Legislature(2017 - 2018)SENATE FINANCE 532
01/24/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB143 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 143 | TELECONFERENCED | |
SENATE BILL NO. 143
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
9:03:40 AM
Co-Chair MacKinnon recognized that there were several
Alaska Mental Health Trust Authority (AMHTA) trustees in
attendance.
MARY JANE MICHAEL, CHAIR, AMHTA, discussed the
presentation, "Legislative Presentation Senate Finance
Committee," (copy on file).
Ms. Michel turned to slide 2, "TRUSTEES":
? Mary Jane Michael, chair
? Chris Cooke, vice chair
? Laraine Derr, secretary
? Paula Easley
? Greg Jones
Jerome Selby
? Carlton Smith
Ms. Michael introduced the trustees, and detailed that
Paula Easley had been on the board for 11 years and would
shortly be ending her term of service. Greg Jones had
served as interim chief executive officer (CEO) and would
also be vacating his board seat.
Ms. Michael discussed two appointees to AMHTA that had yet
to be confirmed.
Ms. Michael reminded that AMHTA was established to provide
a perpetual trust to improve the lives of its
beneficiaries. She acknowledged the fiscal challenges of
the state, and discussed past AMHTA projects such as Bring
the Kids Home. She asserted that the trust recognized that
partnership with the state and its investment must include
broader, overall systems change in the state in order to
create a progressive and sustainable system. She used the
example of the trust's substantial investment in Medicaid
reform and expansion as well as criminal justice
reinvestment.
Ms. Michael continued her remarks and informed that here
had been internal changes at the trust over the previous
year. The trust had hired a new CEO after the departure of
its long-standing CEO Jeff Jessee. After an extensive
search, AMHTA had hired a new CEO. Additionally, the trust
had examined its governance structure and operating
procedures and hired an organizational management
consultant that helped the trust navigate organizational
change.The trust had rewritten bylaws and created committee
charters. Some of the new documents were modelled after the
Alaska Permanent Fund Corporation (APFC). Stakeholders and
the statutory advisory board were engaged in the process.
She was proud of the committed group of trustees and staff
at AMHTA and reported that the organization was financially
and organizationally healthy.
9:07:58 AM
MIKE ABBOTT, CHIEF EXECUTIVE OFFICER, ALASKA MENTAL HEALTH
TRUST AUTHORITY, showed slide 3, "FY19 Anticipated
Available Funding":
Distributable Funds Based on 4-year averages for
stability
Payout $21,137,000
Prior Years Carried Forward $3,042,000
Land Office Average Spendable Income $4,974,000
Interest Average $285,000
Total $29,438,000
Prior Years' Total Distributable Funds
FY18 $28,908,000
FY17 $28,234,000
FY16 $28,126,500
FY15 $28,497,000
FY14 $26,598,000
Mr. Abbott pointed out that the total $29.5 million request
was drawn from three primary revenue streams, the largest
of which was the investment yield from the trust's
investment. He detailed that $450 million of the amount was
from the Mental Health Trust Fund, and the other $100
million was operating funds. The operating funds were
invested by the Department of Revenue (DOR) and APFC. The
fund used a POMV-style payout, and the $21 million payout
represented a 4-year average of 4.25 percent of investment
values.
Mr. Abbot continued discussing slide 3, and informed that
the trust proposed to deploy $3 million in lapsed funds
(again a 4-year average of lapsed funds) which had been
relatively consistent for the previous three years. The
third major revenue stream was the annual income from the
trust land office activities.
Mr. Abbott considered the previous five years total
distributable funds, which represented the culmination of a
relatively useful trend in growth of spendable income from
the trust. He anticipated that the trend would continue,
and thought it was not unreasonable to expect that the FY
20 proposal from the trust might be above $30 million.
Mr. Abbott looked at slide 4, "Trust Land Office Annual
Revenue," which showed a bar graph that showed the relative
change and relative volatility of revenue to the trust land
office. Different revenue categories were shown, including
the five major categories of minerals, coal/oil/gas, lands,
timber, and real estate. Not all the revenue was spendable
for beneficiaries, and a significant portion of the revenue
was required to be invested. The trust land office revenue
stream was split.
