Legislature(1993 - 1994)
03/26/1994 10:05 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 26, 1994
10:05 a.m.
TAPES
SFC-94, #38, Side 2 (000-end)
SFC-94, #40, Side 1 (000-end)
SFC-94, #40, Side 2 (575-135)
CALL TO ORDER
Co-chairman Steve Frank convened the meeting at
approximately 10:05 a.m.
PRESENT
In addition to Co-chairs Frank and Pearce, Senators Kerttula
and Sharp were present. Senators Jacko, Kelly, and Rieger
did not attend.
ALSO ATTENDING: Bruce Botelho, Attorney General, Dept. of
Law; Richard Burton, Commissioner, Dept. of Public Safety;
Jim Baldwin, Assistant Attorney General, Dept. of Law; Dick
Pegues, Director, Administrative Services Division, Dept. of
Law; C.W. Swackhammer, Deputy Commissioner, Dept. of Public
Safety; Janet Clarke, Director, Division of Administrative
Services, Dept. of Health and Social Services; Shirley
Minnich, Director, Division of Administrative Services,
Dept. of Corrections; Kim Elton, Executive Director, Alaska
Seafood Marketing Institute, Dept. of Commerce and Economic
Development; Nancy Slagle, Director of Budget Review, Office
of Management and Budget; Bill Andrews, Finance Officer,
Dept. of Natural Resources; Alison Elgee, Budget Review,
University of Alaska; Dana Latour, fiscal analyst,
Legislative Finance Division; and aides to committee members
and other members of the legislature.
SUMMARY INFORMATION
SB 288 - APPROP: GOVERNOR'S SUPPLEMENTAL
Overview was had of Secs. 15 through the end of
the bill as well as amendments. Testimony was
presented by Nancy Slagle, Janet Clarke, Bill
Andrews, Shirley Minnich, C.W. Swackhammer, and
Kim Elton. The bill was subsequently HELD in
committee for further review.
HB 454 - APPROP: COST OF OIL/GAS LITIGATION
The committee met in an extended Executive Session
with Attorney General Bruce Botelho and Assistant
Attorney General Jim Baldwin. Upon
reconvening in regular session, CSHB 454
(Fin) was REPORTED OUT of committee with a
"do pass" recommendation.
SB 288 - APPROP: GOVERNOR'S SUPPLEMENTAL
An Act making and amending operating and capital
appropriations and ratifying certain state
expenditures; and providing for an effective date.
HOUSE BILL NO. 455
An Act making and amending operating and capital
appropriations and ratifying certain state
expenditures; and providing for an effective date.
[Cross reference between SB 288 and HB 455. Most of SFC
discussion of supplemental funding relates to SB 288. HB
455 was the supplemental bill that ultimately passed the
1994 legislature.]
Co-chair Frank directed that SB 288 be brought on for
discussion and that sectional review of the bill (begun at
the March 24, 1994, meeting) continue. NANCY SLAGLE,
Director of Budget Review, Office of Management and Budget,
again came before committee to conduct the following review:
Sec. 15. Contains a $244.4 appropriation for permanent fund
dividend hold harmless funding in direct relation to
caseload increases generated by AFDC and other programs.
Senator Kerttula noted that the funding derives from the
permanent fund and suggested that hold harmless coverage
should no longer be provided.
Sec 16. Provides a $7,674.5 appropriation to medical
assistance for judgments and settlements. JANET CLARKE,
Director, Division of Administrative Services, Dept. of
Health and Social Services, explained that funding relates
to three primary cases, the first two of which are
relatively small. The first is a $604.6 (50% federal funds)
superior court judgment for Our Lady of Compassion, relating
to a rate appeal case. The second involves Alaska Regional
Hospital (formerly Humana Hospital) and relates to a $704.9
(50% federally funded) attorney general settlement of a 1986
rate appeal case. The major portion of the request relates
to a $5.8 million judgment by the supreme court in a
decision relating to the department's Medicaid rate setting
system for nursing homes. The superior court ruled, and the
supreme court reaffirmed, that the state's Medicaid plan
violated procedural requirements of federal law. Federal
law requires that state payment rates be reasonably adequate
to meet costs of an efficiently and economically operated
facility. The court found that the state Medicaid plan had
procedural flaws in determining what were "economically
operated and efficiently operated facilities."
