Legislature(1995 - 1996)

03/14/1995 02:08 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HHES - 03/14/95                                                               
 HB 228 - REDUCTION IN PUBLIC ASSISTANCE PAYMENTS                            
 Number 899                                                                    
 JIM NORDLUND, Director, Division of Public Assistance, Department             
 of Health and Social Services (DHSS), acknowledged that he was once           
 a representative of Representative Rokeberg's district.  He                   
 recognized that he and Representative Rokeberg had a good contest,            
 of which Representative Rokeberg was the victor.  Mr. Nordlund                
 wished Representative Rokeberg much success in his job.                       
 MR. NORDLUND said in his new capacity he does not see himself as              
 partisan or competitive in what takes place in the legislature,               
 rather, his job is to work with both legislative parties to move              
 welfare reform forward.  This is going to be a big issue.                     
 Number 933                                                                    
 MR. NORDLUND said that he would like to testify on HB 228.  This              
 bill is known as the ratable reduction for Assistance to Families             
 with Dependent Children (AFDC) and Adult Public Assistance (APA).             
 While the Administration does not have a written position statement           
 on this bill, he can say with a great deal of confidence that the             
 Administration is opposed to this measure.  Mr. Nordlund                      
 understands the commitment behind the bill, and he does not think             
 it is not a mean-spirited measure on the part of the bill's                   
 MR. NORDLUND understands the motivation of the bill is one of                 
 trying to reduce the state budget.  However, there are other ways             
 of reducing the state budget in terms of welfare payments than                
 reducing benefit levels.  The approach of the Knowles                         
 Administration is one of reducing the caseload.  The calculations             
 are made a little differently, but basically the bottom line could            
 be the same.  Less money will be spent on welfare payments.                   
 Number 1012                                                                   
 MR. NORDLUND said his office is promoting caseload reduction by               
 finding work for people, particularly in private sector jobs, and             
 getting them off the welfare rolls.  The Governor's blueprint for             
 welfare reform is riddled with ideas about moving people from                 
 welfare to work.  Combined with caseload reduction through jobs,              
 Mr. Nordlund's division will continue to be vigilant to insure                
 benefit payments are accurate.  There is always a little bit of               
 error that causes additional benefits to be paid out that should              
 not be.                                                                       
 MR. NORDLUND said his office will also continue to be vigilant                
 concerning misuse and fraud that takes place within the system.               
 This is not a budget hearing, but his office has put a budget                 
 before the House Finance Committee which shows that the requested             
 AFDC budget is being reduced this year.  This is due to the                   
 continued efforts to move people into jobs, to make sure payments             
 are accurate, and to insure there is no fraud.                                
 Number 1072                                                                   
 MR. NORDLUND mentioned that his staff has been working with the               
 HESS Committee members to make sure that what the HESS Committee              
 plans to do with the bill in terms of benefit reductions are                  
 accurate.  There were some problems with that.  A staff member                
 would testify when the committee came to discussion of that part of           
 the bill.  There are federal limits concerning how much payments              
 can be reduced.  In some cases, the bill went too far in the                  
 original draft.  Mr. Nordlund understands that is the reason for              
 the Committee Substitute (CS).                                                
 MR. NORDLUND commented on the cuts to APA.  The Adult Public                  
 Assistance program is assistance that goes to blind, aged and                 
 disabled adults.  Those are people who cannot reasonably find work.           
 They are, by definition, the truly needy.  They are the most needy            
 in the state.  The APA cuts in this bill are particularly                     
 troublesome to Mr. Nordlund for that reason.                                  
 Number 1126                                                                   
 MR. NORDLUND noted that the sponsor statement contains some wording           
 he would like to correct.  The statement says, "Health and Social             
 Services, along with education and state employee benefits and                
 salaries have traditionally been left out of budget reductions."              
 In terms of social services cuts, HB 67, which passed several years           
 ago, was a budget reduction to both AFDC and APA.                             
 MR. NORDLUND's office has calculated that the savings for the                 
 upcoming fiscal year, FY 96, due to the passage of that bill, will            
 be about $15 million.  This saves payments that would otherwise be            
 made if that law had not gone into effect.  There definitely have             
 been budget reductions in welfare payments in the past legislature.           
