Legislature(2017 - 2018)SENATE FINANCE 532
04/16/2018 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB151 | |
| HB176 | |
| HB213 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 176 | TELECONFERENCED | |
| += | HB 213 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 151 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 16, 2018
1:34 p.m.
1:34:51 PM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 1:34 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Donny Olson
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Representative Les Gara, Sponsor; Michelle Sydeman, Staff,
Representative Les Gara; Christy Lawton, Director, Office
of Children's Services; Representative Adam Wool, Sponsor;
Rob Earl, Staff, Representative Adam Wool; Rich Etheridge,
Fire Chief, Juneau; David Teal, Director, Legislative
Finance Division; Representative Justin Parish, Sponsor;
Robert Edwardson, Staff to Representative Parish; Mike
Barnhill, Deputy Commissioner, Department of Revenue;
Alexei Painter, Analyst, Legislative Finance Division.
PRESENT VIA TELECONFERENCE
Margaret Brodie, Director, Division of Healthcare Services,
Anchorage; Jeff Tucker, President, Alaska Fire Chiefs
Association, Kenai; Brittany Smart, Fairbanks North Star
Borough/Mayor's Office, Fairbanks; Brian Bjorquist,
Attorney Generals Office, Anchorage.
SUMMARY
CSHB 151(FIN)
DHSS;CINA; FOSTER CARE; CHILD PROTECTION
CSHB 151(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 176(FIN)
EMER. MEDICAL TRANSPORT SERVICE PAYMENTS
CSHB 176(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 213(FIN)(efd fld)
PUBLIC SCHOOL TRUST FUND
CSHB 213(FIN)(efd fld) was HEARD and HELD in
committee for further consideration.
CS FOR HOUSE BILL NO. 151(FIN)
"An Act relating to the duties of the Department of
Health and Social Services; relating to training and
workload standards for employees of the Department of
Health and Social Services and providing immunity from
damages related to those standards; relating to foster
care home licensing; relating to civil and criminal
history background checks for foster care licensing
and payments; relating to placement of a child in need
of aid; relating to the rights and responsibilities of
foster parents; requiring the Department of Health and
Social Services to provide information to a child or
person released from the department's custody; and
providing for an effective date."
1:36:46 PM
REPRESENTATIVE LES GARA, SPONSOR, introduced himself. He
explained that the bill would result in fewer children in
foster care and for shorter periods of time. He said that
the bill provided average caseload standards, training
standards, and was a model that had worked well in other
states.
MICHELLE SYDEMAN, STAFF, REPRESENTATIVE LES GARA,
introduced herself.
1:37:05 PM
Co-Chair MacKinnon thanked Vice-Chair Gara for his work on
behalf of children in the foster care system.
1:39:30 PM
Representative Gara explained the Sectional Analysis (copy
on file):
Section 1 provides that the short title of the bill is
the Children Deserve a Loving Home Act.
Section 2 amends legislative findings related to
children to add a finding that the department should
enable a child's contact with previous out-of-home
caregivers if it is appropriate and in the best
interests of the child.
Sections 3 - 5 amend AS 47.05.310(c), (i), and (k) to
conform to a new subsection added in section 6 of this
Act.
1:40:38 PM
AT EASE
1:40:40 PM
RECONVENED
Representative Gara continued with the Sectional Analysis:
Section 6 allows the Department of Health and Social
Services (the department) to issue or renew a foster
home license or provide foster care payments to an
entity, individual service provider, or person if the
applicant or a person who resides in the home is
barred from licensure or payments because of a barrier
condition under AS 47.05.3 IO(c), (i)(2), or (i)(3) if
(I) a person in the home is an adult family member or
family friend of a child in the custody or supervision
of the state, (2) the department finds that placing
the child with the entity, individual service
provider, or person is in the best interests of the
child, and (3) the conduct that is the basis of the
barrier occurred at least ten years before the date
the department receives the application for licensure
or renewal or makes a payment to the entity,
individual service provider, or person.
Section 7 amends requirements relating to the transfer
of a child from one placement to another to require a
supervisor at the department to certify in writing
whether the department has conducted a search for an
appropriate placement with an adult family member or
family friend.
Section 8 provides that a foster parent has the right
and responsibility to use a reasonable and prudent
parent standard to make decisions relating to a child
in foster care, and requires the department to provide
foster parents with training relating to the
reasonable and prudent parent standard.
Section 9 requires the department to engage a child in
an out-of-home placement who is 14 years of age or
older in the development or revision of a case plan,
permanency goal, or alternative permanency plan for
the child and allows the child to select up to two
adults, in addition to the child's foster parents or
department employees who are supervising the care of
the child, to participate in the development of the
plan.
Section 10 amends AS 4 7.10.093(a) to conform to new
AS 47.17.030(g) added in section
18 of this Act.
Section 11 amends confidentiality provisions to
require a state or municipal agency or employee to
disclose appropriate confidential information
regarding a case to the sibling of a child who is the
subject of the case if it is in the best interests of
the child to maintain contact with the sibling.
Section 12 requires a supervisor at the department,
when the department takes emergency custody of a
child, to certify in writing whether the department
has conducted a search for an appropriate placement
with an adult family member or family friend.
Section 13 requires the department to search for an
appropriate placement with an adult family member or
friend when the child is removed from the parent's
home. The section also requires a supervisor at the
department to certify in writing whether the
department has conducted the search.
Section 14 amends AS 14.14. l OO(i) to provide that
when a child can remain safely at home with an adult
family member or guardian who lives with the child,
the child may not be placed with an out-of-home care
provider.
