Legislature(2017 - 2018)ADAMS ROOM 519

04/05/2018 01:30 PM FINANCE

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Audio Topic
01:37:16 PM Start
01:38:32 PM Confirmation Hearings: Alaska Mental Health Trust Authority Board: Verne Boerner
01:48:13 PM HB240
01:56:45 PM HB219
02:26:05 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearings: Mental Health Trust TELECONFERENCED
Authority Board
-- Public Testimony --
+= HB 212 REAA & SMALL MUNI SCHOOL DISTRICT FUND TELECONFERENCED
<Bill Hearing Canceled>
+= HB 219 CRIM HIST CHECK: ST EMPLOYEES/CONTRACTORS TELECONFERENCED
Moved CSHB 219(JUD) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 240 PHARMACY BENEFITS MANAGERS TELECONFERENCED
Moved CSHB 240(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 5, 2018                                                                                            
                         1:37 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:37:16 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:37 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Verne  Boerner,  Trustee  Appointee,  Alaska  Mental  Health                                                                    
Trust Authority; Michele  Michaud, Deputy director, Division                                                                    
of  Retirement and  Benefits, Department  of Administration;                                                                    
Emily Ricci,  Health Care Policy Administrator,  Division of                                                                    
Retirement  and  Benefits,   Department  of  Administration;                                                                    
Brandon   S.   Spanos,   Deputy  Director,   Tax   Division,                                                                    
Department of  Revenue; Kate Sheehan, Director,  Division of                                                                    
Personnel    and    Labor     Relations,    Department    of                                                                    
Administration.                                                                                                                 
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
None                                                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 219    CRIM HIST CHECK: ST EMPLOYEES/CONTRACTORS                                                                             
                                                                                                                                
          CSHB 219 (JUD) was  REPORTED out of committee with                                                                    
          four   "do   pass"   recommendations,   four   "no                                                                    
          recommendation"    recommendations,   and    three                                                                    
          "amend"  recommendations and  with six  previously                                                                    
          published  fiscal notes,  four  with zero  impact:                                                                    
          FN6(COR),  FN7(DHS), FN8(LWF),  and FN9(DPS);  and                                                                    
          two fiscal impact notes: FN10(REV) and FN11(REV).                                                                     
                                                                                                                                
HB 240    PHARMACY BENEFITS MANAGERS                                                                                            
                                                                                                                                
          CSHB 240 (FIN) was  REPORTED out of committee with                                                                    
          a "do  pass" recommendation and with  one new zero                                                                    
          fiscal  note by  the Department  of Administration                                                                    
          and  with  one  previously published  zero  fiscal                                                                    
          note: FN1(CED).                                                                                                       
                                                                                                                                
CONFIRMATION HEARINGS: ALASKA MENTAL HEALTH TRUST AUTHORITY                                                                     
BOARD: VERNE BOERNER                                                                                                            
                                                                                                                                
Co-Chair Foster reviewed the agenda for the meeting. He                                                                         
intended to move HB 240 and HB 219 from committee if it was                                                                     
the will of members.                                                                                                            
                                                                                                                                
^CONFIRMATION   HEARINGS:   ALASKA   MENTAL   HEALTH   TRUST                                                                  
AUTHORITY BOARD: VERNE BOERNER                                                                                                
                                                                                                                                
1:38:32 PM                                                                                                                    
                                                                                                                                
VERNE BOERNER, TRUSTEE APPOINTEE, ALASKA MENTAL HEALTH                                                                          
TRUST AUTHORITY, introduced herself and explained that she                                                                      
was named by the Navy. She read a prepared statement:                                                                           
                                                                                                                                
     Thank you,  Co-Chairs and Members of  the Committee for                                                                    
     this opportunity  to share with  you my  experience and                                                                    
     interest in serving as a  Trustee for the Alaska Mental                                                                    
     Health Trust Authority. I am  humbled and honored to be                                                                    
     before you today. My name  is Verne Boerner, my I?upiaq                                                                    
     name  is  Qaanaaq,  after  my   grandmother.  I  am  an                                                                    
     enrolled tribal member of  the sovereign Native Village                                                                    
     of Kiana.                                                                                                                  
                                                                                                                                
     In my other hearings, I  started by sharing my earliest                                                                    
     memory. I  remember when  I was  about four  years old,                                                                    
     driving  the snowgo  to the  Armory for  Head Start  in                                                                    
     Kiana, Alaska. I wasn't driving,  but thought I was and                                                                    
     remember  being  very  proud of  myself.  Kiana  is  my                                                                    
     hometown   and   where   my  grandmother   and   attain                                                                    
     (namesake)  served  as   one  of  the  first-generation                                                                    
     community health  aides. She  was my first  exposure to                                                                    
     tribal  health and  back then,  patients often  came to                                                                    
     our  home for  care. We  did not  have a  toilet and  I                                                                    
     remember having to  scamper in the middle  of winter to                                                                    
     the outhouse  with all the  scary stories  of Inuuqungs                                                                    
     and nataqs  that my aunts  and uncles used to  tease me                                                                    
     with. (By the  way, it is amazing to me  that there are                                                                    
     many homes in Kiana today  that still do not have water                                                                    
     and  sewer).  By  the  time  I  graduated,  our  Tribal                                                                    
     leaders  working with  our Elders  created the  I?upiat                                                                    
     Ilitqusiat    Inupiaq  Values,  with  the premise  that                                                                    
     Every  Inupiaq  person  is  responsible  to  all  other                                                                    
     Inupiat  for the  survival of  our cultural  spirit and                                                                    
     the values  and traditions  through which  it survives.                                                                    
     Through our extended family, we  retain, teach and live                                                                    
     our  Inupiaq way  of life.  With  guidance and  support                                                                    
     from  our Elders,  we teach  our  children our  Inupiat                                                                    
     Ilitqusiat values.                                                                                                         
                                                                                                                                