9:11:44 AM
Mr. Abbott spoke to slide 5, "Trust Land Office Principal
and Income Revenue," which showed the principal and
(spendable) income portion of the trust land office
revenue. The $4.9 million he referenced earlier was the
green portion of the bar graph.
Co-Chair Hoffman asked to return to slide 4 and wondered if
there were any land sales in the FY 19 revenue projections.
Mr. Abbott answered in the affirmative, and informed that
the FY 19 projects were based on anticipated activity in
the land office, which was a combination of sales activity,
leasing, easements, and other related transactions.
Co-Chair Hoffman asked how much land was anticipated to be
sold, and where the land was located.
Mr. Abbott stated the trust had an ongoing sale process,
through which land was consistently available for sale.
Expectations for FY 19 were not parcel-specific, and the
trust was not obligated to sell any specific amount of
lands in any given time frame. The trust had expectations
but did not have a schedule that described specific
transactions in specific years.
Co-Chair Hoffman observed that over time land sales had
been a substantial portion of income since the inception of
the trust. He wondered how much total land the trust owned
and sold.
Mr. Abbott stated that since inception, the trust had
disposed of less than 3 percent of the original
entitlement, which would equate to approximately 30,000
acres.
9:15:03 AM
Senator von Imhof asked if the trust also purchased land.
Mr. Abbott referenced the Southeast Land Exchange, which
had been congressionally and legislatively authorized. The
trust was in the process of final negotiations with the
United States Forest Service (USFS), which would result in
the disposal of some trust lands, and the acquisition of
others. There were other cases in which the trust had
acquired land, typically in order to increase the long-term
value of existing trust lands by purchasing adjacent land.
Senator von Imhof asked if the trust occasionally purchased
land specifically for its development potential.
Mr. Abbott was not aware of a time when the trust had
specifically purchased land to be developed. He qualified
that he was speaking to the trust's land portfolio itself.
He clarified that the real estate investment component was
a separate element of the trust and had acquired seven
different parcels of land specifically for revenue-
generating potential.
Senator von Imhof asked if the acquisitions were
represented by the light blue line on slide 4.
Mr. Abbott answered in the affirmative.
Mr. Abbott discussed slide 6, "FY19 Budget," which showed a
pie chart that showed how the trust planned to deploy its
FY 19 revenue. He explained that trust funding fell into
three categories: $10 million in authority grants, Mental
Health Trust Authority Authorized Receipts (MHTAAR), and
administrative expenses of the trust. He detailed that
MHTAAR funds went to state agencies and had to be approved
by the legislature. Administrative operations funding went
towards managing trust assets and making funding choices
and reallocations for trust beneficiaries.
9:19:18 AM
Mr. Abbott addressed slide 7, "Current Priorities":
? Medicaid Reform
? Criminal Justice Reform & Reinvestment
Established Focus Areas
? Disability Justice
? Substance Abuse Prevention & Treatment
? Beneficiary Employment & Engagement
? Housing and Long-term Services & Supports
Mr. Abbott thought that the committee was aware of the
trust's two primary priorities of Medicaid reform and
criminal justice reform and reinvestment. He stated that
every dollar of the MHTAAR authority grant funding worked
toward one of the six established focus areas, and
sometimes more than one. He stated that by statute the
trust did two-year budgeting; which explained why the focus
areas were the same as the previous year. He explained that
the trust would beginning a new budget planning and
prioritization cycle in the subsequent spring.
Senator Micciche wondered what was meant by "Medicaid
Reform" or "Medicaid Expansion" when listed as priorities.
Mr. Abbott explained that the expansion effort had been
accomplished, and now the trust was focused on the reform
effort. The trustees had committed approximately $10
million in a multi-year effort to support most of the
state's expenses associated with the Medicaid expansion and
reform effort.
Senator Micciche relayed that the committee had recently
been given a supplemental budget and had partnered with the
trust on SB 74 [Medicaid reform legislation passed in
2016]. The legislature continued to work on reforming
Medicaid.
