Legislature(2023 - 2024)ADAMS 519
03/07/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB79 | |
| Overview: Governor's Fy 23 Supplemental Budget | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 79 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 79
"An Act making supplemental appropriations,
reappropriations, and other appropriations; amending
appropriations; and providing for an effective date."
1:36:33 PM
^OVERVIEW: GOVERNOR'S FY 23 SUPPLEMENTAL BUDGET
1:36:39 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, provided a PowerPoint presentation
titled "Office of Management and Budget: Fast Track
Supplemental Budget HB79," dated March 7, 2023 (copy on
file).
Co-Chair Johnson noted she would leave the meeting at some
point and would pass the gavel to Co-Chair Foster.
Mr. Steininger addressed the fast track supplemental that
included three specific items with a need for urgent
legislative action. He explained that the items were a bit
different than regular supplemental items. He detailed that
other supplemental items were often related to cost
overruns that may present unanticipated funding challenges
throughout the course of the fiscal year. The fast track
supplemental items required additional funding to execute
on additional operational costs in order to meet an
unanticipated need going into the future. The
administration was looking for expedited consideration of
the items to ensure the Department of Administration (DOA)
and Department of Health (DOH) could fulfill their mission
related to specific circumstances that arose during the
current fiscal year. He noted the departments would provide
additional detail on the needs included in the fast track.
Mr. Steininger highlighted that the fast track supplemental
included a total of $8.4 million including close to $4.7
million in undesignated general funds (UGF) and $3.7
million in federal funds. He noted that part of the total
was a transfer of $3 million from Medicaid to Public
Assistance field services; therefore, the true increase in
operational costs was closer to $8 million UGF and nearly
$4 million in federal funds. He requested to hear from the
departments on the specifics.
1:39:40 PM
JAMES STINSON, DIRECTOR, OFFICE OF PUBLIC ADVOCACY,
DEPARTMENT OF ADMINISTRATION, thanked the committee for
hearing the request by the Office of Public Advocacy (OPA).
He explained that the funding was needed to address a dire
situation within the agency. He detailed that OPA caseloads
had hit a point where in-house attrition may occur if there
was not additional contract authority to immediately
relieve some of the pressure on the in-house attorneys. The
agency also faced other challenges independent of the
caseload backlog. He was happy to provide details if
members had questions. He relayed that the additional
funding requested in the fast track supplemental would
enable OPA to begin tackling the problem immediately.
Without the funding, the backlog would increase and the
agency would start to lose employees.
Mr. Stinson understood the Public Defender Agency (PD) was
facing a similar challenge, which was concerning to OPA. He
explained that OPA was a downflow agency; when other
agencies involved in the criminal justice system were not
doing well, particularly the frontline Public Defender
Agency, it had a direct deleterious impact on OPA's ability
to execute its constitutionally and statutorily mandated
duties. He elaborated that the situation put the agency
between "a rock and a hard place" because there was nowhere
for the cases to go. The cases had to go to an in-house
attorney or a contractor. The agency was mandated to take
the cases from the court.
Representative Hannan shared that she served on the DOA
subcommittee and supported the need. She looked at page 1,
line 10 of the bill [version A] and asked why the bill
would appropriate money to OPA in two fiscal years (FY 23
and FY 24). She noted the bill also included an increment
in two fiscal years for PD on page 2.
Mr. Steininger answered that the increments were
supplemental multiyear appropriations. He turned to slide 3
and pointed to a one-time increment of $750,000 for backlog
contractor support as an example of a supplemental
multiyear appropriation. He explained there a surge in
activity needed within OPA and PD to address the backlog,
which would not be completed in the current fiscal year.
The Office of Management and Budget (OMB) had worked with
OPA and PD to determine approximately how much would be
needed in FY 23. The appropriation had been structured to
ensure any of the unspent money from FY 23 was available
for use in FY 24.