Section 15 requires the department to provide contact
information to siblings who are in separate placements
if it is in the best interests of the children to
maintain contact.
Section 16 requires the department to implement
workload standards and a training program for
department employees and to provide a report to the
legislature if the department is not able to meet
certain standards. Section 16 also provides that the
department is immune from suit if the department is
unable to meet workload standards under certain
circumstances. Section 16 requires the division of the
department with responsibility over the custody of
children to provide an annual report to the
legislature on employee recruitment and retention.
Section 17 adds a new subsection requiring the
department to assist an adult family member in
obtaining a foster care license, including any
necessary variances, if placing the child with the
adult family member is in the best interests of the
child.
Section 18 adds a new subsection providing that when
the department or a local government health or social
services agency completes certain investigations and
identifies an appropriate community organization that
will provide support services to families, that the
department or a local government health or social
services agency shall refer the child's parent or
guardian to the community organization upon consent of
the child's parent or guardian. Section 18 also
provides for confidentiality of information received
by the community organization under the new
subsection.
1:46:31 PM
Representative Gara continued to address the Sectional
Analysis:
Section 19 requires the department, for a person who
is 16 years of age or older, to provide the person, or
assist the person with obtaining, the person's birth
certificate, social security card, health insurance
information, medical records, driver's license or
identification card, and certificate of degree of
Indian or Alaska Native blood, if applicable, when the
person is released from state custody under AS 47.10.
Section 20 requires the department, to the extent
feasible, to approve or deny a foster care home
license, including a request for a variance, not more
than 45 days after the date the department receives
the application for a foster care home license.
Section 21 provides secs. 2, 7 ? 9, 11 - 15, 17, and
19 of the Act applies to a child in the custody or
under the supervision of the department under AS 47.10
on or after the effective dates of secs. 2, 7 - 9, 11
- 15, 17, and 19 of the Act. Section 19 also provides
that secs. 3 - 6 and 20 of the Act apply to
applications for a license, license renewal,
certification, certification renewal, or payment
received by the department on or after the effective
dates of secs. 3 - 6 and 20 of the Act Section 22
allows the department to adopt regulations necessary
to implement the changes made by the Act. The
regulations may not take effect until the effective
date of the section of the Act implemented by the
regulation.
Section 23 requires the department to implement the
changes made by secs. 7 - 9 and 12 - 14 not later than
90 days after the effective date of those sections.
Those sections relate to searches for appropriate
placements with family members, foster parent
decision-making, involving children 14 or older in
case plans, and allowing a child to remain in the
child's home with an adult family member. Section 23
also requires the department to implement the changes
made by secs. 2 - 6, 11, 15, 17, 19, and 20, and some
of the changes made by sec. 16, not later than one
year after the effective date of those sections. Those
sections relate to legislative findings, barriers to
foster care licensing and payments, sharing case
information with siblings, providing sibling contact
information in certain situations, department training
and reports, assisting family members in obtaining
foster care licenses, providing identification
information to children 16 or older when released from
department custody, and approval of foster care
licenses within 45 days of receiving an application.
Section 23 further requires the department to
implement the rest of the changes made by sec. 16 of
the Act not later than two years after the effective
date of that section. Those changes relate to employee
workload standards.
Section 24 provides that sec. 22 of the Act takes
effect immediately.
1:47:47 PM
Ms. Sydeman relayed that the bill would give 1 year for the
department to implement searches for placement with
appropriate family members, to train staff on how to
involve children 14 and older on the development of case
plans, to implement the policy of allowing a child to
remain in a home with an adult family member that was not a
parent, and to bring training up to the new standard of 6
weeks of training. She said that there was a 3-year
implementation period for several of the more difficult
parts of the bill. She thought that the Senate Health and
Social Services committee had ultimately adopted a 2-year
training period for caseload standards; to get to the
average standard of 13 families per worker, 6 within the
first 6 months and 12 within the first year.
1:49:16 PM
Representative Gara added that the 90-day effective date
sections were for Sections 7 through 9 and 12 through 14.
Co-Chair MacKinnon requested further clarification.
Representative Gara responded that Sections 7 referred to
the supervisor certifying in writing that a family search
and been done. Section 8 referred to the prudent parent
standard that would allow for children to participate in
extracurricular activities without the consent of the
Office of Children's Services (OCS). Section 9 would allow
for the engagement of children 14 years and older in their
case plan and permanent placement planning goals. Sections
12 and 13 referred to OCS signoff on family friend foster
home placement. Section 14 was a provision that said that
if there was a family member in the home that could keep
the child safe then the child would not be removed from the
home.
1:51:02 PM
CHRISTY LAWTON, DIRECTOR, OFFICE OF CHILDREN'S SERVICES,
(OCS) introduced herself.
Co-Chair MacKinnon asked whether the department supported
the bill and the transitional dates therein.
Ms. Lawton replied that the department supported the
legislation. She revealed that the department had worked
with the bill sponsor on the transitional dates and
believed that they could be implemented without delay.
1:51:41 PM
Co-Chair MacKinnon asked whether there was a mechanism in
the bill that required the department to report back to the
legislature on the progress of the transitions.
Ms. Lawton responded that the bill required that an annual
report be submitted to the legislature.
1:51:52 PM
Co-Chair MacKinnon asked whether the department would be
able to submit a report in 90 days that would let the
legislature know that the department that trained
supervisors of the updated requirements.
Ms. Lawton replied in the affirmative.
1:52:30 PM
Senator Micciche expressed concern about Section 6 and the
barrier crimes. He worried that people who had committed
crimes against children might be eligible to become foster
parents.
