Legislature(2003 - 2004)

02/24/2003 09:10 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     SENATE BILL NO. 75                                                                                                         
     "An Act making supplemental and other appropriations; amending                                                             
     appropriations; and providing for an effective date."                                                                      
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 76                                                                                                         
     "An Act making supplemental and other appropriations; amending                                                             
     appropriations; making appropriations to capitalize funds; and                                                             
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was the  second hearing for these  bills in the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Department of Natural Resources                                                                                               
                                                                                                                                
     SB 76                                                                                                                      
     Section 7                                                                                                                  
     Department of Natural Resources                                                                                            
     Fire Suppression                                                                                                           
      Fixed costs and fire suppression costs incurred to date                                                                   
     $19,033.8 general fund                                                                                                     
                                                                                                                                
NICO  BUS,  Acting  Administrative  Services  Manager,  Division  of                                                            
Support  Services, Department  of  Natural Resources,  informed  the                                                            
Committee  that  the Department  has  provided  a  written  response                                                            
titled  "Questions  raised at  2/21/03  Committee hearing  re:  Fire                                                            
Supplemental" [copy on  file] that provides answers to the questions                                                            
that arose during the previous meeting.                                                                                         
                                                                                                                                
Co-chair Green asked whether,  in addition to the specified stand-by                                                            
status rates identified  in equipment contracts, the  State receives                                                            
special  rates for  personnel  and other  related  fire suppression                                                             
associated  costs. She stated  that information  pertaining  to this                                                            
subject is included  on page one of the Department's  aforementioned                                                            
response, in the chart titled "Flight Time Breakdown PC-7s."                                                                    
                                                                                                                                
Mr.  Bus responded  that  the contracts,  which  address  discounted                                                            
stand-by rates,  are finalized well  in advance of an upcoming  fire                                                            
season to assure  that the State receives the best  available rates.                                                            
                                                                                                                                
Co-chair  Green  asked  whether contracted  aircraft  are  used  for                                                            
purposes other than fire  suppression; specifically whether they are                                                            
used to transport people to fire sites.                                                                                         
                                                                                                                                
JEFF JAHNKE,  State Forester,  Division of  Forestry, Department  of                                                            
Natural Resources,  testified via teleconference from  Anchorage and                                                            
informed  the  Committee  that  aircraft   are  sometimes  used  for                                                            
administrative flights,  but the majority of the usage is for direct                                                            
fire suppression or firefighter support.                                                                                        
                                                                                                                                
Co-chair Green  assumed, therefore,  that the Department  uses other                                                            
available aircraft to transport individuals.                                                                                    
                                                                                                                                
Mr.  Jahnke  agreed  that  this  would  be  the  norm  for  non-fire                                                            
transportation needs.                                                                                                           
                                                                                                                                
Co-chair Green  asked for further information regarding  the $58,000                                                            
designated for  Parts, Bench, Stock and Replacement  as specified in                                                            
the Maintenance section of the Department's backup material.                                                                    
                                                                                                                                
Mr. Jahnke  responded that  the Division  maintains an inventory  of                                                            
parts in order  to quickly repair  aircraft during the fire  season.                                                            
He  noted that  were  this  inventory  not available,  some  of  the                                                            
aircraft would not be operational during crucial times.                                                                         
                                                                                                                                
Co-chair Green  asked why this item is included in  the supplemental                                                            
request rather than in the annual budget.                                                                                       
                                                                                                                                
Mr. Bus responded  that this item is included in the  section titled                                                            
"Fixed Costs."                                                                                                                  
                                                                                                                                
Co-chair Green  noted that oftentimes  firefighters are called  upon                                                            
to respond to  fires outside of the area they reside.  She asked how                                                            
this practice is coordinated to ensure economy of scale.                                                                        
                                                                                                                                
Mr. Bus  responded that  there are 72 established  village  response                                                            
crews that  operate  on a rotation  basis beginning  with Team  One,                                                            
then Team Two, and so forth.  He stated that a team could decline to                                                            
respond to a particular  fire, and in that situation,  the next team                                                            
would be called upon.                                                                                                           
                                                                                                                                
Co-chair  Green asked whether  this approach  is the most  efficient                                                            
way  to respond,  particularly  when  a team  might  be required  to                                                            
travel from one area to another.                                                                                                
                                                                                                                                
Mr. Jahnke replied  that the process allows the Division's  dispatch                                                            
office to contact "the  closest, locally available crews" until that                                                            
resource  is  exhausted.  He  continued  that, at  that  point,  the                                                            
Division would resort to the rotation list.                                                                                     
                                                                                                                                
Co-chair  Green communicated  the need  to conduct  a review  on the                                                            
Division of Forestry with  a focus on the fire suppression operation                                                            
and "those costs  that have been fixed costs or well  established as                                                            
recurring  costs;" from whence,  she stated  it could be  determined                                                            
which of those costs could  be appropriately reflected in the annual                                                            
budget rather than in the supplemental budget.                                                                                  
                                                                                                                                
Co-chair Green  asked whether the  Department excludes May  and June                                                            
2003  fire suppression  expenses  in  the supplemental  because  the                                                            
Department  has  "been  told  not  to  and that  it  is  subject  to                                                            
Ratification,"  or  is  the  Department's   approach  to  the  "fire                                                            
suppression budget basically spend it and you will be refunded."                                                                
                                                                                                                                
Mr. Bus commented  that the potential cost of fires  for the May and                                                            
June  2003  time  periods  is  not  included   in  the  $19  million                                                            
supplemental request  because of the unknown extent  of those fires.                                                            
He explained  that were  an expense  for large  fires included,  but                                                            
smaller   "regular   incidence"    fires   experienced,   then   the                                                            
supplemental  request   would  have  been  significantly   inflated.                                                            
Therefore, he  explained, "the practice" for the past  several years                                                            
has been "to just  deal" with this expense through  the Ratification                                                            
process.                                                                                                                        
                                                                                                                                
Co-chair Green  voiced her preference to address this  "predictable"                                                            
expense as a fixed  cost by "studying" the May and  June expenses of                                                            
the previous five years.                                                                                                        
                                                                                                                                
Co-chair Wilken observed  that the State annually expends $1 million                                                            
for year-round  use of two PC-7 aircraft, which, he  stated, equates                                                            
to $500,000  per craft  on a ten-year  lease.  He surmised that  the                                                            
State generates  significant  revenue from  the 323 hours of  flight                                                            
time charged  to the federal government  for use of these  craft, as                                                            
depicted  in  the  chart  breakout  provided  on  page  one  of  the                                                            
aforementioned handout.                                                                                                         
                                                                                                                                
Mr. Bus concurred.                                                                                                              
                                                                                                                                
Co-chair Wilken continued,  therefore, that the 117 hours charged to                                                            
the federal government  in excess of the State's 206  hours of usage                                                            
could be considered as "a profit on those leases."                                                                              
                                                                                                                                
Mr. Bus  responded that  the Department  regards  this revenue  as a                                                            
means of offsetting  the cost to the State rather  than as a profit.                                                            
                                                                                                                                
Co-chair Wilken  commented that the federal government,  in essence,                                                            
is helping  pay for the  State's lease of  these aircraft.  He asked                                                            
whether  the Department  is concerned  with the  expense  associated                                                            
with the leasing of these  two-seat high performance aircraft, which                                                            
he calculated,  cost approximately  $2,000  per hour to operate.  He                                                            
asked if a different aircraft  could perform the required service at                                                            
a lesser cost.                                                                                                                  
                                                                                                                                
Mr. Bus noted  that the Department  has determined that the  federal                                                            
government pays  approximately half of the lease cost.  He continued                                                            
that consideration  should be given to the fact that,  at the end of                                                            
the lease period, the State  would own the aircraft as the result of                                                            
the lease/purchase agreement.                                                                                                   
                                                                                                                                
Co-chair Wilken asked whether  $1900 an hour is an "excessive" price                                                            
to pay for a spotter aircraft.                                                                                                  
                                                                                                                                
Mr. Jahnke  responded that  the Division  conducted "a very  lengthy                                                            
analysis" on the type of  aircraft required to conduct the necessary                                                            
missions. He continued  that the high performance aircraft currently                                                            
under the  lease/purchase  agreement are the  most efficient  of the                                                            
aircraft options  and are very maneuverable. He stated  that this is                                                            
important, as these are high-risk missions.                                                                                     
                                                                                                                                
Co-chair Wilken  asked whether the cost per hour for  these aircraft                                                            
is an acceptable cost.                                                                                                          
                                                                                                                                
Mr.  Jahnke replied,  "it  is indeed"  given  the mission  that  the                                                            
aircraft fly.                                                                                                                   
                                                                                                                                
