03/27/2025 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

                  HB 133-PAYMENT OF CONTRACTS                                                                               
                                                                                                                                
8:46:51 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HIMSCHOOT announced  that the  final order  of business                                                               
would  be HOUSE  BILL  NO.  133, "An  Act  establishing a  30-day                                                               
deadline   for  the   payment  of   contracts  under   the  State                                                               
Procurement  Code;  establishing  deadlines for  the  payment  of                                                               
grants,  contracts,  and  reimbursement agreements  to  nonprofit                                                               
organizations, municipalities,  and Alaska  Native organizations;                                                               
relating to  payment of grants  to named recipients that  are not                                                               
municipalities; and providing for an effective date."                                                                           
                                                                                                                                
8:47:15 AM                                                                                                                    
                                                                                                                                
ELLA  LUBIN,  Staff,  Representative  Rebecca  Himschoot,  Alaska                                                               
State Legislature,  on behalf of Representative  Himschoot, prime                                                               
sponsor,  gave  a recap  of  HB  133,  which would  bring  prompt                                                               
payment parity  to nonprofits, municipalities, and  Alaska Native                                                               
organizations, and  streamline the  process of prompt  payment to                                                               
contractors.    She  spoke  to  the  systemic  issue  surrounding                                                               
delayed   payments,  the   impacts  of   which  include   service                                                               
disruptions, financial  strain, higher costs, and  lack of fiscal                                                               
sustainability.                                                                                                                 
                                                                                                                                
8:48:20 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HIMSCHOOT opened public testimony on HB 133.                                                                           
                                                                                                                                
8:49:03 AM                                                                                                                    
                                                                                                                                
JEN   GRIFFIS,  Vice   President,  Policy   &  Advocacy,   Alaska                                                               
Children's  Trust,  testified  in  support of  HB  133.    Alaska                                                               
nonprofits  continue to  experience system  challenges with  long                                                               
delays in payments that have  impacted Alaska communities and the                                                               
state's economy,  as well as  essential services  like childcare,                                                               
domestic violence,  food security, and public  safety, which play                                                               
an essential role in preventing  child abuse and neglect.  Timely                                                               
payments are  essential to execute  state policy  efficiently and                                                               
enable resources to be provided to Alaskan families.                                                                            
                                                                                                                                
8:51:12 AM                                                                                                                    
                                                                                                                                
MICHELE  GIRAULT, Executive  Director, Hope  Community Resources,                                                               
testified in support  of HB 133.  She said  the bill is necessary                                                               
for nonprofits who  applied for grants in good faith.   She spoke                                                               
to  the challenges  created by  delayed payments  and highlighted                                                               
its catastrophic  impact on  smaller nonprofits  specifically, as                                                               
it creates the  need to open lines of credit  to pay for services                                                               
that should be promptly paid by those grants.                                                                                   
                                                                                                                                
8:52:26 AM                                                                                                                    
                                                                                                                                
SUSAN  ANDERSON, Relational  philanthropic leader,  Boys &  Girls                                                               
Clubs of  Southcentral Alaska,  testified in  support of  HB 133,                                                               
which    would    provide    reliability,    transparency,    and                                                               
accountability for  payment of state  obligations.  She  spoke to                                                               
the challenges  created by  late payments and  the impact  on the                                                               
Boys  and Girls  Club, an  organization  that does  not have  the                                                               
flexibility to float  payments on behalf of the state.   She said                                                               
the bill  would strengthen Alaska's nonprofit  sector by ensuring                                                               
timely disbursement of  funds, thereby allowing them  to focus on                                                               
delivering critical  programs to  the communities that  need them                                                               
most.                                                                                                                           
                                                                                                                                
8:55:14 AM                                                                                                                    
                                                                                                                                
EILEEN  ARNOLD,  Executive  Director, Tundra  Women's  Coalition,                                                               
testified in  support of HB 133.   She spoke to  the difficulties                                                               
facing Alaska  nonprofits and the  challenges created  by delayed                                                               
payments for  a cash poor  organization.  She explained  that The                                                               
Tundra Women's  Coalition has not received  its quarterly advance                                                               
on time  in years, which  has been  remedied by loaning  money to                                                               
itself  via  unrestricted funds  that  had  been invested.    She                                                               
explained   that   the   state's  frequent   late   payments   in                                                               
reimbursements and  advancements have  gotten in  the way  of the                                                               
coalition's ability to build wealth.                                                                                            
                                                                                                                                