Ms. Lawton replied that the challenge with the barrier
crimes sometimes came up with grandparents that may have
had previous criminal or child protection history. She said
that the bill allowed for an evaluation on a case by case
basis, it did not require that a license be granted, but
allowed for the person to demonstrate how they had changed
their behavior.
1:53:42 PM
Senator Micciche asked whether a person who had a history
of sexual abuse of a minor or physical abuse of a minor
would be allowed to foster a child after the 10-year
statute of limitations elapsed.
Ms. Lawton replied that no acceptations would be made for
perpetrators of sexual abuse. She said that in the case of
physical abuse the facts of the case would be examined. She
reiterated that each case would be examined on a case by
case basis.
1:54:26 PM
Senator Micciche asked whether there should be a limitation
in written into statute that addressed sexual abuse.
Ms. Lawton believed that the language in the bill was
written sufficiently. She said that process for reviewing
such cases was multi-layered. She did not believe that a
person who should not be licensed would slip through the
cracks.
1:55:15 PM
Senator von Imhof thought that there were aspects of the
bill that could be dealt with in regulation. She wondered
why a statute was required.
Ms. Lawton replied that a statute would offer stability and
the assurance that the changes would not be undone easily
in the future.
1:56:16 PM
Senator von Imhof related that if the proposals in the bill
were best practices, it seemed unlikely that they would be
challenged in the future.
Ms. Lawton replied that having the language in statute
would give additional strength and authority to the tasks
and activities of the department and would help to ensure
correct implementation and retention.
1:56:50 PM
Senator von Imhof understood that the bill would limit the
number of cases per worker, with the intent of making
caseloads manageable. She asked if there was a transition
plan for current workers to give some of their cases to new
workers.
Ms. Lawton replied that the department would need to be
thoughtful about how new staff was incorporated to provide
relief for existing staff. She said that there had been an
increased effort put into having less entries than exits in
the system. She believed that if the department could get
more children safely exiting foster care, and reduce the
number coming in, that would help to safely lower existing
worker caseloads. She said that the department was working
to refer more services over to the Tribal Child Welfare
Compact, which was working on relative searches, helping
with family contact, and conducting safety assessments in
relative's home for placement. She stressed that the
department was working on many ways to bridge the
transition.
2:00:19 PM
Co-Chair MacKinnon asked how many current case workers were
employed by the state and what was the vacancy factor.
Ms. Lawton responded that there were currently 219
authorized, case carrying workers. In 2017, the turnover of
those caseworkers was at 49 percent.
2:01:10 PM
Co-Chair MacKinnon asked how many vacancies the department
currently had.
Ms. Lawton replied that the department had 64 open
caseworker positions.
Co-Chair MacKinnon questioned whether a reduction in
caseloads could result in the openings being filled without
hiring additional workers.
Ms. Lawton responded that even if the openings were filled,
additional caseworkers would be needed to meet the
standards laid out in the bill.
2:01:31 PM
AT EASE
2:02:38 PM
RECONVENED
2:02:48 PM
Co-Chair MacKinnon asked whether there were reasons, other
than caseload numbers, that had led to the high turnover
rate within the division.
Ms. Lawton shared that an annual staff survey had cited
caseloads as the number one reason for leaving a position;
after that, compensation, lack of sufficient supervision,
and the ability to affect real change in communities were
other reasons that people left the agency.
2:04:12 PM
Co-Chair MacKinnon announced that the bill would be held in
committee for further review.
2:04:21 PM
Representative Gara related that the bill was modeled on
child welfare practices in New Jersey, which were common in
other child welfare agencies. He said that the practice of
hiring 20 percent more caseworkers than initially necessary
was in anticipation of high turnover rates. He said that
neglecting to hire the positions in the fiscal note would
result in caseloads of 30 cases per worker. He understood
that it seemed counterintuitive, but that it necessary to
solve the problem of burnout.
2:06:04 PM=
Co-Chair MacKinnon felt that there were too many positions
on the fiscal note. She felt that the number deserved
further scrutiny.
2:06:36 PM
Senator Stevens asked whether the bill would address the
issue of foster children being placed in many homes over
time.
2:07:10 PM
Representative Gara said that more kinship or family homes
would be sought; additionally, less caseloads per worker
would lead to better outcomes for long-term placement of
children.
2:08:14 PM
Senator Micciche understood that the bill would grant the
authorization for the agency to over-hire but that the
expectation of proportion of spend was similar to the
current spend.
2:09:11 PM
Representative Gara reiterated that the extra positions
would be needed to reduce the caseloads so that when new
people were hired they would face a less staggering
caseload. He noted that of the 21 positions, 12 were case
carrying workers and 9 were support and administrative
staff.
Senator Micciche supported that additional positions. He
wondered whether the same amount of positions would be
necessary in the future once the caseload levels decreased.
2:11:02 PM
Representative Gara said that he hoped that turnover could
be reduced enough that fewer positions could be a reality.
2:11:39 PM
Senator von Imhof thought that increasing caseworkers would
not solve all of the problems faced by the division. She
lamented that the bill did not address changes that could
be made by the department to address efficiencies. She
recommended that the money from the unfilled but fully
funded PCNs could be used to fund an audit of the
department.
2:15:23 PM
Co-Chair MacKinnon said that she would be looking into
whether there were funds associated with the vacant
positions.
2:15:56 PM
Vice-Chair Bishop spoke of the successes of New Jersey. He
hoped that OCS might hire some people to handle an overflow
of casework and then lay off those employees once the
workload had decreased.
