Legislature(2013 - 2014)HOUSE FINANCE 519
01/22/2013 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Fy 14 Governor's Budget Overview: University of Alaska | |
| Overview of Federal Funds and Grants in Alaska, the Fiscal Cliff, Possible Impacts of the Budget Control Act (sequestration), and Future Outlook of Federal/state Relations by Trinity Tomsic, Executive Director, Ffis. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 64 | TELECONFERENCED | |
| *+ | HB 65 | TELECONFERENCED | |
| *+ | HB 66 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 22, 2013
1:32 p.m.
1:32:24 PM
CALL TO ORDER
Co-Chair Austerman called the House Finance Committee
meeting to order at 1:32 p.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative Lindsey Holmes
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
Representative David Guttenberg
ALSO PRESENT
Patrick Gamble, President, University of Alaska; Trinity
Tomsic, Deputy Executive Director, Federal Funds
Information for States (FFIS).
SUMMARY
GOVERNOR'S FY 14 BUDGET OVERVIEW:
University of Alaska
OVERVIEW OF FEDERAL FUNDS AND GRANTS IN ALASKA, THE FISCAL
CLIFF: TRINITY TOMSIC, DEPUTY EXECUTIVE DIRECTOR, FFIS.
HB 65 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 65 was HEARD and HELD in committee for further
consideration.
HB 66 APPROP: MENTAL HEALTH BUDGET
HB 66 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 65
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, amending
appropriations, and making reappropriations; and
providing for an effective date."
HOUSE BILL NO. 66
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
^FY 14 GOVERNOR'S BUDGET OVERVIEW: UNIVERSITY OF ALASKA
1:32:39 PM
PATRICK GAMBLE, PRESIDENT, UNIVERSITY OF ALASKA, introduced
himself and Michelle Rizk, who was the budget officer and
the acting director of the university's human resources
department. He provided a budget overview and noted that
the subcommittee process had not yet begun. He explained
that he would refer to charts prepared by the Legislative
Finance Division (LFD).
Mr. Gamble presented the "FY14 Budget Overview" (copy on
file).
1:36:50 PM
Mr. Gamble began with slide 2: "Many Traditions, One
Alaska." He noted that the University of Alaska had various
campuses located around the state. He stated that the
organization was regrouping after a significant growth
period. He added that the reassessment of processes was the
focus in 2013.
1:38:00 PM
Mr. Gamble discussed slide 3: "UA's Mission."
The University of Alaska inspires learning and
advances and disseminates knowledge through teaching,
research, and public service, emphasizing the North
and its diverse peoples."
1:39:31 PM
Mr. Gamble discussed slide 4: "Who Are We?"
· 34,000 students; 15 nationalities
· 3 urban campuses; thirteen community campuses;
numerous outreach centers
· More than 500 degrees
· 4,174 graduates (FY 12)
Mr. Gamble discussed slide 5: "Core Competencies."
· Higher Education
o PhD
o MA/MS
o BA/BS
o AA
· Workforce Development
o Licenses
o Certificates
o Skilled Labor Training
o Industry Partnerships
· Research and Development(R&D)
o State needs
o Federal needs
o International needs
o Economic needs
· Cultural Priority and Integration
· Community Partners
Mr. Gamble voiced that college graduates were in high
demand. He mentioned conversations with Exxon and Alyeska
who expressed interest in university graduates. The
university provided industry with the highest single source
of engineers. He mentioned projections of growth in the
health care industry over the next three to four years. He
added that new mining opportunities provided significant
employment.
Mr. Gamble pointed out industry partnerships and the need
to share the burden of training workers that add to the
industry's benefit.
1:42:34 PM
Vice-Chair Neuman asked about duplicate programs throughout
the state. He wondered about the university's role
regarding efficiencies in education programs. He recalled a
controversial nursing program at the Alaska Vocational
Technical Center (AVTEC). He expressed interest in
streamlining and providing efficiencies. He asked if the
duplication of effort was inefficient.
Mr. Gamble agreed that the state and university duplicated
workforce training. The duplication was a problem that
could be avoided. He clarified that the university's core
competency graduated four-year nurses and most hospitals
would hire nurses with a four-year degree only. He
advocated for a division of courses between the state and
the university.