     These were  my formative  experiences, and this  is the                                                                    
     briefest way  that I  can think  of introducing  you to                                                                    
     who I  am and the  foundational experiences I  bring to                                                                    
     the table.                                                                                                                 
                                                                                                                                
     My specific interest in the  Alaska Mental Health Trust                                                                    
     Authority  comes   from  the  Tribes  and   the  tribal                                                                    
     leaders.  I am  the  President and  CEO  of the  Alaska                                                                    
     Native  Health Board.  ANHB is  the statewide  voice on                                                                    
     Alaska Native health  issues. ANHB is in  its 50th year                                                                    
     as an  advocacy organization  for the health  needs and                                                                    
     concerns of  all Alaska Native people,  and its mission                                                                    
     is to promote the  spiritual, physical, mental, social,                                                                    
     and  cultural well-being  and  pride  of Alaska  Native                                                                    
     people.  Since  my returning  to  Alaska  and prior  to                                                                    
     that, our Leadership has stated  that the Alaska Mental                                                                    
     Health   Trust  Authority   Board  of   Trustees  needs                                                                    
     representation  from  those  familiar with  the  Alaska                                                                    
     Tribal  Health  System.  Particularly  considering  the                                                                    
     overrepresentation  of   our  People  as   the  Trust's                                                                    
     beneficiaries.                                                                                                             
                                                                                                                                
1:42:04 PM                                                                                                                    
                                                                                                                                
Ms. Boerner continued to read from prepared remarks:                                                                            
                                                                                                                                
     The Alaska  Tribal Health  System is  a true  system of                                                                    
     care with  voluntary participation of  sovereign Tribes                                                                    
     and  Tribal  Health   Organizations  through  a  single                                                                    
     negotiated  compact with  the  Federal Government,  the                                                                    
     ATHS provides  health services  for Alaska  Natives and                                                                    
     American Indians  in over 200 facilities  and locations                                                                    
     all across the state.                                                                                                      
                                                                                                                                
     The  ATHS   provides  health  care  in   every  Alaskan                                                                    
     community, and  is a critical  component of  the Alaska                                                                    
     Public Health System. I come  before you today with the                                                                    
     encouragement and blessing of  the Alaska Native Health                                                                    
     Board.                                                                                                                     
                                                                                                                                
     With regard  to my experience,  I have worked  for over                                                                    
     20  years  in  Tribal   Health,  health  promotion  and                                                                    
     disease   prevention,   administration  and   budgeting                                                                    
     experience. I  served tribes  in the  establishment and                                                                    
     formation of tribal epidemiology  centers and have over                                                                    
     13   years   of   experience  serving   on   a   tribal                                                                    
     institutional   review   board,    working   on   human                                                                    
     protection  issues  with  particular attention  to  the                                                                    
     vulnerable populations  such as those who  comprise the                                                                    
     beneficiaries of  the Alaska Mental Health  Trust. I am                                                                    
     also  a  Native  American Research  Centers  on  Health                                                                    
     Fellow and hold a master's  degree in public health and                                                                    
    an undergraduate degree in business administration.                                                                         
                                                                                                                                
     My   passion  is   addressing  health   disparities  in                                                                    
     indigenous  and  minority  populations  through  health                                                                    
     research, policy  development, education  and outreach.                                                                    
     I  am   a  firm  believer  in   taking  community-based                                                                    
     approaches  to  best  tap the  existing  strengths  and                                                                    
     resources these resilient  populations possess in order                                                                    
     to  design  and  address  health  disparities.  I  have                                                                    
     observed  that  culturally intelligent  approaches  are                                                                    
     needed  to   build,  and  build   upon,  evidence-based                                                                    
     approaches in interventions, outreach and treatment.                                                                       
                                                                                                                                
1:44:10 PM                                                                                                                    
                                                                                                                                
Ms. Boerner continued to read from prepared remarks:                                                                            
                                                                                                                                
     I  have had  the  honor of  being  entrusted by  tribes                                                                    
     through the  years to represent  them on  health issues                                                                    
     and  workgroup at  state and  national levels,  such as                                                                    
     the  restructuring  initiative  of  the  Indian  Health                                                                    
     Service, the National  IHS Budget Formulation Workgroup                                                                    
     as  well  as  serving on  translational  research  into                                                                    
     practice advisory groups.                                                                                                  
                                                                                                                                
