HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE April 26, 1995 8:36 a.m. MEMBERS PRESENT Representative Con Bunde, Co-Chair Representative Cynthia Toohey, Co-Chair Representative Gary Davis Representative Norman Rokeberg Representative Caren Robinson MEMBERS ABSENT Representative Tom Brice Representative Al Vezey OTHER LEGISLATORS PRESENT Representative Carl Moses COMMITTEE CALENDAR HB 246: "An Act directing the commissioner of administration to seek a buyer for the Alaska Pioneers' Home and eliminating the Alaska Pioneers' Home program if the Alaska Pioneers' Home is sold; directing the commissioner of administration to contract for all or part of the operation of the Alaska Pioneers' Home if a suitable buyer is not found; relating to the closure of the Alaska Pioneers' Home; and providing for an effective date." HEARD AND HELD HB 94: "An Act relating to the management of public schools by a private agency." SCHEDULED BUT NOT HEARD WITNESS REGISTER RUPE ANDREWS, Legislative Coordinator American Association of Retired Persons, Alaska Branch 9416 Long Run Drive Juneau, AK 99801 Telephone: (907) 789-7422 POSITION STATEMENT: Testified against HB 246. GLADYS KLOSE 822 Jackson Street Ketchikan, AK 99901 Telephone: (907) 225-4770 POSITION STATEMENT: Testified against HB 246. ED LYNCH 250 Fireweed Palmer, AK 99645 Telephone: (907) 746-0320 POSITION STATEMENT: Testified against HB 246. VIRGINIA and FOSTER WALTERS, Members American Association of Retired Persons 214 Birch Street Kenai, AK 99611 Telephone: (907) 283-7305 POSITION STATEMENT: Testified against HB 246. SYLVIA JOHNSON, Member American Association of Retired Persons P.O. Box 152 Kenai, AK 99611 Telephone: (907) 283-4751 POSITION STATEMENT: Testified against HB 246. CHARLES QUARRE', Member American Association of Retired Persons HC1, Box 3336 Sterling, AK 99672 Telephone: (907) 262-2115 POSITION STATEMENT: Testified against HB 246. DR. JEAN BONAR Anchorage Pioneers' Home 923 West 11th Anchorage, AK 99501 Telephone: (907) 276-3414 POSITION STATEMENT: Testified against HB 246. BETTY THIELSEN, Resident Anchorage Pioneers' Home 923 West 11th Anchorage, AK 99501 Telephone: (907) 276-3414 POSITION STATEMENT: Testified against HB 246. JOHN GIBBONS, President Residents' Council Anchorage Pioneers' Home 923 West 11th Anchorage, AK 99501 Telephone: (907) 276-3414 POSITION STATEMENT: Testified against HB 246. EMELY DuBEAU, Resident Anchorage Pioneers' Home 923 West 11th Anchorage, AK 99501 Telephone: (907) 276-3414 POSITION STATEMENT: Testified against HB 246. GERALD BOHMS P.O. Box 80155 Fairbanks, AK 99708 Telephone: (907) 479-6970 POSITION STATEMENT: Testified against HB 246. LEE CARMAN, President Fairbanks AARP 712 Bentley Drive Fairbanks, AK 99701 Telephone: (907) 452-6296 POSITION STATEMENT: Testified against HB 246. ART NIELSEN, Resident Sitka Pioneers' Home 120 Katlian Street Sitka, AK 99835 Telephone: (907) 747-3213 POSITION STATEMENT: Testified against HB 246. ALTHEA BUCKINGHAM, President Residents' Council Sitka Pioneers' Home; Community Coordinator, AARP 120 Katlian Street Sitka, AK 99835 Telephone: (907) 747-3213 POSITION STATEMENT: Testified against HB 246. ANNE JANZEN, Resident Speaking for CAROL KLANEY Sitka Pioneers' Home 120 Katlian Street Sitka, AK 99835 Telephone: (907) 747-3213 POSITION STATEMENT: Testified against HB 246. JULIA OLSEN, Resident Sitka Pioneers' Home 120 Katlian Street Sitka, AK 99835 Telephone: (907) 747-3213 POSITION STATEMENT: Testified against HB 246. MARGARET NEWELL, Resident Anchorage Pioneers' Home 923 West 11th Anchorage, AK 99501 Telephone: (907) 276-3414 POSITION STATEMENT: Testified against HB 246. MARCY BUTLER, Resident Anchorage Pioneers' Home 923 West 11th Anchorage, AK 99501 Telephone: (907) 276-3414 POSITION STATEMENT: Testified against HB 246. INEZ WELLS, Resident Anchorage Pioneers' Home 923 West 11th Anchorage, AK 99501 Telephone: (907) 276-3414 POSITION STATEMENT: Testified against HB 246. ROBERLY WALDRON, former Deputy Commissioner Department of Administration 2200 Belmont Drive Anchorage, AK 99517 Telephone: (907) 338-4213 POSITION STATEMENT: Testified against HB 246. EUGENE SMITH 2009 Dimond Drive Anchorage, AK 99507 Telephone: (907) 563-7335 POSITION STATEMENT: Testified against HB 246. KATHY DIETRICH, Business Agent Alaska State Employees Association 1951 Red Leaf Road Fairbanks, AK 99709 Telephone: (907) 455-6064 POSITION STATEMENT: Testified against HB 246. PREVIOUS ACTION BILL: HB 246 SHORT TITLE: OPERATION OF PIONEERS' HOME SPONSOR(S): REPRESENTATIVE(S) G.DAVIS JRN-DATE JRN-PG ACTION 03/09/95 677 (H) READ THE FIRST TIME - REFERRAL(S) 03/09/95 677 (H) HES, STATE AFFAIRS, FINANCE 04/11/95 (H) HES AT 02:00 PM CAPITOL 106 04/18/95 (H) HES AT 10:00 AM CAPITOL 106 04/18/95 (H) MINUTE(HES) 04/26/95 (H) HES AT 08:30 AM CAPITOL 106 ACTION NARRATIVE TAPE 95-42, SIDE A Number 000 CO-CHAIR CON BUNDE called the meeting of the House Health, Education and Social Services standing committee to order at 8:36 a.m. Present at the call to order were Representatives Toohey, Bunde and Davis. A quorum was not present to conduct business. Co-Chair Bunde read the calendar. He recognized the presence of Representative Carl Moses, and invited him to sit at the committee table. CO-CHAIR BUNDE turned the gavel over to HESS Committee Vice-Chair Gary Davis, who is also the primary sponsor and author of HB 246. HB 246 - OPERATION OF PIONEERS' HOME Number 090 REPRESENTATIVE GARY DAVIS noted this bill was being heard for the second time. The intent of the hearing is to listen to all the concerns and get some understanding of the current operations of the Pioneers' Homes. HESS Committee members would like to get some input as to the validity of the proposed HB 246. Representative Davis has also requested that HB 246 and the entire issue be studied intensely and discussed thoroughly by a task force over the interim. REPRESENTATIVE DAVIS wanted to make it clear that HB 246 and the provisions within are not immediately imminent. Therefore, all concerned parties can "sit back and relax." Representative Davis assured current residents of the Pioneers' Homes that they can relax at any stage of the process because it is not his intent to disrupt any existing residents of the homes. Number 215 RUPE ANDREWS, Legislative Coordinator, American Association of Retired Persons (AARP), Alaska Branch, said the AARP has many concerns with the bill. At present, the AARP is opposed to the bill for two reasons. First, the bill is untimely because if it passes in its present form, it will reverse 35 years of public policy without adequate public debate or dialogue. Secondly, it is causing a lot of concern, anguish and frustration among the residents of the