1:45:32 PM
Mr. Gamble discussed sequestering and the fact that fewer
universities would receive federal dollars. He stated that
the arctic and circumpolar north were important areas where
the university was primed for success. He added that the
cultural priority and integration of native learning
methods was important. The university worked to provide
relevant information to all cultures. He mentioned the
outreach in the forms of agricultural extension, which was
a large statewide focus.
1:47:46 PM
Representative Costello asked about the Fisher report.
Mr. Gamble responded that the Fisher report was addressed
in the Strategic Directive Initiative (SDI). The Fisher
report contained approximately 80 write-ups, which were
considered in SDI. He offered to address the
recommendations during the subcommittee process. He noted
that the Fisher report preceded the recognition of the need
for SDI.
Mr. Gamble addressed slide 6: "FY 12 Report Card
Performance Review" and the flat performance review
exhibited. The diversity was present for numbers and types
of degrees. He added that the chart indicated that the
growth years were over. The demands of job growth must be
met, hence growth at the university must continue.
1:51:22 PM
Mr. Gamble mentioned the revolution occurring in higher
education. The recognition of the poor returns on
investment, skyrocketing tuition, high fixed costs and low
student performance and graduation existed on a national
level. He appreciated the support of the legislature, since
other states were forced to operate without such support.
He stated that the university was working hard to solve
their problems.
Representative Gara asked about live courses versus online
classes.
1:54:21 PM
Mr. Gamble explained that the classroom described by
Representative Gara was known as a "mixed class." The
university offered mixed classes, utilizing multiple
screens with presenters from various areas. The goal was to
equip more classrooms with the necessary equipment. He
lamented that the track record was poor because the
equipment required modernization and the funding for that
was not approved. He stated the goal of expanding e-
learning. He noted that the bandwidth limitation presented
challenges, especially in rural areas.
Representative Gara pointed out that engineering, math and
science required higher education, but liberal arts classes
also proved important in teaching problem solving skills.
He wondered about the importance placed on liberal arts at
the university.
Mr. Gamble replied that critical thinking was the most
important product provided to a university student. He
added that a broad liberal arts demand existed across the
country.
2:00:06 PM
Representative Costello asked about the percentage of
incoming students who were obligated to take remedial
courses. She asked if the percentage had changed since last
session.
Mr. Gamble replied 57 to 60 percent of incoming students
took remedial courses. He stated that the number had
increased slightly, but was leveling as demographics in the
state were leveling. He explained that one goal of SDI was
to remedy the issue. The university wished to obviate the
need for remediation.
Representative Costello asked if the university should
direct attention to primary education and its deficiencies.
She opined that the need for remediation was an issue that
began earlier than high school. She mentioned that children
were most successful when they had learned to read before
entering the third grade.
Mr. Gamble responded that reading and especially critical
thinking was important. Critical thinking required the
basics of reading.
2:02:33 PM
Mr. Gamble addressed slide 7: "Challenges."
· State Funding support - trending down
· Restrictions on internal budget reallocations
· Huge and aging facility complex
· Enrollment - leveling out
· Matching degrees and training to workforce needs
· Health care costs - unsustainable
· Bandwidth limitations - rural student impact
Mr. Gamble discussed slide 8: "Meeting UA's Challenges
Strategic Direction Initiative (SDI)."
· Focus on Student Achievement
· Asking "Why…?"
o Credit transfer - common complaint
o Students service - "hassle factor" too high
o Limits to e-Learning - rural impact growing
o Tuition can't keep up with cost of doing business
· Placing Emphasis Across UA System
o Value
o Quality
o Throughput
o Excellence
o Attainment
o 3 critical years
· Incorporate lessons learned - studies, reports
Mr. Gamble elaborated that the university was a
bureaucracy. The goal of SDI was to create a service
organization. He stated "we are all in the university
business, but the business of the university was to
graduate students, maintain high standards and pay the
bills." The burden of the business should not fall on the
students. Service was deemed important and bureaucracies
were not known for service. He added that the cost of books
was considerable.
Mr. Gamble noted that many of the concerns were expressed
via student surveys and the question of why things do not
change was valid. He explained that the purpose of SDI was
to evaluate the reasons for the various university
practices. He believed that change required the courage to
act on the suggestions provided. The emphasis across the
system was for a value-added organization. He spoke to the
transition period between high school and college where
students required the most help. The university had master
plans included in the accreditation process.