2:16:40 PM
Senator Olson thought that an audit would cost hundreds of
thousands of dollars. He agreed it could be valuable but
expressed concern that the issues that the bill addressed
would only get worse if the legislature waited for an audit
to be conducted.
2:17:18 PM
Co-Chair MacKinnon understood that the suggested audit was
meant to occur in conjunction with implementation of the
bill. She thought that an audit of OCS could be
illuminating.
2:18:20 PM
Vice-Chair Bishop thought that it was a matter of exploring
best practices.
2:18:42 PM
Senator Micciche suggested that senators review the
comprehensive audit of the department that had already been
conducted. He did not believe that an audit of OCS was
necessary. He believed that the challenges faced by OCS
were obvious and did not require further study.
2:19:47 PM
Co-Chair MacKinnon announced that amendments were due the
following day by 5pm.
CSHB 151(FIN) was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 176(FIN)
"An Act relating to medical assistance reimbursement
for emergency medical transportation services; and
providing for an effective date."
2:20:47 PM
REPRESENTATIVE ADAM WOOL, SPONSOR, introduced himself.
ROB EARL, STAFF, REPRESENTATIVE ADAM WOOL, introduced
himself.
2:21:00 PM
Representative Wool explained that the bill would set up a
mechanism that the Department of Health and Social Services
(DHSS) could use to gain access to federal funds that could
then be dispersed to municipalities to further reimburse
them for medical transport, both ground and air. He relayed
that, currently, emergency medical services (EMS) were only
compensated for a fraction of the costs associated with
transporting a Medicaid beneficiary. The bill requests that
the federal government amend Alaska's Medicaid plan to
include supplemental reimbursements for medical transport.
He said that the Title 19 Social Security Act allowed for a
certain reimbursement for states. Tribal transports would
be reimbursed at 100 percent. He noted other states that
had enacted similar programs. He stated that in 2017,
Alaska had 21,000 claims for ground transport, averaging
$800, unreimbursed by Medicaid, for each transport. Based
on those numbers, the state could receive roughly $8.5
million to recoup some of the transport costs. He furthered
that there had been 281 claims in air transport in 2017,
averaging $17,000 for each incident. Based on those numbers
the state could receive $2 million in unreimbursed costs.
He stated that the number of transports was increasing in
the state due to the opioid crisis. He cited the document
"HB 176 Flow Chart"(copy on file).
2:25:23 PM
Mr. Earl looked at the document titled, "Flow Chart" (copy
on file). The chart illustrated the flow of funds for
medical transport:
Explanation Based on Hypothetical $1000 Transport
Cost The Provider is reimbursed $400 under regular
state Medicaid for a $1000 transport. This leaves a
$600 UCC. Under HB 176, the Provider then sends $300
to DHSS (Supplemental) and CMS matches with the $300
federal share. DHSS then sends $600 back to the
Provider. The Provider recoups $700 of the $1000
Transport Cost ($400 Regular State Medicaid + $300
Federal Share). Administrative fees (expected to be
nominal) will be deducted from the reimbursement to
the Provider.
2:27:00 PM
Vice-Chair Bishop asked what would happen in the
hypothetical scenario if the bill were not to pass.
Mr. Earl replied that the provider would get the $400, but
that the bill would offer significant help.
2:27:18 PM
Vice-Chair Bishop said that the non-reimbursable rate of
transport was reaching crucial levels in his district.
2:27:53 PM
Co-Chair MacKinnon queried how the department would process
the $800 piece of paperwork.
2:28:11 PM
Representative Wool looked at the fiscal note, which
reflected that one person would need to be hired to process
the paperwork. The cost would be passed on to the federal
government in the overall cost of the uncompensated portion
of the transportation bill. The 50/50 split for the
administrative cost was between the federal government and
municipalities.
2:28:59 PM
Vice-Chair Bishop understood that the position started at
Range 18, or $97,000 annually.
2:29:26 PM
Co-Chair MacKinnon asked whether the state would need to
apply for a waiver.
Representative Wool replied that a negotiated new contract
would need to be approved by the Center for Medicaid
Services (CMS); approval was expected.
2:30:02 PM
Co-Chair MacKinnon asked whether the program involved a
waiver or a contract.
Representative Wool deferred to the department for
confirmation.
2:30:44 PM
MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTHCARE SERVICES,
ANCHORAGE (via teleconference), shared that the bill would
not require a waiver but would require a state plan
amendment.
2:31:05 PM
Co-Chair MacKinnon asked how ling the state plan amendment
process would take.
Ms. Brodie replied that the state plan was amended on a
regular basis; the entire process could take 30 days to 9
months.
Co-Chair MacKinnon asked whether the state had been
certified for its Medicaid system.
Ms. Brodie responded that the system had yet to be
certified.
2:31:48 PM
Co-Chair MacKinnon asked where the state was in the
certification process.
Ms. Brodie said that the department had received an email
from CMS and was in the process of setting up a
teleconference to discussed issues that had been raised.
She said that some of the issues raised by CMS were
optional and not mandatory for certification.
Co-Chair MacKinnon asked whether the state had covered all
of the critical outstanding issues.
Ms. Brodie relayed that the one issue outstanding was that
of the National Correct Coding Initiative Editing Sequence.
The issue should be cleared up by the end of April 2018.
2:33:10 PM
Co-Chair MacKinnon understood that there were other issues
still unresolved.
Ms. Brodie asserted that there were no critical defects in
the system. She added that the defects that were relevant
did no impact claims payments.