     I  consider  myself  to   have  three  citizenships:  a                                                                    
     citizen of  my Native  Village of Kiana,  United States                                                                    
     citizen  and I  am  a naturalized  citizen of  Germany.                                                                    
     Alaska  has grown  in so  many ways  in our  lifetimes.                                                                    
     Even   in  our   small  village   of  Kiana,   we  have                                                                    
     naturalized  citizens from  around  the  world. I  know                                                                    
     what it is like to go  through that process and to seek                                                                    
     health  care and  mental health  services in  a foreign                                                                    
     country   with  limited   command   of  the   language.                                                                    
     Naturalized  families experience  unique health  issues                                                                    
     and concerns  of which  I have  not only  learned about                                                                    
     academically  but have  personally experienced.  I have                                                                    
     this to offer as well.                                                                                                     
                                                                                                                                
     Like all  the Trustees,  I have  a very  personal drive                                                                    
     for wishing to  serve as a Trustee. I hope  to honor my                                                                    
     late  sister. She  lost her  battle with  alcohol three                                                                    
     days before her  29th birthday. She was  trying to quit                                                                    
     and had  no drugs in  her system. The  coroner's report                                                                    
     listed  her   cause  of  death   as  natural,   due  to                                                                    
     complications of chronic ethanolism.  I pose that there                                                                    
   is nothing natural about the death of a 29-year-old.                                                                         
                                                                                                                                
     Thank you  for your time and  consideration and welcome                                                                    
     your questions.                                                                                                            
                                                                                                                                
Co-Chair Foster  asked Ms. Boerner  to submit  her statement                                                                    
in writing. He recommended that  Ms. Verne Boerner's name be                                                                    
forwarded  to  a  joint  session   of  the  legislature  for                                                                    
consideration.  He  reminded  members that  by  signing  the                                                                    
conference report  it did not  reflect intent of  any member                                                                    
to vote for or against Mr. Boerner's confirmation.                                                                              
                                                                                                                                
1:47:24 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:48:04 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 240                                                                                                            
                                                                                                                                
     "An  Act relating  to the  registration  and duties  of                                                                    
     pharmacy  benefits  managers; relating  to  procedures,                                                                    
     guidelines,  and  enforcement mechanisms  for  pharmacy                                                                    
     audits; relating  to the  cost of  multi-source generic                                                                    
     drugs and insurance  reimbursement procedures; relating                                                                    
     to  the  duties of  the  director  of the  division  of                                                                    
     insurance; and providing for an effective date."                                                                           
                                                                                                                                
1:48:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster indicated that the bill was last heard on                                                                       
the previous day. There was one amendment submitted.                                                                            
                                                                                                                                
REPRESENTATIVE DAVID  GUTTENBERG, SPONSOR, relayed  that the                                                                    
fiscal note had changed from  the time the committee adopted                                                                    
the previous version.  The fiscal note by  the Department of                                                                    
Administration  (DOA)  was  zeroed  out  when  language  was                                                                    
changed from "shall" to "may."                                                                                                  
                                                                                                                                
Co-Chair Seaton asked which version of the amendment would                                                                      
be under consideration.                                                                                                         
                                                                                                                                
1:49:40 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:50:11 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Gara MOVED to ADOPT Amendment 1 (copy on file):                                                                      
                                                                                                                                
     Page 1, line l, following "Act":                                                                                           
                                                                                                                                
          Insert relating  to prescription  prices available                                                                    
          to  consumers; relating  to penalties  for certain                                                                    
          pharmacy or pharmacist violations;"                                                                                   
                                                                                                                                
     Page 1, following line 6:                                                                                                  
          Insert new bill sections to read:                                                                                     
                                                                                                                                
     "* Section 1.  AS 08.80.297 is amended by  adding a new                                                                    
     subsection to read:                                                                                                        
          (b)  No  contract  or  agreement  may  prohibit  a                                                                    
          pharmacy,   pharmacist,   or   pharmacy   benefits                                                                    
          manager from informing a patient  of a less costly                                                                    
          alternative for a   prescription  drug or  medical                                                                    
          device  or supply,  which may  include the  amount                                                                    
          the  patient  would  pay  without  the  use  of  a                                                                    
          health care plan.                                                                                                     
                                                                                                                                
     *  Sec.  2.  AS  08.80.297 is  amended  by  adding  new                                                                    
     subsections to read:                                                                                                       
          (c)  A   pharmacist  or   person  acting   at  the                                                                    
          direction  of   a  pharmacist  shall   notify  the                                                                    
          patient if  a known less costly  alternative for a                                                                    
          prescription drug  or medical device or  supply is                                                                    
          available,  which  may   include  the  amount  the                                                                    
          patient  would pay  without the  use  of a  health                                                                    
          care plan.                                                                                                            
          (d) In this section,                                                                                                  
               (1)  "health  care   plan"  means  a  policy,                                                                    
               contract,   benefit,    or   agreement   that                                                                    
               provides, delivers,  arranges for,  pays for,                                                                    
               or  reimburses any  of  the  costs of  health                                                                    
               care services under                                                                                              
                 (A)     a    health    care insurance plan                                                                     
                  as     defined   under AS 21.54.500;                                                                          
                 (8)  a  governmental  or  employee  welfare                                                                    
                 benefit  plan under 29  U.S.C. 1001  - 1191                                                                    
                 (Employee  Retirement  Income Security  Act                                                                    
                 of 1974);                                                                                                      
                 (C) a plan offered under AS 39.30.090 or                                                                       
                 39.30.091;                                                                                                     
                 (D) a federal     governmental   plan    as                                                                    
                  defined under AS 21.54.500;                                                                                   
                 (E) the Medicaid or Medicare program; or                                                                       
                 (F) a self-insured employer benefit plan;                                                                      
               (2) "pharmacy benefits manager" has the                                                                          
              meaning given in AS 21.27.955.                                                                                    
                                                                                                                                