2:07:58 PM
Mr. Gamble discussed slide 9: "Major SDI Initiatives
Underway Since Last Year."
· Improved Student Services
o MAP - Works
o UAS Honors Program
o UAA VetSuccess
o Stay on TRACK
o Educational opportunities in rural Alaska
· Partnerships K-12
o School Board dialogues with DEED
o Alaska Middle College
o Cordova Campus relocated to Cordova High School
2:10:49 PM
Mr. Gamble discussed slide 10: "Major SDI Initiatives
Underway Since Last Year."
· Public Private Partnerships
o UAS Center for Mine Training (CMT) has been
established
o UAF Sustainable Village
o Dillingham nursing students trained and hired
locally
o FSMI - Fisheries, Seafood, Maritime Initiative
o P3 Dining Facility
· Increased Alaska-Related Grant Funded Research
o Alaska adapting to changing environments
o Alaska Native health research
· Program Review
o Common Courses
o Common Cut Scores
Mr. Gamble continued with slide 11: "FY 14 Budget Request."
· Supporting SDI Themes
o Student Achievement and Attainment
o Productive Partnerships with Alaska's Schools
o Productive Partnerships with Alaska's Public
Entities and Private Industries
o R&D to Sustain Alaska's Communities and Economic
Growth
o Accountability to the People of Alaska
Mr. Gamble spoke about program review. He planned to have
an in-depth discussion during the subcommittee process. He
stated that many of the classes were reviewed. He mentioned
that the themes listed above were integrated into the
budget work.
2:13:52 PM
Mr. Gamble discussed slide 12: "Governor's Proposed FY 14
Operating Budget." He pointed out the state appropriations
at 2.9 percent. Compensation increase listed as $7.6
million, were essentially 2.9 percent. The new
facility/additions estimated operating costs was for GO
bond and legislative funded new initiatives.
Mr. Gamble discussed slide 13: "Deferred Maintenance."
· Bottom Line
o UA seriously needs a programmatic solution to
acquiring annual funds for real property
maintenance, R&R and DM reduction. Going back to
the well each year is clearly not working in the
state's best financial interest.
2:16:44 PM
Mr. Gamble continued with slide 14 and the "Governor's
Proposed FY 14 Capital Budget." The governor's proposed
budget consisted of $37.5 million, which was appropriated
for the fourth year with the purpose of buying down the
cost of deferred maintenance. The receipt authority was for
the "Sustainable Village Phase 2-4."
Mr. Gamble skipped to slide 18: "Sustainment Funding Model
for UA Facilities." He noted that the university was the
largest real property owner in the state. He described the
chart, the red line indicating the deferred maintenance
backlog with no additional funding beyond the governor's
five year plan. He mentioned the deferred maintenance
reductions displayed by the green lines. He explained that
the curve increased, which indicated that (red line) would
occur without additional funding from the governor. He
noted that FY 14 and FY 15 illustrated the descent of the
third green line. He described the relationship between the
various needs of the university.
2:22:53 PM
Mr. Gamble discussed slide 13: "Deferred Maintenance,
Bottom Line."
UA seriously needs a programmatic solution to
acquiring annual funds for real property maintenance,
R&R and DM education. Going back to the well each year
is clearly not working in the state's best financial
interest.
2:25:33 PM
Mr. Gamble discussed slice 16: "Federal Agencies Seek Out
UA Research."
· $133 million external research funding
· Growing recognition that Alaska should have more
involvement in circumpolar research questions and
answers
· To be competitive complimentary Alaska funding for
research is needed
2:28:44 PM
Mr. Gamble discussed slide 19 "University of Alaska's Share
of Total Agency Operations," prepared by LFD. He noted that
the graphs were valuable for illustrating trends that lead
to various issues. These graphs provided general trends and
the general trend lines were in the positive direction. The
growth rate was approximately 4.8 percent. He added that
the percentage would change if the state contribution
changed, which would be out of the university's control. He
pointed out that slide 20 was simply another way of viewing
slide 19.
