Legislature(1999 - 2000)

04/08/1999 06:06 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                                                                                
SENATE BILL NO. 111                                                                                                             
"An Act designating certain Pioneers' Home receipts as                                                                          
program receipts, appropriations of which are not made                                                                          
from the unrestricted general fund; and providing for                                                                           
an effective date."                                                                                                             
                                                                                                                                
                                                                                                                                
Senator Gary Wilken, sponsor of the bill, testified.  He                                                                        
told the committee he had come to learn that designated                                                                         
receipts roped off monies that were put into the general                                                                        
fund and showed intent that the Legislature would spend                                                                         
those monies in certain areas. From a cost-accountant                                                                           
standpoint, he liked the theory that the cost-causer was                                                                        
the cost payer. This legislation, as similar legislation in                                                                     
the past, would add set up designated receipts for Pioneer                                                                      
Homes receipts.                                                                                                                 
                                                                                                                                
If there was one type of receipts that should be designated                                                                     
for state services was the Pioneer Home receipts, he                                                                            
stressed. The people who used the pioneer homes essentially                                                                     
divorced themselves from all other state services other                                                                         
than the pioneer home itself. When a resident paid for                                                                          
those services, he or she had the right to expect that                                                                          
those monies be spent on their care.                                                                                            
                                                                                                                                
He gave a history of the pioneer homes.  They were in the                                                                       
fourth of a seven-year rapid-ramp program to pay for their                                                                      
own costs. He pointed out to committee members, a schedule                                                                      
showing that the homes would be self-supported for those                                                                        
patients who could afford it. He stressed that this was a                                                                       
steep ramp. He gave an example of his two parents living in                                                                     
the Fairbanks Pioneer Home. The services were not cheap;                                                                        
his parents wrote a check for $6125 per month.  Starting in                                                                     
July 1999, the fee will rise to $7480. That will be a 22                                                                        
percent increase.  By the time the program is fully                                                                             
implemented, his family will have to pay $11,515 per month.                                                                     
He stressed that the care his parent's receive was                                                                              
excellent and he did not oppose the high costs.  He did                                                                         
have concerns that any part of his parent's payment could                                                                       
be used for other state services such as road repairs.  He                                                                      
wanted those funds to only pay for the care of residents in                                                                     
the pioneer homes.                                                                                                              
                                                                                                                                
He noted the requirements for care in the pioneer homes was                                                                     
changing. The need for an increased number of caregivers                                                                        
was increasing and therefore the pioneer home dollars were                                                                      
precious.                                                                                                                       
                                                                                                                                
He concluded by saying, this was the time to rope off that                                                                      
money and show the Legislature's intent that the cost                                                                           
payers were the cost providers and that those in the                                                                            
pioneers homes deserved 100 percent benefit of their                                                                            
payments.                                                                                                                       
                                                                                                                                
Senator Lyda Green asked for explanation of the                                                                                 
Legislature's role with this money as it was done currently                                                                     
and if the bill were adopted into law.  Senator Gary Wilken                                                                     
compared this to Item #2 of the bill, listing University of                                                                     
Alaska receipts. Those receipts were from tuition receipts                                                                      
and were designated as University of Alaska monies unless                                                                       
the Legislature intervened.                                                                                                     
                                                                                                                                
Co-Chair John Torgerson clarified that the money could only                                                                     
be spent in the category in which it was designated to be                                                                       
spent.  It was still subject to the power of appropriation                                                                      
by the Legislature, but could not be appropriated for                                                                           
another category. This bill would designate that the                                                                            
pioneer home receipts could only be spent for pioneer home                                                                      
programs. The funds would still have to be appropriated.                                                                        
If the Legislature appropriated a lesser amount than was                                                                        
collected, the balance would remain as a designated receipt                                                                     
for the pioneer homes.                                                                                                          
                                                                                                                                
Senator Lyda Green went back to an earlier conversation on                                                                      
the FY99 supplemental budget request relating to the                                                                            
additional Certified Nursing Assistants positions that                                                                          
would be funded with the increased fees. It was said that                                                                       
would be awkward because previous funding had been from a                                                                       
different source for other employees.  She wanted to know                                                                       
if this was an attempt to solve that problem, or would this                                                                     
leave the Legislature out of the loop on decisions to add                                                                       
new positions.                                                                                                                  
                                                                                                                                
Co-Chair John Torgerson responded that the Legislature                                                                          
would still be in the loop. The total budget for the                                                                            
pioneer homes was $33 million so this amount was just a                                                                         
portion.                                                                                                                        
                                                                                                                                