In the major dispute, the state was sued by the Alaska
Hospital Nursing Home Association on behalf of nursing homes
statewide. Ms. Clarke stressed that 85 to 90% of revenue
for nursing homes in Alaska flows from the Medicaid program.
The federal government did not participate in the lawsuit.
Normally, 50% would be funded by the federal government.
The decision not to participate has been appealed by the
state for several of the years with approved Medicaid plans.
The department is hopeful of a determination by the federal
government that will allow for reduction of general funds
and replacement with federal moneys. However, it is
unlikely the $5.8 million supreme court judgment will be
split 50/50.
Co-chair Frank asked why the federal government was not sued
along with the state. Ms. Clarke deferred to staff from the
Dept. of Law. Discussion followed between Co-chair Frank
and Ms. Clarke regarding the federal claim process. The
department hopes for a decision by the end of March.
Sec. 17. Provides a $5,045 million appropriation to medical
assistance to cover increased participation and payment of
FY 93 bills in FY 94. Co-chair Frank asked how the request
relates to department efforts to reduce Medicaid. Janet
Clarke explained that last year, based on early projection
numbers, the department "gave out $4.5 million out of our
Medicaid program." Projections remained on track until
April, May, and June, the last three months of the fiscal
year, when the department determined that the money should
have remained in the Medicaid program. The department thus
ended up "pushing" $7.8 million in FY 93 bills into FY 94.
In FY 94, the legislature reduced the Medicaid budget by
$4.5 million and asked the department to look for cost
containment to live within provided funding. The department
found $7 million in cost containment, but it was not enough
to make up for the cumulative effect of FY 93 bills pushed
into FY 94 and the reduction.
Discussion followed concerning the number of eligible
Medicaid recipients and growth projections. Co-chair Frank
voiced concern that increases in the number of recipients
appear to be outstripping the population growth.
Further comments followed regarding attempts to limit rates
and effect cost containment.
Responding to a question from Senator Sharp concerning
reductions to the statutory list of priority services, Ms.
Clarke said that the Governor was reluctant to reduce any of
the listed services. The department followed his direction.
Ms. Slagle added that the Governor believes there are other
means of achieving cost reductions.
In the course of further discussion with Co-chair Frank, Ms.
Clarke said that one cost containment effort denied rate
increases for physicians and dentists. In response to a
question from Senator Kerttula, Ms. Clarke explained that
60% of the Medicaid budget is either mandatory or related to
difficulties in reducing facility rates. Other states have
also been hamstrung by federal law. State efforts in court
continue to lose.
Sec. 18. Contains a $1,842.5 appropriation for medical
assistance. It relates to the disproportionate share
reimbursement to private hospitals (Charter North and North
Star) for indigent care. Ms. Clarke distributed information
(copy appended to these minutes as Attachment A) showing
disproportionate share payments. She then read printed text
from the document and described the movement of funding as
set forth on the accompanying flow chart. The $5.4 million
GF/MHT savings results from the fact that more federal
dollars are available to replace current general funds in
API's budget. However, in order to achieve the savings from
API, the department must pay private hospitals more. Rules
governing the program do not allow the state to discriminate
against private hospitals.
Sec. 19. Provides a $3,567.4 appropriation in federal funds
for increased Indian health service payments for medical
assistance. Janet Clarke explained that the program is all
federal funds through Medicaid. Senator Kerttula asked that
department staff inquire concerning a proposal to merge the
federal program into state health care offerings. Ms.
Clarke said that the department is concerned about
maintenance of effort requirements for the Medicaid state
match in any health care reform activity.
Sec. 20. Appropriates $887.5 for general relief medical due
to the increased number of participants and includes $246.6
for FY 93 bills carried into FY 94. Janet Clarke explained
that the division is looking into the cause of the increase.
The general relief medical program has existed since 1953.