Mr. Gamble discussed slide 21: University of Alaska
Unrestricted General Fund (UGF) Increases Compared to
Designated General Fund (DGF) Increases ($ Thousands). The
House Finance Committee (HFC) proposed a goal of reaching a
ratio of $1.25 university to $1 state match in revenue. In
the process of reaching the ratio, the HFC recommended the
goal of a 1 to 1 ratio. Slide 21 addressed the request/goal
over the last several years. He noted the volatility of the
chart, but highlighted that the trend was good and last
year the university exceeded the 1 to 1 ratio. He noted
that if the university charged the same tuition as they had
last year, $6 million dollars could be added to the FY DGF
of $8,081,000. The university made the decision to hold
tuition to 2 percent.
2:32:02 PM
Mr. Gamble continued to discuss slide 21. The chancellors
made a decision that the university would remain at 2
percent through efficiencies. He had issued a 4.8 percent
cut across his staff, which amounted to $2 million. He
stressed that the university was working hard no matter
what the formula was and the results were good.
Mr. Gamble moved to slide 22, which illustrated a lookback
for the past 10 years. It was not possible to sustain 4.8
percent annual growth that far into the future without
initiatives. He pointed out the break in the graph's curve
between FY 13 and FY 14 where the flattening process was
visible. He furthered that the budget was largely paying
benefits. He worried about national health care costs, as
they might present difficulty. He briefly pointed to slide
23, which provided another version of the theme.
2:35:28 PM
Representative Wilson asked about the K-12 tracking system.
She wondered whether the university was able to determine
and track deficiencies.
Mr. Gamble replied that the university received a federal
grant and was working with Department of Education and
Early Development on a project known as "P/20W" or "SLEDS."
The grant provided the opportunity to gather the requested
data on high school deficiencies. The "data pipeline"
extended from a data source prior to college to allow for
the tracking of student records. It was possible to
populate the database with many different options. Students
were then offered remediation or scholarships. He stated
that the full populated and federally approved data set
would be provided as a result of the grant funding. The
state had requirements that would allow for the
improvement.
Representative Wilson requested a time frame.
Mr. Gamble replied that the data was prepared for loading.
He stated that the data would be available for assumptions
if the stipulations of the federal grant were met.
2:39:23 PM
Representative Thompson asked about the out migration of
jobs, from Fairbanks to Anchorage. The migration left
vacant space in the Butrovich building. He requested an
update.
Mr. Gamble replied that Fairbanks was a difficult place to
live. He stated that a premium must be paid to get people
to live in Fairbanks. He pointed out that the staff count
remained level in all categories. He added that he had
great staff in Anchorage, who preferred not to live in
Fairbanks. He agreed that it would be more efficient to
have the entire staff in Fairbanks. He stated that the
video teleconferencing capabilities had provided some
relief, but travel from Anchorage to Fairbanks was less
than efficient.
Representative Guttenberg commented that each community
provides unique benefits.
Mr. Gamble responded that his key staff was living in
Fairbanks and they loved it.
Representative Munoz announced the university subcommittee
schedule.
2:45:29 PM
^OVERVIEW OF FEDERAL FUNDS AND GRANTS IN ALASKA, THE FISCAL
CLIFF, POSSIBLE IMPACTS OF THE BUDGET CONTROL ACT
(SEQUESTRATION), AND FUTURE OUTLOOK OF FEDERAL/STATE
RELATIONS BY TRINITY TOMSIC, EXECUTIVE DIRECTOR, FFIS.
2:45:55 PM
TRINITY TOMSIC, DEPUTY EXECUTIVE DIRECTOR, FEDERAL FUNDS
INFORMATION FOR STATES (FFIS), presented "The Federal
Budget and Alaska" (copy on file). She explained that FFIS
was a small organization with five members that worked with
all states' executive and legislative branches. The
organization provided federal level fiscal information and
predicted the potential fiscal impact.
Ms. Tomsic discussed slide 2: "Where the money goes: Pieces
of the federal budget pie." She described the chart, which
showed that the federal government spent $3.6 trillion in
FY 11 in total. More than half of the spending was
considered "mandatory." Mandatory spending included Social
Security, Medicare, Medicaid and other programs such as
nutrition and farm programs and retirement benefits. The
mandatory expenses were outside of the regular budget
discussions or appropriation process. The appropriation
process covered the discretionary aspect of the budget,
which included domestic discretionary and defense, which
amounted to less than half of the budget. She pointed out
that FY 11 saw a federal budget deficit of 1.5 trillion.
The deficit would exist with the exclusion of defense and
domestic discretionary spending.