2:34:04 PM
Co-Chair MacKinnon expressed appreciation for the work done
by Ms. Brodie and her team.
2:34:49 PM
JEFF TUCKER, PRESIDENT, ALASKA FIRE CHIEFS ASSOCIATION,
KENAI (via teleconference), spoke in support of the bill.
He noted that there was zero cost to the state to implement
the program. [Mr. Tucker has a letter of support on file.]
2:37:38 PM
Co-Chair MacKinnon asked whether he was comfortable with
the 50/50 split between municipalities and the federal
government.
Mr. Tucker replied in the affirmative.
2:38:31 PM
Co-Chair MacKinnon understood that claims would be paid one
per year.
Mr. Tucker said that the payment timing would be set up in
the plan; the processing of the claims could be set up
monthly, quarterly, or annually.
2:39:15 PM
Senator Micciche warned that EMS organizations might over
invest, and the federal government could discontinue the
program.
Mr. Tucker believed that any federal program carried the
same risk. He noted that the program had existed for over
30 years.
2:40:56 PM
Co-Chair MacKinnon noted that the State of Alaska was
picking up approximately 60 percent of all healthcare
costs, at a 30 percent higher fixed cost for medical
services than the rest of the nation. She asked whether the
bill would provide another federal dollar that would drive
costs up further.
Mr. Tucker replied that he did not know whether the
legislation would drive up the cost.
2:42:25 PM
Senator Micciche lamented that medical procedures under
Medicaid were high. he was concerned that they would
increase for transport related services under the bill.
Mr. Tucker did not believe so. He stated that most
transport was provided by local municipalities or volunteer
organizations and were non-profit or publicly funded. He
believed that the bill would result in the fully realized
cost of services already being provided.
2:44:48 PM
RICH ETHERIDGE, FIRE CHIEF, JUNEAU, spoke in strong support
of the legislation. He relayed that the call volume for
emergency transportation was increasing rapidly and without
staffing increases. He understood that the program would
offset the costs that were already being incurred.
2:47:47 PM
Vice-Chair Bishop understood that the intent of the
legislation was to help municipalities collect on expenses
already incurred and not to buy new equipment.
Mr. Etheridge replied in the affirmative. He said that a
few more personnel would be needed to drive the ambulances
that were already part of the fleet.
2:48:21 PM
Co-Chair MacKinnon spoke again of the high cost of
healthcare in Alaska. She felt that Medicaid reimbursements
led to the increase in costs in the private sector.
Mr. Etheridge could not speak to the private sector. He
replied that local municipalities were required to justify
any cost increases.
2:49:54 PM
Co-Chair MacKinnon said that it was easier to raise a fee
that was being reimbursed by the federal government and the
state. She asserted that the more services provided by the
state and federal governments, the higher the private
sector cost to receive the services.
2:50:27 PM
Senator Micciche warned that the smaller districts needed
to remember that the program was not guaranteed into the
future.
2:51:33 PM
Co-Chair MacKinnon asked whether the opioid crisis had
contributed to an increase in emergency transportation
calls.
Mr. Etheridge replied that there had been a 16 percent
increase from 2016 to 2017. In 2018 there had already been
a 12 percent increase in the call volume. Medicaid cases
constituted 25 percent of the calls received.
2:52:20 PM
Co-Chair MacKinnon asked whether EMS directed indigent
patients to DHSS to sign up for Medicaid.
Mr. Etheridge replied in the negative. He said that
hospital employees helped people to obtain services. He
said that the fire department generally ended up absorbing
the costs.
2:53:05 PM
BRITTANY SMART, FAIRBANKS NORTH STAR BOROUGH/MAYOR'S
OFFICE, FAIRBANKS (via teleconference), testified that the
borough supported the legislation. She shared that the
borough charged $1000 per ambulance transport, plus mileage
charges; however, the average Medicaid reimbursement was
only $455 per patient. During 2016, approximately 30
percent of the patients transported by borough EMS
providers were Medicaid beneficiaries, accruing more than
$430,000 in uncompensated costs.
2:54:26 PM
Co-Chair MacKinnon CLOSED public testimony.
2:54:32 PM
AT EASE
2:54:54 PM
RECONVENED
2:54:57 PM
AT EASE
2:55:21 PM
RECONVENED
2:55:24 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
explained the fiscal notes. He used the $1000 hypothetical
example illustrated on the flow chart. He said that the
administrative costs were projected at approximately
$110,000, per year. He noted that local municipalities
would be reimbursed - the state would receive nothing and
would be charged nothing.
2:58:16 PM
Co-Chair MacKinnon said that the fiscal note under
discussion was note #3(copy on file). She furthered that
the second note under discussion was #4(copy on file).
Mr. Teal said that the funding sources on the fiscal notes
gave the illusion that the bill would cost the state $22
million, but that it was a net zero fiscal note. He
stressed that the fiscal notes reflected a zero cost to the
state.
3:00:44 PM
Vice-Chair Bishop interjected that the bill was budget
neutral.
3:01:07 PM
Senator Micciche asked whether the vision was that the
department would change municipalities or medical
transportation service providers a few dollars per
transport to recoup costs.
3:01:36 PM
Mr. Teal said that the state position would be paid for
with interagency receipts that came from what EMS paid to
the state. The state commission would be paid by
municipalities.
3:02:13 PM
Senator Micciche thought that the full cost would be
reimbursed, and the state would be compensated for costs.
Mr. Teal replied in the affirmative. He reiterated that the
state would not be fronting money; the municipality would
pay and then the federal government would be matching those
funds.
3:04:09 PM
Vice-Chair Bishop said that the plan was all contingent on
the federal government.