Co-chair Wilken  asked whether the calculation that  the lease costs                                                            
$500,000 per year per plane is correct.                                                                                         
                                                                                                                                
Mr. Jahnke  clarified that the cost  per plane is $250,000  and that                                                            
$500,000 is the cost for both planes.                                                                                           
                                                                                                                                
Co-chair Wilken  acknowledged the  correction, and recalculated  the                                                            
per hour cost to be approximately $900.                                                                                         
                                                                                                                                
Co-chair Wilken  supported Co-chair  Green's position that  a review                                                            
should  be  conducted   on  the  fire  suppression  operation,   and                                                            
suggested  that  the review  be  conducted  in the  interim  between                                                            
Legislative sessions. He  stressed that the cost of fire suppression                                                            
should be wrestled with "proactively rather than retroactively."                                                                
                                                                                                                                
AT EASE 9:28 AM / 9:28 AM                                                                                                       
                                                                                                                                
Co-chair Green noted that  some of the items identified in the FY 03                                                            
Fire Suppression  Fixed Cost table  in the backup material  are paid                                                            
at the beginning  of the fiscal year. She asked whether  the numbers                                                            
reflect the full year or a six-month expense.                                                                                   
                                                                                                                                
Mr. Bus  stated that the  pre-paid Fixed  Cost expense reflects  the                                                            
full year.                                                                                                                      
                                                                                                                                
Co-chair  Green   asked  whether  the  $600,000  equipment   charges                                                            
identified in  the Department's Supplemental backup  information are                                                            
reoccurring  expenses that  could be included  in the annual  budget                                                            
request. She also asked  the nature of the equipment in the request.                                                            
                                                                                                                                
Mr. Bus responded  that a list of the supplies purchased  under this                                                            
request would be provided to the Committee.                                                                                     
                                                                                                                                
Co-chair Green  voiced that were this amount spent  annually for new                                                            
equipment, she would consider the amount excessive.                                                                             
                                                                                                                                
Mr.  Bus  responded   that  the  forthcoming   list  would   provide                                                            
expenditure details.                                                                                                            
                                                                                                                                
AT EASE 9:31 AM / 9:31 AM                                                                                                       
                                                                                                                                
Co-chair Green  asked how long fire  suppression expenses  have been                                                            
processed as a portion of the Supplemental Budget Request.                                                                      
                                                                                                                                
Mr. Bus responded that  this has been the procedure for at least ten                                                            
years.                                                                                                                          
                                                                                                                                
Co-chair Green asked whether  the Department "adequately considered"                                                            
the removal of $85,000  of the Department's FY 03 unallocated budget                                                            
reduction "from the fire suppression line item."                                                                                
                                                                                                                                
Mr. Bus commented  that when "percentage reductions"  are discussed,                                                            
"the unfortunate  situation at the  Department of Natural  Resources                                                            
is that  the Division of  Forestry's fire  suppression portion  is a                                                            
sizable chunk  of our general funds,"  therefore, he continued,  the                                                            
Department  attempts to "find that  money in our regular  programs."                                                            
However, he concluded,  this is "not fair" as the fire suppression's                                                            
unallocated  percentage  is then  subtracted from  the Department's                                                             
other programs.                                                                                                                 
                                                                                                                                
Co-chair Green stated that this "is a really bad idea."                                                                         
                                                                                                                                
Mr. Bus agreed.                                                                                                                 
                                                                                                                                
Co-chair  Green  recommended  that the  Department  reconsider  this                                                            
approach  for future budgeting.  She voiced  that "since its  funded                                                            
after the  expense is incurred,"  she opined,  the Department  could                                                            
have submitted  the entire unallocated  cut in this section  because                                                            
the Department is aware "that they are going to get it."                                                                        
                                                                                                                                
Mr.  Bus stated  that  the  Department  carefully  considered  other                                                            
options, and he voiced  that, "unallocated reductions are a bad idea                                                            
in the first  place. He voiced support  for assigning reductions  to                                                            
specific   programs,   as,   he  continued,    decisions   regarding                                                            
unallocated  reductions   are difficult   on  a Department   without                                                            
specific direction.                                                                                                             
                                                                                                                                
Co-chair  Green restated  her desire  for the  Department to  assign                                                            
fixed costs to its annual budget.                                                                                               
                                                                                                                                
Senator  Taylor  commented  that the  PC-7  aircraft "looks  like  a                                                            
hotrod." He asked why such a fast aircraft is required.                                                                         
                                                                                                                                
Mr. Bus  expressed that the  PC-7 serve as  air traffic control  and                                                            
that  these planes  are required  to fly  the fire  zone and  direct                                                            
other aircraft  and equipment  to locations  as needed. He  asserted                                                            
that wilderness area settings require a high performance plane.                                                                 
                                                                                                                                
Mr. Jahnke  confirmed  that the high  performance  PC-7 is the  lead                                                            
plane.  He continued  that their ability  to maneuver  close  to the                                                            
ground  in   smoky  conditions  provides   the  needed  information                                                             
regarding  a  fire. He  stated  that  the cost  of  operating  these                                                            
aircraft  is  similar  to costs  incurred  by  other  fire  fighting                                                            
aircraft used in the Lower 48.                                                                                                  
                                                                                                                                
Senator Taylor  asked the cost of fuel and maintenance  for the PC-7                                                            
in addition to the lease/purchase agreement cost.                                                                               
                                                                                                                                
Mr. Jahnke  stated  that he  would supply  this  information to  the                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator Taylor  stressed the need to know the inclusive  actual cost                                                            
of operating the PC-7 on a per hour basis.                                                                                      
                                                                                                                                
Mr. Jahnke  assured  the Committee  that this  information would  be                                                            
forthcoming.                                                                                                                    
                                                                                                                                
Department of Health and Social Services                                                                                      
                                                                                                                                
     SB 75                                                                                                                      
     Section 3(1)                                                                                                               
     Department of Health and Social Services                                                                                   
     General Relief Assistance                                                                                                  
     Caseload growth. Current funds projected to be fully spent by                                                              
     mid-April                                                                                                                  
     $271,000 general funds                                                                                                     
                                                                                                                                
JANET  CLARKE,  Director,   Division  of  Administrative   Services,                                                            
Department  of Health  and Social  Services informed  the  Committee                                                            
that this  program "was developed  as a safety  net program"  in the                                                            
territorial  days  to  pay  for  indigent  burials  and  low  income                                                            
individuals' emergency needs.                                                                                                   
                                                                                                                                
Ms.   Clarke   continued   that   indigent   burials   account   for                                                            
approximately   81  percent  of  the  program's  funding   with  the                                                            
remaining  19 percent supporting  the emergency  needs program.  She                                                            
stated that as a result  of these unexpected FY 03 expenditures, the                                                            
Department developed  the line chart that is included  in the backup                                                            
information, to determine  whether a trend was occurring. She stated                                                            
chart depicts  the total cost, the  burial costs, and the  emergency                                                            
assistance costs. She explained  that the emergency assistance costs                                                            
have lowered  and  remained constant  over the  past several  years;                                                            
however,  she noted,  the indigent  burial expenses  have  increased                                                            
substantially.  She noted  that an  average of  42 indigent  burials                                                            
have occurred  per month in FY 03  compared to an average  of 32 per                                                            
month  in FY  02. She  stated  that this  explains  the increase  in                                                            
program expenses.                                                                                                               
                                                                                                                                
Co-chair  Green noted  that this  program's FY  03 budgeted  funding                                                            
level was at the level requested by Governor Tony Knowles.                                                                      
                                                                                                                                
Ms. Clarke concurred.                                                                                                           
                                                                                                                                
Co-chair  Green summarized  that  this increase  is a  result of  an                                                            
increase in the number of indigent burials.                                                                                     
                                                                                                                                
     SB 75                                                                                                                      
     Section 3(2)                                                                                                               
     Department of Health and Social Services                                                                                   
     Foster Care Special Needs                                                                                                  
     Formula program shortfunding $445.3 and caseload growth                                                                    
     $170.0. Current funds projected to be fully expended in May                                                                
     $615,300 general funds                                                                                                     
                                                                                                                                
Ms. Clarke  stated that  this program provides  funding for  special                                                            
one-time  items  such  as "extraordinary"   clothing  for  "fragile"                                                            
children  or food for  children with  special dietary  needs  in the                                                            
foster care program. She  noted that this program could also provide                                                            
for special  dental care that is not  covered through Medicaid.  She                                                            
characterized these expenses are non-reoccurring items.                                                                         
                                                                                                                                