Representative Hannan asked how it impacted the agencies'
regular FY 24 budget. She asked if the [fast track
supplemental] increment would reduce the agencies' FY 24
operating budget appropriation. Alternatively, she asked
whether the supplemental request was in addition to the FY
24 budget.
Mr. Steininger responded that the one-time cost need and
the surge in support could be viewed as a combination of
the two appropriations. The amount in the fast track
supplemental was the estimate of what would be spent in FY
23, but some of the spending may push into FY 24. He
clarified that the fast track funds were in addition to the
FY 24 operating budget funds.
1:44:43 PM
Representative Josephson referenced Mr. Stinson's statement
about OPA being a downflow agency. He stated that the
Department of Law (DOL) was situated at the top of the
flow. He highlighted that DOL was receiving nothing from HB
325 [legislation updating domestic violence statutes passed
in 2022], which he found to be astonishing. He questioned
whether OPA would not need anything because DOL would not
vigorously prosecute new cases under HB 325. Alternatively,
he wondered whether DOL would prosecute the cases within
its means. Yet OPA was anticipating increased sexual
assault cases and DOL had communicated it was not spending
any more money. He asked what Mr. Stinson made of that.
Mr. Stinson replied that he did not want to speak out of
turn about DOL and its strategy for acquiring funding. He
communicated that his current situation was critical. He
stated OPA was at a precipice and the agency anticipated
increased prosecutions from HB 325. He agreed with
Representative Josephson on some of the logical
inconsistencies. He posited that over many previous years
sometimes there may have been resource differences and
allocation to the various agencies. He suggested that some
of what was impacting OPA may be tied to a year where OPA
did not receive resources, while a different agency did. He
believed OMB's strategy moving forward to approach the
situation holistically by looking at the actual need made
sense. He knew what cases his attorneys had and what kind
of caseloads they had in terms of sexual assault cases, and
he did not have the capacity to wait for the other shoe to
drop. Some of OPA's needs were driven by ancillary factors
such as independent court action and other things that may
also be stressing the agency. He relayed that OPA based its
fiscal note off of projection from DOL. He believed the
projection was conservative in terms of what OPA was
anticipating.
1:47:21 PM
Representative Josephson considered the words "fast track"
and thought the administration was doing a good thing by
taking action immediately. He asked if the administration
would treat the bill more like a supplemental or amendment
or if it was asking for the legislation to be brought to
the floor quickly.
Mr. Steininger replied that the administration was asking
for HB 79 to be passed quickly by the legislature. He
detailed that OMB took the three items from the
administration's existing supplemental and amendment
package and repackaged them into a separate bill in
consideration of the urgency of the needs in OPA, PD, and
the Office of Public Assistance. The administration wanted
the bill to move forward cleanly to address the issues as
expeditiously as possible.
Co-Chair Johnson requested a report showing how the
different funding had transpired between the courts, DOL,
and the OPA attorneys to see if there was a need for
leveling [of funding] in the future. She passed the gavel
to Co-Chair Foster.
1:49:51 PM
Representative Ortiz clarified he was supportive of the
needs in the bill. He recalled there were fast track
supplementals in the past that ended up not being so fast.
He stated the urgency was there. He asked if there was
anything different about the way the current bill had been
brought forward to hopefully guarantee a more positive
outcome for fast tracking it.
Mr. Steininger confirmed that fast track supplementals had
been put forward in the past (before his tenure with OMB)
and generally supplementals passed alongside the operating
and capital budgets. The difference in the case of the
current fast track was it had been limited as much as
possible to only three items that presented true
operational concerns for state agencies in terms of the
impact on the public, particularly those who the state had
a higher moral obligation to serve. The administration
hoped limiting the items and excluding items requiring a
greater policy discussion would help facilitate the speed
of the bill and communicate the urgency of the needs within
the agencies.
Representative Ortiz stated that contracting for services
often required RFPs [request for proposals]. He asked if
the current situation was different. He wondered whether
the administration would be able to contract out quickly
and get things moving. Alternatively, he asked if there
would be a lag time.