Mr. Abbott stated that the trust's interest in Medicaid
reform was in the interest of helping the department
deliver Medicaid more efficiently and therefore serve more
beneficiaries.
Senator von Imhof wanted to learn more about Medicaid
reform. She shared that she was on a health care task
force. She hoped to have a lengthier conversation at
another time.
Mr. Abbott indicated willingness to have a more in-depth
discussion at a later date.
9:23:16 AM
Co-Chair MacKinnon asked about the passage of SB 74.
Senator Micciche believed SB 74 had passed in 2016.
Co-Chair MacKinnon referenced criminal justice reform and
reinvestment legislation, as well as a report from the
Department of Corrections and the Department of Health and
Social Services. The report referenced a partnership
between the state and the trust. She asked Mr. Abbott to
discuss the partnership and how the trust's beneficiaries
were sensitive to the subject matter.
Mr. Abbott stated that the trust was committed to criminal
justice reform, as trust beneficiaries were over-
represented within the criminal justice system as a result
of mental health issues, substance abuse, and a variety of
other concerns. The trust had been a long-standing
participant in a variety of criminal justice reform and
reinvestment efforts. He stated that the report referenced
by Co-Chair MacKinnon had been paid for by the trust, and
it was one of the ways sought to support criminal justice
reform efforts. The trust sought to measure outcomes
associated with incremental pieces within different
elements of criminal justice reform. The associated
research, data gathering, reporting, and analysis would
continue; and the trust would continue to be one of the
largest funders of the effort.
Mr. Abbott continued his remarks. He thought the report had
demonstrated that there was savings to the state, and
thought there was recidivism benefits as well as a result
of criminal justice reform action taken by the legislature.
He stated that the trust was very appreciative of the
legislatures continued efforts over the previous two years.
9:26:46 AM
Co-Chair MacKinnon asked if there were improved treatment
options for beneficiaries and other Alaskans that were
seeking substance abuse treatment.
Mr. Abbott thought there was directional improvement, yet
not seeing the level of benefit believed to be necessary in
order to get the full improvement in the criminal justice
system that was sought. He opined that continued investment
and ongoing practice was required to realize the benefits
that were being sought. There were limitations with
facilities, resources, and in the criminal justice system.
Co-Chair Hoffman asked what the trust was doing to mitigate
the opioid crisis.
Mr. Abbott stated cited work with the division of
behavioral health and the division of public health and
funding a number of the divisions' activities. Much of the
work the trust had been doing toward general substance
abuse would make a difference in the opioid abuse
specifically. The trust was working to expand overall
capability, as well as working to expand individual
program. The trust's efforts were a combination of capacity
building and direct services in treatment, housing, and
other elements of the substance abuse treatment continuum.
Co-Chair Hoffman asked if Mr. Abbott could cite a dollar
amount that had been expended on the effort.
Mr. Abbott agreed to provide the information in two days'
time.
9:29:31 AM
Senator von Imhof asked the relationship between Medicaid
funding and substance abuse treatment centers.
Mr. Abbott relayed that in its current form, Medicaid did
not provide much funding for substance abuse. One of the
targets of the reform effort was to improve the connection
between Medicaid paid services and substance abuse. He
thought the committee would hear from DHSS on a variety of
reform efforts, primarily funded by the trust. He mentioned
trying to seek waivers from the federal government in aid
of expanding services for some Medicaid beneficiaries that
would make more substance abuse treatment fundable by
Medicaid.
Senator von Imhof recalled reading an article about the
Trump administration stating that waivers were required to
shift funds to substance abuse treatment. She thought more
waivers were becoming available as states struggled with
the issue.
Mr. Abbott stated that DHSS was in the final stages of
developing the waiver application for the federal
government in order to access more funds for the purpose of
substance abuse treatment.