Co-chair Green noted that  the Foster Care program consists of three                                                            
components: base;  Augmented Care; and Special Needs.  She asked for                                                            
the definition of these three components.                                                                                       
                                                                                                                                
Ms.  Clarke  explained   that  federal  regulations   and  Title  4E                                                            
primarily  establish  the  definitions  for  these  components.  She                                                            
stated that the definitions would be forthcoming.                                                                               
                                                                                                                                
Co-chair  Green asked whether  individuals  could transfer  from one                                                            
program to another.                                                                                                             
                                                                                                                                
Ms. Clarke  replied that  the base rate, which  is the monthly  rate                                                            
paid  to  Foster  Care  providers,  applies  to  all  Foster  Parent                                                            
participants.  She stated  that the other  two components are  "add-                                                            
ons."                                                                                                                           
                                                                                                                                
Co-chair Green  asked for the definition  of the augmented  program.                                                            
                                                                                                                                
Ms. Clarke explained  that this program provides for  an increase in                                                            
monthly payments  to Foster Parents  to provide for the reoccurring                                                             
needs of  a special  needs child.  She continued  that this  differs                                                            
from  special  needs  payments,   which  are  for  a  one-time  non-                                                            
reoccurring item.                                                                                                               
                                                                                                                                
Co-chair Green  summarized, therefore,  that augmented payments  are                                                            
for  long-term  situations.  She asked  how  the decision  to  grant                                                            
augmented payments is determined.                                                                                               
                                                                                                                                
Ms. Clarke responded that an extensive review is conducted.                                                                     
                                                                                                                                
Co-chair  Green observed that  the level of  this request is  higher                                                            
than the amount requested in FY 01 and FY 02.                                                                                   
                                                                                                                                
Ms. Clarke agreed.                                                                                                              
                                                                                                                                
     SB 75                                                                                                                      
     Section 3(3)                                                                                                               
     Department of Health and Social Services                                                                                   
     Subsidized Adoptions & Guard                                                                                               
     Formula program shortfunding $2,000.0 and caseload growth                                                                  
     $833.3. Current funds projected to be fully expended in April.                                                             
     $2,833.3 general funds                                                                                                     
                                                                                                                                
Ms.  Clarke  informed   the  Committee  that  this   request  is  in                                                            
anticipation of program  funding being depleted in April. She stated                                                            
that  this  program provides  for  the  cost  of special  needs  for                                                            
children  and the families  who adopt them  until the child  reaches                                                            
the age  of eighteen.  She shared  that the  needs of approximately                                                             
1,961  children would  be  provided for  through  this program.  She                                                            
stated  that  this amount  is  in excess  of  the FY  03  Governor's                                                            
proposed budget  allocation, and that the program  request was short                                                            
funded by the Legislature  in FY 03. She additionally noted that the                                                            
number of special needs children has increased.                                                                                 
                                                                                                                                
Co-chair Green asked whether  the expenses of this program have been                                                            
affected by changes in other programs.                                                                                          
                                                                                                                                
Ms.  Clarke  referred  the  Committee  to  the  line  chart,  titled                                                            
attachment  B in the backup  material, which  depicts the growth  of                                                            
the subsidized  adoption  and guardianship  program  as well as  the                                                            
foster care  base rate. She  pointed out  that while the  subsidized                                                            
adoption and  guardianship program  has been growing, the  base rate                                                            
has remained  constant. She stated  that being able to move  special                                                            
needs children into permanent  homes has offset the need to increase                                                            
funding for the foster care program.                                                                                            
                                                                                                                                
Co-chair Green questioned  why, if this were the situation, there is                                                            
a request for increased funds for the foster care program.                                                                      
                                                                                                                                
Ms. Clarke  clarified that the request  for the foster care  program                                                            
involves funds  to support the special needs portion  of the program                                                            
which provides  for "the one-time,  extraordinarily high"  items not                                                            
provided for in the monthly base rate.                                                                                          
                                                                                                                                
Ms. Clarke  expressed that the chart  reflects the "good  news" that                                                            
the  growth  of the  foster  care  program has  slowed  because  the                                                            
Department  has been  able  to place  more children  into  permanent                                                            
homes.  She stated  that  this  placement  has been  accelerated  by                                                            
recently adopted legislation that established program timelines.                                                                
                                                                                                                                
Co-chair Green  asked whether the legislation being  referred to was                                                            
"the balloon project."                                                                                                          
                                                                                                                                
Ms. Clarke responded  that in addition to the balloon  project other                                                            
legislation  as well as  "congressional mandates  for timeliness  to                                                            
move children who had been  in the foster care program for more than                                                            
22 months into permanent  homes." She stated that the Department has                                                            
accomplished   these  directives   by  moving  more  children   into                                                            
permanent  homes.  She voiced  that  while  the number  of  children                                                            
coming  into the  foster care  program is  still large,  it is  "not                                                            
overwhelming" the program  as the Department has been able to move a                                                            
corresponding number of children into permanent homes.                                                                          
                                                                                                                                
Senator Taylor  commented that a "policy shift" occurred  during the                                                            
first years of  Governor Tony Knowles' administration  "where we, as                                                            
a State,  went from being  comparable to all  other states on  a per                                                            
capita  basis for the  number of  children we  had placed in  foster                                                            
care, to  within about a  year and a half  after that policy  change                                                            
occurred,  we were  running the  highest  in the  nation, at  almost                                                            
double the  nearest state  to us on a per  capita basis." He  stated                                                            
that this policy shift  created the need for a large increase in the                                                            
budget of this  Department, as well as increasing  the need for more                                                            
foster homes.  He recalled there "being perhaps three  child deaths"                                                            
resulting  from the State  removing a child  from one home due  to a                                                            
perceived threat  to the child's safety and placing  that child in a                                                            
foster  home that  had not  been sufficiently  investigated  and  at                                                            
which the child  died. He asked whether the Department  continues to                                                            
abide by the  same guidelines that  created the rapid growth  in the                                                            
program.                                                                                                                        
                                                                                                                                
Ms. Clarke responded  that she could not verify that  Alaska has the                                                            
highest per  capita number of children  in the foster care  program;                                                            
however, she voiced that  the Department would investigate this. She                                                            
stressed that  Governor Murkowski's  administration is committed  to                                                            
solving issues  that were identified  in a recent federal  review of                                                            
the  Department.  She stated  that these  issues  include  "serious"                                                            
concerns regarding  the child protection system. She  continued that                                                            
Commissioner  Joe  Gilbertson  "is  committed  to  hiring  the  best                                                            
manager for the child protection  division." She stated that, "there                                                            
is an  attitudinal  shift"  in addressing  this problem  within  the                                                            
Department and  that the Department's findings would  be shared with                                                            
the Legislature.                                                                                                                
                                                                                                                                
Senator  Taylor  continued  to  voice his  concern,  and  urged  the                                                            
Committee to not  only discuss the situation with  the Commissioner,                                                            
but additionally  to request a statistical analysis  be conducted to                                                            
compare the cost of specialized  childcare, general foster care, and                                                            
general relief  care prior  to and after  the aforementioned  policy                                                            
shift. He stressed  that additional research should  be conducted to                                                            
determine the  "cost of keeping children  in their home rather  than                                                            
removing  them and placing  them in  foster care"  He declared  that                                                            
involving  parents  in the  latter project  would  be beneficial  in                                                            
developing  the "baseline parameters,"  and he pointed out  that the                                                            
answer to  this question  should be reviewed  and discussed  by this                                                            
Committee as well  as the Senate Health & Social Services  Committee                                                            
as it "could  have major ramifications  on how we focus"  the budget                                                            
for the Department.                                                                                                             
                                                                                                                                
Co-chair Wilken  characterized the  47 percent growth of  subsidized                                                            
adoption and guardianship  depicted on the aforementioned  graph "B"                                                            
to reflect "an  alarming rate" of increase. He asked  how this graph                                                            
would have looked in the  mid 1990's. He reiterated Senator Taylor's                                                            
concern regarding  the Department's  policy for placing children  in                                                            
foster care.                                                                                                                    
                                                                                                                                
Ms. Clarke  stated that the Department  would provide the  requested                                                            
statistical information about the Foster Care program.                                                                          
                                                                                                                                
     SB 75                                                                                                                      
     Section 3(4)                                                                                                               
     Department of Health and Social Services                                                                                   
     Old Age Asst/ALB Hold Harmless                                                                                             
     Caseload growth. Current funds projected to be fully spent by                                                              
     the end of May.                                                                                                            
     $110.0 general funds                                                                                                       
                                                                                                                                
