04/03/2025 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

                  HB 133-PAYMENT OF CONTRACTS                                                                               
                                                                                                                                
8:10:07 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MEARS announced  that the first 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."                                                                           
                                                                                                                                
8:10:18 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HIMSCHOOT,  as prime sponsor  of HB 133, gave  a summary                                                               
of the bill, which would  address delayed payments to nonprofits,                                                               
Tribes, and municipalities  that don't have the  means to weather                                                               
the storm  that's created when  the state makes late  payments on                                                               
awarded grants or nonprofits.                                                                                                   
                                                                                                                                
8:10:58 AM                                                                                                                    
                                                                                                                                
ELLA  LUBIN,  Staff,  Representative  Rebecca  Himschoot,  Alaska                                                               
State  Legislature,  in  response  to  Representative  Himschoot,                                                               
prime  sponsor,  said the  bill  sponsor's  office met  with  the                                                               
Department  of  Health   (DOH)  to  learn  the   reason  for  the                                                               
prevalence   of  delayed   payments,  which   are  training   and                                                               
personnel.   High  turnover rates  impede training  capabilities,                                                               
and  many  grants  require  complex  adjudication  and  reporting                                                               
protocols,  including  intradepartmental  communication,  all  of                                                               
which require a high level  of training.  Furthermore, grants and                                                               
reimbursements,  such as  Medicaid,  that come  from the  federal                                                               
government,   often  require   additional   adjudication.     The                                                               
department  explained that  they are  currently rebuilding  their                                                               
workforce  after COVID-19  burnout  and  increased vacancies  and                                                               
expect that  a delayed  effective date for  HB 133  would provide                                                               
adequate time for continued hiring  and training on these complex                                                               
systems  and  protocols.   In  addition,  the current  accounting                                                               
system that  was implemented in  2019 have caused  delays between                                                               
the department and  its grantees.  They are  working with several                                                               
other  departments  to employ  a  new  system that  would  create                                                               
continuity   between   departments   and   make   several   other                                                               
improvements to  speed up processes.   While this  information is                                                               
specific  to DOH,  she  believed the  overarching  themes may  be                                                               
similar across other departments.                                                                                               
                                                                                                                                
CO-CHAIR HIMSCHOOT added that several  zero fiscal notes had been                                                               
submitted  by  multiple departments.    She  reiterated that  her                                                               
office  was actively  looking  into the  questions  posed by  the                                                               
committee at  a previous hearing  and indicated that  a committee                                                               
substitute (CS)  would be forthcoming that  would include several                                                               
changes, like a  delayed effective date to  allow the departments                                                               
time to come into compliance.                                                                                                   
                                                                                                                                
CO-CHAIR  MEARS  initiated  a discussion  on  the  Department  of                                                               
Commerce, Community & Economic Development (DCCED) fiscal note.                                                                 
                                                                                                                                
CO-CHAIR HIMSCHOOT  said she  was trying  to understand  why that                                                               
section  of  the  bill  was necessary  and  was  considering  its                                                               
removal.                                                                                                                        
                                                                                                                                
MS. LUBIN noted that the section  in question is Section 3, which                                                               
talks about advancing grants to grantees.                                                                                       
                                                                                                                                
8:16:14 AM                                                                                                                    
                                                                                                                                
HANNAH  LAGER,  Director,  Division of  Administrative  Services,                                                               
Department  of  Commerce,  Community,  and  Economic  Development                                                               
(DCCED), said  DCCED's fiscal note  includes a change  in revenue                                                               
in a  negative amount to  the general fund  (GF).  The  impact of                                                               
Section  3 is  that  it  would require  an  automatic advance  on                                                               
grants,  which would  result in  outlaying funds  earlier in  the                                                               
year resulting in lost interest revenue  to the GF as those funds                                                               
are held by the state.                                                                                                          
                                                                                                                                
8:17:16 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX  asked whether the problems  occurring at DOH                                                               
are happening at DCCED.                                                                                                         
                                                                                                                                
