Legislature(1999 - 2000)

04/12/1999 09:07 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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SENATE BILL NO. 40                                                                                                              
"An Act relating to eligibility for the longevity                                                                               
bonus; and providing for an effective date."                                                                                    
                                                                                                                                
                                                                                                                                
ALISON ELGEE, Deputy Commissioner, Department of                                                                                
Administration testified to this bill that was submitted at                                                                     
the request of the Governor.  She told the committee the                                                                        
bill would take the existing longevity bonus program and                                                                        
amend it to provide for an income cap for eligibility.  The                                                                     
proposed income cap would be $60,000 for a single                                                                               
individual and $80,000 for a married couple.                                                                                    
                                                                                                                                
The proposal would disqualify individuals who exceeded                                                                          
those income limits in the qualifying year. It would not be                                                                     
a permanent disqualification.  Instead, the senior would be                                                                     
suspended, and if they continued to meet the other                                                                              
eligibility requirements, such as residency, they could                                                                         
return to the program if their income fell below those                                                                          
levels.                                                                                                                         
                                                                                                                                
In looking at the longevity bonus program, Alison Elgee                                                                         
shared that the feeling was that a number of seniors                                                                            
depended on longevity bonuses for their monthly expenses.                                                                       
However, the seniors earning above the proposed income cap                                                                      
levels were not dependent upon the bonus for day-to-day                                                                         
living expenses.                                                                                                                
                                                                                                                                
She concluded saying, it was a concern that so much of                                                                          
state spending was on the pass-through side. This was the                                                                       
Governor's attempt to propose a means to reduce some of the                                                                     
formula program expenses in a way that would be least                                                                           
harmful to the people that were currently benefiting.                                                                           
                                                                                                                                
Co-Chair John Torgerson asked about the provision to verify                                                                     
the gross income amounts and required the applicants to                                                                         
provide access to records. He wondered why the department                                                                       
didn't just refer to tax forms for income verification. He                                                                      
thought the income amounts should be taken straight from                                                                        
line 33 of the 1040 IRS forms.  Alison Elgee replied that                                                                       
was an approach that would work.                                                                                                
                                                                                                                                
She noted that to implement the program, the department                                                                         
would need to reprogram their computer system.  She also                                                                        
anticipated there would be more disputes and more hearing                                                                       
officer time would be required to address those.                                                                                
                                                                                                                                
Co-Chair John Torgerson asked about verification of all                                                                         
participants in the program. Alison Elgee said the                                                                              
department would expect individual certification of their                                                                       
own income, but that the department would request records                                                                       
from participants in the case of an audit.                                                                                      
                                                                                                                                
Co-Chair John Torgerson asked if the department felt it                                                                         
would be an unjust burden to require submittal of a copy of                                                                     
the 1040 form. Alison Elgee answered it would be a policy                                                                       
call of the Legislature. She noted earlier concerns about                                                                       
providing the state too much information.                                                                                       
                                                                                                                                
Co-Chair John Torgerson wanted a definition of "income                                                                          
received from bonuses" as stated on line 13. Alison Elgee                                                                       
explained that was the longevity bonus itself.  This would                                                                      
prevent someone from becoming disqualified simply due to                                                                        
the receipt of the longevity bonus the previous year.                                                                           
                                                                                                                                
Senator Randy Phillips questioned the preference given to                                                                       
single people over married couples. He wondered if this                                                                         
would be an incentive for seniors to dissolve marriages or                                                                      
"live in sin" to manipulate the system. Alison Elgee had no                                                                     
comment.                                                                                                                        
                                                                                                                                
Senator Randy Phillips warned that if this bill passed,                                                                         
that would happen. He said it was not unheard of to have                                                                        
unmarried seniors living together to meet their cost of                                                                         
living. Co-Chair John Torgerson asked if the department                                                                         
planned to verify where recipients lived. Alison Elgee                                                                          
responded that the longevity bonus program had always                                                                           
operated on an honor system and the department had very few                                                                     
problems as result of that.  She noted they did do periodic                                                                     
verifications against the Permanent Fund Dividend records.                                                                      
The Legislative Audit Division reviewed the longevity bonus                                                                     
program rolls in the past and found very few problems.                                                                          
Therefore, the department did not anticipate much abuse                                                                         
with the passage of this legislation.                                                                                           
                                                                                                                                
Alison Elgee added to her earlier testimony that the                                                                            
Department of Health and Social Services SSI and Adult                                                                          
Public Assistance Program were federal programs that                                                                            
required the longevity bonus program hold harmless the                                                                          
longevity bonus recipient just as they were held harmless                                                                       
for permanent fund dividends. Otherwise, they would see a                                                                       
reduction in SSI.  These were the programs for the poorest                                                                      
seniors in the state.  The way the federal legislation was                                                                      
written, if the state provided an income cap in the                                                                             
longevity bonus program, even though the income cap was                                                                         
higher than the poverty levels, the state would no longer                                                                       
be obligated to hold the SSI recipient harmless. That would                                                                     
save just under $2 million general fund for the Department                                                                      
of Health and Social Services.                                                                                                  
                                                                                                                                
JEFF JESSEE, Executive Director, Alaska Mental Health Trust                                                                     
Authority, Department of Revenue, testified. The trustees'                                                                      
interest in this bill related to their concern over the                                                                         
growing need for services to elderly Alaskans.  That over-                                                                      
85 population group was the fastest growing segment in the                                                                      
state.  The need for community services, in-home support                                                                        
and other alternative ways of providing services to this                                                                        
group of Alaskans was going to be one of the most                                                                               
significant financial challenges both to the Legislature                                                                        
and to the Trust in the coming decade.                                                                                          
                                                                                                                                
The trustees made a recommendation to the Commission on                                                                         
Aging to consider modifications to programs like the                                                                            
longevity bonus program as a way to create funding to                                                                           
address some of these long-term issues.  He gave examples                                                                       
of the assisted living legislation heard in the committee                                                                       
last week. One of the arguments raised was the question of                                                                      
how to fund the raise in rates paid to the providers. The                                                                       
trustees suggested using the longevity bonus funds to help                                                                      
support these types of programs.                                                                                                
                                                                                                                                
Senator Randy Phillips asked if any members of the public                                                                       
present wished to comment on his earlier statement about                                                                        
favoritism given to non-married couples.  There was no                                                                          
response.                                                                                                                       
                                                                                                                                
Break 9:20 AM / 9:28 AM                                                                                                         
                                                                                                                                
Senator Sean Parnell offered a motion to move SB 40 from                                                                        
committee. There was no objection and it was so ordered.                                                                        
                                                                                                                                

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