pioneers' homes. MR. ANDREWS said those residents feel, rightly or wrongly, that they have a contract with the state. Those residents are not sure of their future, what is going to happen to them, and what is going to happen to the pioneers' homes. As a matter of public policy, the AARP feels the right approach is for the legislature to establish a bipartisan task force to study the issues and the options. The task force should study the problems and how to solve them. Number 296 MR. ANDREWS said pioneers' homes are unique to Alaska. Visitors admire them, and go back to their own states and wonder why their home states cannot do something like it. Those homes were set up originally to do something about the old pioneers. The homes have since progressed. MR. ANDREWS said people in the homes live in dignity. They live in a free, open atmosphere. Mr. Andrews invited HESS Committee members to visit the Juneau Pioneers' Home to experience the quality of the place. To reverse the pioneers' home policy without adequate dialogue and public input is not the right way to go on public policy. MR. ANDREWS asked if the value of the pioneers' homes had been appraised. According to HB 246, residents would have about five years of care under the contract. But the price will probably be so prohibitive that whoever purchases or even leases the pioneers' homes will not be able to survive financially. Mr. Andrews asked what would happen to the residents of the pioneers' homes then. Number 390 MR. ANDREWS said the best approach to these issues, because they deal with a long-term, public policy, is to establish a bipartisan task force to study the issues, and then return with the legislation if it is required. Number 406 CO-CHAIR CYNTHIA TOOHEY asked if Mr. Andrews was present last year when the pioneers' home task force was started by the Governor. MR. ANDREWS said he was not present. CO-CHAIR TOOHEY said the task force was quite involved, and testimony was taken from all across the state. Co-Chair Toohey said last year, the same thing happened--residents panicked and said, "You people are going to throw me out onto the street." She noted Representative Davis has said it is nobody's intention to throw anyone into the street. CO-CHAIR TOOHEY warned Mr. Andrews that to say residents are going to be thrown out into the street is to cause all kinds of fright. This bill has nothing to do with throwing anybody into the street. She asked Mr. Andrews to please stop that kind of rumor, and pass the word along that no one is going into the street. MR. ANDREWS said residents have contacted the AARP, and they are very concerned. This bill is causing some anguish. CO-CHAIR TOOHEY apologized for the anguish, and reiterated there is no intention to put anyone out of the homes. She again asked Mr. Andrews to reassure people whenever he hears such a rumor. Number 500 REPRESENTATIVE DAVIS announced that Representative Robinson and Representative Rokeberg joined the meeting at 8:40 a.m. A quorum was now present to conduct business. CO-CHAIR BUNDE said the problem he foresees is much like the problem with the longevity bonus. There are the "haves," the "have nots," and then the lawsuit. Currently, there are the "haves," those who get about a $50,000 subsidy from the state by being in a pioneers' home. There are many people who cannot be in the pioneers' homes. As the legislature investigates this issue and looks for a solution, he would hope the AARP would help the legislature come up with a solution that addresses that "have-have not" issue. The financial realities must also be dealt with. CO-CHAIR BUNDE said the legislature has worked all session to cut the budget, and yet he just heard the news that $100 million has been lost this year. Co-Chair Bunde said Co-Chair Toohey has an expression that he likes to use, "We are not the enemy, we are just trying to do a job." Number 588 MR. ANDREWS recalled that last session, the AARP worked with the Administration on the bill which aimed to phase out the longevity bonus. The AARP supported that bill right through to the end of the session. Mr. Andrews asked to respond to the sponsor's statement on HB 246. The first sentence reads, "The purpose of HB 246 is to direct the commissioner of administration to seek a suitable buyer for the Alaska Pioneers' Homes." MR. ANDREWS said when individuals, particularly residents of the pioneers' homes, read the bill they immediately become upset. That first statement says much to them. The commissioner is directed to seek a buyer. The next question those residents have is, "What happens to us?" That is a valid question. CO-CHAIR BUNDE noted Co-Chair Toohey had said the current residents are held harmless. However, Co-Chair Bunde does not agree because some residents would remain at the subsidized rate, and new residents will have to pay their own way. This would never withstand a court challenge. Co-Chair Bunde therefore does not agree that current residents would be held harmless. Number 659 GLADYS KLOSE testified via teleconference that she is very upset by HB 246. She thinks the long-time residents of Alaska have worked very hard to establish these homes, and the homes could not exist under private ownership, because private owners have to make a profit. A change from state management could force many seniors to leave Alaska. She strongly opposed HB 246. MS. KLOSE said the pioneers' home system works as it is, and should not be taken away from the old-timers. Number 773 ED LYNCH testified via teleconference that he has been a resident of the Homer Pioneers' Home for eight years. He does not speak for the other residents, but they have been telling him they are all very concerned about the possibility of the homes being sold and the consequences of that. The residents realized that when and if the homes are sold, the charges to stay at the homes would skyrocket. Very few residents could meet the new rates. MR. LYNCH said the purchaser would have government programs to fall back on for their revenue. The purchaser would look at that, because they are nonprofit organizations. This bill could not have come up at a worse time, when there is talk of discontinuing the permanent fund and cutting the longevity program. This is very traumatic to the residents of the homes. MR. LYNCH noted that one resident told him, "These things hang over our heads on a thread." The state must cut back on the funding of some programs, because the cash flow is not what it was a few years ago, and overspending has occurred in many areas. However, such a drastic measure as selling the pioneers' homes to make up for the shortfall is unthinkable. Mr. Lynch hopes HESS Committee members would see to it that