappointed to several hundred old cases
associated with the Blakely decision, which rendered some
aspects of the State of Alaska's sentencing framework
unconstitutional. Also, increases in travel to remote courts,
expert witness, discovery and file storage costs. Funding of
$24,900 in general fund/program receipts is from the
Department of Law from collections under Criminal Rule 39 and
Appellate Rule 209. Also includes Therapeutic court funding
coming from federal funds received by the National Council on
Alcohol and Drug Dependency and allocated to State agencies.
$887,200 general funds
Mr. Swanson noted this request is similar to the Office of Public
Advocacy request. The amount requested for this item represents the
difference between the initial FY 05 appropriation and the amount
required to fund the Agency for the remainder of the fiscal year.
He spoke to significant caseload growth.
Co-Chair Wilken pointed out that the Agency was also fully funded
for FY 05 in the amount requested.
BARBARA BRINK, Director, Public Defender Agency, Department of
Administration, affirmed the appropriation was the full amount
requested. She indicated a chart showing consistent caseload growth
for the Agency [copy not provided.] It is expected that caseload
would increase nine percent, partially due to the finding that
Alaska sentencing statutes were unconstitutional. This impacted an
unknown number of cases involving defendant sentencing. The Agency
has already been assigned multiple new cases as a result of the
appellate court finding. In addition, felony filings have
increased. This is a reasonable consequence of the funding of nine
additional prosecutor positions, additional State Trooper positions
and the appointment of two new judges.
Item: 72
Section: 1(e)
RDU: Risk Management
Supplemental Need: Two major claims against the State's self-
insurance deductible ($1 million per loss) for catastrophic
losses have been incurred: Fairbanks Correctional Center
(total cost is just over $1 million) and Fairweather hull
damage $350,000.
$1,350,000 general funds
Mr. Swanson outlined this item.
Senator Bunde asked if the Fairbanks Correctional Center damage was
the result of the incident involving heavy equipment used in an
attempted escape.
Mr. Swanson affirmed.
Senator Bunde asked about potential opportunities to recover this
expense
Mr. Swanson would follow up on the matter.
Co-Chair Green had understood the purpose of risk management was to
amass funds to provide for costs in the event of such losses when
the costs are less than the amount of the deductible.
Mr. Swanson replied the amounts of these claims are higher than the
amount the risk management has available.
Co-Chair Green asked if the deductible should be lowered.
Mr. Swanson deferred the matter to the Division of Risk Management.
Senator Stedman understood the M/V Fairweather was running in sea
conditions that were calmer than the worst conditions the ship was
rated as able to withstand. He asked if the manufacturer would
provide for at least a portion of the repair costs.
Mr. Swanson replied that remedies were pursued and this item
reflects the outcome of those efforts.
Co-Chair Wilken requested further information.
Senator Olson asked why the repairs are not covered through the
Department of Transportation and Public Facilities budget.
Mr. Swanson explained that the Department of Administration manages
the insurance program.
Item: 73
Section: 1(f)
RDU: Satellite Infrastructure
Supplemental Need: The department has realized decreased
rental costs for satellite equipment.
-$500,000 general funds
Mr. Swanson stated this item represents a reduction in the amount
necessary to pay rental costs for public broadcasting. The
Department was able to negotiate more favorable terms.
Co-Chair Wilken asked why the funds were not transferred for
information services activities rather than deposited to the
general fund.
Mr. Swanson replied that the information services program operates
from a separate fund source.
Item: 84
Section: 7(c)
RDU: Fund Capitalization - Information Services Fund
Supplemental Need: Telecommunications Partnering Agreement
(TPA) disentanglement remediation $3,200,000, State of Alaska
Telecommunications System (SATS) and 2-Way Radio removed from
statewide rate allocation and funded separately $3,043,400
$6,243,400 general funds
Mr. Swanson stated the first portion of this request is to provide
for costs relating to telecommunications operations.
Mr. Swanson informed that the Department separated the SATS and 2-
way radio programs from the TPA chargeback system. The costs had
exceeded what the Department could reasonably collect from
participating agencies.
Co-Chair Wilken noted the amount of the total request.
STAN HERRERA, Director, Enterprise Technology Services, Department
of Administration, detailed the purpose of the division. The first
portion of the request relates to the cancelled contract with
Alaska Communications System to provide telecommunication services
to the State. Upon the failure of that contract, the previous
provider resumed oversight and responsibility for the network. This
resulted in increased network costs as well as unrealized savings
anticipated from the ACS contract. One anticipated reduction was
the elimination of certain toll charges.
Mr. Herrera continued that the second portion of this item relates
to the transfer of the costs of the SATS microwave system and the
two-way radio system from the telecommunications chargeback costs
assessed to agencies. It was determined that the $2.8 million
operating costs of the two systems should be isolated, although the
amount was deemed to onerous to the departments.
Co-Chair Wilken asked if federal funds could be utilized to replace
any general funds expended for this project.
Mr. Herrera answered that this would not likely be possible, as a
portion of the costs were related to infrastructure. He detailed
the expenses incurred in canceling the telecommunications contract
relating to ownership of circuits and bandwidth. Efforts have been
made to reduce costs, including software to enhance bandwidth
capacity.
Co-Chair Wilken asked if by funding this project with general funds
the option to receive federal funding for a portion of the costs is
eliminated.
Mr. Swanson responded that it is possible that State agencies could
be charged for some expenses, regardless of the use of general
funds. Those charges might be eligible to "leverage" federal
funding.
Co-Chair Wilken requested the Department identify those instances
where this could be possible.
Mr. Swanson was unsure of other agencies' ability to "backfill"
this expense.
Co-Chair Wilken indicated that further review of this item would be
made.
Co-Chair Wilken ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Wilken adjourned the meeting at 10:38 AM
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