Ms. Clarke  commented that this request  for Old Age Assistance  and                                                            
the  Alaska Longevity  Bonus  (ALB)  Hold  Harmless program  is  the                                                            
result  of  "an error"  in  Department  calculations  regarding  the                                                            
number  of participants  in  the  program.  She explained  that  the                                                            
Department  should have  requested  a decrement  of $122,100  rather                                                            
than its "aggressive"  requested decrement  of $232,100.  She stated                                                            
that while this  program, "mirrors the Longevity Bonus  program," it                                                            
has experienced more delays in its participant reduction levels.                                                                
                                                                                                                                
Co-chair  Green  clarified  that  this  request  concerns  the  Hold                                                            
Harmless program.                                                                                                               
                                                                                                                                
Ms. Clarke concurred.                                                                                                           
                                                                                                                                
Co-chair Green  understood the request to be based  on the number of                                                            
people  in the  system requiring  payment  resulting  from the  Hold                                                            
Harmless  provision.   She  inquired  as  to  whether   receiving  a                                                            
permanent fund dividend could disqualify an individual.                                                                         
                                                                                                                                
Ms. Clarke responded  that the longevity program is  based on Alaska                                                            
statute  that   "requires  that  any   benefits  from  federal   SSI                                                            
[Supplemental  Security  Income] or  State Adult  Public  Assistance                                                            
that are  reduced or terminated  because of  the receipt of  the ALB                                                            
payment shall be replaced  with State general funds." Therefore, she                                                            
continued,  individuals are held harmless  from losing these  funds.                                                            
                                                                                                                                
Co-chair  Green asked  whether individuals  could  receive two  hold                                                            
harmless  provisions:  one resulting  from  the Old  Age  Assistance                                                            
program and one from the Permanent Fund program.                                                                                
                                                                                                                                
Ms. Clarke responded in the affirmative.                                                                                        
                                                                                                                                
Co-chair Green asked the  average age of the participants in the Old                                                            
Age Assistance Program.                                                                                                         
                                                                                                                                
                                                                                                                                
SFC 03 # 7, Side B 10:02 AM                                                                                                     
                                                                                                                                
                                                                                                                                
Ms. Clarke  responded that  she did not have  that information.  She                                                            
stated the Hold Harmless  program participants must be over 65 years                                                            
of age, which is the same  age required to participate in the Alaska                                                            
Longevity Bonus Program.                                                                                                        
                                                                                                                                
Co-chair Green asked how  the current number of program participants                                                            
compares to the prior year.  She noted that every year the number of                                                            
people  qualifying  for  the  program should  be  deceasing  as  the                                                            
population ages.                                                                                                                
                                                                                                                                
Ms. Clarke informed the  Committee that the program expenditures for                                                            
FY 03 are less  than the amount spent in FY 02. She  reiterated that                                                            
this request is  the result of the Department "missing  the mark" in                                                            
its projections.                                                                                                                
                                                                                                                                
     SB 75                                                                                                                      
     Section 3(5)                                                                                                               
     Department of Health and Social Services                                                                                   
     Kenai Peninsula Youth Facility                                                                                             
     Funds to hire superintendent and unit leader and provide other                                                             
     operating funds needed to open the facility that will be                                                                   
     completed April 15, 2003.                                                                                                  
     $155.2 general funds                                                                                                       
                                                                                                                                
Ms.  Clarke informed  the  Committee that,  when  completed in  mid-                                                            
April 2003, this facility  would be the newest youth facility in the                                                            
State.  She reminded  the  Committee  that the  Department  received                                                            
authorization from the  Legislature to build several youth detention                                                            
facilities   with  the  intent   of  housing   youth  within   their                                                            
communities or local regions.  She explained that this request would                                                            
provide  funding  for utilities  and  facility management  staff  in                                                            
preparation of housing youth as of July 2003.                                                                                   
                                                                                                                                
Co-chair Green  asked the reason for  including this funding  in the                                                            
supplemental  budget request  since of the  opening of the  facility                                                            
was anticipated.                                                                                                                
                                                                                                                                
Ms. Clarke agreed  that this is not an unexpected  event. She stated                                                            
that the  decision was  made the  previous year  not to request  the                                                            
funds in the regular budget;  however, she stressed that funding the                                                            
facility's  utility costs  is necessary. She  reported that  partial                                                            
funding has  been requested in the  past for facilities that  opened                                                            
in the spring;  however, she stated,  the reason for presenting  the                                                            
request in the supplemental budget is not known.                                                                                
                                                                                                                                
Co-chair  Green asked the  number of youth  currently housed  at the                                                            
McLaughlin  Youth  Center,  and  whether  the  opening  of  the  new                                                            
facility would  alleviate any overcrowding that McLaughlin  might be                                                            
experiencing.                                                                                                                   
                                                                                                                                
Ms. Clarke responded  that the opening of the facility  would assist                                                            
in relieving overcrowding  at McLaughlin. She noted  that additional                                                            
information would be presented in other supplemental requests.                                                                  
                                                                                                                                
Co-chair Green asked whether  the start-up costs associated with the                                                            
new facility  are comparable  to the start-up  costs of other  youth                                                            
facilities.                                                                                                                     
                                                                                                                                
Ms. Clarke  believed the costs to  be comparable, but stated  that a                                                            
cost comparison  with the facilities  in Ketchikan and Mat-Su  would                                                            
be provided to the Committee.                                                                                                   
                                                                                                                                
Senator Taylor  opined that the Legislature  could request  that the                                                            
opening of the facility be delayed until July.                                                                                  
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(1)                                                                                                            
     Department of Health and Social Services                                                                                   
     Adult Public Assistance                                                                                                    
     Program  shortfunding was estimated  to be $1,750.0  GF in May.                                                            
     Caseload  growth has added an  additional $333.0 GF  and $285.0                                                            
     Fed.  Average projected  monthly caseload  is 4.3% higher  than                                                            
     the 1% caseload growth level funded last session.                                                                          
     $2,368.0 total funds                                                                                                       
          $2,083.0 general funds                                                                                                
          $  285.0 federal funds                                                                                                
                                                                                                                                
Ms.  Clarke stated  that  this request  would  provide  funds for  a                                                            
projected  average  of  15,390  individuals   in  the  Adult  Public                                                            
Assistance  program. She  stated that this  number is approximately                                                             
4.3%  higher   than  projected.  She   mentioned  that  eligibility                                                             
requirements  include being  elderly or being  at least 18  years of                                                            
age and blind,  or a person diagnosed by a physician  as permanently                                                            
disabled.  She  noted that  this  program  supplements  the  federal                                                            
Supplemental  Security   Income  (SSI)  program  by  providing  cash                                                            
assistance  to individuals  to help them  remain independent  and in                                                            
their own homes for longer periods of time.                                                                                     
                                                                                                                                
Co-chair Green  asked whether the  requirements for the program  are                                                            
stringent.                                                                                                                      
                                                                                                                                
Ms.  Clarke responded  in  the affirmative  and mentioned  that  the                                                            
people in  the program must  qualify for  the federal definition  of                                                            
disabled   in   addition   to   meeting   the   income  eligibility                                                             
requirements.  She stated the average supplement is  $162 per month,                                                            
which, when combined with  the SSI payment, amounts to approximately                                                            
$900 per month.                                                                                                                 
                                                                                                                                
Co-chair Green asked the  number of individuals being served by this                                                            
program.                                                                                                                        
                                                                                                                                
Ms.  Clarke  stated   that  of  the  projected  average   of  15,390                                                            
individuals  being  served in  this program  per  month, 10,614  are                                                            
disabled and 4,776 are  elderly. She mentioned that this program has                                                            
been growing approximately 4.5 to 5.5 percent per year.                                                                         
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(2)                                                                                                            
     Department of Health and Social Services                                                                                   
     Family Preservation                                                                                                        
     Unanticipated federal grant award to fund Child Abuse                                                                      
     Treatment Plans for Alaska Native Children and Parents                                                                     
     project.                                                                                                                   
     $450.0 federal funds                                                                                                       
                                                                                                                                
Ms. Clark stated  that this request  would authorize the  receipt of                                                            
$450,000  in federal  Indian  Child Welfare  Act  funds. She  stated                                                            
that, although  the Department  applied for  the grant in May  2002,                                                            
the awarding  of this  federal grant  in October  2002 dictated  its                                                            
being submitted in the  supplemental budget request rather than as a                                                            
revised  program request  through the Legislative  Budget and  Audit                                                            
Committee.  She stated that the Child  in Need of Aid program  would                                                            
use these  funds  to work  on such issues  as  Native child  welfare                                                            
concerns,  Native   foster  homes,  and  implementation   of  policy                                                            
procedures for Native children in foster care.                                                                                  
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(3)                                                                                                            
     Department of Health and Social Services                                                                                   
     McLaughlin Youth Facility                                                                                                  
     Population   increase  of  18.9%  has  resulted   in  increased                                                            
     overtime  of $16.7  and laundry,  food, and  clothing costs  of                                                            
     $9.1.  FY2002 average  population  was 179.6  while FY2003  has                                                            
     averaged 198.3                                                                                                             
     $25.8 general funds                                                                                                        
                                                                                                                                