9:31:57 AM
Mr. Abbott reviewed slide 8, "Operating Budget":
? Governor's budget is very similar to trustee-
approved budget, with one exception
? Governor's budget includes $18 million increase in
GF/MH for comprehensive continuum of care for
substance use disorder services
Mr. Abbott stated that the trust would typically comment on
concerns with the governor's proposed operating budget, but
almost all the trustee's recommendations for operating
budget expenditures were supported in the governor's
proposed budget. The trustees did not specifically identify
the governor's recently announced initiative of deploying
$18 million for comprehensive substance abuse disorder
services but was in full support. He thought it was an
excellent demonstration of state support for the services.
He stated that there were minor differences between trustee
recommendations and the governor's proposed budget,
primarily around funding sources. The trust gave the
governor's proposed budget a strong endorsement.
Senator Micciche asked Mr. Abbott to clarify how much
Undesignated General Funds (UGF) came from the legislature
to the trust, or if the trust was fully self-sufficient
from fundraising from the original land grant.
Mr. Abbott stated that the trust did not employ any non-
trust funds. As a result of the settlement in the 1990s,
only the trustees could deploy trust funds. In many cases,
the trust needed the legislatures agreements on some
deployments. The trust recommended funds to be appropriated
to others. He thought that historically the administration,
legislature, and trust had worked well together.
Senator Micciche stated that typically the presentations
were started with a history of the trust.
9:35:27 AM
Mr. Abbott turned to slide 9, "Capital Budget":
? Homeless Assistance Project and Special
Needs Grant
Trustees recognize the housing and homelessness
crisis in the state
Trustees respectfully requested an increase of
$5.3 million in state funds to address this issue
Mr. Abbott stated that most of the trust's priorities had
been addressed in the governor's proposed budget, with the
exception of the Homeless Assistance Project and Special
Needs Grant. The trust had deployed millions of trust funds
towards addressing a variety of housing and homelessness
issues over the years. He acknowledged the constraint on
capital budgets but believed that additional investment in
housing would have a significant positive effect in
substance abuse treatment, recidivism, and other general
mental health issues. He referenced research that showed
lack of housing led to lack of resolution of other
difficult issues. The trust believed that marginal
investments in housing were believed to reduce overall
state expenditures and will improve challenges in other
areas as well.
Senator von Imhof asked if the trust gathered data on the
participants that received trust services. She wanted to
see the fundamental links between cause and effect. She
thought more sophisticated collection of data would help
fine-tun where support needed to be directed.
Mr. Abbott agreed with Senator von Imhof, and was glad to
share additional data pertaining to the beneficiary
population.
9:39:14 AM
Senator von Imhof thought the $5.3 million request was
relatively small and wondered if the trust had a
recommendation as to where the funds would be spent.
Mr. Abbott identified that the trust considered two
programs to be excellent investments for the state. He
discussed expansion of permanent supportive housing in
regional hubs and cities. He cited a rapid re-housing
program, which was a system of deployment of funds on an
incremental basis to help individual families stay housed.
It included rent support and other types of funding that
kept people in housing they were in. Rapid rehousing was
done on a limited basis thus far, and data showed that the
program was dramatically reducing emergency room visits,
substance abuse, and recidivism.
Vice-Chair Bishop thought that data would drive the
operating budget down. He thought seeing the cause and
effect, and the savings that could be realized were
important to address the problems being discussed.
Mr. Abbott agreed with Vice-Chair Bishop, and emphasized
that housing was a key element in addressing the problems
of people with a variety of challenges. He relayed that the
trust had funded a position in the mayor's office in
Fairbanks, and the position was generating data that the
trust relied upon. He encouraged members to consider data
from a variety of data sources on a local or statewide
level that could help illustrate the benefits of programs
such as listed on slide 9.
Co-Chair MacKinnon noted that the governor had proposed a
unique way of funding some projects that was not typical
for the capital budget. She thought that Alaska Housing
Finance Corporation (AHFC) dividends might be available.
She thought the approach was tied to the successful passage
of legislation that would ask Alaskans to contribute to
sustaining the programs. She was not sure the approach
would be successful.
