Legislature(1995 - 1996)
01/31/1995 08:05 AM House STA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HSTA - 01/31/95
Number 535
HB 70 - PERMANENT FUND DIVIDEND HOLD HARMLESS
ROD MOURANT, Administrative Assistant to Representative Kott,
sponsor of the bill, said there would be new items in their bill
packet, including a revised fiscal note from the Permanent Fund
Division, and a series of fiscal notes from the Department of
Health and Social Services, demonstrating the financial savings and
expenses to the various programs that are affected by this
legislation. There is also a letter from Hope Cottages expressing
concern about HB 70 and its effects on their program.
Number 562
REPRESENTATIVE PETE KOTT stated that he did not have anything more
to add. However, he would answer questions.
REPRESENTATIVE GREEN wanted assurance that if the bill passed, it
would not cause people to lose their benefits. He said the
Department of Health and Social Services had said that individuals
would not lose their benefits, because they were the administrators
of the program, but that some people questioned if that was true.
Number 600
ELMER LINDSTROM, Special Assistant to Commissioner Perdue,
Department of Health and Social Services, testified that the
department is opposed to the bill. He asserted that although there
is a net saving if thinking in terms of total funds, there is a net
cost to the state, in terms of general funds.
Number 605
CHAIR JAMES asserted that we have a tax on everyone in the state
for this hold harmless amount. It is never appropriated in the
budget, because it is part of the statute, yet Alaska residents are
paying close to $23 million to $24 million in additional benefits
that would not have to be paid if we did not have the hold harmless
provision. This should be included in the budget appropriations'
process.
Number 622
MR. LINDSTROM said that all the funds, PFD, the various public
assistance programs, and the hold harmless, are included in the
operating budget on an annual basis. The confusion is the funding
source. He said that they dont often talk about that during the
budget deliberation because, again, the hold harmless funds are not
general funds, they are earnings of the permanent fund. They are
real dollars, and they are appropriated through the regular
operating process. The information about the reductions from the
PFD check is included on the PFD check stub.
Number 656
CHAIR JAMES said people are distressed that money comes out of
their PFD checks. The issue is that this is a tax, any time the
state takes money from income, it is a tax. She suggested that we
take the funds from the general fund.
Number 661
REPRESENTATIVE ROBINSON asked what the savings would be to the
individual, and what the increased amount would be to the general
fund.
CHAIR JAMES asked if the expense would be the same or less if these
funds were taken from the general fund instead of from the PFD fund
since it would only be a different funding source.
MR. LINDSTROM said the expense would be the same. There would be
an increase of $20 million in the general fund costs, however, if
the legislature were to take that approach. He said that if the
decision were made to fund the hold harmless out of the general
fund it would not require a piece of legislation. It would be a
budget decision made by the finance committees. Legislation would
not be required to accomplish a funding source switch.
TAPE 95-5, SIDE B
Number 001
MR. CURTIS LOMAS, Welfare Reform Coordinator, Department of Public
Assistance, Department of Health and Social Services gave
information on the expenditures on the various relief programs.
About $1,050,000 would be the increased expenditures of the general
relief program; $330,000 would be part of the increased
expenditures in the Medicaid Program; and $472,000 would be the
increased expenditures in Public Assistance administration.
Number 016
REPRESENTATIVE ROBINSON brought up the debate and the letter from
Hope Cottage that disputes what the Mr. Lomas had said the other
day that people would not lose their medical benefits. They
believe that in cases of nursing homes, and others, that they would
lose their benefits.
Number 025
JON SHERWOOD, Program Coordinator, Division of Medical Assistance,
Department of Health and Social Services, reported that the receipt
of the Permanent Fund Dividend (PFD) would not disqualify someone
for Medicaid in the month of receipt. If they retained the
dividend, they would become ineligible because they would be what
they call "over resource" in future months. Some people were
placed on the Hold Harmless Program, and about 75 percent of the
spending in the Medicaid Hold Harmless Program is for facilities,
hospitals and nursing homes. They don't know the reasons why
people chose to retain that money, but Mr. Sherwood said they are
pretty sick people, so spending their PFD may not be their first
priority. There are situations where Medicaid allows up to three
months of coverage retroactively. If they are looking at
retroactive cases some people will be disqualified, because of the
receipt of a permanent fund dividend check in a prior month.