this bill never comes to a vote, and find other ways to be good stewards of the state's money. Number 857 MR. LYNCH has spent all his life in Alaska, and many he knows have spent most of their lives in this state. He feels as if he is being betrayed by the new breed of legislators. Number 880 VIRGINIA WALTERS testified via teleconference that she is adamantly opposed to HB 246. She still fears, despite the legislators' assurances, that the homes will be closed. She read one of the statements in the long title of the bill, which says, "...relating to the closure of the Alaska Pioneers' Home; and providing for an effective date." She thinks everyone needs to be aware that those words are there. She asked that the bill not come to vote. Number 921 FOSTER WALTERS testified via teleconference in opposition to HB 246 as it will make cost of staying in the homes prohibitive. Number 937 SYLVIA JOHNSON testified via teleconference that she also opposes HB 246. The bill is premature and not too well thought out. Number 955 CHARLES QUARRE', District Director, AARP, testified via teleconference. He stated if the homes are sold to a private enterprise, the private enterprise obviously wants to make a profit. He asked why the state cannot operate these homes on a break-even basis. MR. QUARRE' also stated that if a private property owner is going to operate the pioneers' homes at the same level and is to make a profit, the rents will have to be raised or the services will have to be cut. If the rents are raised and the services cut, the marginal people in these homes will be out on the street. MR. QUARRE' continued that the legislature knows the seniors in this state represent a large voting block. The AARP alone has over 44,000 members, or almost 8 percent of the total population of the state. These seniors recognize there is a problem with the budget and they want to help be part of the solution. However, the seniors want to make sure the money goes to reduce the budget and is not used for other circumstances if this money comes into the state. Number 1024 REPRESENTATIVE DAVIS answered Mr. Quarre's question as to why the state cannot run a break-even operation. That is the question many people have. But the answer is quite obvious. Every facility has a cost per day per resident. That cost would be prohibitive currently for most residents. There are some things that can be done in that regard, and one of those options is to become Medicaid eligible. That would be the first step. There are a lot of Medicaid eligible residents. REPRESENTATIVE DAVIS said, "That would draw from another pot of money which is still tax dollars, it would be federal tax dollars, but it would be even with all of those who are eligible for Medicaid in other situations where the federal government pays 50 percent and the state pays 50 percent." REPRESENTATIVE DAVIS continued that there are many things being done currently to improve the financial situations of the pioneers' homes and the cost of operation. There will continue to be efficiencies provided. HB 246 is of course drawing additional attention to that situation, and looking at alternatives. Number 1099 CO-CHAIR BUNDE commented that there is not, in his experience, any state agency that can run cheaper or more efficiently than a private agency. The legislature is currently attempting to reduce state workers' compensation because private industry cannot compete. When people have a chance to work for the state, they leave private industry because the state pays more and has better benefits. CO-CHAIR BUNDE recalled the question about the cost per day per resident. He also wanted to know what the state pays annually for the pioneers' homes. Number 1140 REPRESENTATIVE DAVIS said the total budget for the pioneers' homes is over $30 million. There is about $5 million in revenues. CO-CHAIR BUNDE concluded "it would be $25 million net, approximately." He asked what that breaks down into residents per day. REPRESENTATIVE DAVIS said he had not calculated that amount. CO-CHAIR BUNDE wanted to assure Mr. Quarre' there is no way he would support a reduction in the state expenditures of the pioneers' homes only to have it transferred to another entity. The legislature has worked all session to reduce state spending in light of the budget deficit, only to find out that the latest forecast is more than double of any reduction. The latest forecast of the increase of the deficit is more than double of any decrease the legislature could hope for. The legislature is fighting a losing battle. Number 1196 DR. JEAN BONAR had written a letter which was read to HESS Committee members via teleconference. Dr. Bonar has practiced medicine at the Anchorage Pioneers' Home for 20 years, and sees a number of elderly patients. She wrote: "The Alaska population that is over 65 is the fastest growing segment of the Alaska population because many of these residents who moved here during the forties, fifties and even sixties to build here in this great state have reached retirement age. DR. BONAR'S letter continued. "Many of this group do not have the present income to afford care outside their home if they grow infirm and incapable of living independently. In this economy, their incomes are often inadequate, and if they have any disabilities or infirmities and cannot live independently, they must leave the state to find retirement homes where they can have assistance. "For example, there are two patients I would like to describe to you. Carl was in his seventies and a construction builder from the forties. He could not live independently because of a stroke, and his wife had emphysema so she could not adequately care for him. They ended up moving to a trailer park in Southern California, where together their income could just barely pay. They did not have adequate medical help. They were about $100 over what would have qualified them for Medicaid. "Another patient, whom I'll call Priscilla, has multiple sclerosis and diabetes. She is in her sixties and retired as a clerk from the federal government, had to sell her condo, furniture, carpet, car, everything, because her civil service retirement was not enough to afford the (indisc.) Program Home or Our Lady of Compassion. And the pioneers' home list was long indeed, and she needed (indisc. -coughing). "She had lived here for 30 years, and all her friends were here. She had to leave the state for Washington, where she lived for a short time with an elderly sister, not receiving adequate care. The quality of care cannot extend rapidly enough to take care of the older population. The state is obliged to provide an opportunity for these seniors to live out the rest of their lives near their