Legislature(1993 - 1994)
05/05/1994 09:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 409(FIN) am(efd fld)
An Act relating to the maximum amount of assistance
that may be granted under the adult public assistance
program and the program of aid to families with
dependent children; proposing a special demonstration
project within the program of aid to families with
dependent children and directing the Department of
Health and Social Services to seek waivers from the
federal government to implement the project.
Co-chair Pearce directed that CS FOR HOUSE BILL NO. 409(FIN)
am(efd fld) be brought on for discussion and directed
attention to a draft Senate Finance Committee Substitute
(8-LS121\L, Lauterbach, 5/2/94). Co-chair Frank explained
that the draft increases the ratable reduction from 1.7 to
2.2. He then suggested that his staff speak to other
changes. Co-chair Pearce requested that the sponsor of the
legislation first speak to the demonstration project.
REPRESENTATIVE MARK HANLEY, sponsor of the legislation, came
before committee. He explained that the proposed bill
attempts to change the way the state administers Alaska's
welfare program. He suggested that the best way to reduce
welfare costs is to get people off welfare rolls. That
approach is consistent in what is happening in other states.
There are three parts to the proposed bill:
1. It attempts to remove disincentives to work and
provides incentives instead.
2. A workfare program which requires individuals, if
they are able, to do either community service or
to work for
pay in order to receive benefits.
3. A ratable reduction.
At the present time, after an individual is on welfare for
four months and needs to continue to receive benefits, he or
she is only allowed to keep $50 of anything made while
working. The proposed bill increases that amount to $200
and allows an individual to keep one-third of "anything
after that." That removes a disincentive to work and
provides an incentive. It also reduces state costs by
allowing the state to keep the two-thirds. The legislation
also increases the car allowance. At the present time, the
federal government allows an automobile value of only up to
$1,500. That was increased to $7,500 in a version passed
out of Senate HESS. The bill also eliminates the 100-hour
rule which limits certain families to work no more than 100
hours a month.
The workfare program requires that an individual do paid
work for ten hours a week or unpaid community service work
for at least twenty-one hours in order to receive benefits.
The bill requires that the community service work portion be
contracted out where possible.
Representative Hanley acknowledged that the program will
cost money to implement. It requires additional eligibility
workers as well as people to monitor the program. The
ratable reduction in the original bill was intended to cover
the cost of the program, but it was eliminated in the HESS
version. Representative Hanley voiced his understanding
that the ratable reduction was increased to 2.2% in the
proposed Senate Finance draft. In response to a question
from Senator Kerttula, Representative Hanley explained that
the ratable reduction represents a "straight percentage
reduction in the benefits paid to recipients of adult public
assistance and AFDC."
DAVE SKIDMORE, aide to Senator Frank, next came before
committee. He concurred that the proposed draft would
increase the ratable reduction for both AFDC and APD from
1.7% to 2.2% The only other change in the Senate Finance
draft is that the reduction would not be repealed in 1999.
It would remain in effect even when the demonstration
project is repealed.
Mr. Skidmore next directed attention to a Senate Finance
Committee fiscal note for the Alaska Work Program. He
explained that the Dept. of Health and Social Services
initially submitted a note for the bill but when provisions
allowing for the contracting of these services were added,
the fiscal note increased dramatically. The Senate Finance
note returns to original amount since it is believed that
costs should remain the same regardless of whether the state
or private sector provides the service.
Senator Kerttula inquired concerning liability for injuries
that might be sustained as a result of workfare. JAN
HANSEN, Director, Division of Public Assistance, Dept. of
Health and Social Services, came before committee. She
explained that part of the proposal includes purchase of
insurance comparable to worker compensation. Insurance
would thus be covered by the state in a manner similar to
the JOBS program. That is included in the fiscal note for
the Alaska Work program. The cost amounts to a $25 charge
for six-month placement of an individual in workfare.
Senator Kerttula next directed attention to page 4, line 14,
and inquired concerning the issuing of contracts on a
competitive basis. Representative Hanley said that
provisions for contracting workfare to the private sector
were added on the floor of the House. In some areas there
is potentially more than one organization that could do the
work. There is thus need to provide for competitive award.