8:58:30 AM                                                                                                                    
                                                                                                                                
DAVID   WILSON,  Director   of   Public   Policy,  Matsu   Health                                                               
Foundation, read a portion of  written testimony [included in the                                                               
committee packet],  which read  as follows  [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     The   MSHF  is   deeply  invested   and  dedicated   to                                                                    
     suppo1ting the health and  well-being of our community,                                                                    
     and  we recognize  the  critical  importance of  timely                                                                    
     payments  for services  rendered.  HB  133 addresses  a                                                                    
     significant   issue   that   affects   many   nonprofit                                                                    
     organizations,   municipalities,   and  Alaska   Native                                                                    
     organizations, including those  we fund and collaborate                                                                    
     with.  The establishment  of  a  payment deadline  will                                                                    
     ensure that these entities receive  the funds they need                                                                    
     to  continue  their   vital  work  without  unnecessary                                                                    
     delays.                                                                                                                    
                                                                                                                                
     Timely  payments   are  essential  for   the  financial                                                                    
     stability   of  nonprofit   organizations.  Delays   in                                                                    
     payment   can   disrupt  operations,   hinder   project                                                                    
     progress,  and create  financial  strain.  HB 133  will                                                                    
     help  provide  a  reliable payment  schedule,  allowing                                                                    
     these  entities  to  plan and  execute  their  programs                                                                    
     effectively.                                                                                                               
                                                                                                                                
     Our   organization   has    witnessed   firsthand   the                                                                    
     challenges    faced    by   nonprofit    organizations,                                                                    
     municipalities, and Alaska  Native organizations due to                                                                    
     delayed   payments.   Through  our   pa1tnerships   and                                                                    
     initiatives,  we  have  worked  tirelessly  to  support                                                                    
     these  entities in  their efforts  to provide  critical                                                                    
     services  to our  communities. The  passage  of HB  133                                                                    
     will  provide  much-needed  support  and  resources  to                                                                    
     amplify  these  efforts  and create  lasting,  positive                                                                    
     change.                                                                                                                    
                                                                                                                                
      We believe that HB 133 is a necessary and beneficial                                                                      
     measure that will greatly improve the efficiency and                                                                       
     effectiveness      of     nonprofit      organizations,                                                                    
     municipalities,  and  Alaska Native  organizations.  We                                                                    
     urge the legislature to pass  this bill and support the                                                                    
     timely payment of contracts and grants.                                                                                    
                                                                                                                                
9:00:40 AM                                                                                                                    
                                                                                                                                
SAM CHANAR, Mayor, City of  Tooksook Bay, testified in support of                                                               
HB 133.   He  discussed the challenges  created by  late payments                                                               
and  the  impact on  the  City  of  Tooksook Bay,  including  the                                                               
inability  to pay  for insurance  renewals by  the deadline.   He                                                               
explained that  as a second-class  municipality, the  city places                                                               
itself at  risk of  being sued for  not securing  these coverages                                                               
for services and would have  no chance but to reallocate budgeted                                                               
line  items  to  pay  for   the  insurance.    This  reallocation                                                               
unnecessarily disrupts the city's operations and services.                                                                      
                                                                                                                                
9:03:28 AM                                                                                                                    
                                                                                                                                
KAYLEE MORTON,  Billing Director, Presbyterian  Hospitality House                                                               
(PHH), testified in  support of HB 133.  She  spoke to the impact                                                               
of late  payments on  PHH and the  trickledown effect  on smaller                                                               
providers.   Without  services, she  explained that  children are                                                               
left in dire and unsafe  situations and providers are being asked                                                               
to hold the  financial burden of services already  rendered.  She                                                               
referenced Optum and reported that PHH  had up to $1.2 million in                                                               
outstanding payments at one point.                                                                                              
                                                                                                                                
9:07:03 AM                                                                                                                    
                                                                                                                                
LANCE JOHNSON, Chief Operating  Officer, Alaska Behavioral Health                                                               
Association (ABHA), testified in support of  HB 133.  He spoke to                                                               
the challenges  created by delayed  payments and the  impact it's                                                               
had on  his wife who is  a state contractor.   He reiterated that                                                               
the  State of  Alasa, as  a vendor,  is statutorily  obligated to                                                               
distribute  contract payments  within  30 days  of receiving  the                                                               
invoice.   He opined  that there must  be a  monetary consequence                                                               
for failing  to meet  this obligation.   Low  reimbursement rates                                                               
for Medicaid  services that do  not cover the cost  of delivering                                                               
care are  financially straining providers, which  the state can't                                                               
afford  to lose.    He  spoke to  statutory  language related  to                                                               
delinquent grant  payments, the definition of  reimbursement, and                                                               
reiterated his belief  that the state should be held  to the same                                                               
standards  as  delinquent  agencies  and  pay  interest  of  10.5                                                               
percent for  each day a claimed  payment is unpaid to  help cover                                                               
the  cost  of  the  loans, the  extra  administrative  work,  and                                                               
discontinued  programs.   He  opined  that  HB  133 is  fair  and                                                               
appropriate and urged its passage.                                                                                              
                                                                                                                                
CO-CHAIR HIMSCHOOT sought clarity on Optum.                                                                                     
                                                                                                                                