 Number 1188                                                                   
 CO-CHAIR BUNDE thanked Mr. Nordlund for his vigorous pursuit of               
 fraud.  One of the problems with welfare reform is public                     
 confidence in the system.  Pursuing potential fraud raises the                
 public's confidence and makes them more comfortable with the                  
 REPRESENTATIVE DAVIS said it was nice to see Mr. Nordlund and                 
 wished him good luck in his current position.  It is the                      
 understanding of Representative Davis that the Knowles                        
 Administration currently agrees with the disparity in the state's             
 basic AFDC payments compared to the next level of spending in the             
 United States, as seen in Connecticut.                                        
 Number 1230                                                                   
 MR. NORDLUND said the Administration has not taken a position on              
 the level of benefits in Alaska versus any other state.  Mr.                  
 Nordlund knows that Alaska is ranked very high in terms of payment            
 amounts, if not the highest.  The position of the Administration is           
 that need must be studied.  It is an attitude of "we don't care how           
 they do it on the Outside."  There are needy people in the state,             
 and it must be determined what is an adequate amount of money to              
 support those people.                                                         
 MR. NORDLUND passed out a sheet which contained the results of an             
 analysis of the APA program.  The sheet showed in a typical case,             
 how much recipients get in APA, how much they get in food stamps,             
 and how much they get in federal Supplemental Security Income                 
 (SSI), which is a complement to APA.  By making some assumptions              
 about what recipients pay in rent, utilities and food, Mr.                    
 Nordlund's office determined that a typical recipient family then             
 has $46 left over each month.  This $46 would be for                          
 transportation, clothing, household and personal care items.                  
 Number 1290                                                                   
 MR. NORDLUND said therefore, Alaska might be high compared to other           
 states, but certainly Alaska's recipients are not living "high off            
 the hog" on the assistance paid by Alaska.  Mr. Nordlund personally           
 thinks the assistance is adequate, but not too much.                          
 CO-CHAIR TOOHEY asked if the chart showed APA, and if the chart               
 assumed it was a family of two.                                               
 MR. NORDLUND said the analysis was based on a household consisting            
 of a single disabled individual residing in a one-bedroom.  The               
 analysis also was based on a nonsubsidized housing unit in                    
 Anchorage.  A different chart shows what the figures would be like            
 in a subsidized housing unit.  In addition, the same sort of                  
 analysis is going to be done for AFDC.                                        
 Number 1350                                                                   
 ANGIE SALERNO, Executive Director, National Association of Social             
 Workers, testified via teleconference.  She spoke in opposition to            
 HB 228.  She sees this bill as short-sighted social and fiscal                
 policy.  This bill is justified by sponsors and supporters as                 
 necessary because the state is facing a budget crisis.  They also             
 feel a budget gap must be closed.  While this is true, and everyone           
 understands that state spending must be brought more closely to               
 state income, it is not true the place to start is with programs              
 that serve poor families and individuals who are elderly or                   
 MS. SALERNO said such statements are misleading at best.  Every               
 dollar cut from these programs result in the loss of a federal                
 dollar.  Both of these dollars are then lost to the Alaska economy.           
 In return for this false economy, more citizens lose the                      
 opportunity for decent productive lives.  In addition, the goal of            
 the AFDC program is undermined.  Poor families will be less able to           
 care for their families.                                                      
 Number 1403                                                                   
 MS. SALERNO said cutting the social welfare budget is bad business            
 for Alaska.  She thanked Director Nordlund for offering a spirit of           
 cooperation and hope for real answers to reform, and for offering             
 some figures on the reality of living off welfare.  Ms. Salerno               
 added that welfare has already taken cuts in the last legislative             
 session.  Ms. Salerno offered to answer any questions.                        
 REPRESENTATIVE DAVIS said that Ms. Salerno made the statement that            
 welfare was not the place to start cutting the deficit.                       
 Representative Davis said the legislature has not started with                
 welfare.  Seventy-five percent of the state's budget relates to               
 wages, welfare and education.  As indicated, with the exception of            
 the $24 a month basic cut from welfare two years ago, all of the              
 other cuts that have been addressed in the last four or five years            
 have come from the remaining 25 percent of the general funds.                 
 REPRESENTATIVE DAVIS said welfare is not the place to start, it is            
 just the fact that areas that have not been addressed in the past             
 are now being placed on the table for study.  Representative Davis            
 appreciates the problems, concerns and the different degrees of               
 values that are placed on the legislature's attempts.  The HESS               
 Committee members will be considering all those.                              