     * Sec. 3. AS 08.80.460(a) is amended to read:                                                                              
     (a)  Except for  a  violation of  AS  08.80.297, a  [A]                                                                    
     person  who violates  a provision  of  this chapter  is                                                                    
     guilty of a class B misdemeanor.                                                                                           
                                                                                                                                
     * Sec. 4. AS 08.80.460(b) is amended to read:                                                                              
     (b)  A  person  who   violates  the  provisions  of  AS                                                                    
     08.80.295 or 08.80.297 may  be punished [IS PUNISHABLE]                                                                    
     by a civil  fine in an amount established  by the board                                                                    
     in a  schedule or schedules establishing  the amount of                                                                    
     civil fine for a  particular violation. The schedule or                                                                    
     schedules shall be adopted by  the board by regulation.                                                                    
     Any  civil  fine  imposed under  this  section  may  be                                                                    
     appealed in the manner provided for appeals in AS                                                                          
     44.62 (Administrative Procedure Act)."                                                                                     
                                                                                                                                
     Page 1, line 7:                                                                                                            
          Delete "Section l"                                                                                                    
          Insert "Sec. 5"                                                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 8, lines 21 - 23:                                                                                                     
     Delete all material and insert:                                                                                            
          "APPLICABILITY.  (a)  AS  21.27.901  -  21.27.955,                                                                    
          enacted by sec. 5 of  this Act, apply to audits of                                                                    
          pharmacies   conducted    by   pharmacy   benefits                                                                    
          managers and contracts entered  into or renewed on                                                                    
          or  after the  effective date  of sec.  5 of  this                                                                    
          Act.                                                                                                                  
     (b) AS 08.80.297(b), enacted by sec. 1 of this Act,                                                                        
     applies to contracts entered into or renewed on or                                                                         
     after the effective date of sec. 1 of this Act."                                                                           
                                                                                                                                
     Reletter the following subsection accordingly.                                                                             
                                                                                                                                
     Page 8, line 25:                                                                                                           
          Delete "added by sec. l                                                                                               
          Insert "enacted by sec. 5"                                                                                            
                                                                                                                                
     Page 9, line 6:                                                                                                            
          Delete "Section 3 of this Act takes                                                                                   
          Insert "Sections 1, 3, and 6 of this Act take"                                                                        
                                                                                                                                
     Page 9, line 7:                                                                                                            
          Delete "sec. 5"                                                                                                       
          Insert "sec. 9"                                                                                                       
                                                                                                                                
There being NO OBJECTION, Amendment 1 was ADOPTED.                                                                              
                                                                                                                                
Co-Chair Foster  asked Vice-Chair Gara to  review the fiscal                                                                    
notes. Vice-Chair  Gara indicated  there were 2  zero fiscal                                                                    
notes. The  first zero fiscal  note was from  the Department                                                                    
of  Commerce, Community  and  Economic Development  (DCCED).                                                                    
The   appropriation  was   insurance  operations,   and  the                                                                    
allocation   was  insurance   operations.   The  Office   of                                                                    
Management and  Budget (OMB) component  number was  354. The                                                                    
second  zero fiscal  note, OMB  component  number 2152,  was                                                                    
from DOA.  The appropriation was  centralized administrative                                                                    
services    and   the    allocation    was   health    plans                                                                    
administration.                                                                                                                 
                                                                                                                                
Representative  Wilson  referred  to the  fiscal  note  with                                                                    
component number 2152. She referred  to page 2 in the second                                                                    
paragraph  where  it  stated  that  the  actuarial  analysis                                                                    
assumed that,  with the mandate,  planned costs  for generic                                                                    
drugs  filled  by  independent pharmacies  in  Alaska  would                                                                    
increase  by  20  percent.  The   assumed  impact  on  chain                                                                    
pharmacy pricing  would be  an increase  of 10  percent. She                                                                    
asked  where  the  percentage   numbers  were  derived.  She                                                                    
relayed  that  the  fiscal  note had  been  written  by  the                                                                    
Division of Retirement and Benefits.                                                                                            
                                                                                                                                
Co-Chair Foster invited testifiers to come to the table.                                                                        
                                                                                                                                
MICHELE  MICHAUD, DEPUTY  DIRECTOR,  DIVISION OF  RETIREMENT                                                                    
AND  BENEFITS,  DEPARTMENT   OF  ADMINISTRATION,  introduced                                                                    
herself.                                                                                                                        
                                                                                                                                
EMILY RICCI,  HEALTH CARE POLICY ADMINISTRATOR,  DIVISION OF                                                                    
RETIREMENT  AND  BENEFITS,   DEPARTMENT  OF  ADMINISTRATION,                                                                    
introduced herself.                                                                                                             
                                                                                                                                
