04/17/2002 09:23 AM Senate FIN

     CS FOR SENATE JOINT RESOLUTION NO. 43(STA)                                                                                 
     Requesting the United States Congress to grant a two-year                                                                  
     moratorium on requirements for certain state payments under                                                                
     federal programs.                                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Kelly  complimented Co-Chair Donley for his  effort and the                                                            
forethought on this "the maintenance of efforts resolution."                                                                    
                                                                                                                                
AT EASE 9:28 AM / 9:29 AM                                                                                                       
                                                                                                                                
Co-Chair Donley moved to  adopt CS SJR #43, 22-LS1632\F as a working                                                            
draft,  and  explained  that  this  proposed  committee   substitute                                                            
inserts the language  "maintenance of effort" into  the title of the                                                            
bill for clarification purposes.                                                                                                
                                                                                                                                
Without  objection,  the  committee  substitute  was  ADOPTED  as  a                                                            
working draft.                                                                                                                  
                                                                                                                                
Co-Chair  Donley explained  to the Committee  this resolution  "asks                                                            
the federal government  to consider a one or two year  moratorium on                                                            
maintenance  efforts requirements  so that  states can adjust  their                                                            
spending consistent  with current  needs and budgetary restraints."                                                             
                                                                                                                                
Co-Chair Kelly  noted that Co-Chair  Donley recently presented  this                                                            
intent language to an Alaska  United States Congressman and received                                                            
favorable  response.  He furthered  that  this intent  language  has                                                            
never  been  formally  presented  at the  federal  level  and  would                                                            
probably  begin debate,  as  this language  would  allow "states  to                                                            
establish a new  level of maintenance of efforts"  so that they "are                                                            
not constantly  held" to historical levels of efforts.  He continued                                                            
this would,  in effect, request a  moratorium on the maintenance  of                                                            
effort requirement provisions.                                                                                                  
                                                                                                                                
Senator Olson  inquired how Senator  Donley determined the  two-year                                                            
time frame presented in this legislation.                                                                                       
                                                                                                                                
Co-Chair  Donley  replied  that  43  states  currently  have  budget                                                            
shortfalls. He voiced understanding  of the federal government's use                                                            
of maintenance of efforts  requirements; however the problem is once                                                            
the maintenance  of efforts requirements  are established,  they are                                                            
permanent. He  reasoned that this language would provide  the states                                                            
"a window of  opportunity to readjust  their budgets" while  keeping                                                            
the federal  maintenance of efforts  program intact. He noted,  "the                                                            
key  to the  feds  is  that  you're not  taking  federal  funds  and                                                            
replacing  them with State  funds, as they  want you to keep  moving                                                            
toward  whatever  program  they want  and  that is  reasonable."  He                                                            
contended  it would  also "be  reasonable  to allow  the states  the                                                            
freedom to adjust once  in a while" based on a multitude of factors.                                                            
                                                                                                                                
JIM NORDLUND,  Director, Division  of Public Assistance,  Department                                                            
of Health and  Social Services, commented  that Co-Chair  Donley was                                                            
"probably motivated"  to present this bill because  of the Temporary                                                            
Assistance  for Needy Families (TANF)  program that has the  largest                                                            
maintenance  of efforts program, in  addition to other block  grants                                                            
such  as  the Maternal/Child   Health Block  grant.  He  stated  the                                                            
maintenance  effort  in  effect  for  the  TANF  program  under  the                                                            
original program  was fifty percent  State funded and fifty  percent                                                            
federally funded; however,  when the program transitioned to a block                                                            
grant,  discussions ensued  as to  what the states'  proper role  in                                                            
financing the Temporary  Assistance to Needy Families (TANF) program                                                            
should be.  He noted there  was concern that  states "would  de-fund                                                            
the program  and create what is known  as "a Race to the  Bottom, to                                                            
be the  state to  have the lowest  welfare  benefits, and  therefore                                                            
save state funding in that fashion."                                                                                            
                                                                                                                                
In  response  to this  concern,  Mr.  Nordlund  continued,  Congress                                                            
established the  maintenance of effort regulations  mandating states                                                            
to be responsible  for 80 percent of the block grant  funding levels                                                            
that were in  effect in 1994; therefore,  he clarified, 1994  is the                                                            
year that maintenance efforts levels are based.                                                                                 
                                                                                                                                
Mr.  Nordlund  stated "there  is  some flexibility  under  the  TANF                                                            
program  that  allows  the  Legislature  to  realize  general  funds                                                            
savings by  using federal TANF dollars  to supplant primarily  child                                                            
care dollars,  general  funded childcare  dollars,"  in addition  to                                                            
welfare  reform   savings.  He  maintained  the  Division   supports                                                            
Congress keeping the maintenance  of efforts in place, and no one at                                                            
the federal level is considering  "getting rid of the maintenance of                                                            
efforts."                                                                                                                       
                                                                                                                                
Co-Chair  Kelly asserted,  "no  one is  talking about  revising  the                                                            
maintenance of efforts,"  and as mentioned, the reaction by Alaska's                                                            
Congressman was encouraging.                                                                                                    
                                                                                                                                
Co-Chair  Kelly stated  Co-Chair Donley  developed  the idea of  re-                                                            
adjusting it, which was,  when first presented, met with opposition.                                                            
Co-Chair  Kelly stated  the idea has  grown, and  has prompted  this                                                            
resolution. Co-Chair Kelly  stated the discussion on the maintenance                                                            
of efforts would continue to grow in the next few years.                                                                        
                                                                                                                                
Co-Chair  Donley  asserted,   "if  ever  there  was  a  gap  in  the                                                            
philosophy   between   the  Knowles'   Administration   and   fiscal                                                            
discipline,   boy,  it  just   emerged."   He  continued  that   the                                                            
Administration  would  rather "rely  on  the federal  government  to                                                            
dictate spending levels"  than allow state governments the option to                                                            
make their own decisions  on their individual budgets, especially in                                                            
light of the current state of Alaska's economy.                                                                                 
                                                                                                                                
Co-Chair  Donley moved to  report "Senate  Joint Resolution  43, the                                                            
committee    substitute,    from    Committee     with    individual                                                            
recommendations."                                                                                                               
                                                                                                                                
There  being  no  objections,  CS  SJR  43(FIN)  was  REPORTED  from                                                            
Committee  with a  previous zero  fiscal note  for all departments,                                                             
dated 4/03/02, from the Senate State Affairs Committee.                                                                         
                                                                                                                                
AT EASE 9:40 AM / 9:43 AM