Further discussion followed between Senator Kerttula and
Representative Hanley regarding the qualifications of
entities to be granted such contracts. Representative
Hanley stressed that the organization would have to have
experience to qualify. Further discussion of the issue
followed with Jan Hansen regarding establishment of criteria
for evaluation of experience.
Representative Hanley explained that while the department
initially intended to conduct workfare on its own, concern
arose in the House that private organizations were available
to provide the service. The Fairbanks Native Association
was cited as an example.
Jan Hansen stressed that the "contract" referenced in the
bill relates to administrative services for workfare rather
than for the individual participant in the program. The
division of public assistance would be the administrative
entity if the program is not contracted to the private
sector.
Discussion followed between Ms. Hansen and Co-chair Pearce
concerning contract arrangements associated with the JOBS
program.
Senator Kerttula expressed concern that private-sector
contracts might, in the end, cost more than state
administration. He then asked if the legislation contained
safeguards to ensure that that was not the end result. Co-
chair Pearce asked if the House would be amenable to a
conceptual amendment requiring that the department first
ascertain whether private-sector contract would be less
rather than more expensive. Representative Hanley advised
that he would have no problem with such a provision. He
noted, however, that the original fiscal note for workfare
was approximately $300.0, but the cost increased to $1.4
million after inclusion of provisions for private-sector
services. The Representative advised he was unsure why
costs are expected to increase so dramatically. Senator
Kerttula voiced support for a conceptual amendment. Co-
chair Frank suggested that the amendment include a report to
the legislature on both costs and avoided costs. The Co-
chair next voiced the following conceptual amendment:
Provide for private sector contracting if, after
having received the bids, the department
determines that the private sector could do it
more effectively and inexpensively than the state.
In determining that, the department must analyze
the avoided costs and report findings to the
legislature, annually.
Jan Hansen voiced concern that assessment of costs after
receipt of bids would be unfair to contractors who devote
substantial time and cost to bid preparation. Both Senator
Kerttula and Co-chair Pearce suggested that the bid proposal
include information to the effect that the state is seeking
to make the above-mentioned evaluation. Jan Hansen
commented that the state should perhaps seek information
rather than a request for bids.
Responding to earlier statements regarding the dramatic
increase in the fiscal note when allowance for private-
sector contracting was included, Ms. Hansen explained that a
portion of the cost was the department assessment that
contracting would cost more. Another part of the increase
resulted from discovery that the cost to the department had
been severely underestimated. The third piece of the cost
relates to review of workfare in other states. The
department could not find another state that was contracting
out the effort. All were performing the service in house.
The department thus reviewed the range of costs in other
states and based its estimate on those numbers.
Co-chair Frank MOVED for adoption of a conceptual amendment
to add language requiring that the department report to the
legislature the avoided costs and the cost of contracted
provision of these services under subsection (b) (page 4,
lines 12 through 21). No objection having been raised, the
conceptual amendment was ADOPTED.
Co-chair Frank then MOVED for adoption of SCS CSHB 409
(Finance) work draft "L." No objection having been raised,
work draft "L" was ADOPTED. Co-chair Frank MOVED that SCS
CSHB 409 (Finance) pass from committee with individual
recommendations together with accompanying fiscal notes. No
objection having been raised, SCS CSHB 409 (Finance) was
*REPORTED OUT of committee with the following fiscal notes:
SFC/ Alaska Workfare 0
DH&SS, AFDC 0
DH&SS, Eligibility Determination 0
DH&SS, PA Administration 200.1
DH&SS, PA Data Processing 631.4
DH&SS, Child Care 0
DH&SS, AFDC (3,080.6)
DH&SS, APA ( 619.2)
DH&SS, PFD ( 423.2)
Co-chair Frank and Senators Jacko and Sharp signed the
committee report with a "do pass" recommendation. Co-chair
Pearce and Senators Rieger and Kelly signed "no rec."
Senator Kerttula signed "do not pass."
*PLEASE NOTE - The SCS CSHB 409 (Finance) containing the
conceptual amendment was never produced due to difficulties
encountered in attempting to develop appropriate language.
The bill was returned to committee 5/6/94, and an
alternative SCS CSHB 409 (Finance) was reported out at that
time.
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