Ms. Michaud  reported that the assumptions  that were listed                                                                    
were in relation  to the original fiscal note,  the one that                                                                    
had  been  resolved.  The numbers  were  provided  by  state                                                                    
actuaries. They  thought that the language  that required an                                                                    
appeal  "shall"  be  granted would  not  only  increase  the                                                                    
number  of appeals  but would  likely  increase the  Maximum                                                                    
Allowable Cost  (MAC) reimbursement rate for  certain drugs.                                                                    
As  a  result  of  that  and  based  on  their  analysis  of                                                                    
utilization trends,  it would  increase the  independents by                                                                    
20 percent and the chain pharmacies by 10 percent.                                                                              
                                                                                                                                
Representative  Wilson  asked  why   the  language  was  not                                                                    
removed. Ms.  Ricci relayed  that it was  an attempt  in the                                                                    
fiscal note to explain why there  had been a change from the                                                                    
previous  fiscal  note  to  the  current  fiscal  note.  The                                                                    
language should be corrected to  reflect the prior actuarial                                                                    
analysis assumed. It was her  understanding that there was a                                                                    
letter   from   the   state's  actuaries   that   would   be                                                                    
accompanying the fiscal note.  The updated version explained                                                                    
the rational why  the change in language resulted  in a zero                                                                    
fiscal note or an indeterminate fiscal note.                                                                                    
                                                                                                                                
Co-Chair  Seaton  MOVED to  report  CSHB  240 (FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CSHB  240 (FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass" recommendation  and with one  new zero fiscal  note by                                                                    
the  Department of  Administration and  with one  previously                                                                    
published zero fiscal note: FN1(CED).                                                                                           
                                                                                                                                
1:55:52 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:56:36 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 219                                                                                                            
                                                                                                                                
     "An   Act   relating    to   background   investigation                                                                    
     requirements  for  state  employees  whose  job  duties                                                                    
     require  access  to  certain federal  tax  information;                                                                    
     relating to persons under contract  with the state with                                                                    
     access    to   certain    federal   tax    information;                                                                    
     establishing  state personnel  procedures required  for                                                                    
     employee  access to  certain  federal tax  information;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
1:56:45 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  reported that the committee  last heard the                                                                    
bill  on March  28, 2018.  The committee  had one  amendment                                                                    
before them. He invited Mr. Spanos to the table.                                                                                
                                                                                                                                
BRANDON   S.   SPANOS,   DEPUTY  DIRECTOR,   TAX   DIVISION,                                                                    
DEPARTMENT  OF  REVENUE,   reported  that  Internal  Revenue                                                                    
Service Publication  1075 listed  all the  requirements that                                                                    
states  were  obligated to  follow  to  receive federal  tax                                                                    
information.  He  elaborated  that  the  requirement  to  do                                                                    
background   checks  and   fingerprinting  as   part  of   a                                                                    
background check was in the  publication and was the impetus                                                                    
of the bill.  At the Department of Revenue  (DOR) there were                                                                    
two  divisions  that received  the  data.  The Tax  Division                                                                    
wanted   to  continue   to  receive   the  data   to  verify                                                                    
information received  by tax payers.  The Division  of Child                                                                    
Support received very limited  information. A federal offset                                                                    
program allowed the division to  capture money that would be                                                                    
refunded to  tax payers  to pay  child support.  He conveyed                                                                    
that  he had  misspoken at  the  last bill  hearing. He  had                                                                    
reported  that   the  Department  of  Labor   and  Workforce                                                                    
Development (DOL) received data  to verify wage information.                                                                    
He was incorrect on that  point. The department also did the                                                                    
federal   offset   program   and   recaptured   unemployment                                                                    
insurance that was paid out in error.                                                                                           
                                                                                                                                
Representative Wilson  MOVED to  ADOPT Amendment 1  (copy on                                                                    
file):                                                                                                                          
                                                                                                                                
     Page 3, following line 19:                                                                                                 
                                                                                                                                
          Insert a new subsection to read:                                                                                      
                                                                                                                                
               "(c) An  employee shall pay to  the state the                                                                    
               fee  established  by  AS  12.62.160  for  the                                                                    
               national  criminal  history record  check  or                                                                    
               the  date of  hire,  whichever occurs  later,                                                                    
               the fee  must automatically be  deducted from                                                                    
              the employee's next paycheck."                                                                                    
                                                                                                                                
     Reletter the following subsections accordingly.                                                                            
                                                                                                                                
Representative Kawasaki OBJECTED.                                                                                               
                                                                                                                                
Representative Wilson  read the  amendment (see  above). She                                                                    
commented that the  state did not have  a significant amount                                                                    
of money.  She wanted  to make sure  the employee  was hired                                                                    
before collecting the fee.                                                                                                      
                                                                                                                                
Representative Kawasaki  asked if an employee  would have to                                                                    
pay  the   fee  if   they  worked   at  DOR,   for  example.                                                                    
Representative  Wilson  replied  that  it was  free  at  the                                                                    
Department of Corrections  (DOC). She did not  know when the                                                                    
federal  law would  change to  include  more employees.  She                                                                    
noted that as part of employment  a person many times had to                                                                    
have a drug  test or had to fulfill  other requirements. She                                                                    
suggested it  should be the responsibility  of the employee,                                                                    
rather than the state, to cover the costs.                                                                                      
                                                                                                                                