lifelong friends, and to live in a state that they dedicated their lives to building. Thank you, Dr. Jean Bonar, 3260 Providence Drive, Suite 523." Number 1410 BETTY THIELSEN testified via teleconference that one of her employed senior friends, who has lived in Alaska for over 40 years, said she will not be eligible to enter the pioneers' home because of the present one-year residency clause for admission. Ms. Thielsen would like for more pioneers' homes to be built for persons wishing residential care as is enjoyed in Anchorage. MS. THIELSEN said she does not want a business, like Providence Hospital, to purchase the pioneers' homes. They would place persons needing nursing care only. Number 1448 MS. THIELSEN recalled that years ago, when she inquired about the cost of living in Lady of Compassion, she was told it was $8,000 per month. At that time, some of the residents' care was supplemented by the Veterans' Administration or the state of Alaska Welfare Department. She called again on April 18, and the cost to live at Our Lady of Compassion is $261 per day. Therefore, the cost per month would be $7,830 excluding therapy. Number 1483 JOHN GIBBONS, President, Residents' Council, Anchorage Pioneers' Home, asked about the current status of HB 246 at this time. REPRESENTATIVE DAVIS answered that the bill was being heard in the House HESS Committee. There is no companion bill as of yet in the Senate. It is intended that the bill stay in a House HESS subcommittee during the interim. MR. GIBBONS asked if the bill would move before the end of the legislature. REPRESENTATIVE DAVIS said the bill would not move this year. MR. GIBBONS asked if the bill was dead for this year. REPRESENTATIVE DAVIS answered yes. Number 1518 CO-CHAIR BUNDE clarified that "dead" means there is no work to be done on the bill, and that is not the case. The bill will be worked on in a subcommittee during the summer and fall. Undoubtedly, the bill will be brought up again the next legislative session, which is in the spring of 1996. There will be ongoing work to reduce the impact of the bill on everyone as much as possible, realizing that no bill can actually please everyone. CO-CHAIR TOOHEY told Mr. Gibbons that testimony will be taken on this bill, and work groups will be conducted in Anchorage so there will be public input. She asked Mr. Gibbons to pass along the assurance that this bill should not panic or worry anyone. This is just a committee, and Representative Davis is trying to get people to realize that a problem exists. Everyone can work together to find solutions. No one is being thrown out onto the street. MR. GIBBONS thanked her for the reassurance. He asked if HESS Committee members had seen an article in the Sitka Sentinel written by Pioneer R.N. DeArmond. REPRESENTATIVE DAVIS said the HESS Committee members had testimony written by Mr. DeArmond. MR. GIBBONS said Mr. DeArmond is a great pioneer, and one of the greatest historians in the state. He suggested that a commission be formed by various organizations. The commission should include pioneers of Alaska, as well as residents of pioneers' homes, members of the legislature and members of the Administration. This commission should do a study to come up with a possible solution to the troubles. This is not an overnight situation, and Mr. Gibbons hopes this suggestion will be given full consideration during subcommittee deliberations on HB 246. Number 1650 MR. GIBBONS said he has watched the legislature since the spring of 1942. He made a general admonition to Representative Davis in writing legislation. He said the first words of the bill would "terrify God." He did not like the way the legislation was written. However, he conceded that the pioneers' home problem is not going away. In the city of Anchorage alone, there are over 20,000 seniors eligible for admittance into the pioneers' home. This statistic alone should make HESS Committee members realize that there is a large problem out there that needs to be solved. CO-CHAIR BUNDE said the state is now over $700 million "in the hole." There are a lot of problems out there that need to be solved. While he agrees with Co-Chair Toohey that no one is going to be thrown into the street, it would be less than honest to encourage people to think that more pioneers' homes can be built when the state is facing a $700 million deficit. Number 1739 REPRESENTATIVE NORMAN ROKEBERG let Mr. Gibbons know that he shares the concerns of pioneers' homes residents. Representative Rokeberg does not agree with Co-Chair Toohey's analysis. He assured those in the Anchorage Pioneers' Home that he is sitting on the HESS Committee trying to look after their interests. Number 1751 EMELY DuBEAU testified via teleconference that she has been a resident of the Anchorage Pioneers' Home for over 12 years. She asked what the state will do with the money it receives from the sale of the homes. REPRESENTATIVE DAVIS assumed the money would roll into the general fund, and help the state recoup some of the deficit spending. MS. DuBEAU asked if that included raising the per diem of the legislators every year and raising their own salaries. REPRESENTATIVE DAVIS said he could not speak for anyone else but himself on that matter, but it would not be his intention to do that. Number 1779 CO-CHAIR BUNDE stated the salary of legislators has not been raised in many years, and the per diem has been raised once that he is aware of. He respectfully asked Ms. DuBeau to not treat the legislators like they were the enemy. Legislators do not have a $50,000 per year subsidy. MS. DuBEAU asked what assurance will be given to the residents regarding their future. All that has been mentioned in this bill is the nursing and assisted living. She asked what would be done concerning the residential occupants. REPRESENTATIVE DAVIS answered the legislature provides the funding. The organization and daily operation of the facilities is determined by the departments and the Administration. At this point, this is the only bill addressing the pioneers' homes from a legislative standpoint. It is Representative Davis's intent for the current residents to continue with the contract which states they will be provided with the pioneers' home service. Number 1871 GERALD BOHMS testified via teleconference that he has been a resident of Fairbanks for about 47 years. He opposed HB 246, as he felt it was an ill-advised piece of legislation. The legislators always talk about the state's deficit, and it seems like this would be a prudent time to reinstate the state income tax, or create an additional tax to supplement the oil income. That would go a long way toward solving the financial problems of the state. In