3:04:17 PM
Co-Chair MacKinnon asked for the location in the bill that
said that the state would not be fronting the money and
would not reimburse prior to receiving the federal funds.
Ms. Brodie replied that she did not know where in the bill
the language was located.
3:05:13 PM
Co-Chair MacKinnon believed that such a safeguard should be
written into the bill.
Representative Wool agreed.
3:05:40 PM
Co-Chair MacKinnon expressed concern that the state was
covering much of the cost of Medicaid in the state at the
expense of driving up private sector costs.
Ms. Brodie replied that the bill was for government
entities exclusively and would not include private sector
transportation.
3:07:32 PM
Co-Chair MacKinnon felt that there had been conflicting
information given during the meeting. She believed that the
inclusion of Tribal entities meant that private entities
had to be included in the bill.
Ms. Brodie replied that tribal entities were considered
government entities.
3:08:13 PM
Senator Micciche cited Page 2, line 10. He asked whether
there was no one enrolled at the department who was a
medical assistance provider that was a private entity. He
said that he was unaware of any air transportation
providers that were not private entities.
Ms. Brodie replied that there were private entities that
provided transport and that one of those entities was
partially owned by a Tribal entity.
3:09:04 PM
Senator Olson informed the committee that the North Slope
Borough had a leer jet and a king air aircraft for air
transport.
3:09:33 PM
Co-Chair MacKinnon relayed that the bill would be reviewed
again for consistency.
Ms. Brodie stated that there would not be a change in the
rate paid to private providers.
3:10:28 PM
Representative Wool referred to an earlier asked question.
He believed that answer could be found on Page 1, lines 8
through 13:
Except as provided in (b) of this section, the amount
of the supplemental reimbursement paid to a provider
must be equal to the amount of federal financial
participation that the department receives for the
nonfederal matching funds paid by the provider through
intergovernmental transfers or certified public
expenditures, less any administrative fee described in
(d) or (e) of this section.
3:10:45 PM
Co-Chair MacKinnon added that answers to questions about
the private section could be found on Page 2, lines 8
through 14:
(c) An emergency medical transportation service
provider is eligible to participate in the program if
the provider
(1) is enrolled with the department as a medical
assistance provider;
(2) voluntarily enters into an agreement with the
department to participate in the program;
(3) is owned or operated by the state, a
political subdivision of the state, or a
federally recognized tribe or tribal
organization;
3:10:48 PM
Representative Wool offered to walk through a Sectional
Analysis.
3:11:15 PM
Co-Chair MacKinnon determined that it would be unnecessary.
3:12:10 PM
Co-Chair MacKinnon announced that concerns and amendments
were due to her office by 5pm the following day.
CSHB 176(FIN) was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 213(FIN)(efd fld)
"An Act relating to the investment, appropriation, and
administration of the public school trust fund."
3:12:54 PM
REPRESENTATIVE JUSTIN PARISH, SPONSOR, introduced the
legislation. He explained that the bill would help the
public school trust fund to operate at the industry
standard. He lamented that failure to modernize the trust
had resulted in years of lost income.
3:13:45 PM
AT EASE
3:14:25 PM
RECONVENED
3:14:44 PM
Representative Parish looked at a graph title, "CSHB
213(FIN), Public School Trust, Actual vs. POMV 6/30
Balances" (copy on file). The document contained a bar
graph that provided the numbers in thousands. the POMV
assumed a 70/30 equity/fixed income asset allocation from
July 1, 1978 - with a 4.75 percent payout of trailing 5
year market average. He relayed that the bill would allow
the use of equity growth as a form of income, which would
have a higher yielded income. He remarked that the fund was
dedicated to education. He thought that the bill would
allow for more consistency and predictability by using the
POMV draw on the fund and preserving the inflation adjusted
value.
3:16:28 PM
Co-Chair MacKinnon solicited questions from the committee.
She believed that the fund management plan in the bill was
unique.
3:16:54 PM
ROBERT EDWARDSON, STAFF TO REPRESENTATIVE PARISH, discussed
the Sectional Analysis (copy on file):
Section 1. (page 1, line 4): Amends AS 37.10.071(d) to
reflect the repeal of AS 37.14.110(c) in section 5 of
the bill. Current AS 37.14.110(c) maintains the
distinction between principal and income, and the
purpose of this bill is to convert the public school
trust fund to an endowment fund structure that does
not require maintaining the distinction between
principal and income.
Section 2. (page, line 7): AS 37.14.160 is amended to
add section 5 to the duties to direct the commissioner
to determine the average monthly balance for the
public school trust fund based on the monthly average
market value of the fund for the five years preceding
the previous fiscal year.
3:18:52 PM
Mr. Edwardson continued to discuss the Sectional Analysis:
Section 3. (page 2, line 21-26): Adds new section, AS
37.14.165 relating to the use of the public school
trust fund allowing the legislature to appropriate
4.75 percent of the amount determined by the
commissioner under new AS 37.14.160 (enacted by
section 2 of the bill). Appropriations must be for the
purpose of funding support for state public schools or
for reimbursing the costs of administration of the
fund.
Section 4. (page 2, line 27 page 3, line 8): AS
37.14.170 is amended to focus the investment of the
trust fund on increasing returns from capital
appreciation as opposed to increasing net income from
the generation of cash dividends and interest. This
permits the commissioner to invest for long term
capital appreciation by adjusting the asset allocation
of the trust fund to weight it more heavily to
equities as opposed to cash-generating fixed income
securities.