2:00:26 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki  indicated   in   the  health   care                                                                    
setting fingerprinting  was typically required.  He recalled                                                                    
in  his experience  having to  get fingerprinted  within the                                                                    
first 30 days  of employment. He did not  remember having to                                                                    
pay  for the  fingerprinting  costs; his  employer paid  the                                                                    
costs.  He  wondered if  someone  else  could speak  to  the                                                                    
employer normally  paying the  fees. He  also asked  how the                                                                    
amendment  might  affect  the labor  unions.  Representative                                                                    
Wilson responded that in her  experience she was required to                                                                    
have a Tuberculosis  test as a condition  of employment. She                                                                    
paid  the  cost  for  the   test.  She  imagined  that  some                                                                    
employers paid  the fee, and  some expected  their employees                                                                    
to pay.  She did not feel  that the state was  in a position                                                                    
to pay the fees.                                                                                                                
                                                                                                                                
Representative  Thompson agreed  with Representative  Wilson                                                                    
that  many   industries  required  their  employees   to  be                                                                    
fingerprinted  and  to  have   a  background  check  at  the                                                                    
employee's expense.  He referenced  the liquor  industry and                                                                    
employees having to pay for  their own Techniques of Service                                                                    
Industry  Alcohol Management  (TAM)  training.  He would  be                                                                    
supporting the bill.                                                                                                            
                                                                                                                                
Co-Chair Foster  reviewed the  list of  available testifiers                                                                    
online.                                                                                                                         
                                                                                                                                
Representative  Pruitt relayed  a personal  example. Fifteen                                                                    
years  prior  when  he  worked   for  the  Anchorage  School                                                                    
District he was required to  pay for his own fingerprinting.                                                                    
Representative  Kawasaki   directed  his  question   to  the                                                                    
Division of Personnel. He  wondered about current collective                                                                    
bargaining agreements and whether  the state paying for fees                                                                    
was  part of  negotiations. He  wondered if  fees should  be                                                                    
built into future contracts.                                                                                                    
                                                                                                                                
2:04:44 PM                                                                                                                    
                                                                                                                                
KATE  SHEEHAN, DIRECTOR,  DIVISION  OF  PERSONNEL AND  LABOR                                                                    
RELATIONS, DEPARTMENT  OF ADMINISTRATION, responded  that it                                                                    
was  something that  would  need to  be  bargained with  the                                                                    
unions.                                                                                                                         
                                                                                                                                
Co-Chair Seaton  wondered if state  insurance would  pay the                                                                    
fees.   He  was   considering  the   wording  in   the  bill                                                                    
referencing  the employee  paying the  fee. He  wondered how                                                                    
much  the   fee  was.  He   had  heard  that  the   cost  of                                                                    
fingerprinting was  about $47. He  did not know the  cost of                                                                    
the  national criminal  history  record  check. He  wondered                                                                    
about  additional expenses  including  the time  it took  to                                                                    
have  a  background  check   and  fingerprinting  done.  Ms.                                                                    
Sheehan believed it involved more  than the finger printing.                                                                    
She was not sure.                                                                                                               
                                                                                                                                
Co-Chair Seaton  asked the sponsor  about the intent  of the                                                                    
amendment.  He   wondered  if  it  included   the  time  and                                                                    
administrative  time that  went into  the national  criminal                                                                    
history  check.  He referred  to  line  4.  He did  not  see                                                                    
anything  about  fingerprinting fee.  Representative  Wilson                                                                    
responded that  the language came  from the bill.  She cited                                                                    
the section  and lines. She  responded that the fee  was the                                                                    
same fee that the employee would be required to pay.                                                                            
                                                                                                                                
Co-Chair  Seaton  was  having  a problem  with  line  19  on                                                                    
page 3.  Representative Wilson  explained  that  it was  the                                                                    
place  the amendment  would be  inserted. The  line referred                                                                    
back to AS  12.62.160 listed in Section 1 on  page 1. It was                                                                    
also her understanding that the  fee was associated with the                                                                    
background  check   rather  than  the   fingerprinting.  She                                                                    
relayed that child care providers  and school employees were                                                                    
required  to have  fingerprinting done.  She suggested  that                                                                    
since DOC  had the ability to  conduct fingerprinting, maybe                                                                    
the department could offer the  service to other departments                                                                    
free of charge.                                                                                                                 
                                                                                                                                
2:08:23 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton   was  trying  to  better   understand  the                                                                    
amendment.  He read  from the  amendment which  talked about                                                                    
fingerprints. He wondered if the  amendment was only talking                                                                    
about  fingerprinting. Representative  Wilson read  from the                                                                    
bill on  page 1. It was  her understanding that it  would be                                                                    
the entire fee of approximately  $47 as listed in the fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Representative Guttenberg  asked Ms. Sheehan if  the current                                                                    
contracts  would  have  to  lapse  and  be  renegotiated  to                                                                    
include the  new provision. He  wondered if  the legislation                                                                    
would apply  to people under current  contracts. Ms. Sheehan                                                                    
responded  that  it  would  apply.  The  state's  collective                                                                    
bargaining agreements  contained a  clause that  stated that                                                                    
if there  was something  that did not  comply with  state or                                                                    
federal law  the parties  would meet  and negotiate.  If the                                                                    
provision became law, the state  would have to meet with the                                                                    
unions and renegotiate prior to the contracts lapsing.                                                                          
                                                                                                                                