2:49:50 PM
Ms. Tomsic continued with slide 3: "Payments to individuals
have come to dominate federal grants." The chart
illustrated federal outlays for state and local grants as a
share of total federal outlays.
Co-Chair Stoltze asked about debt service and the pie-chart
on slide 2.
Ms. Tomsic responded that the debt service was illustrated
in the "net interest" slice of the pie.
Ms. Tomsic continued with slide 4: "What program's areas
are supported by state/local grants?" Of the $3.6 trillion,
approximately $600 billion was allocated to state and local
governments in the form of grants. States also received
benefits from Social Security payments, Medicare, and
defense. Slide 4 detailed only the grants for state and
local government. Grants represented 18 percent of the
federal budget. The chart divided the types of grants going
to state and local governments. Medicaid increased, while
the other categories decreased. Capital or transportation
was declining.
Ms. Tomsic continued with slide 5: "Federal grants going to
Alaska: share of funding by function." She explained that
the chart was broken down by budget function. The chart
compared Alaska to the national average. She noted that
state transportation, mineral leasing and national forests
incurred greater grant funding than the national average.
Fish and wildlife federal programs were also higher than
the national average. Health and income security were
charted below the national average.
2:54:04 PM
Ms. Tomsic referred to slide 6: "Federal grants going to
Alaska: per capita, 2011." She explained that Alaska ranked
10 with $1041 per person in Medicaid funds. Discretionary
was ranked number 1 with $1812 per person. The total rank
was approximately twice the national average.
Ms. Tomsic discussed slide 7: "What influences grant
allocations?"
· Medicaid redistributes income from:
o richer to poorer states
o smaller to larger programs
o cheaper to more expensive programs
o Alaska receives $1041 per capita in federal
Medicaid funding and ranks number 10; FMAP =
50.00 percent
· Many programs allocate funds based on need
o Alaska is a relatively wealthy state (high per
capita income and low poverty rate)
o Alaska benefits from grant programs with small-
state minimums
Representative Edgmon noted that 23 percent of fund sources
were from the overall budget and Alaska was "federal
government driven." He believed that much of the federal
funding did not go through the state budget process.
Ms. Tomsic responded that the grants were the focus of the
previous slide. She agreed that the defense budget was
greater and added to the money flowing through the state.
Representative Edgmon understood the trend in Alaska for
federal funding to remain static.
2:56:44 PM
Ms. Tomsic stated that the discretionary grants showed a
slight decline over time, but mandatory spending was driven
by caseloads. As caseloads increased, an increase in
funding in food stamps and Medicaid occurred.
Representative Guttenberg asked for a breakdown of cost for
service. He wondered if the cost of delivering service was
different.
Ms. Tomsic did not have a cost-of-service breakdown. She
provided data related to the Medicaid dollars flowing to
Alaska on a per capita basis.
Ms. Tomsic responded that the intention of the presentation
was to provide a quick overview. She noted that the
matching rate for Medicaid was 50 percent.
Ms. Tomsic referred to slide 8: "What influences grant
allocations?"
· Demographics
o 26 percent of Alaska's population is under 18
(above average) and 8 percent is 65 or older
(below average)
o Alaska has experienced a slight increase in its
share of total population since 2000
· Federal facilities/land
o Large federal presence in Alaska
o Alaska benefits from programs with formulas based
on receipts from federal land
ƒBLM's Payments in Lieu of Taxes, Mineral
Leasing Payments, Impact Aid
2:59:50 PM
Ms. Tomsic discussed slide 9: "What's the outlook in FY 1
and beyond?"
· Budget Control Act (BCA) sequester
· FY 2013 appropriations
o Continuing Resolution (CR) expires 3/27/13
o State/local programs disproportionately targeted
for spending cuts since 2010
· Comprehensive deficit reduction
o Medicaid reform; cost-shift to states?
o Further cuts in discretionary spending
o Trade-off: more certainty, less funding
3:01:45 PM
Ms. Tomsic referred to slide 10: "Discretionary spending
has been on the decline:" The chart detailed discretionary
spending as red bars, which decreased over time. The
mandatory spending saw a slight increase.
Ms. Tomsic discussed slide 11: "The BCA and Looming
Sequester."