addition, it would give people a larger stake in what the legislature is doing with their tax money. Number 1921 MR. BOHMS said the income tax, when it was in place, did not cause anyone a great hardship. Those in the lower income brackets would be affected minimally if at all. A tax would allow the state to support the programs that the state currently has, including the pioneers' homes. MR. BOHMS reiterated that the sale of the homes would be a real detriment to the state. The old-timers and pioneers who have spent their lives in Alaska deserve a brighter future than selling the homes would bring. The costs would be raised, so people couldn't afford to live there. In the past, the state has looked into qualifying for Medicaid for the pioneers' homes. That in itself would destroy the homes. Therefore, that is not an option either. REPRESENTATIVE DAVIS appreciated the testimony of Mr. Bohms, which contained concerns and possible solutions. Number 2003 LEE CARMAN, President, Fairbanks AARP, said he has lived in Alaska for many, many years. He cannot understand why the legislators cannot create another state income tax. The tax would never be large enough to hurt anyone, and it would help guarantee that the shortages the state is currently experiencing will abate. He said the people of Alaska would not have to pay too much, perhaps just a little sales tax or an income tax. MR. CARMAN cannot understand why there is no work on bringing money into the general fund except what can be taken from the oil companies. There are many people in Alaska that live out of the Alaska general fund, and never pay a nickel. Mr. Carman draws pension. He is over 80-years-old, and he would be willing to share a part of his retirement to help correct the funding shortage of the state. Number 2098 MR. CARMAN asked how long it would be before the new buyer of the pioneers' homes abandoned those homes. Mr. Carman does not think it would take over a year, because the new buyer would not have the expertise to take care of them. The new buyer would start cutting corners, and consequently the homes would be gone. It was decided by the courts that a person only needs one year of Alaska residency to get into the pioneers' homes. If those new residents are allowed to go into the homes, they would be a bigger burden on the finances of the homes than those who are currently residents. MR. CARMAN feared that in order to correct the shortfalls of the system, the permanent fund and perhaps the longevity bonus will be taken away from many people in Alaska. Number 2155 CO-CHAIR BUNDE appreciated Mr. Carman's willingness to be part of the solution. Co-Chair Bunde said he could only speak for himself, but he has no fear of taxes. However, Co-Chair Bunde is a representative. When the majority of people in the state feel they want to pay taxes to support the pioneers' homes or any other program, then Alaska residents will pay taxes. However, taxes will not be paid until the majority of people want to pay them. CO-CHAIR BUNDE stated if taxes were paid at the previous rate, it would generate about $250 million. That would still leave the state with a $500 million deficit. There would still be no extra money to go into the pioneers' homes or anything else. Taxes at the previous level are not the only solution. It may be one of the solutions, but Co-Chair Bunde personally feels the solution will be made of taxes, the permanent fund and a cut of state services. Number 2197 REPRESENTATIVE DAVIS recalled Mr. Carman's question about private contractors, the future of the homes, and how long the contractors will be preset before the homes are used for something else. Those concerns need to be addressed in the legislation, as well as any contractual arrangements that may be acceptable to the legislature and to the state. Representative Davis thanked Mr. Carman for bringing up that point. Number 2218 ART NIELSEN testified via teleconference that he has been a resident of the Sitka Pioneers' Home for over one year. He asked why his corporation could not buy the homes if a suitable buyer could not be found. REPRESENTATIVE DAVIS said that could be a possibility. Any proposals would have to be acceptable to the state. MR. NIELSEN stated that he belongs to two corporations, so any one would be suitable. REPRESENTATIVE DAVIS asked Mr. Nielsen how long he was on the waiting list to get into the home. MR. NIELSEN said he got admitted under a doctor's care, so he did not have to wait very long. Number 2263 ALTHEA BUCKINGHAM, President, Residents' Council, Sitka Pioneers' Home; and Community Coordinator, AARP; testified via teleconference that she is speaking on behalf of both those organizations. She is encouraged that HESS Committee members have the written testimony of Mr. DeArmond. She sent a letter and she was under the impression that her testimony was thrown into a pile. She was interested in knowing how many letters have been received in favor of the bill, and how many have opposed the bill. MS. BUCKINGHAM was therefore encouraged to hear that the letters are on file. She was not able to testify at the first meeting on HB 246, and she feels this bill should be completely withdrawn. It is not well-thought out, and it is poorly worded. MS. BUCKINGHAM suggested a task force study the issue and come up with solutions. Ms. Buckingham also said she does not know about the hearings in Anchorage held by the Governor's Pioneers' Home Task Force. She said she would be interested in knowing the outcome of those hearings. TAPE 95-42, SIDE B Number 000 REPRESENTATIVE DAVIS said there was a Governor's Pioneers' Home Task Force, and he did not have a copy of the resulting report. However, she can be provided with any number of other reports on the homes. In addition, Representative Davis noted that her written testimony was in the bill packets of the HESS Committee members. ANNE JANZEN, resident, Sitka Pioneers' Home, was asked to read Carol Klaney's testimony as Ms. Klaney is able to write, but she cannot speak clearly. Ms. Janzen read, "As a ten-year resident of the Sitka Pioneers' Home, I strongly oppose the sale of the pioneers' home. The pioneers' homes are the best health care facilities existing. The pioneers' homes are staffed with caring, well-qualified personnel. The medical, dietary and CNA departments take a personal interest in the welfare of the people they care for--a concern that will be lost in a privately-owned facility. "If the sale of the pioneers' homes becomes finalized, I am only one of a number of pioneers' home residents who will be left homeless by being unable to meet the increased costs of a privately-owned care facility. For the above reasons, I protest the