Mr. Abbott mentioned that AHFC was also working to expand
its commitment to permanent supportive housing and were
requesting proposals form agencies that might be able to
provide the services. The trust was eager to see the impact
that such expansion might have. He thought there was an
indication of the growing consensus around the benefits of
investments in housing.
9:44:26 AM
Mr. Abbott showed slide 10, "Administrative Budgets":
Trust Authority
? Trustees approved: $4,135.3
? Governor's proposed budget: $3,867.4
Trust Land Office
? Trustees approved: $4,568.4
? Governor's proposed budget: $4,213.2
Total difference: $623.1
Impacts our ability to generate revenue and provide
grants and oversight of existing programs for
beneficiaries.
Mr. Abbott detailed the trust diverged from the governor's
proposed budget with regard to its proposed funding for the
administrative budget for the trust authority and the trust
land office (housed in the Department of Natural Resources
[DNR]). The trustees had determined that the appropriate
level of funding for the two agencies listed on the slide
was $8.7 million, while the governor had recommended $8.1
million to essentially flat-fund the administrative. The
trustees recommended two separate appropriations entirely
funded by trust resources. The trust respectfully requested
that the funds be restored to its budget. The trust
believed that the impact of the 8 percent reduction would
reduce the effort of the trust in deploying funds
intelligently and managing lands and resources. The trust
sought the committee's support in restoring the funding.
Vice-Chair Bishop had read through the DNR finance
subcommittee notes and had identified the area of the
trust's budget that Mr. Abbott had referenced.
Senator Micciche asked how often the governor adjusted the
trust's budget. He did not recall it being an issue in the
past.
Mr. Abbott believed the current budget was one of the first
times.
Senator Micciche asked if there had been communication
between the governor's office and the trust's
administrative team.
Mr. Abbott believed there had been a frank exchange of
views between the two parties. He furthered that the trust
had conferred with the director of the Office of Management
and Budget (OMB). The director had written a very useful
reply to the trust that he was happy to share with the
committee. He summarized that the director had communicated
about the trust following the same spending discipline as
other agencies. He thought that it could be demonstrated
that the trust spent its money wisely. He cited growth in
the trust's budget and revenue streams, as well as the
quality of the deployment of its resources that showed the
trust's administrative expenses were well spent in the
effort to support its beneficiaries. He appreciated the
director's perspective on the budget, but respectfully
disagreed and requested the committee follow the guidance
of the trustees on the issue of the trust's administrative
budget.
9:48:39 AM
Co-Chair Hoffman asked if Mr. Abbott could briefly describe
how the additional requested funds would be spent.
Mr. Abbott informed that the proposed reduction would have
an incremental impact on the trust's personnel. There would
be positions left vacant or eliminated, and/or contractual
efforts on behalf of trust lands would be truncated. He
expected that the proposed lesser funds would have a
marginal but measurable impact on the quality of the
trust's land management efforts or the quality of
beneficiary support.
Senator Micciche commented that he had worked with the DHSS
budget for years and worked for reductions. He thought the
trust had helped reduce spending. He was concerned that
administration was putting pressure on programs that could
save the state money.
9:50:50 AM
Co-Chair MacKinnon thought it was important for the
committee to point out that UGF was different than
Designated General Funds (DGF). She thought the subject had
been contentious. The DGF associated with the trust could
not be spent in other places. The committee, at the request
of previous CEO Jeff Jessee, has asked the trust to use its
assets in a different way. The committee had seen the
strategy play out for two years. She referenced Senator
Micciche's remarks about the difference in the governor's
proposed budget and the trust's administrative budget
request. She offered her full support in trying to work
with the administration to increase funding but not use
UGF.
Co-Chair MacKinnon continued her remarks. She used the
example of the University of Alaska (UA). The legislature
had not taken from UA tuition, which was DGF. She
referenced Department of Fish and Game funds that were
designated and passed through to local communities. She
pointed out that the DGF were different and used for the
highest and best use to provide services. She referenced
Medicaid and noted that the legislature had actively
pursued federal funds to benefit the people of Alaska
through Medicaid. The committee was endeavoring to use DGF
and federal funds to stop the downward spiral of
unemployment in the state.