Representative Guttenberg asked her  to repeat her response.                                                                    
Ms. Sheehan indicated the department  would have to meet and                                                                    
negotiate with the unions. It would not be automatic.                                                                           
                                                                                                                                
Representative  Guttenberg noted  that the  amendment talked                                                                    
about two  things; fingerprinting and the  national criminal                                                                    
history check. There  was a cost for  fingerprinting and for                                                                    
the   history  check.   He  asked   if  lost   time  getting                                                                    
fingerprints taken was factored or  if the state would bring                                                                    
someone in-house.  He asked about  the process.  Ms. Sheehan                                                                    
was unsure  of the process.  She did not  know if it  was an                                                                    
option  to bring  someone in.  She  was aware  that DOC  did                                                                    
fingerprinting in-house for employees  on their first day of                                                                    
work. She was uncertain if  there was an operation that came                                                                    
into the  workplace or  if an employee  would need  to leave                                                                    
work. She was also unsure if  an employee could do the check                                                                    
on work time  or if they would  have to do it  in their free                                                                    
time.                                                                                                                           
                                                                                                                                
Representative  Guttenberg asked  about employees  having to                                                                    
do the  checks outside of  work time and whether  that would                                                                    
have to be  part of negotiations with  the bargaining group.                                                                    
Ms. Sheehan replied, "Not  necessarily." She elaborated that                                                                    
there were  things employees  were required  to do  in their                                                                    
free time.                                                                                                                      
                                                                                                                                
2:12:31 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki noted  that for continued employment                                                                    
there  was   currently  a   clause  within   the  collective                                                                    
bargaining agreement that stated  that if there were changes                                                                    
to federal law,  the entities could go back to  the table to                                                                    
negotiate. The legislation would  force it. If the amendment                                                                    
was added, it would require  an employee in the Tax Division                                                                    
to be  fingerprinted and, because  of federal law,  it would                                                                    
have to  come out  of the employee's  paycheck. He  asked if                                                                    
that  was  what would  be  negotiated.  Ms. Sheehan  thought                                                                    
there  would  be  several  things  that  would  have  to  be                                                                    
addressed. She noted that the  employee would be required to                                                                    
pay for  their fingerprinting and for  the background check.                                                                    
She  was uncertain  the state  would be  able to  deduct the                                                                    
fees from their  pay under the federal  fair labor standards                                                                    
act.  Some employees  were  paid each  hour  or minute  they                                                                    
worked. It  would have to  be discussed  at the table.  If a                                                                    
current employee were  to fail a background  check the state                                                                    
would have to do a type of effects bargaining.                                                                                  
                                                                                                                                
Representative Kawasaki had a  problem with implementing the                                                                    
standard for  a current  employee. He  thought it  made more                                                                    
sense for future employees.                                                                                                     
                                                                                                                                
Vice-Chair Gara  was unclear which  employees would  have to                                                                    
undergo  background  checks.  It  was  now  a  condition  of                                                                    
employment to comply  with federal law. For  an employee who                                                                    
worked  for the  state, the  issue could  be handled  in two                                                                    
ways; The state  could pay for it or the  employee could pay                                                                    
for it. In his view, employees  went through 2 years of wage                                                                    
freezes.  It was  not a  luxury  item; it  was something  an                                                                    
employee  was required  by their  employer to  do to  comply                                                                    
with  federal law.  He asked  if  he was  accurate that  the                                                                    
checks  were   a  condition   of  employment.   Ms.  Sheehan                                                                    
responded, "Yes it would be."                                                                                                   
                                                                                                                                
Vice-Chair Gara  did not support the  amendment for charging                                                                    
the fees  to perspective  employees applying  for a  job. He                                                                    
did not agree with such a condition of employment.                                                                              
                                                                                                                                
Representative Wilson  asked why  state employees  could not                                                                    
go through DOC. She wondered  if anyone had investigated the                                                                    
option.  Ms.   Sheehan  had  not   looked  at   the  option.                                                                    
She reported reaching  out to as many  agencies as possible.                                                                    
The  Department  of  Corrections and  Department  of  Public                                                                    
Safety (DPS)  did fingerprinting  and background  checks in-                                                                    
house because  of the nature  of their work. She  was unsure                                                                    
DOC  could  extend the  service  to  other state  employees.                                                                    
Representative  Wilson   thought  it  would   be  worthwhile                                                                    
looking into the  idea. She was fine with  the suggestion of                                                                    
the   amendment  applying   only  to   new  employees.   She                                                                    
understood  that  $47  was  not   very  much.  However,  she                                                                    
believed every little bit added  up. She wanted to make sure                                                                    
an employee had been hired before requiring the checks.                                                                         
                                                                                                                                