1:53:01 PM
SAMANTHA CHEROT, PUBLIC DEFENDER, PUBLIC DEFENDER AGENCY,
DEPARTMENT OF ADMINISTRATION, replied that PD would be able
to immediately spend the funds on contracted cases to
private attorneys. The agency was currently doing so and in
particular to stave off having to move to vacate from new
appointments in Bethel and Nome. The agency had exhausted
the balance of funds from its personal services line to be
able to contract the cases to private attorneys. She
relayed that the agency's enabling statute allowed it to
contract the cases immediately.
Representative Coulombe stated her understanding that the
backlog was a result of the COVID-19 pandemic. She looked
at the contractor rate cap increase [on slide 3] and asked
if it reflected an anticipation of more cases coming or
whether it was digging the agency out of the backlog. Her
immediate concern was the existing backlog. She asked if
the funding [in the bill] would enable the agencies to get
out of the backlog. She asked how long it would take.
Mr. Stinson replied that the answer was both. He stated
that the HB 325 supplemental was designed to head off the
anticipated increase; however, in the interim that in
addition to the increased contractor rate and cap increase
included in the fast track would tackle the backlog. The
agency was getting additional resources to get to the end
of the current fiscal year. He relayed his understanding
that the governor's FY 24 budget proposal was the moving
forward plan. He stated that like PD, OPA had a procurement
exemption because the service was mandated. He explained
that OPA would have the ability to instantly begin
contracting. He added that news of the fast track items had
resulted in some increased interest, especially amongst
former public defenders, former OPA employees, and other
defense agency firms.
Representative Coulombe asked whether the courts could
handle the cases if they increased quickly. She wondered if
there would be a scheduling obstacle with the courts.
Mr. Stinson answered that when cases were contracted to
private counsel, contractors were better able to negotiate
and perhaps fully investigate the cases. He stated it was
an interesting question of whether or not there were enough
judges as well. He believed it would depend on the number
of cases that were pushed to trial. The current issue was
the backlog. For example, if a serious felon was caught in
FY 19 or FY 20 that needed to go to trial, the case was
going on three to four years old. The other issue was that
cases continued to come in. He explained it was necessary
to contract some of the cases out in order to get breathing
room for the in-house attorneys. The independent
contractors had less cases and more options at their
disposal and therefore a better ability to resolve the
cases short of trial. He understood the court system was
trying to get creative with things like settlement
conferences and other items. There were differing opinions
on how successful the options were, but there were options
that existed. He understood the point that there was a
potential for a series of bottlenecks. He stated that a
relief valve was needed for some of the cases. The need for
PD was urgent as well.
1:57:13 PM
Ms. Cherot echoed the comments made by Mr. Stinson. She
emphasized the importance of digging out of the backlog and
providing relief for existing overburdened attorneys. The
agency's new attorneys needed time to gain more experience.
She relayed that the agency was waiting for its next class
of attorneys to start. She detailed that the next class
would include third year law students graduating in the
spring and law clerks would start in August and September.
The money would not instantly fix or erase the backlog that
had accumulated over years, but it would help immensely to
provide relief and stave off having to not accept new
appointments in Nome and Bethel and potentially Palmer and
other areas of the state. She stated it was a dire
situation for clients and overburdened attorneys. The
agency did not want to see the backlog increase and did not
want to lose more district attorneys.
Co-Chair Edgmon asked if the $7.8 million total on slide 3
was a typo. He noted the subtotals did not result in the
$7.8 million shown.
Mr. Steininger confirmed it was a typo.
Mr. Steininger turned to slide 4 that covered the Division
of Public Assistance under DOH. He deferred to the
department for detail. The proposed amount was $3.1 million
UGF. The administration was proposing transferring the $3.1
million in excess Medicaid Services funds and $3.7 million
in federal funds.