REPRESENTATIVE ROBINSON asked what would happen to someone in a
nursing home if they were dying and received the dividend and were
suddenly ineligible. She asked if they would be kicked out. If
they did not have money to continue to be in the facility, she
asked what would happen to them.
MR. SHERWOOD said he wasn't aware of a case where anyone was
kicked out in a situation like that. Generally, the social workers
at the nursing home would work with the family to try to get the
money spent as soon as possible. If there was a period of
ineligibility that would become a debt that the client had to pay
the nursing home. If the client couldn't pay the debt, it would be
a "bad debt" to the facility. Medicaid also allows provisions for
people to use their income, when they are in a nursing home, to pay
uncovered medical expenses such as expenses they haven't covered.
If someone had some income coming in later months, they could pay
off the debt using that income.
REPRESENTATIVE ROBINSON asked who is responsible for the bad debt
if the client or family doesn't have money to pay it.
MR. SHERWOOD said that he thought the bad debt does not go into the
rate they pay nursing homes, but he wasn't certain.
Number 100
REPRESENTATIVE PORTER commented that it is not a problem of
accepting the permanent fund dividend, but retaining it.
MR. SHERWOOD said that is the case; there are a few exceptions but
that is the rule.
REPRESENTATIVE PORTER said it puts a person in the unusual
situation of having to spend their money to get more.
MR. SHERWOOD said he is in situations where he encourages people to
plan spending their PFD to pay some uncovered medical expenses.
CHAIR JAMES asked if there were any other questions of the people
from the Division of Public Assistance.
Number 120
REPRESENTATIVE SCOTT OGAN asked if people on public assistance
spend their money on medical expenses, they would lose their PFD.
MR. SHERWOOD said if they spend it in the month they receive it, in
most cases it won't effect their Medicaid eligibility.
Number 150
REPRESENTATIVE IVAN said he is not familiar with the welfare
program and he asked what the average length of time is that a
family is on public assistance if they got on AFDC or Medicaid or
some sort of Public Assistance.
Number 173
MR. CURTIS LOMIS said it is hard to say. The data they have
indicates that most families remain on public assistance for less
than two years. He did not have detailed length of participation
data to provide specific information on that.
REPRESENTATIVE IVAN brought up how different Alaska is from other
states. It is equivalent to five states. It is very diverse and
different circumstances occur if you compare one family in an urban
setting versus a rural setting. He said he would need more
information on the impact of this bill on the different
constituencies before he could consider supporting such legislation
as this.
Number 195
MR. LOMIS presented a legislative research report, prepared last
year, for purposes of analysis for a different piece of
legislation. It is research request 94-94.172, and what it has is
a breakdown of public assistance benefits by community for the
month of October, 1993. This report is being updated by
Legislative Research with October, 1994, information. He referred
the committee to this document for analysis. The numbers are very
representative. REPRESENTATIVE JOE GREEN asked if they must spend
the PFD in the same month or same year to avoid the problem.
Number 227
MR. LOMAS said they have to spend the PFD check in the same month
it is received. The PFD money is considered as income for that
month. If it is retained in the next month it is a resource, so
then it might put the recipient over the resource line.
Number 214
REPRESENTATIVE ROBINSON spoke about the lengths of time people are
on public assistance, and about the people who come to Alaska from
the Lower 48 states. There is a strong impact of other people
coming in to get our benefits. She wondered if this would be part
of the research they are doing.
CURTIS LOMAS said the question has come up repeatedly over the last
several years and the department did some research about three
years ago. They questioned applicants who had been in the state
less than a year about their reasons for coming to Alaska. They
come for reasons like anyone else, they are looking for jobs.
There is also a prevailing perception that Alaska is wealthy and it
brings people here.
CHAIR JAMES recalled hearing about people moving into the state
specifically because they had a disabled person in the family and
medical benefits and treatments for disabled people are better here
than in other states. She asked Mr. Lomas to respond to that
issue.
Number 276
CURTIS LOMAS confirmed that the benefit levels in Alaska are higher
than other states, although we are not higher in disability
programs. The department's research does not bear out that
benefits are a major factor when people from other states decide to
come to Alaska.
Number 290
REPRESENTATIVE CAREN ROBINSON wanted to know how much higher our
payments are, and if that is because our cost of doing business
here is higher. She wondered if the reason is that medical costs
are higher and housing is higher; we are not so much higher
compared to the kind of service they can get in the Lower 48.