 Number 1492                                                                   
 MS. SALERNO said she agreed that everyone has to take cuts.  She              
 suggested the state not think about any more cuts.  The state                 
 should think about enhancing revenues.  She said many people are              
 not afraid of the word taxes.  People are not taxed highly in this            
 state.  She said the permanent fund could be capped.  There are               
 options.  She said cuts are going to damage the state.  That day,             
 HESS Committee members had already considered HB 230, in which                
 education may be cut, and now welfare.  She asked that the HESS               
 Committee members think about what kind of state they want in the             
 CO-CHAIR BUNDE observed that the decisions are not personally hard            
 to make.  The problem lies in finding the majority of people who              
 agree on a course of action.                                                  
 Number 1543                                                                   
 REPRESENTATIVE ROBINSON asked someone to explain last year's cuts.            
 She wanted to know how much they were and other information.                  
 CO-CHAIR BUNDE said the cuts took place two years ago.                        
 CURTIS LOMAS, Program Officer, Division of Public Assistance, said            
 he did not come with a detailed analysis to speak to Representative           
 Robinson's question, but he can certainly characterize the cuts for           
 her.  The cuts occurred in October 1993 as a result of legislation            
 that was sponsored by Governor Hickel.  The legislation went                  
 through a lot of debate and the cuts originally proposed were                 
 substantially larger.                                                         
 MR. LOMAS said the benefit reduction in AFDC payments was roughly             
 4 percent.  That is the closest he can come to an estimate off the            
 top of his head.  The cuts were not the same in every category, but           
 the cuts netted out to approximately a 4 percent decrease.  The               
 benefit reductions in APA were roughly on the order of 3.5 percent.           
 Number 1600                                                                   
 CO-CHAIR BUNDE suggested that more specific details and accurate              
 numbers could be provided by Ms. Lomas later.                                 
 MR. LOMAS said the other piece of that bill was that the statutory            
 automatic Cost of Living Allowance (COLA) increases that had                  
 previously been awarded annually became subject to the budgetary              
 discretion of the legislature and have not been awarded since.                
 CO-CHAIR TOOHEY said the reduction came to about $12 to $15 every             
 CO-CHAIR BUNDE said he has heard up to $24, but he is sure that               
 depends on the inflation factor.                                              
 MR. LOMAS said typically, previous cuts amounted to about $27 for             
 an AFDC family of three.  If they had no other income, their                  
 assistance went down about $27 per month.                                     
 Number 1645                                                                   
 CO-CHAIR BUNDE asked Mr. Lomas to address the fact that the                   
 original version of HB 228 is not in compliance with federal law.             
 Therefore, there is a blank CS in the bill packets.  He said the              
 HESS Committee members are not asking Mr. Lomas to support the                
 bill, they are just asking him to speak on the need for a CS.                 
 MR. LOMAS said he discussed the problems identified with the                  
 committee staff for a few days, and the CS results from those                 
 discussions.  The staff also asked Mr. Lomas to talk with the                 
 drafter in Legislative Legal.  Two fundamental changes occurred.              
 The first is that the provision in the original bill on line 10 of            
 page 1, which referred to effective dates has been changed.                   
 MR. LOMAS said the original bill language would have had the                  
 reductions go into effect on July 1 or the effective date of the              
 legislation, whichever is earlier.  Both the Attorney General's               
 office and Legislative Legal opined that is illegal.  That is                 
 making the law go into effect before the law goes into effect.                
 That provision has been eliminated, and the changes would go into             
 effect as of the effective date of the Act.                                   
 Number 1705                                                                   
 MR. LOMAS said the other change was on line 12 of page 1 of the               
 original version of the bill.  The amount listed there is $451.00.            
 That provision came up against the 1988 federal floor.  There is a            
 provision in federal law that requires states to maintain their               
 benefit level to a family without an income at the level in effect            
 as of May 1988 or face denial of approval for a Medicaid state                
 MR. LOMAS said recently, the state of California put benefit cuts             
 into effect that are below that level.  California was then                   
 required by the federal courts to restore benefits to the previous            
 Number 1746                                                                   
 MR. LOMAS said there were some changes to AFDC benefit levels.  The           
 changes to one and two affected 1993 and the same piece of                    
 legislation that was being previously referred to.  Also, Mr. Lomas           
 made some technical changes to the standards to bring Alaska's                
 program in compliance with other federal law requirements.  The               
 federal law had been pressuring the agency for years to change the            
 way the standards were structured in two areas.                               