It primarily serves unemployed and underemployed
individuals. The primary caseload is those who are not
eligible for other Medicaid services. The population group
spans 21 to 64. To qualify, one must have an income of less
than $300 per month, resources of less than $500 per month,
and no other medical coverage. Co-chair Frank voiced his
understanding that because of general relief medical, no one
is without coverage. Ms. Clarke concurred. The Co-chair
then asked how many people the program covers for the $7
million in funding. Ms. Clarke advised of approximately
700. She further noted that a number of very expensive
cases drive the average up. She agreed to provide numbers
relating to the cost of individual cases as well as the
payees.
Sec. 21. Appropriates the $7 million in federal receipts
for the disproportionate share program flowing to API.
Sec. 22. Transfers funds from the waivers authorization
back to community DD grants to cover individuals who were
not switched over to the waivers program because of late
start up. Janet Clarke noted that Sec. 22 duplicates SB
360.
Sec. 23. Appropriates $238.7 for McLaughlin Youth Center.
Funding is needed to cover population increases due to youth
gang activities. Janet Clarke spoke to an increase, at both
McLaughlin and the Johnson Center, of "more violent youth
than we have seen in recent times." The McLaughlin
detention center capacity is 25. The last census showed a
population of 89. For the safety of both staff and other
residents of McLaughlin, the department has had to increase
overtime and use of non-permanent employees.
Senator Kerttula asked if a separate facility is needed.
Ms. Clarke explained that the department is exploring
capacity and renovation costs at the Fairbanks Youth
Facility for "another closed detention unit."
Sec. 24. Contains a $41.9 appropriation for the Johnson
Youth Center. The situation here is the same as at
McLaughlin. In response to a question from Co-chair Frank,
Ms. Clarke explained that population increases at the
Fairbanks Youth Facility have been covered from other areas
of the youth facility budget, particularly from vacancies at
the Nome facility.
Sec. 25. Shows a $323.7 fund source change to reflect the
uncollectability of laboratory fees. It was anticipated
that regulations would be in place to commence collections
for services. That effort has been delayed. In response to
questions from Co-chair Frank, Ms. Clarke explained that
tests performed by the state lab are those that are not
profitable for the private sector, or they relate to issues
for which the state must have information (tuberculosis was
cited as an example).
Sec. 26. Deleted.
Sec. 27. Deleted.
Sec. 28. Contains remaining funding for the
disproportionate share program. It involves a realignment
of funding sources for API and program receipts from
increased collections from third-party payors. Responding
to a question from Co-chair Frank, Ms. Clarke said that
average occupancy at API is approximately 100 per day.
There are 1,100 admissions each year.
End: SFC-94, #38, Side 2
Begin: SFC-94, #40, Side 1
Discussion followed between the Co-chair and Ms. Clarke
concerning negotiations with local hospitals for evaluation
and short-term care of mental health patients. API has been
downsized in an effort to provide psychiatric care closer to
home for many patients. Costs at local hospitals are
substantially higher than API because of hospital need to
cover the cost of medical infrastructure.
Sec. 29. Funds $548.2 for Harborview Development Center to
cover increased costs of the steam heat plant and
certification deficiencies. Costs relating to the heating
plant total $50.0. The remaining $498.2 covers
deficiencies.
Sec. 30. Contains $37.5 for the Dept. of Military and
Veterans Affairs to cover an under-estimation of 50 in the
FY 93 death gratuity. The program is no longer functioning
in FY 94.
Sec. 31. Provides a $4,643.8 appropriation to the Dept. of
Natural Resources for fire suppression. Funding will cover
shortages in fixed costs, moneys due the federal government,
and anticipated fire activity for the rest of the fiscal
year. Senator Kerttula stressed need to allow fires in
uninhabited areas to simply burn out. In response to a
question from Co-chair Frank, Mrs. Slagle advised that the
Office of Management and Budget reduced the agency request
by $1 million. Co-chair Frank requested a breakdown of
fixed costs. BILL ANDREWS, Finance Officer, Dept. of
Natural Resources, directed attention to backup material
showing detail for aviation contracts, pilots, etc. He
further explained that the contract with BLM provides for
smoke jumpers. He agreed to provide a further breakdown as
well as department policy relating to fires in remote areas.
Sec. 32. Relates to ratification of past Dept. of Natural
Resource expenditures. There is no impact on the general
fund.