proposed sale of the pioneers' homes. Thank you. Cordially, Carol Klaney." Number 160 JULIA OLSEN, resident, Sitka Pioneers' Home, testified via teleconference that she will be 71 years old next month. She was born and raised in Alaska. She was admitted to the Sitka Pioneers' Home on a doctor's advice. If it was not for the home, she would not be alive today. Thanks to the care of the administrator of the home, she is improving. For people who have a low income level such as her, things are getting pretty shaky. They want someone to tell them everything is going to be okay. They want some reassurance. REPRESENTATIVE DAVIS hoped that some assurance has been provided as to his intent for the bill. Residents of the homes should remain comfortable at the homes as long as they wish. Number 299 MARGARET NEWELL, Resident, Anchorage Pioneers' Home, testified via teleconference that she is against HB 246. The author of the bill, she decided, has done no research on this proposal. It is very cruel to upset people that are no longer able to care for themselves. When she came into the pioneers' home, she had to dispose of most of her earthly possessions. Not much can be put into a 168 square foot room and still have room to walk around. MS. NEWELL said when she entered the home in 1987, she had to give up a lot. Now a legislator is trying to disrupt her life and the lives of other residents financially and emotionally. This is not only cruel but it is extremely thoughtless. She reminded Representative Davis of the Golden Rule, "Do unto others as you would have them to unto you." And she added that "What goes around, generally comes back around also." She asked HESS Committee members to please kill the bill, and relieve the residents of the pioneers' home. Number 394 MARCY BUTLER testified via teleconference that the sons and daughters of the pioneers' home residents wanted to see that their parents would have appropriate medical help and facilities as they aged and became ill. As one of the daughters of the pioneers, Ms. Butler told HESS Committee members that her mother came to Alaska in 1936. Her father came to Alaska in 1923. MS. BUTLER strongly opposes HB 246 because it thwarts her intent as a daughter of pioneers. She would like to speak for her mother who has had a stroke and cannot speak. Ms. Butler said her parents worked hard in Alaska and worked for statehood. She did not want the homes to be sold to companies that worked for profit. Ms. Butler mentioned the names of other pioneers who she knows. She said the legislature aims to "Kick the people into the streets that built the streets, and paid for the streets." MS. BUTLER continued that she has been a public school teacher in Anchorage for 28 years. Last fall, a young woman attended her class for six days. She had a child and was cared for by the state by Aid to Families with Dependent Children (AFDC). That girl was pregnant with another child, and she was assigned a visiting teacher--also paid for by the state. That visiting teacher kept in contact with Ms. Butler in order to get assignments. MS. BUTLER subsequently found out in January that the pregnant young woman had not completed any of her work, and her second baby was well on its way at that time. MS. BUTLER said the pioneers paid more than their debt to society, and they earned the right to be taken care of by the people they took care of. Number 609 CO-CHAIR TOOHEY said she has lived in Alaska since 1955, and she never did a thing in Alaska that she thought she was going to be repaid for when she got to be 65. Getting to be 65 is the responsibility of Co-Chair Toohey. MS. BUTLER replied that whether one expects to be helped by the state or not is a private matter. She only wanted to point out the example of the student who has never and probably will never contribute in the way that the pioneers have contributed to the state. She reiterated that those pioneers have earned the right to be taken care of by the people they took care of. Number 675 INEZ WELLS, Resident, Anchorage Pioneers' Home, said she came to Alaska in 1966 with the military. She worked for statehood, and she has worked all of her life in Alaska. Now that she is not able to take care of herself, she has moved to the pioneers' home, which she likes very much. She is very disappointed that those who have worked so hard might lose the homes. She requested that the bill be killed. Number 769 ROBERLY WALDRON, former deputy commissioner, Department of Administration, testified via teleconference that the homes are excellent providers of service. While there are many reasons why the ownership and management of the homes must remain with the state, she said she would talk about only a few. First, the homes primarily admit those who cannot receive care at other facilities. The private sector takes care of persons with high and low income levels. MS. WALDRON said therefore, if a person has adequate resources to pay for care, or qualifies for Medicaid, a private facility will admit that person. Where does one go if he/she does not meet either of these tests? While the homes may have a few clients who could be in private facilities, the vast majority could not. A private facility does not want and cannot afford to admit those who cannot pay for care from some source. Several times, the private facility administrator in Representative Davis's district has criticized the homes and has asked the state to put the residents in private facilities and pay for their care. MS. WALDRON said that is the same facility that over-bills because the development involves political forces and increases the bed number and certificate of need number from Health and Social Services. She asked why the state would want to give away cost control if the state is going to be liable for the care of those individuals. Number 862 MS. WALDRON said secondly, to qualify for Medicaid, a person must have a diagnosis that relates to physical ailments, to the exclusion of mental needs. Therefore, a person suffering from dementia does not qualify for Medicaid. Even if that person met the financial criteria, but had the diagnosis of Alzheimer's disease which requires 24-hour attendance, the person would not qualify for Medicaid. Most of the persons in the pioneers' homes in the nursing care facility and in assisted living have a diagnosis that includes dementia. MS. WALDRON explained that those who have a dual physical and mental illness and qualify financially are in private facilities already. They enter the facility due to the long waiting list at the pioneers' homes and they can receive services in the private facility. Number 918 MS. WALDRON continued with her third point. The state