 MR. LOMAS said the first area was that of families that included              
 only eligible children, and no eligible adults.  Those are normally           
 families in which a child or children are living with a relative              
 who is not a parent.  Under those circumstances, the caretaker and            
 adult is not required to be needy in his or her own right.  Only              
 the children's needs are covered.                                             
 MR. LOMAS said for years, Alaska had paid one child in that                   
 situation twice as much as two children, and then incremented for             
 each additional child at a much smaller amount.  It was the same              
 increment that was used in families which included an adult for               
 each additional child.                                                        
 Number 1795                                                                   
 MR. LOMAS said the federal government had problems with Alaska                
 paying more for the first child than for each additional child.  So           
 the change in the standards in 1993 had the increment for the                 
 second child in families that had no needy adult the same as the              
 increment for each additional child in other families.  In order to           
 not violate the federal floor when making that change, the payment            
 for a family of one needy child increased.  This was because the              
 state could not reduce the payment for a family of two children               
 below the amount paid in 1988.                                                
 MR. LOMAS said as a result, the standard was changed to what can be           
 seen in the original version of the statute--to $452 for one child.           
 The increment that was put in place at that time was $102 for each            
 additional child.  This brought the total payment for two children            
 living with a non-needy relative to $554.  The federal floor is               
 $550.  That is the amount paid for two children in that situation             
 in 1988.  In effect, the original version of the bill would bring             
 the payment for two children down to $451 plus $87, which is a                
 total of $538, which is below the 1988 floor.                                 
 Number 1855                                                                   
 MR. LOMAS continued that in order to bring payment levels down to             
 the minimum allowable under the maintenance of effort provision,              
 which Mr. Lomas understood was the will of the committee, it is               
 necessary to increase the amount of payment for one child to $463             
 so the $87 increment for the second child does not violate the 1988           
 floor of $550.                                                                
 MR. LOMAS said that is the shortest way to explain those changes.             
 In effect, this is a problem that occurred back in 1993, and this             
 is a fallout from that.  The impact is relatively minor.  The                 
 overall impact of the reductions in the original version of the               
 bill on the assistance payments budget component was 7.1 percent in           
 total payments.  The impact of the CS version is 7.0 percent.                 
 Therefore, the practical impact of the changes is relatively minor.           
 MR. LOMAS said these cases that actually would receive an increase            
 of $11 a month, account for 1.5 percent of all the children on                
 Number 1950                                                                   
 REPRESENTATIVE BRICE asked what the average benefit is for AFDC and           
 APA recipients.  It needs to be made clear that there is a big                
 difference between maximum benefit being discussed here and the               
 average benefit paid out.                                                     
 MR. LOMAS said the average benefit under current law for 1996 is              
 projected at $788.  That includes all variations in family size and           
 type.  This legislation would bring that down to $733.  There will            
 be an average reduction of $55 per month.                                     
 REPRESENTATIVE BRICE said in Section 1 on page 2, lines 7 or 8, the           
 words "or a single person household that does not consist of a                
 dependent child" are being taken out.  This bill is taking these              
 words out of statute.                                                         
 MR. LOMAS said he can see how people might object to that language            
 being in there, and that might lead people to believe that is to              
 cover people who are not parents.  Mr. Lomas said the reason the              
 language is in there is because federal law requires that in very             
 specific circumstances the state has to pay AFDC benefits to an               
 individual who does not have a child who is included in the AFDC              
 case.  That is if the only child in the home meets all the                    
 requirements of being a dependent child for AFDC purposes, but                
 instead receives SSI benefits because the child is disabled.                  
 MR. LOMAS continued that in those circumstances, the AFDC grant               
 includes only the needs of the adult caretaker because the child's            
 needs are met through the SSI program.                                        
 Number 1999                                                                   
 REPRESENTATIVE BRICE said therefore, basically those children are             
 no longer eligible to receive any type of benefit by striking that            
 MR. LOMAS said as he reads the remaining language, what is left               
 sets the maximum standard for various categories of individuals.              