Ms.  Clarke  referred the  Committee  to  the  chart in  the  backup                                                            
material  that denotes  the  capacity levels  of  the Facility.  She                                                            
shared  with  the  Committee  that  cost  containment  efforts  have                                                            
concentrated  on keeping staffing  levels to  a minimum and  curbing                                                            
expenses  by  delaying   the  purchasing  of  items;   however,  she                                                            
continued,  the overtime demanded  of staff  to oversee the  growing                                                            
youth  population at  the facility,  combined with  the increase  in                                                            
costs  for  such things  as  laundry,  prompted  the need  for  this                                                            
request.                                                                                                                        
                                                                                                                                
Ms. Clark added that the  opening of the new youth facility in Kenai                                                            
is  welcome  as the  youth  population  at  McLaughlin  is  reaching                                                            
capacity.                                                                                                                       
                                                                                                                                
Co-chair  Green voiced  that  the staff  at McLaughlin  should  have                                                            
better addressed this situation.                                                                                                
                                                                                                                                
Senator Taylor  asked how an increase of 19 youth  caused this level                                                            
of expense.                                                                                                                     
                                                                                                                                
Ms. Clark  responded  that the  numbers  projected are  not a  daily                                                            
count but rather  depict the average  of the number of youth  in the                                                            
facility.  She continued  that,  at times,  there could  be a  large                                                            
number  of youth  or  a lesser  number  of  youth. She  stated  that                                                            
another  factor  is  that situations  arise  that  create  an  over-                                                            
capacity  situation in one  unit, particularly  the detention  unit,                                                            
thereby concentrating the  numbers in one area rather than spreading                                                            
them throughout the overall bed count.                                                                                          
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(4)                                                                                                            
     Department of Health and Social Services                                                                                   
     Fairbanks Youth Facility                                                                                                   
     Extraordinary medical costs including MRI, extensive brain                                                                 
     testing, weekly allergy shots, and surgery.                                                                                
     $20.0 general funds                                                                                                        
                                                                                                                                
Ms. Clarke  conveyed that  the extent of  these medical costs  could                                                            
not be covered through  the regular budget. She stated that, similar                                                            
to adult correction facilities,  juveniles in State institutions are                                                            
not eligible  for Medicaid.  She furthered  that  if a juvenile  has                                                            
other  insurance  in  effect,  that insurance  would  be  billed  as                                                            
primary;  however,  she explained,  in  these situations,  no  other                                                            
coverage was available and there was no other payment "source."                                                                 
                                                                                                                                
Co-chair  Green voiced that  juveniles in  correction faculties  are                                                            
classified  as adults  according to  federal law.  She voiced  being                                                            
unaware  that Medicaid coverage  is not  available for correctional                                                             
facility inmates.                                                                                                               
                                                                                                                                
Ms. Clarke  identified  this exemption  "as a big  barrier that  the                                                            
feds put up; they  will not pay for those medical  costs to Medicaid                                                            
even if the  individuals are eligible  if they're in a correctional                                                             
facility."                                                                                                                      
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(5)                                                                                                            
     Department of Health and Social Services                                                                                   
     Nome Youth Facility                                                                                                        
     Staff  for population  increase. Average  daily population  has                                                            
     increased  36% over  FY2002.  Facility capacity  is 6.  Average                                                            
     population  is FY2002 was 6.9  while FY2003 average  population                                                            
     has been 9.3.                                                                                                              
     $100.8 general funds                                                                                                       
                                                                                                                                
Ms. Clarke  responded that the Nome  facility is one of the  State's                                                            
smallest youth  facilities. She stated  that it was reopened  in the                                                            
mid  1990's with  the  intention of  being  staffed  as a  community                                                            
detention facility.  She continued  that the increase in  the number                                                            
of youth  entering the  Nome facility, primarily  from the  Kotzebue                                                            
area, has required the  staffing of the facility "to be increased by                                                            
one  on every  shift to  deal with  these kids  who come  in to  our                                                            
facility."  She stated  that  some of  these children  have  serious                                                            
offenses  and require twenty-four  hour  supervision. She  explained                                                            
that  the "original  plan"  for  this facility  included  one  staff                                                            
person for  each evening and graveyard  shift; however, she  stated,                                                            
"that was not  a safe assumption for  the number of children  coming                                                            
into the Nome facility,"  and additional staff was required "to keep                                                            
that facility safe."                                                                                                            
                                                                                                                                
Co-chair Green asked whether Nome is a lockdown facility.                                                                       
                                                                                                                                
Ms. Clarke responded that it could be a locked facility.                                                                        
                                                                                                                                
Co-chair Green noted that the facility is not very large.                                                                       
                                                                                                                                
Ms. Clarke stated that it is not large "and is very cramped."                                                                   
                                                                                                                                
Co-chair  Green  commented  that  the  request  appears  to  be  "an                                                            
excessive amount" for 2.4 extra occupants.                                                                                      
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(6)                                                                                                            
     Department of Health and Social Services                                                                                   
     Johnson Youth Facility                                                                                                     
     Medical costs for physical therapy for 1 youth                                                                             
     $11.5 general funds                                                                                                        
                                                                                                                                
Ms. Clarke stated that  this facility, much like the Fairbanks Youth                                                            
Facility,  experienced  additional  medical  expenses  for  a  youth                                                            
needing braces  for which the Shriners Club could  not fully provide                                                            
coverage. She  stated that physical therapy needs  also exceeded the                                                            
budgeted amount.                                                                                                                
                                                                                                                                
Co-chair  Green   asked  whether   this  addressed  a  pre-existing                                                             
condition.                                                                                                                      
                                                                                                                                
Ms. Clarke stated that this information would be provided.                                                                      
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(7)                                                                                                            
     Department of Health and Social Services                                                                                   
     Bethel Youth Facility                                                                                                      
     Population increased 34.7% over FY2002 and extraordinary                                                                   
     medical costs estimated at $35.0                                                                                           
     $66.1 general fund                                                                                                         
                                                                                                                                
Co-chair Green  asked whether a medical  review group could  address                                                            
changes to State  policy to clarify the level of coverage  the State                                                            
would be responsible for individuals in State custody.                                                                          
                                                                                                                                
Ms. Clarke responded  that multiple issues, including  the growth in                                                            
the number of  youth in State facilities, have created  the increase                                                            
in medical  expenses being  experienced. She  stated that while  the                                                            
Department  does   budget  for  medical  expenses,  the   "increased                                                            
pressure" placed  on this budget by  a growing population,  combined                                                            
with   increased   medical   expenses,   have   "outstripped"    the                                                            
Department's ability to cover the expenses.                                                                                     
                                                                                                                                
Co-chair Green  asked whether the Department attempts  to recoup the                                                            
medical expenses.                                                                                                               
                                                                                                                                
Ms. Clarke  assured the Committee  that attempts are made;  however,                                                            
she communicated,  the findings reveal  that many of these  children                                                            
to not have medical coverage.                                                                                                   
                                                                                                                                
Co-chair  Green asked  whether  any of  the children  at the  Bethel                                                            
facility, for instance, qualify for Indian Health Services.                                                                     
                                                                                                                                
Ms. Clarke stated that this would be investigated.                                                                              
                                                                                                                                
Co-chair  Green stated that  children qualifying  for Indian  Health                                                            
Services should be 100 percent covered for medical expenses.                                                                    
                                                                                                                                
Co-chair Green  voiced that children  who qualify for Indian  Health                                                            
Services should be treated  at an Alaska Native Hospital rather than                                                            
at a non-Native hospital  where expenses would be totally charged to                                                            
the State.                                                                                                                      
                                                                                                                                
Ms. Clarke concurred.                                                                                                           
                                                                                                                                
Co-chair  Green requested  a  review  be conducted  regarding  where                                                            
services are being provided.                                                                                                    
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(a)(8)                                                                                                            
     Department of Health and Social Services                                                                                   
     Vital Statistics                                                                                                           
     Operating  costs driven  by increased  number  of licenses  and                                                            
     certificates,  including non-permanent  positions to  deal with                                                            
     backlogs.  Also  covers  rent as  were able  to  move into  new                                                            
     facility earlier than anticipated.                                                                                         
     $195.0 Receipt Supported Services                                                                                          
                                                                                                                                