owns hundreds of millions of dollars in property, buildings, and other assets. Yet the state budget gives not one dime for maintenance in Fiscal Year (FY) 1995. In the budget request for FY 96, the homes asked for a barely sufficient capital budget to provide basic maintenance for the building, with no requests for major work to be done. One of the buildings is 61 years old, and almost any breakdown is major and expensive. The amount of the request for FY 96 is $326,000. Divide that by six, and each home will only receive $64,000. That is not enough. MS. WALDRON asserted as a consequence of year after year of inadequate capital funds, the buildings all need major work. A survey completed three years ago showed the buildings need about $98 million in work. That means that before a new owner can convert the facilities to Medicare/Medicaid facilities, they would have to spend that much, or more, in renovation and maintenance. After the state has received their market value for the property, who could afford the homes? MS. WALDRON added that the state is in the process of phasing out services at the Harborview facility in Valdez. It should be noted that it currently has the Sourdough Unit, which houses older Alaskans with dementia. There are other reasons why the state should not sell the pioneers' homes, and Ms. Waldron said she was sure HESS Committee members were going to hear many of those reasons from others. MS. WALDRON spoke about contracting. She said the homes currently do contract for food services, and two of the homes include either laundry or housekeeping. This saves money, and there may be other services that may be contracted. Those options should be reviewed often. The overall management of the homes should not be contracted. A survey completed about a year ago shows that top management in the pioneers' homes are the lowest paid of all long- term care administrators. MS. WALDRON said the homes have professional and good administrators. She asked why the state would want to increase the cost and lose the advantage of the experienced administrators. Since they are required to be licensed as well, unless a contractor would retain the present administrators, it is most likely that persons outside of Alaska would be hired. There simply is not that many licensed administrators who are available for work. Many are already employed, and others, like Ms. Waldron, are retired. Number 1063 MS. WALDRON said even though she strongly disagrees with selling or contracting management of the homes, she believes there are many things the state can do to make the homes more viable. She said, "The current residents of the homes don't like to hear this, but everything must be done to help keep the homes viable so the state can continue to own and operate them." This would include continuing to increase the rates paid by the residents. MS. WALDRON conceded that there has been an increase for the last three years, but the rates are still extremely low. The rate paid for those in assisted living and residential care would not pay for one month's rent, utilities, groceries, gas and incidentals if that person lived in their own apartment. Number 1107 MS. WALDRON felt many resident can pay more, while it is recognized that some cannot. All residents in the homes are currently being subsidized, and it should add to the dignity of those residents to pay more, rather than less, when funds are available. MS. WALDRON asked that residents not resist reasonable rate increases for the benefit of the homes, so people don't have to defend why the homes should continue to exist. Secondly, Ms. Waldron asked that the employees become more patient with the offerings of the homes. Assisted living is not only better for the residents, it is less costly to them and the state. It is an advantage to the employees as well. MS. WALDRON said employees should visit other facilities or talk to those who have gone to work for other facilities. Ms. Waldron guaranteed that legislators will see that the homes give the most excellent care at the appropriate levels, and that the homes are adequately staffed. Number 1169 MS. WALDRON requested that the Administration continue, as it has done in the past, to make changes that are necessary, to look for efficiencies, and to serve clients with the love and compassion they deserve. If those three requested things happen, this issue of selling the homes would not be brought up again for a long, long time. MS. WALDRON concluded by asking the legislators to look to the Governor's Advisory Board on Pioneers' Homes and to the Alaska Commission on Aging for guidance on issues relating to pioneers' homes. She knows legislators will find that those entities are reasonable and willing to contribute. While those organizations are supportive of the homes, they are also supportive of home and community-based services. MS. WALDRON stated the commission has been charged by the legislature to address the mental health needs of the aging population. This group should be allowed to plan their services as charged by the legislature. There is already two committees in place: The Governor's Advisory Board for Pioneers' Homes, and the Alaska Commission on Aging. MS. WALDRON said she would provide her written testimony to HESS Committee members, along with a history on pioneers' homes. REPRESENTATIVE DAVIS thanked Ms. Waldron, and stated he was certain she will be a valuable asset when considering what to do with the homes. Number 1239 CO-CHAIR TOOHEY asked if the year-long task force that was set up by the Governor last year has completed/distributed a report. MS. WALDRON said the person who may be contacted for a copy of that report is with the Attorney General's Office. She also commented that earlier, there was talk about continuing to take care of the current residents. She has been the one who, over the last three years, has had to approach current residents and tell them that their rates are being raised again. She knows how that disturbs the residents, but she also knows that it is necessary for many reasons. MS. WALDRON recalled that at one time, there was talk about raising the rates quite a bit. Ms. Waldron went to the Attorney General's office and asked if there was any way current residents could be protected, and have incoming or new residents treated differently. That would include "grandfathering" people in at lesser rates, and have new residents pay higher rates. She was told that could not happen, and that Medicaid would not allow that to happen. Equal services must be offered for equal pay. MS. WALDRON explained the only time individuals could utilize the grandfather clause is if a program is being phased out, such as