· Sequester scheduled to occur on March 1, 2013
· $984 billion in cuts required over FYs 2013-2021
(roughly $109 billion per year, half from defense and
half from nondefense)
o "Fix" reduced FY 2013 cuts from $109b to $85b
· Many mandatory and few discretionary programs are
exempt (special rule for special/trust funds)
· ATB in FY 2013, different process for FY 2014+
Ms. Tomsic stated that Medicaid, transportation funding and
other mandatory programs that benefit low income
individuals were all exempt from sequester. Much federal
funding was subject to a "special rule" stating that
programs subject to sequester would get the money back
later.
Co-Chair Austerman asked if the $984 billion included cuts
to the base or to future growth.
Ms. Tomsic responded future growth. She clarified that
every year approximately $109 billion would be cut for a
period of ten years. She noted that the base assumed some
growth over time. She pointed out the different process in
2013, where every program subject to sequester would
receive an across-the-board cut. In future years,
discretionary programs would be subject to a lower
reduction in the discretionary spending limits, meaning
that congress would determine which programs were reduced.
Ms. Tomsic referred to slide 12: "FAQs on the BCA
Sequester."
1. What is the ATB percentage cut?
a. FFIS estimates -5.9 percent for nondefense
discretionary (was -8.2 percent) and -5.7 percent
for nondefense mandatory (was -7.6 percent)
b. Exact percentage won't be known until march 2013
2. How will individual programs be affected?
a. ATB cut applied to FY 2013 funding in place on
3/1/13 (CR?)
b. Cuts must be applied to each program, project,
and activity
c. OMB has authority to apply special rules,
exemptions
3. What is the timing of the cuts?
a. Agencies have some discretion
b. Reflected in grant awards issued after March 1,
2013
3:07:05 PM
Representative Holmes understood that the federal
government would be six months into their fiscal year when
they would be asked to make the cuts.
Ms. Tomsic responded that the federal fiscal year began in
October, but circumstances for the sequester were
different. She explained that agencies had some discretion
regarding the timing of the cuts. States had already
received grant awards for 2013. Most of the cuts would come
in the second half of the fiscal year. Some agencies, such
as education preferred that school districts were not
worried about this school year. Much of the funding was
advance funding, which would occur the July - September
quarter. She expected the preferences to vary on a program
by program basis. The continuing resolution was funded on
an FY 12 level plus a slight adjustment for across-the-
board increases in FY 13 included in CR, which would mean
new annualized levels for those programs.
Representative Holmes opined that the process would prove
interesting for this legislature as various departments
unveiled their plans.
3:09:46 PM
Ms. Tomsic continued with slide 13: "While most state grant
programs are subject to sequester…" She explained that a
program subject to a sequester would absorb the costs. The
Office of Management and Budget (OMB) would decide how to
apply or interpret the special rules and exemptions.
Ms. Tomsic moved on to slide 14: "Most Alaska grant funding
is exempt." She noted that the data base had 216 programs
and 165 were covered by sequester (76 percent). Most grant
funding for Alaska was exempt from sequester. Only 24
percent of federal funding in Alaska was subject to
sequester.
Ms. Tomsic discussed slide 15: "Some program areas in
Alaska are more affected than others." The chart observed
the funding for Alaska by budget function to determine how
much of the funding was subject to sequester. Programs such
as agriculture, employment and training, community
development, justice, energy, environment, natural
resources, and general government had 100 percent of the
funding subject to sequester. She mentioned that education
showed 87 percent of funding covered by sequester, but she
added that Pell grants were not tracked. She noted that
only 6 percent of the health program was subject to
sequester, although Medicaid, children's health insurance
program and vaccines for children remained exempt from
sequester. The remainders of the public health programs
were subject to sequester. Transportation was the lowest at
3 percent.
3:13:46 PM
Ms. Tomsic continued with slide 16: "Among the 10 largest
grants in Alaska, 7 are totally exempt." Only a few
programs were subject to sequester.
3:15:23 PM
Representative Edgmon asked if the database allowed for the
understanding of federally recognized tribes.
Ms. Tomsic apologized that the federal fund tracking was
not well documented for tribal entities.
Representative Edgmon wondered how Alaska would compare to
other states with large Native American populations.
Ms. Tomsic appreciated the comment, as the need for the
data was valid.
