02/02/1993 08:00 AM House STA

  HB 81: PHASE OUT LONGEVITY BONUS                                             
                                                                               
  Number 463                                                                   
                                                                               
  CHAIRMAN VEZEY stated the committee would hold CSHB 69 for                   
  further consideration.  He then read the title of HB 81 and                  
  invited Commissioner Nancy Usera to testify.                                 
                                                                               
  Number 475                                                                   
                                                                               
  NANCY USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,                     
  stated the longevity bonus was within her department.  She                   
  explained the history of the longevity bonus, the intent of                  
  which was to have the bonus be an incentive to help keep                     
  seniors in Alaska.  The cost of the program grew five                        
  million dollars per year.  One thousand people have come                     
  annually into the program.  The Governor's proposal was very                 
  simple, direct and doable, she said.                                         
                                                                               
  MS. USERA explained the step down program as two hundred and                 
  fifty dollars per month to those who were grandfathered into                 
  the program.  After three years of stepping down the amount                  
  to one hundred dollars the program would end.  She said, "If                 
  not this, what?  If not now, when?"  This protected as many                  
  people as possible who have come to rely on this revenue,                    
  she added, and noted there was a negative fiscal note from                   
  the cost savings of the step down.                                           
                                                                               
  Number 530                                                                   
                                                                               
  CHAIRMAN VEZEY asked about the negative fiscal note from the                 
  Division of Pioneer Benefits.                                                
                                                                               
  Number 534                                                                   
                                                                               
  COMMISSIONER USERA explained the cost of cutting checks.                     
  She spoke of the variety of proposals that had been looked                   
  at and discussed in prior years.  The Department of                          
  Community and Regional Affairs was using a model for                         
  legislators but the Department of Administration did not                     
  have access to this model, she said.                                         
                                                                               
  Number 547                                                                   
                                                                               
  REPRESENTATIVE OLBERG asked about new longevity bonus                        
  recipients.                                                                  
                                                                               
  Number 551                                                                   
                                                                               
  COMMISSIONER USERA explained the migration of seniors into                   
  the state that became grandfathered into the program.                        
                                                                               
  Number 562                                                                   
                                                                               
  REPRESENTATIVE G. DAVIS discussed the residency requirement.                 
                                                                               
  Number 570                                                                   
                                                                               
  COMMISSIONER USERA discussed cases regarding residency                       
  preference.  There was a program phase out which would allow                 
  the issue of residency repeal for Longevity, Permanent Fund                  
  and Pioneer's Home.                                                          
                                                                               
  Number 587                                                                   
                                                                               
  REPRESENTATIVE ULMER asked for information regarding the                     
  number of people receiving the longevity bonus who would                     
  have qualified originally under the program.                                 
                                                                               
  Number 590                                                                   
                                                                               
  COMMISSIONER USERA stated there were 401 people and people                   
  were added each year if they were here before statehood, had                 
  25 years residency, and were 65 years old.  Under today's                    
  program, 125,000 people ultimately qualified.  From the                      
  4,700 in 1973 that came into the program only 400 were left,                 
  and currently 23,000 people received the bonus, she advised.                 
                                                                               
  Number 611                                                                   
                                                                               
  REPRESENTATIVE ULMER asked why the step down way was better                  
  than the annuity option.                                                     
                                                                               
  Number 615                                                                   
                                                                               
  COMMISSIONER USERA explained the history of the annuity                      
  program and its support.  The annuity plan called for a                      
  fifteen year phase out, she disclosed.                                       
                                                                               
  TAPE 93-12 SIDE A                                                            
  Number 000                                                                   
                                                                               
  COMMISSIONER USERA continued to explain the fifteen year                     
  phase out.  The cost was now eighty-eight million dollars                    
  more because that program was not adopted in 1986.  Further                  
  discussion of the annuity program in comparison to the step                  
  down was given.  People under the annuity plan who needed                    
  the program would not use it.  They need money today, she                    
  said.