 It does not prohibit the department from making payments to men or            
 women whose only child receives SSI assistance.  It merely                    
 eliminates the specificity of the standard.  In practical effect,             
 in order to continue to comply with federal law, Mr. Lomas thinks             
 the state will continue to make payments to those individuals and             
 use the state's regulatory authority to do so.                                
 Number 2030                                                                   
 CO-CHAIR BUNDE moved to adopt the CS, but announced it is not the             
 Chair's intention to move the bill today.  The bill would be                  
 addressed again on Thursday.                                                  
 REPRESENTATIVE ROKEBERG said he has not read the bill in-depth, and           
 he is having trouble identifying where the APA line item is.  He              
 asked if the amount was not being specified.                                  
 CO-CHAIR BUNDE read, "to comply with federal requirements, reduce             
 the maximum state contribution..."                                            
 REPRESENTATIVE ROKEBERG asked if that was a variable amount of APA.           
 CO-CHAIR TOOHEY moved that CSHB 228 be adopted.                               
 CO-CHAIR BUNDE asked that the motion be held for just a minute, and           
 asked Mr. Lomas to address Representative Rokeberg's concerns.                
 Number 2083                                                                   
 MR. LOMAS said the language basically effects a 10 percent                    
 reduction in APA payments whether it is the maximum level or                  
 someone is receiving benefits below the maximum level because the             
 amount of benefits is calculated by subtracting the income from the           
 maximum level.                                                                
 REPRESENTATIVE ROKEBERG asked if there was a variable of factors              
 present.  In an individual case, there are going to be variations.            
 CO-CHAIR BUNDE said there is a motion before the committee to adopt           
 the CS for HB 228.   There were no objections and the CS was                  
 adopted.  He asked for further discussion.                                    
 Number 2112                                                                   
 REPRESENTATIVE BRICE asked how the need standard in the state is              
 affected by all the discussion about reduction of this benefit and            
 that benefit.  There should not be any effect on the need standard.           
 Representative Brice asked about the process necessary to increase            
 the need standard.                                                            
 MR. LOMAS said the need standard is set in regulation.  What was              
 done when the level maximums were reduced in 1993, is that the                
 needs standard was maintained at the current level.  This was                 
 largely because if the needs standard is reduced, there are going             
 to be some people receiving very small grants who lose their                  
 eligibility for a payment, and thereby lose their eligibility for             
 Medicaid coverage.                                                            
 MR. LOMAS said the legislature expressed, in 1993, a will to reduce           
 the benefit payment level without causing anyone to lose                      
 eligibility.  Based on that, the same needs standards were kept in            
 regulation.  That applies both to AFDC and APA.                               
 TAPE 95-20, SIDE A                                                            
 Number 000                                                                    
 CO-CHAIR BUNDE reminded the HESS Committee members and the audience           
 that the bill was being held until Thursday.                                  
 REPRESENTATIVE ROKEBERG asked about the bills that are coming                 
 forward on the permanent fund dividend and hold harmless issues.              
 He asked if Mr. Nordlund and Mr. Lomas will be involved in                    
 testifying on those issues.                                                   
 MR. NORDLUND said those bills affect his division.  Some of those             
 bills were actually winding their way through the legislative                 
 process before Mr. Nordlund was hired to his current position.  Mr.           
 Lomas is the primary testifier on those topics.                               
 REPRESENTATIVE ROKEBERG asked for the record if anyone had                    
 requested Mr. Lomas provide some sort of impact flow charts that              
 could be readily discernible to legislators to show the effects of            
 the various aspects of the proposed legislation on the general                
 fund.  He asked if such charts were being worked on.                          
 MR. LOMAS said there has been several requests for such charts.               
 Other bills have held up that work, but that is something his                 
 office hopes to have out in the next week or so.  Some information            
 has been developed for the Senate Finance Committee.  There are               
 additional pieces to be developed that should be available.                   
 Number 122                                                                    
 CO-CHAIR BUNDE observed that these bills are in a state of flux,              
 and perhaps addressing them in the Finance Committee might be the             
 best place so Mr. Lomas does not do work that is perhaps not                  
 REPRESENTATIVE ROKEBERG asked if those bills were going to be heard           
 before the HESS Committee.                                                    
 CO-CHAIR BUNDE said those bills are well beyond the HESS Committee.           
 CO-CHAIR TOOHEY said probably, Representative Hanley has already              
 requested such numbers.                                                       

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