Sec. 33. Appropriates $20.0 to the Dept. of Fish and Game
for additional vendor compensation for increased king salmon
tag activity. KEVIN BROOKS, Director, Division of
Administration, Dept. of Fish and Game, explained that
vendors generally withhold a portion of the cost of licenses
for compensation. For the salmon tag, vendors are paid an
additional amount after the department completes a tally of
sales. This additional compensation is thus handled
differently than normal compensation. The fiscal note
estimated $120.0. In response to a question from the Co-
chair, Mr. Brooks agreed to provide additional information
on the reason for special handling of compensation for king
salmon tag sales.
Sec. 34. Shows a fund source change from federal funds to
general fund program receipts. It relates to an error in
budgeting of a $60.5 grant derived from the University of
Utah rather than the federal government. Co-chair Frank
commented that supplemental requests from the Dept. of Fish
and Game are relatively small and asked why they were not
accommodated within existing funds. He referenced intent
language in last year's budget advising that the legislature
would not look favorably on supplemental requests that are
not large in relation to the department budget. Mr. Brooks
explained that the majority of the budget relates to
commercial fisheries (70%) and management. Smaller
divisions such as subsistence have very tight budgets. The
department cannot shift funds between appropriations.
Sec. 35. Relates to an additional ratification of
expenditures by the Dept. of Fish and Game. There is no
dollar impact on the general fund.
Sec. 36. Contains a language change, reappropriation, and
$10.0 reduction in funding for a Wood River sonar project.
Kevin Brooks explained that the $55.0 project for Wood River
was reduced to $45.0. Funding is now proposed for the
Ugashik River. Work on this legislative add-on from last
year has been conducted in conjunction with Representative
Moses' office.
Sec. 37. Contains a $331.9 appropriation of motor vehicle
license fee program receipts to the Dept. of Public Safety,
Motor Vehicle Administration, for data processing chargeback
costs. Nancy Slagle explained that a portion the fees and
taxes collected by the department is used to fund the
division of motor vehicles. The remainder accrues to the
general fund. Shortfalls in the chargeback have existed
since FY 93. The Governor's FY 95 budget contains an
additional $375.0 to "take care of this problem."
Discussion followed between Mrs. Slagle and Co-chair Frank
concerning use of revenues from license fee and taxes.
Further comments followed by the Co-chair regarding lack of
use of full data processing chargeback funding in other
departments that might offset increased need within the
Dept. of Public Safety.
Sec. 38. Provides an appropriation of $70.4 to contract
jails for prisoner transportation. C. W. SWACKHAMMER,
Deputy Commissioner, Dept. of Public Safety, came before
committee and provided a brief recap of progress made by the
task force on contract jails. He noted that municipalities
submitted contract jail budgets that exceeded the amount
funded by $1.3 million. Standards must be applied to the
budget process so that there is equity and some rationale
behind the funding mechanism. Mr. Swackhammer advised of
two components within contract jails which interact with the
Dept. of Corrections for prisoner transportation. An
appropriation of $180.7 is used by the Dept. of Corrections'
transportation division for airline tickets for transport
within institutions. The inmate population within the Dept.
of Corrections is above emergency capacity. The department
is continually attempting to even it out among the various
facilities. A second component of $317.6 provides for
charter aircraft to accomplish the same purpose, when there
is need for transport of one or more prisoners.
The budget for contract jails was shorted $70.4. Costs
associated with the Dept. of Corrections have increased.
The last 60 days of the fiscal year, funds for transport of
prisoners will not be available.
Sec. 39. Involves a $1.5 million change in funding source
(from general fund program receipts to straight general
funds) for the Dept. of Transportation and Public Facilities
due to the uncollectability of rural airport landing fees.
Senator Sharp attested to intent within the FY 94 budget
that the department should not collect the fees but should
instead "look to other sources of revenue." The new
approach is a tax increase on aviation fuel.
Sec. 40. Contains a $34.7 appropriation of international
airport revenue funds to the Dept. of Transportation and
Public Facilities for a court-stipulated settlement of a
discharged employee's retirement costs. Senator Sharp noted
need to move $77.0 out of Sec. 9 funding for the Dept. of
Law, since that amount reflects attorney fees relating to
the $34.7 settlement. Co-chair Frank asked that Mrs. Slagle
review legal and technical aspects of proceeding as
suggested by Senator Sharp and report back to committee.