Senator Sean Parnell explained the dispute on the                                                                               
supplemental budget matter and how this situation was                                                                           
different.  The existing CAN positions were funded with                                                                         
general funds and the proposed positions would have been                                                                        
funded with program receipts. This legislation would treat                                                                      
the program receipts as one category.  He stated that this                                                                      
was a good policy call because $12 million would be moved                                                                       
from what was considered general fund spending.  There were                                                                     
many revenue or enterprise type activities throughout state                                                                     
government such as the University of Alaska that were                                                                           
already treated that way. At this point, he was not ready                                                                       
to support the bill but felt there should be discussion as                                                                      
to how these funds should be treated.                                                                                           
                                                                                                                                
Senator Lyda Green was uncomfortable with this bill.                                                                            
                                                                                                                                
Senator Dave Donley suggested the Division of Insurance                                                                         
should be included in the designated receipts category                                                                          
because if was difficult to do their budget. He had that                                                                        
budget in the past.  He detailed the problem where the                                                                          
companies actually paid for the services provided, but the                                                                      
receipts were shown as general fund.  It didn't make sense                                                                      
to take cuts to that program because that would just reduce                                                                     
the service to the companies who had paid for it.  He spoke                                                                     
of the pressure to cut general funds but felt this process                                                                      
was not successful.                                                                                                             
                                                                                                                                
Senator Randy Phillips stated it in more simplistic terms                                                                       
saying that the constitution prohibited the Legislature                                                                         
from dedicating funds unless otherwise authorized by the                                                                        
constitution. Most of the programs listed in the bill were                                                                      
nothing but a "white picket fence."                                                                                             
                                                                                                                                
Senator Lyda Green asked if Senator Dave Donley's                                                                               
distinction for the Division of Insurance was for the                                                                           
program receipts to fully pay for the entire division. She                                                                      
warned that other departments such as Department of Natural                                                                     
Resources and the Division of Motor Vehicles would then be                                                                      
claiming they were entitled to collect all of their                                                                             
revenues and the state would be unable to fund other                                                                            
functions.                                                                                                                      
                                                                                                                                
Co-Chair John Torgerson agreed and stated that was the                                                                          
purpose of this discussion                                                                                                      
                                                                                                                                
Senator Gary Wilken pointed out that three out of four                                                                          
patients in the pioneer homes paid for their care                                                                               
themselves. From the time they moved into the home, they                                                                        
did not go outside the home to use any other state                                                                              
services. He felt it was easy to distinguish between their                                                                      
needs and their draw on state services. He also stressed to                                                                     
Senator Randy Phillips that the constitution spoke to                                                                           
dedicated funds and the bill was for designated funds as                                                                        
mentioned.  Senator Randy Phillips commented that this was                                                                      
a public policy technique.                                                                                                      
                                                                                                                                
Senator Dave Donley said the Division of Insurance used to                                                                      
participate in the designated receipts but was removed                                                                          
because the programs generated more money then they spent.                                                                      
He felt it was unfair that the programs that made money                                                                         
were penalized while the programs that under-generated were                                                                     
given the designated receipts. He didn't have a solution                                                                        
but wanted to see one that treated the groups that over-                                                                        
generated fairer and give them the same degree of                                                                               
protection as those that under-generated.                                                                                       
                                                                                                                                
Co-Chair John Torgerson said the matter had been debated at                                                                     
one time as seen in the changes to the statutes.  He noted                                                                      
that group insurance programs were included but that other                                                                      
insurance programs were not. He didn't know of any of the                                                                       
programs designated that were 100 percent funded with                                                                           
program receipts.                                                                                                               
                                                                                                                                
Senator Al Adams moved for adoption of Amendment #1. Co-                                                                        
Chair John Torgerson objected for discussion.  Senator Al                                                                       
Adams spoke to his motion saying it was not a new idea.                                                                         
This amendment would designate housing receipts as well. It                                                                     
would consolidate all housing programs including the                                                                            
pioneer homes care and support. He provided a table that                                                                        
showed the other housing receipts. He noted other programs                                                                      
participating in the designated receipts method as                                                                              
Department of Fish and Game, Department of Transportation                                                                       
and Public Utilities and Department of Public Safety and                                                                        
the amounts that would change funding categories.                                                                               
                                                                                                                                
The state could use the funding for maintenance and upkeep                                                                      
and other operations of all those facilities.                                                                                   
                                                                                                                                
Senator Randy Phillips asked if there would be a general                                                                        
discussion on the white picket fences first.  If so, he had                                                                     
an amendment to offer.  He did not have one prepared, but                                                                       
would draft one.                                                                                                                
                                                                                                                                
Co-Chair John Torgerson said the bill would not be reported                                                                     
from committee this meeting.  If there were other                                                                               
amendments, they could be submitted later.                                                                                      
                                                                                                                                
Senator Al Adams did not mind if the amendment was voted                                                                        
down.  He did feel the legislation was important and should                                                                     
not be jeopardized.                                                                                                             
                                                                                                                                