MR.  JOHNSON said  it's  the  contracted administrative  services                                                               
organization  (ASO) that  handles claim  payments for  behavioral                                                               
health.   Unfortunately, he said  there were  "a lot of  bumps in                                                               
the  system"  that  resulted  in delayed  payments,  as  well  as                                                               
erroneous recoupments  and denied  codes.   He disclosed  that he                                                               
worked for  Optum for 11 months  and "[knows] how the  sausage is                                                               
made."                                                                                                                          
                                                                                                                                
9:14 :01 AM                                                                                                                   
                                                                                                                                
SARAH HOLLISTER,  Interim Executive  Director, United Way  of the                                                               
Tanana Valley, testified in support of  HB 133.  She spoke to the                                                               
challenges  created by  late payments  and the  impact on  United                                                               
Way.   She said delays  are now  expected, which has  resulted in                                                               
reliance  on credit  and distraction  from United  Way's mission.                                                               
She  emphasized  the  deep  impact that  late  payments  have  on                                                               
smaller organizations.                                                                                                          
                                                                                                                                
9:16:28 AM                                                                                                                    
                                                                                                                                
TOM   HIRATSUKA,   Chief   Financial  Officer,   Hope   Community                                                               
Resources,  testified in  support  of H  133.   He  spoke to  the                                                               
challenges  created  by  late payments  and  how  Hope  Community                                                               
Resources  has been  impacted.   He  said  $150,000 was  received                                                               
three months late,  resulting in the shuffling of  funds to cover                                                               
obligations like payroll, vendor payments, and supplies.                                                                        
                                                                                                                                
9:18:01 AM                                                                                                                    
                                                                                                                                
ROBIN   LUTZ,  Executive   Director,   Alaskan  AIDS   Assistance                                                               
Association (AAAA),  testified in support  of HB 133.   She spoke                                                               
to the challenges created by late  payments and how AAAA has been                                                               
impacted.  She  said its imperative for  organizations that offer                                                               
housing subsidies  to be  able to make  timely payments  and keep                                                               
positive relationships  with landlords.   She described  the day-                                                               
to-day  implications  of  late payments  on  staff  and  clients.                                                               
Because  AAAA cannot  depend on  timely grant  payments from  the                                                               
state, two  of its housing units  are being put on  the market to                                                               
shore up cash reserves.                                                                                                         
                                                                                                                                
9:22:02 AM                                                                                                                    
                                                                                                                                
BRENDA STANFILL,  Executive Director, Alaska Network  on Domestic                                                               
Violence &  Sexual Assault (ANDVSA),  testified in support  of HB
.   She spoke to the  challenges created by late  payments and                                                               
the impact  on ANDVSA.   She said Alaska nonprofits  rely heavily                                                               
on state  and federal funds  to provide services, which  is often                                                               
supplemented by  community fundraising  to ensure that  there are                                                               
enough funds to  meet the need and build reserves.   She detailed                                                               
the difficulties  of delayed payments and  reiterated her support                                                               
for the legislation.   She concluded that "it  hasn't always been                                                               
this way" and encouraged the state to go back to the way it was.                                                                
                                                                                                                                
CO-CHAIR HIMSCHOOT closed public testimony on HB 133.                                                                           
                                                                                                                                
9:26:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   PRAX   characterized   timely  payments   as   a                                                               
performance  measure and  opined that  penalizing the  state with                                                               
interest payments wouldn't  help.  He urged the  committee to dig                                                               
deeper  to  find  the  root cause  and  expressed  concern  about                                                               
setting  an   amendment  deadline   before  hearing   from  state                                                               
agencies.                                                                                                                       
                                                                                                                                
CO-CHAIR HIMSCHOOT agreed that there's an oversight issue.                                                                      
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE inquired  about the  interest provision                                                               
in  Alaska  statutes,  whether  anyone has  paid  it,  where  the                                                               
funding comes from,  and whether its legally binding.   He agreed                                                               
that before setting  an amendment deadline, there's  more for the                                                               
committee to do to produce its intended result.                                                                                 
                                                                                                                                
CO-CHAIR  HIMSCHOOT  said  the amendment  deadline  would  remain                                                               
open.   She  encouraged  members to  share  information with  the                                                               
committee as they uncover it.                                                                                                   
                                                                                                                                
9:31:31 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLLAND  agreed that the issue  is compelling, but                                                               
the desired change needs to  be further identified.  He suggested                                                               
that  deciphering whether  the  issue is  broad  and systemic  or                                                               
targeted could help clarify the goal.                                                                                           
                                                                                                                                
CO-CHAIR  HIMSCHOOT pointed  out  that these  are vital  services                                                               
that Alaskans rely on so  fixing it should be done expeditiously.                                                               
She announced that HB 133 was held over.