the longevity bonus. However, pioneers' homes are not being phased out in the same way. Therefore, at that time she was told there is no way to protect those currently in the homes. Number 1350 EUGENE SMITH testified via teleconference that he has been a resident of Anchorage since 1932. His wife was born in Anchorage and they have many children and grandchildren. He and his wife are not residents of the pioneers' home, but they have sent an application in for residency for close to two years. Mr. Smith is now rather disappointed in the bill. MR. SMITH is now wondering about the future of the current residents, and he is also wondering about those who are on the waiting lists. He asked if it was worthwhile for he and his wife to continue to pursue residency in the pioneers' homes. They have figured they can afford the $1,800 per month that it would cost them to be in the pioneers' home together. But now he wonders whether they will be able to afford it. MR. SMITH said if the state decides to sell the homes, there is no one in the world that can run the homes as the state has done in the past. Profit motive alone would drive people out if they could not come up with the money. Mr. Smith said he was only expressing his own dissatisfaction with the bill, and also he wonders about his and his wife's future. Number 1472 CO-CHAIR TOOHEY asked if Mr. Smith has looked into moving into a small unit and getting someone to care for them should they become incapacitated. She asked if that would not be cheaper and more fun. As time goes on, Co-Chair Toohey suspects that the pioneers' homes will become more of assisted living facilities, or longer- term care homes for people who are incapable of caring for themselves. She asked if Mr. Smith and his wife had looked into the Chugach center or senior citizen housing other than the pioneers' homes. MR. SMITH answered that they had not. Number 1526 CO-CHAIR TOOHEY asked Representative Rokeberg if his mother was in the pioneers' home, and he answered that she was. She asked if she had two homes, her own home and the pioneers' home residence. REPRESENTATIVE ROKEBERG answered that she had sold her house. CO-CHAIR TOOHEY said the issue of people having their own homes and living at the pioneers' homes during the week needs to be addressed. KATHY DIETRICH, Business Agent, Alaska State Employees Association, said privatization seldom achieves the benefits sought. She said she is employed at the pioneers' home and enjoys her job, as does her co-workers. She said one does not work in the pioneers' homes unless one really cares about serving the pioneers. For a private entity to make a profit, the owner will either have to cut services or reduce wages and benefits of the hard-working Alaskans who right now are working at the homes. Those workers want to continue serving the residents. MS. DIETRICH said any owner would most likely come from the Lower 48, and they would send the profits outside if a profit was made. If legislators asked administrators, they would be told there is very little room for profits in running the pioneers' homes. MS. DIETRICH continued that privatization also removes an important level of scrutiny for the state of Alaska by placing the employees serving the residents under the review of profit-motivated employers instead of a responsible administrator who is mindful of the budget and providing quality services. Pioneers' home employees are very afraid they would see cuts to the services. MS. DIETRICH said if legislators were to visit the Fairbanks Pioneers' Home, they would immediately see how warm and friendly it is. Some of those amenities would probably fall by the wayside when a profit was being attempted. MS. DIETRICH asked to address the earlier comment that the majority of Alaskans do not support an income tax. Ms. Dietrich was unsure that it was known what the majority would support as far as an income tax. However, she does feel that, as leaders, it is the responsibility of legislators to educate the public as to the need for taxes, and what Alaskans are giving up if they continue to go without an income tax. MS. DIETRICH said the working people she knows would be more than happy to do their fair share to continue state services. Number 1676 REPRESENTATIVE DAVIS closed the hearing to public testimony. He asked for comments from the committee. CO-CHAIR BUNDE noted the frustration and concerns of the seniors who are currently residents of the pioneers' homes, and those who would like to be residents. However, those people may not get in because of the long waiting lists, and the constraints the state had to operate under when the court said that anyone who has been an Alaska resident for a year is now eligible for pioneers' home care. CO-CHAIR BUNDE wished the courts had made a different decision. He also spoke regarding the tax issue. He said the vast majority of people in his particular district are not willing to pay taxes to subsidize a lot of state services, including the pioneers' homes. Until and unless they are willing to do that, the subsidy will not be seen. Perhaps, rather than privatizing the homes, a nonprofit entity could be established so the homes operated in a break-even basis. CO-CHAIR BUNDE said in order to reduce the impact on other state services, the residency of the pioneers' homes would have to be on a needs basis, and the contribution would have to be a sliding scale depending on circumstances. If a person was wealthy and wanted to live in a pioneers' home, that person would have to pay more. Number 1780 CO-CHAIR BUNDE continued that what to do with the pioneers' homes is just one of the many problems facing the legislature this year. This is a difficult issue, and Co-Chair Bunde thanked those who provided alternative solutions to help meet the challenges. CO-CHAIR BUNDE reassumed the gavel, and appointed a subcommittee to study this issue. He appointed Representative Davis as chair of the subcommittee, and Representative Rokeberg and Representative Robinson were asked to be members. Any other members of the legislature with an interest were invited to be involved. Number 1828 REPRESENTATIVE ROKEBERG told the residents of the pioneers' homes that there are a number of legislators on the HESS Committee and throughout the entire legislature who are very sensitive to the needs of the pioneers' homes. In addition, Representative Rokeberg wanted to note for the record that his mother is a member of the Anchorage Pioneers' Home, he is a long-time member of the Pioneers of Alaska Igloo Number 15, and he is a member of the AARP. Therefore, people are represented in Juneau. ADJOURNMENT Number 1869 CO-CHAIR BUNDE adjourned the meeting at 9:58 a.m.