MS.  LAGER  said  generally,  she's   not  concerned  about  late                                                               
payments to  grantees.   She said  the testimony  for HB  133 has                                                               
made it  apparent that  there may  be some  miscommunication with                                                               
grantees  in  terms  of  expectations  on the  front  end.    She                                                               
explained that  most do  not receive funding  in the  first month                                                               
and should  expect to see it  in the third month  after the grant                                                               
agreement is completed.                                                                                                         
                                                                                                                                
REPRESENTATIVE PRAX  asked whether  DCCED interfaces with  DOH on                                                               
some grants.                                                                                                                    
                                                                                                                                
MS.  LAGER answered  no,  most are  grants  to municipalities  or                                                               
named recipients through legislative action.                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX asked whether  DCCED is involved in improving                                                               
or streamlining the entire system.                                                                                              
                                                                                                                                
MS. LAGER  said different departments work  on different projects                                                               
at different paces.   She added that DCCED  grants have different                                                               
requirements than those issued by DOH.   Similar to DOH, she said                                                               
DCCED  is actively  working on  improving their  grant system  to                                                               
integrate with the financial system.                                                                                            
                                                                                                                                
REPRESENTATIVE  PRAX opined  that  customer  interface should  be                                                               
consistent.                                                                                                                     
                                                                                                                                
CO-CHAIR  MEARS   agreed  that   department  portals   should  be                                                               
consistent.   She pointed out that  it takes a lot  of commitment                                                               
and work to streamline.                                                                                                         
                                                                                                                                
8:22:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLLAND  commented on  the challenges  involved in                                                               
processing the  Supplemental Nutrition Assistance  Program (SNAP)                                                               
benefits,  which  is emblematic  of  a  systemwide problem.    He                                                               
questioned how  different state  agencies manage  the improvement                                                               
processes and the ability  to create efficiencies, consistencies,                                                               
and productivity  changes.  He  said he  is inclined to  keep the                                                               
current  effective   date  and   asked  whether  DCCED   has  the                                                               
information technology  (IT) resources  to address  these issues.                                                               
In  addition,  he  asked  how  Ms. Lager  would  respond  to  his                                                               
observation that this is a systemic issue across departments.                                                                   
                                                                                                                                
MS. LAGER clarified that DCCED  does not administer SNAP benefits                                                               
and declined  to speak on that  topic.  She explained  that DCCED                                                               
is undergoing a  comprehensive review process of  its IT projects                                                               
and system  replacements to evaluate whether  resources are being                                                               
effectively managed.                                                                                                            
                                                                                                                                
REPRESENTATIVE   HOLLAND  clarified   that  the   comments  about                                                               
efficiency and productivity are  about staff and grantee awardees                                                               
and processes, not the selection of projects.                                                                                   
                                                                                                                                
8:29:45 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE asked  whether all  grants received  by                                                               
DCCED are stored in the GFANSI account.                                                                                         
                                                                                                                                
MS. LAGER  said the  vast majority  are in  the General  Fund and                                                               
Other  Non-Segregated  Investments  (GFANSI) account  aside  from                                                               
federal funding streams and specialty funding sources.                                                                          
                                                                                                                                
CO-CHAIR MEARS  highlighted the  significant cost  of modernizing                                                               
systems.                                                                                                                        
                                                                                                                                
8:33:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE asked whether  interest had been paid on                                                               
late payments.                                                                                                                  
                                                                                                                                
CO-CHAIR  HIMSCHOOT shared  her understanding  that no  money had                                                               
been paid; however, technically, it should have been.                                                                           
                                                                                                                                
MS.  LUBIN  responded  that after  speaking  with  Department  of                                                               
Transportation &  Public Facilities (DOT&PF), it  seems as though                                                               
there is no definite data on that.                                                                                              
                                                                                                                                
8:36:57 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HIMSCHOOT  suggested  that  more would  come  to  light                                                               
through the  forthcoming committee substitute (CS)  and asked for                                                               
the committee's patience as they gather more information.                                                                       
                                                                                                                                
8:37:24 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MEARS announced that HB 133 was held over.