2:17:34 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg thought  the committee was talking                                                                    
about state  employees. He  wondered about  state background                                                                    
checks versus federal background  checks. He asked about the                                                                    
difference.  He   spoke  of  privacy  matters.   Mr.  Spanos                                                                    
responded  that  the  state's background  check  was  fairly                                                                    
current in response to the  IRS publication. The publication                                                                    
had been around for a long  time but was updated in 2017 and                                                                    
contained   the   background    check   and   fingerprinting                                                                    
requirement.  The department  created a  new policy  for the                                                                    
state's  background  check.  Currently, a  local  background                                                                    
check was  required which included  all of the states.  If a                                                                    
person  committed a  crime and  was convicted  at the  state                                                                    
level,  it  would  show  up on  the  background  check.  The                                                                    
national background check was  a federal level screening. If                                                                    
a person was  convicted of a crime at the  federal level, it                                                                    
would  show  up  on  the   national  background  check.  The                                                                    
fingerprinting  and the  federal background  check were  the                                                                    
things the state needed to start doing.                                                                                         
                                                                                                                                
Representative  Guttenberg  asked,  if someone  committed  a                                                                    
federal crime,  if the state's  background check  would find                                                                    
the record. Mr.  Spanos responded that the  record would not                                                                    
show up in  the local background check. The  state was doing                                                                    
a  limited  federal   background  check.  Sometimes  federal                                                                    
crimes  showed  up. However,  to  do  a thorough  background                                                                    
check, the state needed fingerprints  that were submitted to                                                                    
the   FBI  run   through   their  database.   Representative                                                                    
Guttenberg had  never been  charged for  urine tests  in his                                                                    
days working  in construction. He  thought the  state should                                                                    
be  paying  for  these  checks. He  would  be  opposing  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
2:20:40 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki MAINTAINED his OBJECTION.                                                                               
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:   Ortiz, Pruitt, Thompson, Tilton, Wilson                                                                             
OPPOSED:    Guttenberg,   Kawasaki,  Gara,   Grenn,  Foster,                                                                    
Seaton                                                                                                                          
                                                                                                                                
The MOTION to ADOPT Amendment 1 FAILED (5/6).                                                                                   
                                                                                                                                
Co-Chair Foster  asked Vice-Chair Gara to  review the fiscal                                                                    
notes for  HB 219.  Vice-Chair Gara  indicated there  were 6                                                                    
fiscal notes.  The first  zero fiscal note  from DOC  had an                                                                    
appropriation   of  administration   and   support  and   an                                                                    
allocation  of administrative  services.  The OMB  component                                                                    
number was  697. The second  zero fiscal note was  from DOL.                                                                    
The  appropriation  was  employment and  training,  and  the                                                                    
allocation  was unemployment  insurance.  The OMB  component                                                                    
number was 2276. The third zero  fiscal note from DPS had an                                                                    
appropriation  of statewide  support  and  an allocation  of                                                                    
criminal  justice  information   systems  program.  The  OMB                                                                    
component number  was 3200. The  fourth fiscal from  DOR had                                                                    
an appropriation of taxation and  treasury and an allocation                                                                    
of  tax division.  The OMB  component number  was 2476.  The                                                                    
fiscal note  had an impact  of $4,800 in  FY 19, and  in the                                                                    
out years the fiscal impact went  down to $500 per year. The                                                                    
fifth fiscal note was from  DOR. The appropriation was child                                                                    
support  services,  and  the allocation  was  child  support                                                                    
services  division. The  OMB component  number was  111. The                                                                    
fiscal impact in the first  year was $6,600 in federal money                                                                    
and  $3,400 in  state costs.  In the  out years  the funding                                                                    
went  down to  $1,000 in  federal  funds and  $500 in  state                                                                    
costs. The  last fiscal note  from the Department  of Health                                                                    
and  Social   Services  (DHSS)   had  an   appropriation  of                                                                    
department   support   services   and   an   allocation   of                                                                    
administrative support  services. The  zero fiscal  note had                                                                    
an OMB component number of  320. The costs he had referenced                                                                    
were  all  for  the   background  check  the  committee  had                                                                    
discussed.                                                                                                                      
                                                                                                                                
Representative Wilson  asked if  DOR could  check to  see if                                                                    
there was  a way  for DOC  to do  the background  checks for                                                                    
other agencies.                                                                                                                 
                                                                                                                                
Co-Chair  Seaton  MOVED to  report  CSHB  219 (JUD)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Co-Chair Seaton had received a  note that the FBI waived the                                                                    
fee  for  law  enforcement agencies  including  corrections.                                                                    
Apparently,   the   background   check  would   include   an                                                                    
additional fee from the FBI.                                                                                                    
                                                                                                                                
CSHB 219 (JUD)  was REPORTED out of committee  with four "do                                                                    
pass"    recommendations,     four    "no    recommendation"                                                                    
recommendations, and three  "amend" recommendations and with                                                                    
six  previously  published  fiscal  notes,  four  with  zero                                                                    
impact: FN6(COR), FN7(DHS), FN8(LWF),  and FN9(DPS); and two                                                                    
fiscal impact notes: FN10(REV) and FN11(REV).                                                                                   
                                                                                                                                
Co-Chair Foster reviewed the agenda for the following day.                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:26:05 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:26 p.m.                                                                                          

Document Name Date/Time Subjects
HB 240 Amendment 1.pdf HFIN 4/5/2018 1:30:00 PM
HB 240
HB 240 Support email - petition.pdf HFIN 4/5/2018 1:30:00 PM
HB 240
HB 219 Amendment #1.pdf HFIN 4/5/2018 1:30:00 PM
HB 219