04/24/1996 09:02 AM Senate HES

             HB 515 am USE OF YOUTH SERVICES GRANTS                           
                                                                              
 CHAIRMAN GREEN introduced HB 515 am as the next order of business.            
                                                                               
 Number 161                                                                    
                                                                               
 KYLE JOHANSEN, staff to Representative Bill Williams who is the               
 prime sponsor of HB 515, read the following sponsor statement into            
 the record:                                                                   
                                                                               
 "House Bill 515 allows the recipient of an operating grant for                
 residential services to use grant money to pay for the purchase of            
 a building, vehicle or other assets.  Residential services are                
 defined in statute as "24-hour care and supervision of minors in              
 residential child care facilities that are commonly known as group            
 homes or institutions" (AS 47.40.091).                                        
                                                                               
 Currently, recipients of these grants may not use the grant money             
 to purchase buildings, vehicles or other assets.  They may,                   
 however, use the money for rent and lease payments.  Today,                   
 recipients pay rent/lease payments year after year with no chance             
 of building equity.  The residential youth home in Ketchikan has              
 spent over $200,000 in rent over the last six years.  They could              
 own their facility today had it not been for the present statute.             
                                                                               
 By changing this statute, these residential centers can, in many              
 cases, lower monthly payments and eventually own their own asset.             
 In the long run this will lessen their dependency on the state and            
 allow more money for the programs that help our troubled youth.               
                                                                               
 During these times of fiscal responsibility, we need to get the               
 most out of every dollar the state spends.  I believe this                    
 legislation will give these homes flexibility toward bettering                
 their programs.  I urge you to support this legislation."                     
                                                                               
 Number 196                                                                    
                                                                               
 SENATOR SALO expressed her strong support for the legislation.                
                                                                               
 Number 204                                                                    
                                                                               
 PAT CLASBY, representing the Alaska Association of Homes for                  
 Children, said their association comprises 17 private nonprofits              
 that provide residential care and other youth services throughout             
 the state.  Much of the use of these facilities is based on the               
 lease payments that's found both in the statute and regulations of            
 the department.  These providers are trying to provide services in            
 a more cost-effective manner in the face of budget constraints, and           
 this bill would provide the opportunity to do business in a wiser             
 way.                                                                          
                                                                               
 Number 225                                                                    
                                                                               
 SENATOR SALO asked if, in addition to being able to allow the grant           
 monies to be spent on a mortgage type payment, would it also then             
 be possible for them to use the grant monies for maintenance                  
 projects.  PAT CLASBY replied it is her understanding that this               
 bill would be removing that part of the statute that does not allow           
 these facilities to provide capital expenditures.  They could then            
 make minor renovations, improvements, etc., as long as it was                 
 within their grant budget.                                                    
                                                                               
 Number 263                                                                    
                                                                               
 JAMES STEELE of Wasilla, testifying from the Mat-Su LIO in support            
 of HB 515, said in many cases this bill will allow providers of               
 residential child care to ower monthly payments and eventually own            
 their own facility.  It will allow and provide a level of                     
 flexibility of control basically to use state dollars to the                  
 benefit of the children served, the agencies providing the services           
 and to the people of Alaska.  It also provides more stability for             
 the children that are being served.  He noted the bill is specific            
 only to grants for residential services, as well as having a zero             
 dollar fiscal impact.                                                         
                                                                               
 Number 295                                                                    
                                                                               
 JACK DUCKWORTH, representing Residential Youth Care in Ketchikan              
 and testifying from the Ketchikan LIO, said there is a tremendous             
 amount of cost to get these residential facilities on line to meet            
 state fire codes, etc.  If a landlord decides to sell the facility,           
 it would not just be a matter of going to a new place and signing             
 a new lease; it would also mean the additional costs of putting in            
 sprinkler systems, fire alarm systems and updating the facility to            
 make sure it meets the needs of the children.                                 
                                                                               
 Mr. Duckworth advised that the Residential Youth Care program in              
 Ketchikan has been in existence for over six years and they have              
 spent over $200,000 for lease payments.  They have two programs,              
 and the lease payments for one of their programs totals $20,000 a             
 year and the lease payments for the other program total $25,200 a             
 year.  The monthly lease payments total $2,100, and they have                 
 estimated that if they could buy the building, it would lower their           
 monthly payments by approximately $400, so not only would they be             
 lowering their monthly expenses, they would be building up an                 
 equity in the facilities as well.                                             
                                                                               
 Number 323                                                                    
                                                                               
 There being no further testimony on HB 515 am, CHAIRMAN GREEN asked           
 for the pleasure of the committee.                                            
                                                                               
 SENATOR SALO moved HB 515 am be passed out of committee with                  
 individual recommendations.  Hearing no objection, it was so                  
 ordered.