03/10/1995 01:06 PM House JUD

 HJUD - 03/10/95                                                               
 CSHB 32 - PFD ADMINISTRATIVE PROCEEDINGS                                    
                                                                               
 Number 340                                                                    
                                                                               
 REPRESENTATIVE GREEN, bill sponsor, introduced CSHB 32.  Sponsor              
 statement:                                                                    
                                                                               
 "HB 32 addresses a serious problem with the number of appeals filed           
 after an applicant is denied a Permanent Fund Dividend (PFD), and             
 the length of time that it takes to process those appeals.  As of             
 January 1, 1995 there were approximately 9,740 appeals pending, the           
 highest number since the PFD program's inception.  One district 10            
 resident is still waiting to be heard almost 2 years after filing,            
 and there are people who have waited even longer for their appeals            
 to be processed and resolved.  Processing such a large number of              
 appeals is costly as well as being unfair to those who have a                 
 legitimate claim.  Currently there are 10 permanent full time                 
 employees in the PFD Division and one appeals officer in the                  
 commissioner's office working on processing the appeals, yet there            
 are still almost 10,000 appeals pending, with no end in sight.                
 Part of the problem is that it only costs a 32 cent stamp to file             
 an appeal.  Many people who clearly do not meet the qualifications            
 for receiving a dividend protest their denial simply because they             
 have the opportunity to do so at no risk to themselves.  The 1994             
 denial rate was 64%.  In years prior to 1994 the percentage rate of           
 denials has been significantly higher.                                        
                                                                               
 "HB 32 would implement a $25 filing fee for individuals protesting            
 the denial of their PFD application (the department will adopt a              
 regulation to allow indigent individuals to be exempt from the                
 fee).  The filing fee would be refundable if their appeal is                  
 successful, and non-refundable if the denial is upheld.  It is                
 anticipated that the implementation of a filing fee would                     
 discourage clearly unqualified individuals from appealing, thereby            
 reducing costs which are deducted from the amount of the dividend,            
 and making the appeals process significantly shorter for legitimate           
 claims."                                                                      
                                                                               
 MELINDA GRUENING, Aide to Representative Green was called forward             
 to answer questions on CSHB 32.                                               
                                                                               
 Number 415                                                                    
                                                                               
 REPRESENTATIVE VEZEY asked for clarification on the definition of             
 indigent.  He himself did not know it until he was actually well              
 along in his career, but he had fallen below the poverty line for             
 a large portion of his life, and nobody had told him.  For that               
 reason, he questioned whether or not the indigent clause would be             
 a reasonable guideline.                                                       
                                                                               
 REPRESENTATIVE GREEN stated they wanted to get away from an                   
 arbitrary application of the cost.  Having an established                     
 definition would suffice.  It certainly eliminates any question               
 about whether or not you are indigent or not.                                 
                                                                               
 CHAIRMAN PORTER felt that including the indigent qualification was            
 probably a requirement.                                                       
                                                                               
 MS. GRUENING answered that was correct.  The Supreme Court has                
 ruled that any fee the state has, has to include an indigent                  
 clause.  Initially, in the bill, we left it up to the department to           
 define indigent.  In the last committee of referral, which was                
 State Affairs, they felt very strongly that we should establish               
 what the criteria would be, and not leave it up to the department.            
 Working with the department, they said they needed something that             
 was very nonsubjective, and easy to verify.  These federal                    
 guidelines are put out by the Department of Health and Human                  
 Services once a year and are  published in the Federal Register in            
 April.  They have a special adjustment for Alaska, taking our                 
 higher cost of living into account.  This standard is also used in            
 determining eligibility for Public Defenders, Fish and Game                   
 reduction of fees, and for Public Assistance benefits.                        
                                                                               
 REPRESENTATIVE CON BUNDE asked if the $25 fee came close to the               
 cost of processing, or if the cost was more of an attempt to                  
 discourage people from appealing.                                             
                                                                               
 REPRESENTATIVE GREEN replied they felt the amount was high enough             
 to act as a discouragement for frivolous appeals, but not so high             
 as to eliminate people who were thinking they had a borderline                
 legitimate appeal.                                                            
                                                                               
 Number 500                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN thought it would be helpful to know the            
 amount of money spent on appeals by the department.                           
                                                                               
 DEBORAH VOGT, Deputy Commissioner, Department of Revenue, did not             
 have the figures, but could say that the department has employed at           
 least one hearing officer full time to handle PFD appeals.  They              
 have employed a number of hearing officers, all of whom had spent             
 a portion of their time on PFD appeals.  Those people have been at            
 a range 25 in the past.  We are in the process of restructuring the           
 section so that they will now be range 22's.  She stated that $25             
 would be minimal in comparison to the actual cost of handling an              
 appeal through review and informal hearings.                                  
                                                                               
 REPRESENTATIVE FINKELSTEIN was concerned about the cost being that            
 low.                                                                          
                                                                               
 Number 550                                                                    
                                                                               
 WENDY HUGHES, Permanent Fund Dividend Specialist III, Department of           
 Revenue, explained that she is a range 18 who overlooks all of the            
 cases.  There are two PFD Specialist II's, at range 16, who present           
 appeals in formal hearings in front of the hearing officer for the            
 division, and they also carry an informal case load.  There are six           
 PFD Specialist I's, at range 13, who hold informal conferences.               
                                                                               
 REPRESENTATIVE CYNTHIA TOOHEY asked if it would be harmful to raise           
 the cost to $50.                                                              
                                                                               
 Number 570                                                                    
                                                                               
 REPRESENTATIVE GREEN answered that when they had a higher fee in              
 the bill, they experienced negative feedback from people, saying              
 the amount was too high to pay.  The idea was to exclude people who           
 might be in that small percentage who had been denied a PFD in                
 error.  That is why we lowered the fee to $25.  That amount was               
 basically given to us by the department itself.                               
                                                                               
 There was a short discussion on whether or not people would be                
 inclined to try and declare themselves as indigent, if the cost of            
 appeal was any higher than $25.                                               
                                                                               
 REPRESENTATIVE FINKELSTEIN felt that raising the cost would be                
 helpful to weed out people who were not actually Alaska residents.            
 He offered an amendment changing the amount from $25 to $50.  There           
 was an objection and a roll call vote was taken.  Representatives             
 Finkelstein and Vezey voted yes.  Representatives Bunde, Toohey,              
 Green and Porter voted no.  Amendment Number 1 failed, four to two.           
                                                                               
 REPRESENTATIVE FINKELSTEIN then offered Amendment Number 2, which             
 would not limit the appeal cost, but would leave the amount of the            
 cost up to the discretion of the department.  There was an                    
 objection, and a roll call vote was taken.  Representatives                   
 Finkelstein and Bunde voted yes.  Representatives Toohey, Vezey,              
 Green and Porter voted no.  Amendment Number 2 failed, four to two.           
                                                                               
 Number 800                                                                    
                                                                               
 REPRESENTATIVE TOOHEY made a motion to move CSHB 32 out of                    
 committee with individual recommendations and attached fiscal                 
 notes.  Seeing no objection, it was so ordered.