Section 5. (page 3, line 9): AS 37.14.110(c) and AS
37.14.140 are repealed. AS 37.14.110(c) is discussed
above at section 1. Current AS 37.14.140 provides for
expenditure of net income only. This is replaced by AS
37.14.165 (section 3 of the bill), which permits
expenditure of 4.75 percent of the average market
value of the fund.
3:20:13 PM
Senator Micciche asked whether the actual rate of return
had been assumed in the data set on the previously
discussed document.
Representative Parish deferred the question to Mr.
Barnhill.
3:21:19 PM
MIKE BARNHILL, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
said that the key element of the fund management could be
found in existing state law, AS 37.14.110(c), which
required retention of the deposits to principal and the
capital gains and losses. He provided a brief history of
the fund and its comparison to the Permanent Fund. He said
that the education fund had grown slowly because it had not
been fully exposed to equity markets. He shared that the
chart showed what would have happened if the fund had been
invested from the beginning like an endowment. He said that
the department supported the bill and believed that it was
time to treat the fund more like an endowment so that it
could take on a larger exposure to equities and grow at a
faster rate over long periods of time.
3:24:04 PM
Co-Chair MacKinnon understood that the fund was a dedicated
fund, which was rare. She asked whether there were any
problems with this approach to the fund, based on its
historical use.
Mr. Barnhill believed that there were no legal issues. e
provided He shared that the fund was a pre-statehood
dedicated fund formed in 1915 by the federal government as
a land grant fund for public education. He relayed that in
the mid-1970s, with the anticipation of substantial oil and
gas revenues, the legislature made the decision that the
fund would be more robust if the land were removed and
replaced with a dedication of one-half percent receipts
from the management of state lands.
3:26:51 PM
BRIAN BJORQUIST, ATTORNEY GENERALS OFFICE, ANCHORAGE (via
teleconference), relayed that the department did not
believe that there was a dedicated fund problem with the
legislation.
3:28:07 PM
Co-Chair MacKinnon asked what would happen if the fund lost
money and had to pay out part of its principal.
Mr. Bjorquist replied that the dedicated fund component
meant that the trust and the monies in it were dedicated to
supporting public schools, regardless of the amounts paid
out or what happened with increases or decreases of the
fund. He added that there was no requirement that there be
no invasion of principal, restrictions applied to one
section of land, only 30 percent of the value of the trust.
He said that the bill would modernize the trust management
of the fund. He did not believe that there were any legal
problems with the bill and that it did not violate the
dedicated fund clause.
3:29:55 PM
Co-Chair MacKinnon referred to a letter from the department
from February 6, 2018. She asked whether the department
maintained the position taken in the letter.
Mr. Bjorquist replied in the affirmative.
3:30:11 PM
Senator von Imhof asked whether the model on the graph
assumed a certain return or used historical returns based
on a theoretical mix of assets.
Mr. Barnhill replied that the graph was modeled on a 70
percent equity, 30 percent fixed income asset allocation
represented by the Russel 3000 Index when it began, prior
to the Russel 3000, the S&P 500 Index had been used. He
said the Lehman Aggregate Index, now called the Bloomberg
Barclays Index, had been used for the 30 percent fixed
income asset allocation.
3:31:06 PM
Senator von Imhof asked who would manage the fund in its
new format.
Mr. Barnhill replied that the department would continue to
manage the fund.
3:31:29 PM
Senator von Imhof asked whether there would be any
cooperation with the Alaska Permanent Fund Corporation
(APFC).
Mr. Barnhill responded that the fund would be kept separate
from APFC.
3:31:48 PM
Co-Chair MacKinnon noted that the department was outpacing
APFC in some areas.
Mr. Barnhill stated that the relative performance between
APFC and the Treasury Division vacillated over time.
3:32:23 PM
Senator von Imhof queried the future proforma return
expectation.
Mr. Barnhill relayed that under current practices a 6.6
percent return was expected.
3:33:46 PM
AT EASE
3:35:31 PM
RECONVENED
3:35:34 PM
Co-Chair MacKinnon explained that a chart containing
forward looking assumptions was being distributed to the
committee. [This document is posted under the "documents"
tab for HFIN meeting 2/28/18]
3:35:51 PM
Mr. Barnhill related that the chart had been developed in
the other body in an effort to understand what the
different trailing averages looked like under a 4.75
percent POMV. He noted that the impact on the balance on
the fund in terms of its ability to keep up with inflation
using the current Callan Capital market assumptions. He
said that the modeling was done on the current balance, as
opposed to the principal balance or the inflation adjusted
balance. He said that because the Callan assumptions were
pessimistic over the next 10 years at 6.5 percent, if the
objective was to maintain the inflation adjusted value of
the current balance, that would be difficult under any of
the methodologies. He said that at some point the 10 year
plus bull market would come to an end and the 8 percent
that was hoped for would not be a reality. He lamented that
it would be difficult to maintain the inflation adjusted
value of the current balance under a POMV methodology, a
variety of percentages, over the next 10 years. He believed
that things would improve over a longer horizon of 20 to 30
years. He stated that as an endowment the objective was to
maintain the inflation adjusted value of deposits to
principal. He said that the total balance of the fund is
north of $650 million. The notional value of those is $310
million and had been tracked since 1978. He said that
taking the deposits to principal and adjusting them for
inflation using the consumer price index, the current
approximate inflation adjusted value of the fund was closer
to $513 million. He furthered that if the objective for
managing the endowment was to maintain over all periods of
time the inflation adjusted value of the principal deposit
it did not matter which trailing average was used. At a
4.75 percent distribution, under the current Callan Capital
market assumptions, inflation adjusted value of the
deposits to principal would be successful over the 10-year
horizon and into the future.