DEB ETHERIDGE, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH, relayed that DOH was experiencing a
tremendous backlog in SNAP [Supplemental Nutrition
Assistance Program] cases (also known as food stamps). She
explained that due to the backlog individuals were going
without benefit. She elaborated it was critical to some
areas in Alaska because they were a "food desert" without a
food bank or access to food. The department was asking for
additional staff and support to handle its virtual contact
centers in order to pivot other staff to move off the
contact center and work on the backlog. She reported that
in addition to the SNAP backlog, there had been cascading
effects to other programs. Additionally, the department was
planning to unwind from the public health emergency,
meaning the department would be doing redeterminations on
all Medicaid recipients starting April 1 for the next 12
months. The request in the fast track supplemental was
aimed at addressing the backlog and the upcoming effort.
Co-Chair Foster asked how many staff would be brought on to
help with the SNAP backlog.
Ms. Etheridge answered, "30 individual eligibility
technicians."
Representative Stapp asked if there were any other funds
(outside of Medicaid Services) within the department that
could be reallocated to pay for the need. He noted there
was a huge vacancy rate in the Medicaid Services section of
the department.
2:02:04 PM
JOSIE STERN, ASSISTANT COMMISSIONER, DEPARTMENT OF HEALTH,
answered it was the only pot of money with enough funds to
support the needs of the Division of Public Assistance.
Representative Stapp relayed that the subcommittee talked
at length about mid-term and long-term solutions for the
problems facing the Division of Public Assistance, but
there had not been significant time spent on immediate
relief for SNAP beneficiaries. He stated that the governor
had spent $1.7 million on food. He highlighted there was a
$6.9 million reappropriation for a capital project, which
also came out of the same pot of money. He asked if the
legislature needed to take the $6.9 million reappropriation
and direct it to an immediate need for SNAP.
Mr. Steininger stated his understanding of the question. He
believed Representative Stapp was asking whether any of the
other excess money in the Medicaid Services program should
be directed to other needs.
Representative Stapp agreed.
Mr. Steininger answered that OMB was confident in the $3
million in excess money in the Medicaid program to satisfy
the need. He noted that Medicaid projections were not hard
and fast. He detailed that there was money spent out of
Medicaid programs weekly. The structure Representative
Stapp was referring to for the IT system for the Division
of Public Assistance was structured to use whatever was
remaining at the end of the year to buy down the general
fund cost in FY 24 for the IT system. He elaborated that
the implementation of the IT system was a solution to the
issue; therefore, the appropriation for the IT system was a
critical need to the division's work. He stated that any
redirection of the funds used to fulfill the need for the
IT system would result in exacerbated problems within the
Division of Public Assistance.
2:04:55 PM
Ms. Etheridge answered it was a multipronged approach. The
division was currently focused on staffing and additional
support through contracting. She relayed that the
division's legacy system was not prepared to be as nimble
as the existing AIRES system. She confirmed that in order
for the division to be prepared it had to be able to move
off of the legacy system onto the cloud based portal.
Representative Stapp asked for verification that the
administration was confident the money was available for
the reappropriation and a capital request of $6.9 million
for an IT system; however, the administration was not
confident the money may not be available for another
purpose.
Mr. Steininger answered, "Not exactly." He was confident
the $3 million on slide 4 would be available in excess in
Medicaid unless there were massive increases in Medicaid
reimbursements in the weekly check writes. The structure of
the appropriation for the IT project would use the
remaining amount available. The cost was estimated to be
$6.9 million but it could end up being $1 million or $18
million. He explained that if the $6.9 million estimate was
applied to an immediate need, because the $6.9 million may
not be realized in excess in the Medicaid program, the
immediate need meant to receive the funds would be in
jeopardy. He clarified that the appropriation for the IT
project was structured to backfill with general funds. He
highlighted that the IT project would also take time to
execute; therefore, any shortfall could be addressed in the
next legislative session. He stated that if the $6.9
million was used as a direct grant to communities, it would
be necessary to wait until the true lapse from the Medicaid
program was known after August 1 in order to execute on the
appropriation.