Sec. 41. Provides $1,631.3 to the Dept. of Corrections for
inmate health care for FY 94. Co-chair Frank advised that
funding would be further explored in subcommittee review.
Sec. 42. Appropriates $85.1 to the Dept. of Corrections for
an arbitration award between the state and ASEA relating to
reinstatement of an employee. SHIRLEY MINNICH, Director,
Division of Administrative Services, Dept. of Corrections,
explained that the employee was laid off in FY 93 due to
lack of funding. An arbitration settlement required that
the department reinstate the individual, however, the
department did not receive funds for reinstatement in FY 94.
Co-chair Frank requested additional information.
Sec. 43. Contains a $39.5 appropriation to the Dept. of
Corrections for a court-appointed monitor. Senator Sharp
suggested that the request be transferred to the court
system budget.
Sec. 44. Appropriates $200.0 to the Dept. of Corrections
for operating costs of 50 additional beds at Spring Creek.
Co-chair Frank asked if the beds are presently occupied.
Shirley Minnich said that, due to an emergency cap
situation, the facility utilized 15 of the beds for a short
period two weeks ago. That was done without additional
funding and at risk to both staff and inmates. If the
requested supplemental is approved, the department will
attempt to immediately utilize the beds. The request
corresponds to a budget increment for FY 95.
Senator Sharp voiced his understanding that more than just
bed costs are involved. Ms. Minnich concurred, citing
personnel costs for additional staff as well as costs for
food and clothing for the inmates.
Sec. 45. Provides a $73.0 appropriation to the Dept. of
Corrections for additional legal costs. Shirley Minnich
explained that during FY 94, the Office of Management and
Budget required that the department pay for the services of
an additional attorney within the Dept. of Law to handle
"just Dept. of Corrections cases." The department is thus
seeking supplemental funding for the position for FY 94.
Funding for FY 95 is contained within the budget for the
Dept. of Law. Co-chair Frank asked for a comprehensive
report on legal costs associated with incarceration. He
requested that it deal only with costs following
incarceration and involve the Dept. of Corrections, Dept. of
Law, Public Defender, Office of Public Advocacy, etc.
Sec. 46. Requests extension of a lapse date on an
appropriation for community residential center beds in FY
93. The amount involved is $688.0.
Sec. 47. Appropriates $36.7 to the Dept. of Environmental
Conservation to reimburse EPA for disallowed expenditures.
Co-chair Frank suggested that the department should be able
to accommodate the request within its total $50 million
budget. Mrs. Slagle advised that the Office of Management
and Budget turned down several smaller requests, but this
one includes disallowed costs dating back to 1988.
Sec. 48. Removed and place in a different bill.
Sec. 49. Contains a $220.0 appropriation to the University
of Alaska for installation of an emergency water well as a
result of Benzene contamination at the Fairbanks campus.
Moneys from the 470 fund were received last year to deal
with the cleanup. In response to a question from Co-chair
Frank, ALISON ELGEE, Budget Review, University of Alaska,
explained that costs associated with the emergency well
exceeded $300.0. The supplemental request reflects the
actual cost of drilling a well that serves the entire
campus.
Sec. 50. Appropriates a total of $337.9 in various amounts
to various departments for stale-dated warrants and
miscellaneous claims. Co-chair Frank again asked why small
requests could not be accommodated within existing budgets.
Mrs. Slagle noted need to follow statutory provisions. She
further advised that warrants have a statutory life of two
years. After that time, they can no longer be cashed by a
bank and must be presented to the Dept. of Administration
for an appropriation. Further discussion of situations
involving stale-dated warrants followed. Co-chair Frank
question the policy behind the two-year limitation on the
warrants.
End: SFC-94, #40, Side 1
Begin: SFC-94, #40, Side 2
Mrs. Slagle noted that provisions within the omnibus bill
change the limitation to four years. That is intended to
cut down on supplemental funding for miscellaneous claims.
New Secs.