Ms.  Clarke  informed  the Committee  that  the  Division  of  Vital                                                            
Statistics  charges fees for the issuance  of certificates  for such                                                            
things  as  births   and  deaths.  She  shared  that   the  Division                                                            
experienced  a significant  increase in the  number of certificates                                                             
being  requested, which  resulted  in an "unacceptable  backlog"  of                                                            
requests. She continued  that a portion of this supplemental request                                                            
would pay for  the expense of hiring non-permanent  staff to address                                                            
the backlog and bring the  requests current. She stated that another                                                            
portion of the request  provides for non-budgeted lease payments and                                                            
associated  costs  of  moving  the  Juneau  facility  to  a  larger,                                                            
competitively  bid location in the  Lemon Creek area. She  explained                                                            
that the expense  of moving the vital  statistic records  to the new                                                            
facility exceeded the Division's estimates.                                                                                     
                                                                                                                                
Co-chair   Green  asked   whether  "glamour   certificates,"   which                                                            
designate  a portion  of  the fee  to such  things  as a  non-profit                                                            
organization, are included in these requests.                                                                                   
                                                                                                                                
Ms. Clark  responded that  the bulk of the  backlogged requests  are                                                            
regular certificates required for legal purposes.                                                                               
                                                                                                                                
Senator  Taylor  expressed   disbelief  that  the  majority  of  the                                                            
increase is for death certificates.                                                                                             
                                                                                                                                
Ms.  Clarke responded  that  the percentage  of  certificates  being                                                            
requested  for  death certificates   is not  defined;  however,  she                                                            
continued,  in  the  last  several  years,  the  overall  number  of                                                            
requests has increased significantly.                                                                                           
                                                                                                                                
Senator  Taylor  inquired  whether  the  increase  in  requests  for                                                            
certificates required the move to the new facility.                                                                             
                                                                                                                                
Ms. Clarke responded  that rather than the move to  the new facility                                                            
resulting  from an  increase  in the  number of  certificates  being                                                            
requested, the move was  approved by the Legislature to provide more                                                            
space for vital  statistics records.  She shared that these  records                                                            
were  overcrowded  and  that  inadequate  space  was  available  for                                                            
individuals  doing  research  on family  history  or  other  private                                                            
matters. In addition, she  noted, the Division recently absorbed the                                                            
responsibility  of  housing  both  medical  marijuana  and  abortion                                                            
records,  as well as records  that were once  the responsibility  of                                                            
the Court System.                                                                                                               
                                                                                                                                
Co-chair  Green asked whether  such things  as moving and  increased                                                            
lease payment  expenses "are typically"  included in a supplemental                                                             
budget request.                                                                                                                 
                                                                                                                                
Ms. Clarke responded that  it is not typical, unless it is something                                                            
that "is extraordinary" and was not budgeted.                                                                                   
                                                                                                                                
Co-chair  Green asked  for  verification  that the  moving  expenses                                                            
amounted to $75,000.                                                                                                            
                                                                                                                                
Ms. Clarke  specified that  the request includes  $120,000  to cover                                                            
the  expense  of  hiring  non-permanent  employees  to  address  the                                                            
backlog and $75,000 in  moving and increased lease payment expenses.                                                            
                                                                                                                                
Senator Taylor  interjected that this Division generates  money from                                                            
the fees charged for certificates.                                                                                              
                                                                                                                                
Co-chair  Green  clarified  that the  funding  for this  request  is                                                            
generated from the fees charged for the certificates.                                                                           
                                                                                                                                
Co-chair  Wilken  asked, were  this  receipt  expenditure  authority                                                            
request approved, whether  the current five-dollar fee being charged                                                            
for certificates would  be sufficient to address the current backlog                                                            
of requests.                                                                                                                    
                                                                                                                                
Ms. Clarke stated that a fee increase is not anticipated.                                                                       
                                                                                                                                
     SB 76                                                                                                                      
     Section 8(b)                                                                                                               
     Department of Health and Social Services                                                                                   
     Medicaid Services                                                                                                          
     Claims growth and match rate adjustment                                                                                    
     $10,991.3 total funds                                                                                                      
          $28,055.8 general funds                                                                                               
          ($16,064.5) federal funds                                                                                             
          ($ 1,000.0) statutory designated program                                                                              
                                                                                                                                
Ms. Clarke  stated that this request  results from a combination  of                                                            
an FY 03 federal  match adjustment and a decline in  Native Medicaid                                                            
participants.                                                                                                                   
                                                                                                                                
Ms.  Clarke  shared  that,  historically,   the authorized   federal                                                            
Medicaid  match  was  50  percent;  however,  she  noted  that  when                                                            
recently-elected  Governor   Frank  Murkowski  was  a Congressional                                                             
Senator, he  was instrumental in raising  Alaska's authorized  match                                                            
rate to  59.8 percent  for a  four-year period.  She continued  that                                                            
Alaska's  match  level  has  "floated"  according  to  the  national                                                            
formula  level  since  the  time  the  elevated  rate  expired.  She                                                            
explained that  Alaska's per capita income level,  which is a factor                                                            
in  determining  the  federal  Medicaid  contribution  to  a  state,                                                            
increased  as a  result of  a federal  calculation  adjustment  that                                                            
began  factoring  in  401K  or  federal  contributions   to  federal                                                            
employees in the  State. She noted that the high percent  of federal                                                            
employees  in the  Alaska  resulted in  increasing  the State's  per                                                            
capita income level and  consequently, lowering the federal Medicaid                                                            
percent contributed to the State.                                                                                               
                                                                                                                                
Ms. Clarke  stressed  that for  a variety  of reasons,  the  State's                                                            
Medicaid reimbursement  rates have  fluctuated, making it  difficult                                                            
to budget.  She stated that  the Department  must adjust to  working                                                            
within the floating rate structure.                                                                                             
                                                                                                                                
Ms. Clarke  continued that another  factor determining this  request                                                            
is that  the number of  Tribal Native participants,  whose  Medicaid                                                            
expenses are reimbursed  at 100 percent rather than  at the floating                                                            
rate, has, "unexpectantly," declined this past year.                                                                            
                                                                                                                                
Co-chair  Green  asked  for  further  information  regarding  Native                                                            
Medicaid reimbursements.                                                                                                        
                                                                                                                                
Ms. Clarke  responded  that the Medicaid  program  has a variety  of                                                            
Medicaid  match rates,  and that were  a Native  Alaskan to  receive                                                            
treatment in a Tribal facility,  the State would receive 100 percent                                                            
federal Medicaid  reimbursement. She  stated that the number  of 100                                                            
percent reimbursements "dropped" this past year.                                                                                
                                                                                                                                
Co-chair  Green   asked  whether  this  resulted  from  individuals                                                             
choosing to go to non-Native hospitals.                                                                                         
                                                                                                                                
Ms.  Clarke responded  that  this might  be possible;  however,  she                                                            
noted  that a  change  in the  Alaska Native  Medical  Center  claim                                                            
process  might have  delayed receipt  of some of  the billings.  She                                                            
stated that, due  to the importance of this issue,  an investigation                                                            
is being  conducted  by the Department  to determine  why there  has                                                            
been a decline in Native billings.                                                                                              
                                                                                                                                
Co-chair Green  asked for further  information regarding  the Alaska                                                            
Native Medical Center billing process.                                                                                          
                                                                                                                                
Ms.  Clark  responded  that  the Center  bills  the  Department  for                                                            
services rendered,  on an individual  basis. She continued  that the                                                            
Department  pays  the bill  at  100  percent  using money  from  the                                                            
federal 100 percent Tribal Medicaid program.                                                                                    
                                                                                                                                
Ms.  Clarke  communicated  that  $3.9 million  of  the  $28  million                                                            
general fund  request is  for unanticipated  growth in the  Medicaid                                                            
program in FY 03 as a result of a growth in children's expenses.                                                                
                                                                                                                                
Co-chair  Green interjected  that  the limits  for children  medical                                                            
expenses are established by the State.                                                                                          
                                                                                                                                
Ms.  Clarke  clarified   that  rather  than  individual   children's                                                            
expenses increasing,  the number of  children served is increasing.                                                             
                                                                                                                                
Co-chair  Green  concluded  that the  increase  is,  therefore,  the                                                            
result of caseload growth.                                                                                                      
                                                                                                                                
Ms.  Clarke informed  the  Committee  that there  has  also been  an                                                            
increase in  the number of pregnant  women in the Medicaid  program.                                                            
                                                                                                                                