2:07:46 PM
Representative Stapp asked why a reappropriation would be
included for a capital request if the administration was
not confident the money would be available. He wondered why
the administration would not just request all of the money
out of general funds rather than from a reappropriation
that may or may not materialize.
Mr. Steininger replied they were doing so in order to
ensure the amount of money obligated out of FY 24 funds was
as low as possible. He highlighted that OMB had projected
an FY 24 deficit of greater than $400 million in previous
presentations. In order to achieve the needs of the state,
it was necessary to use every budgeting tool possible. One
of the tools was to use reappropriations of estimated
values to try to reduce the need for FY 24 revenues.
Representative Josephson wanted to ensure providers were
paid and that payments due in July were paid in July. He
asked, "Can we be confident about that?"
Mr. Steininger answered that the administration was
confident the appropriation shown on slide 3 could be
executed without creating any risk to providers in the
Medicaid program.
Representative Josephson stated that he was in support of
the proposal if it was the way the administration wanted to
provide a partial cure for SNAP, redeterminations, and
freeing up staff to work on the backlog.
Mr. Steininger explained that current revenue projections
combined with the supplemental budget needs (including the
transfer on slide 4) left a zero dollar surplus in FY 23.
He stated it was necessary to look at all available tools
to meet the state's needs in FY 23 and FY 24. He elaborated
that OMB had asked agencies to look within their existing
budgets to determine whether there was money that could be
moved around to achieve a supplemental need. The Department
of Health had identified the excess Medicaid Services
funding to meet the Division of Public Assistance need.
2:11:18 PM
Representative Galvin asked for verification there would be
no unintended consequences where people did not receive
needed services if the [Medicaid Services] funds were
transferred.
Mr. Steininger replied that based on OMB's projection,
there was more than enough surplus in Medicaid Services to
cover the $3 million. The appropriation made to the FY 23
Medicaid budget assumed there would only be two quarters of
enhanced Federal Medical Assistance Percentage (FMAP) in FY
23. However, the state would receive enhanced FMAP for
close to four quarters, which resulted in excess Medicaid
funds.
2:12:48 PM
Representative Coulombe referenced Medicaid eligibility
redeterminations. She noted the department had discussed
the SNAP backlog. She asked if the funding would be used to
hire three new eligibility technicians.
Ms. Etheridge responded that the title was Medicaid
eligibility redeterminations; however, the department took
a "whole case" approach. She elaborated that an individual
was often "multi program" and the department worked "all
program," which applied to the SNAP program. She clarified
that the department would hire 30 eligibility technicians
to work all programs.
Representative Coulombe asked if the proposal all depended
on hiring 30 new people or retraining 30 existing
employees.
Ms. Etheridge replied that it would involve hiring 30 new
employees. She added that a number of individuals had
already been hired and were currently going through
training.
Representative Coulombe asked how long it would take to
hire and train the individuals.
Ms. Etheridge responded that expedited training took eight
to ten weeks with 100 percent follow up to ensure quality.
She explained there was 100 percent case review for an
additional four weeks.
Representative Coulombe surmised that the money would be
fast tracked but would not solve anything for another three
months.
Ms. Etheridge answered there were a number of individuals
in various stages of hire and training who would be able to
work on the SNAP backlog while the others were training and
preparing for the Medicaid redeterminations, which had to
start in April.
Representative Coulombe asked for the existing individuals
in the system.
Ms. Etheridge replied that there were approximately 120
individuals who were able to draw down work and approve.
She stated the department had to use merited staff to
approve those. There was another group of individuals
handling the initial workflow, which involved receiving
applications, electronic signature, and the filing and
registering of cases in the database.
2:16:15 PM
Co-Chair Edgmon asked about the funding source behind the
fast track bill. He asked for verification that it would
not require a Constitutional Budget Reserve (CBR) draw.
Mr. Steininger agreed that the bill would not require a CBR
draw.
Co-Chair Edgmon asked if the funding source would be the
Statutory Budget Reserve (SBR).