Mrs. Slagle next directed attention to new sections within
the bill and noted the following:
DOA - A $35.0 appropriation for ethics complaints
grievance awards. And a request for ratification of
expenditures.
DOTPF - Ratification of prior year expenditures.
DE&ED - Extension of receipts from processor taxes from
FY 93 into FY 94 for utilization by the Alaska Seafood
Marketing Institute. (See below*)
DPS - Ratification of expenditures.
DOC - Funding of $163.9 for settlement of overtime
litigation relating to the canine unit. (See below**)
DEC/DF&G/DNR - Extension of the lapse date for Exxon
Valdez funding for restoration projects. (See below***)
Co-chair Frank asked for a listing of requested ratification
of expenditures for all departments. Mrs. Slagle explained
that many relate to audit exceptions noted by Legislative
Audit in the course of review of accounting records. Actual
amounts are identified in the bill or in amendments
submitted to committee.
*In response to questions raised by Senator Sharp, KIM
ELTON, Executive Director, Alaska Seafood Marketing
Institute, Dept. of Commerce and Economic Development,
explained that the institute is seeking authority to move
approximately $608.0 from FY 93 into FY 94. Funding derives
from two sources. One involves FY 93 receipts in the amount
of $436.0 that the institute did not receive until August of
FY 94. The remainder represents unexpended funds from FY
93. The institute does not know the total of processor
receipts until April, approximately three-quarters of the
way through the fiscal year. That results in a small amount
of unexpended funds.
**Co-chair Frank requested information concerning canine
unit overtime. Mrs. Slagle explained that the Dept. of
Corrections, at one time, had a unit which utilized dogs.
Concern arose over how the dogs would be cared for, and
staff members utilizing the dogs were required to care for
them. The employees felt they should receive overtime for
those services. The canine units were disbanded in May of
last year, after the grievances were filed. The requested
$163.9 represents final settlement amounts for four
individuals receiving overtime pay. Co-chair Frank
requested thorough details.
***Mrs. Slagle referenced the request to extend Exxon Valdez
Trustee funding approved by the Legislative Budget and Audit
Committee and noted that the original RPL requested approval
through next year to accommodate the federal fiscal year.
The supplemental request seeks provision of that authority.
Co-chair Frank asked for a budgetwide report on lapsing
funds for FY 93. He then directed that the meeting be
briefly recessed prior to proceeding with the agenda.
RECESS - 11:45 A.M.
RECONVENE - 12:10 P.M.
CS FOR HOUSE BILL NO. 454(FIN)
An Act making a supplemental appropriation to the
Department of Law to pay costs of certain continuing
legal proceedings; and providing for an effective date.
Upon reconvening the meeting, Co-chair Frank asked that
representatives from the Dept. of Law come forward and speak
to the department's supplemental request. ATTORNEY GENERAL
BRUCE BOTELHO; JIM BALDWIN, Assistant Attorney General; and
DICK PEGUES, Director, Division of Administrative Services,
Dept. of Law, came before committee. Co-chair Frank noted
ongoing litigation, advised that the supplemental seeks
funding for litigation costs, and asked if an executive
session would be appropriate for discussion of the issue.
The Attorney General concurred in need for an executive
session since confidential taxpayer information would be
part of the discussion. Senator Kerttula MOVED that the
committee meet in EXECUTIVE SESSION for consideration of the
Dept. of Law supplemental. No objection having been raised,
IT WAS SO ORDERED.
EXECUTIVE SESSION - 12:12 p.m. to 1:30 p.m.
[Only committee members and staff from the Dept. of Law
remained in the committee room during the executive session.
No recording was made nor were minutes taken during that
time.]
Upon reconvening the meeting at 1:30 p.m., Co-chair Frank
queried members regarding action on the bill. Senator
Kerttula MOVED for passage of CSHB 454 (Fin). No objection
having been raised, CSHB 454 (Fin) was REPORTED OUT of
committee with a "do pass" recommendation from Co-chairs
Pearce and Frank, and Senators Kerttula and Sharp. (Other
members had left the meeting and did not sign the report.)
ADJOURNMENT
The meeting was adjourned at approximately 1:35 p.m.
| Document Name | Date/Time | Subjects |
|---|