Ms. Tomsic continued with slide 17: "The largest nonexempt
grants in Alaska mostly benefit local governments." She
noted that most non-exempt grants benefited local
governments. Examples were impact aid, consolidated health
centers, Title one, special education, etc. She noted that
mineral leasing, and the fish and wildlife fish and
wildlife restoration programs were subject to the "special
rule," meaning that the state should "get back" any funds
that were sequestered in the fiscal year.
3:17:24 PM
Ms. Tomsic discussed slide 18: "Potential impact of amended
sequester in Alaska." She explained that the chart
separated covered programs from those that were exempt. She
noted that Alaska received $637 million for those programs
that were subject to sequester. The estimation was that the
difference would be $18 million. For the exempt or
mandatory programs, funding would increase by $77 million,
which was driven by Medicaid and food stamp programs as
they were experiencing growth. Overall, a $59 million
increase was expected for 2013.
Ms. Tomsic recommended comparing the covered program for
2013 under CR because transportation programs recently
underwent a reauthorization and the structure changed
dramatically. Funding was apparent in 2013 that was not in
2012 and was subject to sequester. If congress tackled the
comprehensive deficit reduction, the changes would lead to
between $18 million or $37 million cut with sequester in
2013. She mentioned that Medicaid proposals were on the
table, but no action had occurred. One proposal existed to
reduce federal match to 45 percent, which would lead to a
cut of $66 million. She offered the information to provide
perspective on Medicaid funding.
3:19:55 PM
Representative Holmes asked about the ratio of covered
versus exempt nationwide.
Ms. Tomsic responded that 18 percent of the funding was
subject to sequester. Alaska had access to the "special
rule," which would allow a refund of some sequestered
dollars.
Representative Holmes asked if sequestration would reduce
the nationwide budget.
Ms. Tomsic responded that the effect of the sequester was
estimated to reduce the budget by $85 billion in 2013. She
added that mandatory programs that were outside of the
process were growing based on eligibility and caseloads.
Representative Munoz asked about mandatory health care
insurance and its effect on the number of Medicaid
recipients.
Ms. Tomsic responded that a state's caseload would be
impacted if they chose to take advantage of the Medicaid
eligibility expansion. She added that a person could exempt
themselves from Medicaid. She stated that increases to
providers would match Medicare rates, which would affect
costs.
3:23:03 PM
Representative Gara asked about the federal match for
Medicaid.
Ms. Tomsic responded that the trends were masked by the
hold-harmless provision of the stimulus program. She stated
that the average had increased over time.
Representative Gara asked if the match would remain at 50
percent unless the law changed.
Ms. Tomsic reminded the committee that the sequester would
not affect Medicaid. She added that Congress attempted to
alter the matching rate. Formula changes tended to be
difficult to agree on.
Representative Wilson asked if the reference to per capita
income was based on residency.
Ms. Tomsic explained that the information was based on
census data. The population estimate used the census
numbers as a starting point. The estimate was then adjusted
for births, deaths, and migration. She offered to provide
the committee with additional information once she obtained
it.
3:26:07 PM
Ms. Tomsic discussed slide 19: "We're captive on the
carousel."
· One "crisis" averted, more in store:
o March 1 sequester
o Debt ceiling has been reached and will need to be
raised
o FY 2013 appropriations
ƒCR expires March 27
· Total nondefense discretionary spending is $610
billion, the federal deficit is $1.1 trillion
Ms. Tomsic discussed slide 20: "So what's the bottom line?"
· The yawning gap between federal revenues and spending
persists
· Tax expenditures and Medicare/Medicaid are squeezing
out other spending
· The state-federal partnership is now defined by
Medicaid
· Non-Medicaid grants have been on the descent for
years, and that's unlikely to change
3:28:14 PM
Representative Gara recalled a past presentation
illustrating that applications for Medicaid had increased.
The per capita cost of medical care was skyrocketing,
leading to the increased Medicaid costs. He mentioned a
healthcare commission that might provide valuable
recommendations. He proposed the idea of seeking cost
saving ideas and imagined that the healthcare commission
would be helpful.
HB 65 was HEARD and HELD in committee for further
consideration.
HB 66 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 3:29 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FFIS Presentation HFC-1-21-13.pdf |
HFIN 1/22/2013 1:30:00 PM |
FFIS Presentation |
| UofA-HFIN Overview1-22-13.pdf |
HFIN 1/22/2013 1:30:00 PM |
UofA Overview |