9:55:24 AM
Co-Chair MacKinnon acknowledged that each of the members
represented communities that used DGF and had been under
heavy scrutiny over the previous five years.
Vice-Chair Bishop referenced slide 4, and considered the
revenue generated by the minerals sector. He wondered why
one would limit the revenue stream.
Senator Micciche pointed out that there were initiatives
that reached across department's ability to generate
revenue for services for Alaskans. He referenced an
possible initiative "Save our Salmon," which he thought
would directly and adversely impact the ability of the
trust to deliver services through beneficiaries by
complicating any proposed mining developments. He thought
the state had adequate protection in place for fish and
natural resources without compromising the ability of state
departments to deliver services.
Senator Stevens referenced an audit of AMHTA funds.
Mr. Abbott looked at slide 11, "Legislative Priorities":
? Protect Criminal Justice Reform
? Pass SB 76, Title 4 Revisions
? Pass Trust Investment Legislation
Mr. Abbott relayed that LBA had initiated a special audit
on trust-related activity in December 2016. The audit was
wide-ranging in scope and dealt with open meetings
compliance, as well as looking at whether some investments
trustees had made over the previous 6 to 8 years had been
properly authorized. The audit was supposed to be done a
month previously and was expected to be brought to the
Legislative Budget and Audit Committee for review in late
February or early March 2018. He stated that the trust had
been working diligently with auditors for the previous 12
months.
Mr. Abbott stated that the trust believed legislative
action was necessary to clarify what the trust's authority
was related to investable revenue streams. The trust was
working with members to start a conversation on the topic.
The trust wanted to start the conversation before the audit
was done in order to have timely resolution.
10:00:16 AM
Mr. Abbott continued to speak to slide 11. He discussed
other legislative priorities. He stated that the the trust
continued to be engaged in ongoing legislation relating to
criminal justice reform. He relayed that Steve Williams,
AMHTA Chief Operating Officer, was a member of the Criminal
Justice Commission. The commission was evaluating a variety
of proposals and the trust was prepared to weigh in and
protect the core objectives envisioned in the criminal
justice reform legislation that had passed.
Co-Chair MacKinnon referenced the trust administrative team
and wondered if Mr. Abbott wanted to introduce anyone in
the gallery.
Mr. Abbott introduced Steve Williams, Chief Operating
Officer; Andy Stemp, Chief Fiscal Officer; Wyn Menefee,
Chief of Operations, Trust Land Office; Carlee Lawrence,
Katy Baldwin, Senior Program Officer; and Kelda Barstad,
Program Officer.
Mr. Abbott introduced individuals from advisory boards,
including the Alaska Commission on Aging, the Governor's
Council on Disability and again, and the Mental Health
Board. He described the boards as critical partners to help
and guide the trust as it made programmatic and
organizational choices.
Co-Chair Hoffman supported Co-Chair MacKinnon's earlier
comments. He had worked on legislation with former AMHTA
CEO Jeff Jessee. He was proud of the work of the committee
in representing the diverse areas of the state. He thanked
the board members for their work.
Vice-Chair Bishop commented that he had read in the paper
that there were several hospitals that had increased mental
health bed capacity. He asked if Mr. Abbot had any further
information.
Mr. Abbott thought the article had referenced Valley
Hospital and Alaska Regional Hospital. He agreed that
anything that increased the capacity of care in the state
was positive.
10:06:05 AM
Senator Micciche referenced the state's poor statistics in
areas of public health. He mentioned opioid abuse, domestic
violence, and suicide. He thought the issues were directly
related to public safety and recidivism reduction and
discussed the balance with protecting the public. He asked
Mr. Abbott to communicate how the legislature could help
aid in the trust's mission.
Co-Chair MacKinnon thanked Jeff Jessee for his work with
the trust. She thanked board members for their service.
Co-Chair MacKinnon discussed the agenda for the remainder
of the week.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012418 AMHTA SFC Presentation.pdf |
SFIN 1/24/2018 9:00:00 AM |
SB 143 |