Co-Chair John Torgerson thanked Senator Al Adams. He felt                                                                       
the matter was a policy call and needed to be addressed.                                                                        
He would also have some amendments to offer.                                                                                    
                                                                                                                                
Senator Al Adams withdrew his motion to adopt Amendment #1.                                                                     
There was no objection and it was so ordered.                                                                                   
                                                                                                                                
Senator Dave Donley thought the amendment had merit.  He                                                                        
wanted to broaden the discussion to add other programs. He                                                                      
also wanted to hear how the sponsor felt about broadening                                                                       
the scope of the bill.                                                                                                          
                                                                                                                                
Senator Gary Wilken had considered other options when                                                                           
drafting the bill, but felt the pioneers home issue was                                                                         
most important. He had concerns with adding other items                                                                         
that could potentially cloud the issue. It was his desire                                                                       
to keep the bill clean.                                                                                                         
                                                                                                                                
Alison Elgee, Deputy Commissioner, Department of                                                                                
Administration, testified in support of the bill.                                                                               
                                                                                                                                
She added to the history of the pioneer home funding                                                                            
program. When the Pioneer Home Advisory Board made the                                                                          
decision to approach a seven-year ramp up to full cost of                                                                       
care in 1995, they were looking at three primary                                                                                
motivations.  At that time there was consideration of                                                                           
legislation that would have privatized the homes.  The                                                                          
board also felt that there was considerable inequity in the                                                                     
long-term care market. The people who were not fortunate                                                                        
enough to get into a pioneer home were being asked to bear                                                                      
the full cost of care in whatever facility that they did                                                                        
find while those who did get into a pioneer home were                                                                           
getting a tremendous deal. The third reason, and probably                                                                       
the most important to the board, was the fact that with the                                                                     
changing mission, they recognized that they was going to be                                                                     
a need to increase the dollars available to the pioneer                                                                         
home program to provide additional staffing.                                                                                    
                                                                                                                                
At the time the first rate increase went into effect in                                                                         
July 1, the pioneer homes were generating approximately $5                                                                      
million in program receipts. In the current year, they                                                                          
generated almost $10 million in program receipts. That $5                                                                       
million increase was used to offset former general fund                                                                         
appropriations.  In point of fact, it reflected a $5                                                                            
million general fund cost that was previously part of the                                                                       
pioneer home budget that was now being supported by the                                                                         
users of the pioneer home system.                                                                                               
                                                                                                                                
The fiscal note did not show the proposal before the                                                                            
Legislature to increase the program by $2.367 million. The                                                                      
department estimated that additional money to be the amount                                                                     
generated by the increased fees between FY 99 and FY00. The                                                                     
money would still have to be appropriated by the                                                                                
Legislature. It would be the Legislature's decision whether                                                                     
it came in as an increased allotment for spending or                                                                            
continued to supplant general funds that support the                                                                            
program.                                                                                                                        
                                                                                                                                
The change to pioneer home revenues to designated program                                                                       
receipts would allow the Legislature to recognize those                                                                         
revenues as new revenues that were not taking away from                                                                         
other general fund program opportunities. It would also                                                                         
demonstrate the increased support by the residents of the                                                                       
pioneer homes programs.                                                                                                         
                                                                                                                                
She added that it was tough emotionally for the board to                                                                        
implement their plan of continuing to raise the rates.                                                                          
Both the Administration and the board believed it was                                                                           
necessary that the pioneer homes move to a full cost of                                                                         
care.  However, to address the residents who were concerned                                                                     
about their own financial ability to pay the higher rates                                                                       
and not be able to demonstrate improvements in the pioneer                                                                      
home services as a result of those increases had been                                                                           
difficult.                                                                                                                      
                                                                                                                                
She concluded saying the department supported the bill                                                                          
because they believed it accurately reflected the efforts                                                                       
in the program to increase the revenues available other                                                                         
than basic general fund resources.                                                                                              
                                                                                                                                
Lester Westling testified via teleconference from                                                                               
Fairbanks.  He wanted to bring to the attention of the                                                                          
committee that the pioneers homes were also assisted living                                                                     
facilities.  He was unfamiliar with the bill. He heard the                                                                      
same concerns stressed that there was a need to compensate                                                                      
those who provided assisted living to seniors.                                                                                  
                                                                                                                                
Senator Randy Phillips explained the bill to the witness as                                                                     
a potential Christmas Tree.  He had another agency he                                                                           
wished to add to the list of designated program receipts.                                                                       
He wanted the witness to understand that.                                                                                       
                                                                                                                                
Co-Chair John Torgerson ordered the bill held in committee.                                                                     
                                                                                                                                

Document Name Date/Time Subjects