Mr. Steininger clarified the funding source was excess
revenue in FY 23. Under current projected revenue there was
roughly $115 million in excess FY 23 revenue that had not
been appropriated. The bill would use the unappropriated
excess funds. He explained that the total equaled roughly
$115 million when adding in the governor's proposed
supplemental requests in the other supplemental budget. He
stated that the total came in underneath the $115 million
level and did not require a three-quarter vote for CBR
access.
Co-Chair Edgmon remarked there was still one quarter
remaining in the fiscal year. He surmised that OMB was
projecting forward for the remaining quarter in order to
assume there was a $115 million surplus.
Mr. Steininger answered affirmatively. The most recent
public forecasts were released on December 15 through mid-
December [2022]. The spring forecast from the Department of
Revenue (DOR) would come out towards the end of March,
which would provide an update to the amount available in FY
23. He stated that the the bill would not require a CBR
vote because it was well under the current projected
excess. He relayed that depending on the upcoming revenue
estimate it may be necessary to look for other tools to
handle the other supplemental requests.
Co-Chair Edgmon had heard from the other body that there
may be some concern about running out of money by the end
of the fiscal year. He referenced the testimony by Mr.
Stinson and Ms. Cherot and got a sense the situation was at
an emergency level. He asked why the situation had not been
brought up much earlier.
2:19:06 PM
Mr. Steininger answered that the items had been included in
the governor's budget amendment packages and supplemental
budget at the normal timeline of release. He relayed that
as soon as the administration found out about the OPA and
PD emergent issue, it had put forward budget amendments
shortly after. He confirmed the situations qualified as
emergencies, which was the reason the items had been
included in the fast track supplemental bill. He relayed
that OMB was keeping an eye on available revenue for FY 23;
however, OMB was encouraging swift adoption of the specific
supplemental items in the bill, which were well underneath
any amount of change that may occur in the revenue
projection. He explained that separating the items from the
other supplemental funding needs such as wildfires would
enable time for ample conversation on those more regular
supplemental items.
Co-Chair Edgmon remarked that putting an appropriations
bill on the floor at an early stage in session opened up
and invited the possibility of all types of floor
amendments. He advised that the requests in the bill had
better be worth it. He clarified that he was not trying to
imply the requests were not worth it. He highlighted that
any member would have the ability to offer any amendment.
He found the issue concerning.
Representative Josephson referenced Mr. Steininger's
statement that the amount was well under the $115 million
excess. He agreed that was mathematically true. He
referenced Mr. Steininger's statement that when including
the additional supplemental requests, the total was not
under the $115 million. He referenced Mr. Steininger's
suggestion that any variability in oil price should not
matter too much. He believed the opposite to be true. He
was unclear whether FY 23 would be fully funded. He did not
want to be difficult, but he wanted to ensure the fiscal
year was fully funded. He noted he knew of numerous options
to do so and was available to help. He was ready to vote
for the bill but needed clarity.
2:23:18 PM
Mr. Steininger replied that when considering all of the
supplemental expenditure needs for additional items like
wildfires, the Department of Corrections, and the
Department of Public Safety, the state was at a zero dollar
surplus/deficit for FY 23 under current projected revenue.
The items resulted in a total general fund need of under
$4.7 million. He stated that based on the current price of
oil and revenue projections, the bill could be passed and
signed without a three-quarter vote to access the CBR. He
stated that when the revenue forecast updates came from DOR
at the end of the month, there may or may not need to be a
conversation about how to balance FY 23 with the available
revenue and the supplemental needs. He remarked that it
would be a broader conversation about the available tools.
He relayed that waiting to have a conversation before the
needs in the bill were addressed would hamper the state's
ability to service a large set of fairly needy Alaskans; it
was the reason for the bill.
Mr. Steininger thanked the committee for its consideration
of the bill.
HB 79 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the schedule for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 79 OMB Fast Track Supplemental Budget Overview HFIN 23.03.07 .pdf |
HFIN 3/7/2023 1:30:00 PM |
HB 79 |