MR. LOMAS said that when the department has compared the AFDC rates
in our state to that of other states, speaking in terms of the
cost of living in Alaska, Alaska comes close to the top six states
as a percentage of the poverty guide line. As generous as Alaska
is, it is not considered remarkable compared to other states.
Number 308
MR. SHERWOOD said people with disabilities may be intrigued by the
levels of benefit payments in Alaska compared to other states, yet
they lose interest in coming to Alaska when he explains the cost of
rent in Alaska, or the lack of availability of some kinds of
services that disabled people need in many communities.
REPRESENTATIVE KOTT returned to give a closing statement on HB 70.
There was concern about how it would effect Child Support and
Enforcement Division (CSED) individuals. Since the last meeting,
he spoke with them and determined that there would not be any
pragmatic impact. Also, he had a preliminary zero fiscal note, so
there is absolutely no impact on CSED.
REPRESENTATIVE KOTT said there may not be statutory requirements to
change the funding source; however, there would be statutory
requirements to eliminate or delete from statute the hold harmless
provisions, as well as the notification to the public, which is
currently required. There will be some kind of statutory
requirement. Also, there may be some start up costs in the
program. The bill has a Judiciary and Finance referral. There is
a mechanism to transfer people on and off of programs, namely,
automation, and he believes some kind of program can be constructed
to offer ease of transfer and to reduce bureaucratic costs.
Number 385
REPRESENTATIVE KOTT said he spoke to Jan Hansen who said many
people have come here because of Alaska's public assistant
programs. Ten percent of Alaskan people are receiving some type of
public assistance, one out of ten people. As stated before, the
majority of people on public assistance stay on the program less
than two years. Judging from the information Representative Kott
has, this is a slim majority, Over 40 percent stay on the program
longer than two years.
The fiscal note is based on the theory that everyone currently on
the Hold Harmless Program will accept the PFD check.
Representative Kott thinks that, in the final analysis, people on
public assistance will opt to stay on public assistance program and
not receive the PFD check.
Number 403
REPRESENTATIVE IVAN spoke of his concern to have slow welfare
reform and said he respects the efforts and the intent of this
legislation.
CHAIR JAMES made a comment that many of the problems result from
federal regulations. We are in a transition period, where in
Washington D.C., they are currently working on what to do and how
they will address welfare. Some federal changes might give us more
control over how we handle public assistance.
Number 442
REPRESENTATIVE BRIAN PORTER does not see this legislation as a step
that would frustrate the attempt at welfare reform. He doesn't
think it will adversely affect anyone, since there are mechanisms
in place for those who have a dire need.
Number 460
REPRESENTATIVE KOTT stated they are trying to work toward a mind
set of being more self-sufficient.
Number 485
REPRESENTATIVE ROBINSON voiced her objections. She totally
disagreed with the testimony. She said that passing this bill
would hurt the most needy people in our state, seniors, disabled,
the poor and sickest. She believe they are spending the PFD
frivolously. The permanent fund is part of their wealth that they
deserve to receive. She said she will be voting against this bill.
Number 526
CHAIR JAMES commented that there are the working poor also who are
not on public assistance. Each one of them is paying about $41 of
their permanent fund dividend check to keep these other people
going.
Number 539
REPRESENTATIVE BRIAN PORTER moved that the committee pass HB 70
from the House State Affairs Committee, with attached fiscal notes
and individual recommendations.
Number 540
REPRESENTATIVE ROBINSON objected.
REPRESENTATIVE ED WILLIS testified that he will not support the
bill. The intent of this bill was that money be put away for all
generations of Alaskans. All Alaskans deserve its bounty. He
believes that those of us who can work must help the people who
cannot help themselves, and he will not support this bill until he
knows precisely what impact this bill would have. As it is,
everyone is only guessing, so for that reason he will have to vote
"No."
CHAIR JAMES said that the motion before the committee was whether
or not to move this bill out of committee with individual
recommendations. She asked the secretary to call the roll.
Number 590
Representatives Ivan, Robinson and Willis voted against moving HB
70. Representatives Porter, Ogan, Green and James voted in favor
of moving the bill with individual recommendations. The motion
passed and HB 70 was moved out of committee.
The committee took a brief break.
CHAIR JAMES called the meeting back to order at 9:35 a.m.
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