3:40:14 PM
Co-Chair MacKinnon said that she had been measuring the
fund by the Power Cost Equalization Fund. She stated that
with that fund, the state had lowered the expected rate of
return and decreased the risk. She understood that under
the bill the asset allocation would be changed, possibly
increasing the risk factor.
Mr. Barnhill felt that the distribution point for the PCE
fund had been fairly aggressive. He said that the bill
contained a modest 4.75 percent distribution point. He
added that the 4.75 to 5 percent distribution range was
standard in managing endowments around the country. He
believed that the department would be successful in
managing the fund going forward while protecting the
inflation adjusted value.
3:40:44 PM
Co-Chair MacKinnon asked whether the 4.75 percent suggested
in the legislation was the effective draw.
Mr. Barnhill said that taking 4.75 percent of the trailing
5-year average would almost always produce a percentage
draw of that year balance of less than 4.75 percent. He
reiterated that the objective was to maintain the inflation
adjusted value over long periods of time. He shared that
the department had requested in the bill that rather than
have a static 4.75 percent, that the words, "not more than
4.75 percent" be included in the language. He explained
that this would correct annually if for whatever reason it
was prudent to spend less than 4.75 percent in a particular
year.
3:41:26 PM
Co-Chair MacKinnon agreed that the department was
attempting to maintain the value. She felt that it had been
hard to determine a calculation on this particular fund
over the past few years working with the department. She
wondered why the legislature would give the department more
flexibility. She wondered how the Office of Management and
Budget Director arrived at the calculation of money
available for education out of the fund over the past
decade. She said that a solid mathematical formula had not
been determined.
Mr. Barnhill did not think that the cash flow should be
volatile. He said that going to a static 4.75 percent of
market value should make the cash flow more predictable and
stable. He offered reasons for why the department would
suggest going below 4.75 percent.
3:46:56 PM
ALEXEI PAINTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
discussed the fiscal notes. The first note was from the
Department of Education and Early Development (DEED), K-12
Aid to School Districts. He stated that the true impact of
the bill would be the increase of the amount of trust funds
used. He asserted that the fiscal notes could be confusing
due to the way that the Governor's FY 19 budget was
written. The fiscal note reflected an increase of general
funds of $1 million, and a decrease of Public School Trust
Funds of $1 million, the actual affect of which would be to
make an additional $17 million realizable. He said that if
the bill passed, the fund change that would be built in
would be an increase of $17 million of trust funds and a
decrease of the same amount of undesignated general fund.
The second note was for DEED, Mount Edgecumbe Boarding
School and showed that the school was no affected by the
legislation.
Co-Chair MacKinnon asked if the first note reflected $1.2
billion in total operating cost.
Mr. Painter replied in the affirmative. He explained that
the bill would impact the source of the funding for the K-
12 formula and the easiest way to show that was to show all
of the funding in the Governor's request and then show the
change in the funding. He clarified that not all the
funding would be affected by the bill.
3:49:39 PM
Co-Chair MacKinnon asked whether the fiscal note would be
incorporated in to the budget.
Mr. Painter replied that the fund source would change and
the numbers appropriation of Public School Trust Funds
would increase, thereby decreasing the fund capitalization
of unrestricted general funds by the same amount. It would
not change the amount that would go to the foundation
formula. He reiterated that the note lacked clarity.
3:50:24 PM
Co-Chair MacKinnon thought that there was a chance that
education was being double funded.
Mr. Painter said that the $1.2 billion was included in the
Governor's request. The appropriation requested in the left
column of the note showed the change in the fund source. He
revealed that the fiscal note could not be adopted into the
budget because the budget adopted by the body did not match
the Governor's request on the fund source.
3:51:15 PM
Senator von Imhof asked why a fiscal note that showed the
difference going from the current statutory income from the
fund to a potential new POMV.
Mr. Painter replied that the Governor's budget had built in
a fiscal note similar to the one before the committee into
the base budget that did not reflect current statute or the
legislation before the committee. He shared that the note
reflected a version of a different bill, that used a
different calculation; and unorthodox move by the Governor,
that created an unusual fiscal note.
3:52:07 PM
Co-Chair MacKinnon offered assurances that an appropriate
bill would be crafted by the committee, and would travel
with the bill, should the legislation pass out of
committee.
3:52:30 PM
Co-Chair MacKinnon OPENED public testimony.
Co-Chair MacKinnon CLOSED public testimony.
3:53:14 PM
Co-Chair MacKinnon announced that amendments were due by
5pm the following day. She discussed additional
housekeeping.
CSHB 213(FIN)(efd fld) was HEARD and HELD in committee for
further consideration.
ADJOURNMENT
3:53:55 PM
The meeting was adjourned at 3:53 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 176 AML Letter.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 176 |
| HB176 Sponsor Statement.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 176 |
| HB176 Flow Chart.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 176 |
| HB176 Letters of Support.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 176 |
| HB176 - Explanation of Changes.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 176 |
| HB 213 Letter to House Finance - Dept. of Revenue.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213 Letter to House Finance - Dept. of Law.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213--Supportive Letter.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213 Support letter.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213 Summary of Changes ver. R 2-8-18.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213 Summary of Changes Ver U to N.A 4-12-2018.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213 Sectional Analysis.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213 Sectional Analysis Ver N.A 4-12-2018.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |
| HB 213 Actual vs. POMV bar chart.pdf |
SFIN 4/16/2018 1:30:00 PM |
HB 213 |