Co-chair  Green asked  whether  these  expenses include  the  Denali                                                            
KidCare program.                                                                                                                
                                                                                                                                
Ms. Clarke responded yes.                                                                                                       
                                                                                                                                
Co-chair  Green  asked  whether  there  has  been a  change  in  the                                                            
Medicaid rate for the Denali KidCare program.                                                                                   
                                                                                                                                
Ms. Clarke  responded  that the match  rate for  the Denali  KidCare                                                            
program has been reduced.                                                                                                       
                                                                                                                                
Co-chair  Green asked  whether the  Medicaid rate  for cervical  and                                                            
breast cancer has been reduced.                                                                                                 
                                                                                                                                
Ms. Clarke  responded that the rate  for this program "floats"  with                                                            
the federal  Medicaid  formula; therefore,  she  stated, this  match                                                            
rate has also been lowered.                                                                                                     
                                                                                                                                
Co-chair  Green asserted  that  this has  resulted  in an  increased                                                            
demand on State general funds.                                                                                                  
                                                                                                                                
Ms. Clarke  estimated that  the current cervical  and breast  cancer                                                            
match rate is 70.79 percent.                                                                                                    
                                                                                                                                
Ms.  Clarke stated  that elderly  caseloads  are  projected to  rise                                                            
slightly;  however,  she noted,  disabled  caseloads  and costs  are                                                            
projected   to  rise  approximately,   2  percent  and  4   percent,                                                            
respectfully more than anticipated in the FY 03 budget.                                                                         
                                                                                                                                
Co-chair Green  asked whether any  of the program's qualifiers  have                                                            
changed or broadened.                                                                                                           
                                                                                                                                
Ms. Clarke  responded  no. She noted  that a  regulation package  to                                                            
clarify eligibility  was introduced  in the  fall of 2002  regarding                                                            
the  waiver   program;  however,   she  noted   that  the   previous                                                            
Administration  removed the package  from consideration.  She stated                                                            
that  Governor   Murkowski's  Administration   recently   adopted  a                                                            
separate general cost containment package.                                                                                      
                                                                                                                                
Co-chair Green voiced that  the savings resulting from this recently                                                            
enacted legislation would be forthcoming.                                                                                       
                                                                                                                                
Ms. Clarke clarified  that this legislation is effective  as of now,                                                            
and that some cost savings are anticipated.                                                                                     
                                                                                                                                
Co-chair  Green  distributed  a  packet  of material  and  from  the                                                          
packet; she read language  located on line 32, page 3 of CCS HB 404,                                                            
Sec.1 [copy on file] as follows.                                                                                                
                                                                                                                                
     "This  statement   is  a  statement  of  the   purpose  of  the                                                            
     appropriation  for  Medical Assistance  and  is neither  merely                                                            
     descriptive language  nor a statement of legislative intent. It                                                            
     the intent  of the legislature that the amount  appropriated in                                                            
     this   appropriation   is  the   full  amount   that  will   be                                                            
     appropriated for Medical  Assistance for the fiscal year ending                                                            
     June   30,   2003.  If   the  amount   appropriated   in   this                                                            
     appropriation  is not sufficient to cover the  costs of Medical                                                            
     Assistance  for  all eligible  persons,  the  department  shall                                                            
     eliminate  coverage for optional  medical services that  have a                                                            
     federal match and  optionally eligible groups of individuals in                                                            
     accordance   with  AS  47.07.035.  It  is  the  intent  of  the                                                            
     Legislature  that requests for supplemental appropriations  for                                                            
     Medical  Assistance for  the fiscal year  ending June  30, 2003                                                            
     will  not  be   approved.  This  intent  covers   the  budgeted                                                            
     reductions  to  Medicaid, but  does not  apply to  any loss  of                                                            
     funds that  may occur if the department's "Fair  Share" funding                                                            
     mechanism is not approved by the federal government."                                                                      
                                                                                                                                
Co-chair Green continued  that the aforementioned package includes a                                                            
Medicaid Services- Component  memo, dated December 14, 2001 [copy on                                                            
file]  from  the Department   of Health  and  Social  Services  that                                                            
contains   information   about  the   Federal   Medical   Assistance                                                            
Percentage (FMAP) that reads as follows.                                                                                        
                                                                                                                                
     "Alaska's  federal  FY  02 FMAP  rate  was decreased  to  57.38                                                            
     percent for Title  XIX and 70.17 percent for Title XXI. This is                                                            
     a significant drop  from FY 01 that carries with it a potential                                                            
     loss of federal  funds for Alaska of more than  $10 million. On                                                            
     November  6,  2001,  U.S. Senator  Mac  Baucus  introduced  the                                                            
     "Economic  Recovery and Assistance for American  Workers Act of                                                            
     2001" that includes  FMAP relief. The Act holds harmless states                                                            
     with 02 FMAP  rates that were reduced, provides  an across-the-                                                            
     board 1 percent  increase and an additional 1  percent increase                                                            
     to states  with a  higher than average  unemployment rate  over                                                            
     the previous 3 months.                                                                                                     
                                                                                                                                
     In anticipation  of the enactment of the Economic  Recovery and                                                            
     Assistance for American  Workers Act of 2001, the department is                                                            
     not asking for additional  general funds to replace potentially                                                            
     lost federal dollars at this time."                                                                                        
                                                                                                                                
Co-chair Green  referenced the letter  she authored to Commissioner                                                             
Jay Levy  of the  Department of  Health and  Social Services,  dated                                                            
August 5, 2002,  [copy on file] that requested, among  other things,                                                            
the Department's  plans for implementing  the FY 03 budget  and cost                                                            
cutting strategies.  She noted that she has not received  a response                                                            
from the Department.                                                                                                            
                                                                                                                                
Co-chair  Green expressed  that this is very  disturbing. She  noted                                                            
that the Legislature  "will be going on the record  again this year"                                                            
that there would  be "a very tight ship" on supplemental  and budget                                                            
requests. She voiced support  for the implementation of cost cutting                                                            
strategic  programs;  programs   to attract   federal  dollars;  and                                                            
possible  re-organization   as  determined  to  be  necessary.   She                                                            
asserted  that "for  reasons that  are not clear,  items that  could                                                            
have been anticipated,  end up on the supplemental  request, without                                                            
any information being provided  that indicates that any options were                                                            
considered  to  produce cost  saving  measures  or to  stop  funding                                                            
things when money was limited."                                                                                                 
                                                                                                                                
Ms. Clarke  responded that the Department,  under the management  of                                                            
its  new  commissioner,   Joel  Gilbertson,  is  focusing   on  cost                                                            
containment   and   alternatives.   She  noted   that  Commissioner                                                             
Gilbertson brings  a breath of experience on the federal  level. She                                                            
stated that  the Department has been  reviewing cost containment  in                                                            
the  Medicaid  program,  and  she  distributed  a  cost containment                                                             
options list  to the Committee titled  "FY 02 Optional Expenditures                                                             
and Recipients" [copy on  file] that contains each item's associated                                                            
dollar amounts.                                                                                                                 
                                                                                                                                
Co-chair Green  interjected that this list is not  the only variable                                                            
being discussed, "as the  cuts were supposed to be very broad based,                                                            
and if  the money is  not there,  the message was  do not come  back                                                            
this year with a supplemental like this, and now you're here."                                                                  
                                                                                                                                
Senator Bunde  asked which item on the optional services  list would                                                            
allow schools to submit claims for Medicaid eligible students.                                                                  
                                                                                                                                
Ms. Clark noted that FY  02 legislation allowing school districts to                                                            
bill  Medicaid  for student  services  in  not  a component  of  the                                                            
optional services list.                                                                                                         
                                                                                                                                
Co-chair Green concurred.                                                                                                       
                                                                                                                                
Ms. Clark described  the elements  of the optional service  list and                                                            
the costs expended  per item. She explained that using  the optional                                                            
services  list  to  generate  savings in  the  Medicaid  program  is                                                            
difficult because  the order of services  performed "must  match the                                                            
list order as  presented in the bill," however, she  noted that were                                                            
these  services  not  part  of  the  optional   services  list,  the                                                            
Department  would be required to pay  more to supply those  services                                                            
through mandatory coverage provisions.                                                                                          
                                                                                                                                
Co-chair Green  voiced appreciation  for being provided the  list as                                                            
well as the understanding  of its implication; however,  she stated,                                                            
"it does not disallow other  cost cutting and saving" measures being                                                            
implemented.  She  stated  that  cost  costing   measures  have  not                                                            
occurred, and  that she would be expecting  them to occur  in FY 04.                                                            
                                                                                                                                
