HB 81: PHASE OUT LONGEVITY BONUS Number 463 CHAIRMAN VEZEY stated the committee would hold CSHB 69 for further consideration. He then read the title of HB 81 and invited Commissioner Nancy Usera to testify. Number 475 NANCY USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION, stated the longevity bonus was within her department. She explained the history of the longevity bonus, the intent of which was to have the bonus be an incentive to help keep seniors in Alaska. The cost of the program grew five million dollars per year. One thousand people have come annually into the program. The Governor's proposal was very simple, direct and doable, she said. MS. USERA explained the step down program as two hundred and fifty dollars per month to those who were grandfathered into the program. After three years of stepping down the amount to one hundred dollars the program would end. She said, "If not this, what? If not now, when?" This protected as many people as possible who have come to rely on this revenue, she added, and noted there was a negative fiscal note from the cost savings of the step down. Number 530 CHAIRMAN VEZEY asked about the negative fiscal note from the Division of Pioneer Benefits. Number 534 COMMISSIONER USERA explained the cost of cutting checks. She spoke of the variety of proposals that had been looked at and discussed in prior years. The Department of Community and Regional Affairs was using a model for legislators but the Department of Administration did not have access to this model, she said. Number 547 REPRESENTATIVE OLBERG asked about new longevity bonus recipients. Number 551 COMMISSIONER USERA explained the migration of seniors into the state that became grandfathered into the program. Number 562 REPRESENTATIVE G. DAVIS discussed the residency requirement. Number 570 COMMISSIONER USERA discussed cases regarding residency preference. There was a program phase out which would allow the issue of residency repeal for Longevity, Permanent Fund and Pioneer's Home. Number 587 REPRESENTATIVE ULMER asked for information regarding the number of people receiving the longevity bonus who would have qualified originally under the program. Number 590 COMMISSIONER USERA stated there were 401 people and people were added each year if they were here before statehood, had 25 years residency, and were 65 years old. Under today's program, 125,000 people ultimately qualified. From the 4,700 in 1973 that came into the program only 400 were left, and currently 23,000 people received the bonus, she advised. Number 611 REPRESENTATIVE ULMER asked why the step down way was better than the annuity option. Number 615 COMMISSIONER USERA explained the history of the annuity program and its support. The annuity plan called for a fifteen year phase out, she disclosed. TAPE 93-12 SIDE A Number 000 COMMISSIONER USERA continued to explain the fifteen year phase out. The cost was now eighty-eight million dollars more because that program was not adopted in 1986. Further discussion of the annuity program in comparison to the step down was given. People under the annuity plan who needed the program would not use it. They need money today, she said.