Ms.  Clarke agreed.  However,  she asserted  that  cost containment                                                             
efforts  in  Medicaid  or  any  other  regulated   program  must  be                                                            
implemented early  in a fiscal year to reflect significant  savings.                                                            
                                                                                                                                
Co-chair Wilken, referring  to page 13 of the backup material, asked                                                            
whether the federally  formulated Medicaid match rate  for Title XIX                                                            
is usually a 60/40 match percent.                                                                                               
                                                                                                                                
Ms. Clarke concurred.                                                                                                           
                                                                                                                                
Co-chair  Wilken asked  for an  explanation  of Tile  XXI, which  is                                                            
referred to having a federally formulated enhanced rate.                                                                        
                                                                                                                                
Ms. Clarke responded that  the federally formulated enhanced rate is                                                            
a better rate  that is allowed for  Denali KidCare. She stated  that                                                            
it is approximately  71 percent  compared to  the 58 percent  of the                                                            
Title XIX formula.                                                                                                              
                                                                                                                                
Co-chair  Green reminded  the Department  to  provide the  Committee                                                            
with information  regarding detention  facility occupants  who might                                                            
qualify for Indian Health Services.                                                                                             
                                                                                                                                
Senator  Hoffman  asked whether  the  $53.1 million  identified  for                                                            
long-term care  on the optional services list is the  total expense.                                                            
He additionally  asked the  portion of the  medical fee that  is the                                                            
patient's responsibility.                                                                                                       
                                                                                                                                
Ms. Clarke responded that  this is the total expenditure amount. She                                                            
stated that  the federal  government remits  approximately 58  to 60                                                            
percent of  the services  expense to the  State. She explained  that                                                            
this  category provides  for  the home  and community  based  waiver                                                            
program for elderly and disabled individuals.                                                                                   
                                                                                                                                
Senator  Hoffman asked whether  the recipients  are responsible  for                                                            
any of the expense of this service.                                                                                             
                                                                                                                                
Ms. Clarke  understood that recipients  are not responsible  for any                                                            
of  the  cost;  however,  she  continued,  the  federal   government                                                            
specifies a small co-payment fee for some services.                                                                             
                                                                                                                                
Co-chair  Green  asked  which  institutions  are  involved  in  this                                                            
service.                                                                                                                        
                                                                                                                                
Ms. Clarke  clarified that this program  involves non-institutional                                                             
services.  She  stated that  these  services  could be  provided  to                                                            
people in assisted living  homes or to people in their own homes who                                                            
receive Medicaid services.                                                                                                      
                                                                                                                                
Senator Hoffman  asked what organizations  would be providing  these                                                            
services.                                                                                                                       
                                                                                                                                
Ms. Clarke  responded that  personal care  attendants could  provide                                                            
these services.                                                                                                                 
                                                                                                                                
Co-chair Green  asked if food and  medications are included  in this                                                            
category.                                                                                                                       
                                                                                                                                
Ms. Clarke voiced that  Medicaid does not provide for room and board                                                            
services  unless the  service is conducted  in a  nursing home.  She                                                            
clarified that these are non-nursing home services.                                                                             
                                                                                                                                
Co-chair  Green concluded  that the  distinction  in these  services                                                            
could be characterized  as nursing  home service verses non-nursing                                                             
home service.                                                                                                                   
                                                                                                                                
Ms. Clarke  stated that a broader  definition of the services  would                                                            
be provided.                                                                                                                    
                                                                                                                                
Senator  Hoffman voiced  that  the cost  of the  service equates  to                                                            
approximately  $24,000 per  recipient. He  understood that  assisted                                                            
living would be  a less expensive alternative to nursing  home care.                                                            
                                                                                                                                
Ms. Clarke  asserted  that, when compared  to the  cost of  Alaska's                                                            
nursing home care,  the cost "is significantly less."  She continued                                                            
that the  "home and  community based  waiver program  is one  of the                                                            
fastest  growing programs  in the  Medicaid program  as it serves  a                                                            
number  of people  who,  without this  service,  might end  up in  a                                                            
nursing home" at a per  person annual cost of approximately $80,000.                                                            
                                                                                                                                
Senator   Bunde   asked   for   further   distinction   between   an                                                            
institutional and non-institutional home.                                                                                       
                                                                                                                                
Ms. Clarke responded  that clarifying material would  be supplied to                                                            
the Committee.                                                                                                                  
                                                                                                                                
Co-chair  Wilken asked the  Department to supply  a breakout  of the                                                            
entities  that  would   receive  $300,000  of  the  total   $450,000                                                            
allotment  of the  federal  Family Preservation  Grant  detailed  in                                                            
8(a)(2).                                                                                                                        
                                                                                                                                
Ms. Clarke  answered that the $300,000  grant would be allocated  to                                                            
the Alaska Native Health Board.                                                                                                 
                                                                                                                                
Co-chair Wilken  asked the Department  to provide a breakout  of how                                                            
the Alaska  Native Health Board grant  would be spent, particularly                                                             
the portion of it allocated to rural Alaska non-profit entities.                                                                
                                                                                                                                
Senator B. Stevens  asked for a breakout detailing  the amount spent                                                            
by the  State, the  federal government,  and the  recipients  of the                                                            
items on the optional services list.                                                                                            
                                                                                                                                
Ms. Clarke stated that this information would be provided.                                                                      
                                                                                                                                
     SB 76                                                                                                                      
     Ratifications: Section 17(a)(3)(A)                                                                                         
     Department of Health and Social Services                                                                                   
     AR 22520-01 (Medicaid Services)                                                                                            
     $2,753,274.86 general funds                                                                                                
                                                                                                                                
Ms. Clarke  informed the  Committee that  FY 2001 Medicaid  expenses                                                            
generated  this   ratification  expense.  She  explained   that  the                                                            
Department claimed  some family planning services  at the allowed 90                                                            
percent rate;  however, she  noted, $4.3 million  of that claim  was                                                            
disallowed  by the  federal agency  administering  the program.  She                                                            
stated  that the  federal  determination  specified  that the  State                                                            
supplied  inadequate  documentation  and consequently  disallowed  a                                                            
portion  of the  claim.  She  stated that  this  ratification  would                                                            
provide funding  to cover those expenses,  which, she attested,  the                                                            
State believed to be legitimate at the time.                                                                                    
                                                                                                                                
Co-chair Green  asked whether there  is a challenge process  whereby                                                            
the State could have contested the federal ruling.                                                                              
                                                                                                                                
Ms.  Clarke responded  that  the State  has challenged  the  federal                                                            
determination of the "Fair Share" program.                                                                                      
                                                                                                                                
     SB 76                                                                                                                      
     Ratifications: Section 17(a)(3)(B)                                                                                         
     Department of Health and Social Services                                                                                   
      AR 22553-01 (Family and Youth Services Staff Training)                                                                    
     $54,910.55 general funds                                                                                                   
                                                                                                                                
Ms. Clarke  this ratification  request was  generated by a  claiming                                                            
error  in the  Federal Title  IV-E  program wherein  the  Department                                                            
submitted legitimate  direct charge claims, which  were subsequently                                                            
reviewed and disallowed by the federal government.                                                                              
                                                                                                                                
Senator Hoffman  asked why the State misinterpreted  the eligibility                                                            
of these charges for services.                                                                                                  
                                                                                                                                
Ms.  Clarke  commented  that  these claims  were  understood  to  be                                                            
eligible; "but  the determination was that the State  did not supply                                                            
adequate documentation  to prove"  their eligibility to the  federal                                                            
reviewers.                                                                                                                      
                                                                                                                                
Senator Hoffman  voiced the hope that  the Department "is  providing                                                            
adequate documentation now, and in the future."                                                                                 
                                                                                                                                
Ms. Clarke stated yes, the Department believes it is.                                                                           
                                                                                                                                
     SB 76                                                                                                                      
     Miscellaneous Claims                                                                                                       
     Section 16(6)                                                                                                              
     Department of Health and Social Services                                                                                   
     Admin Support                                                                                                              
     Miscellaneous Claims and State-dated warrants $42,267.93                                                                   
     $42.3 general funds                                                                                                        
                                                                                                                                
Ms. Clarke  informed  the Committee  that this claim  consists  of a                                                            
series of individual miscellaneous invoices.                                                                                    
                                                                                                                                
Co-chair Green asked whether these invoices were processed late.                                                                
                                                                                                                                
Ms. Clark  stated that  these claims  consist of  such things  as an                                                            
invoice that  was misplaced  by a vendor,  then found and  submitted                                                            
two years later.  She noted that State law obligates  the Department                                                            
to  obtain   authorization   to  pay  late   expenses  under   these                                                            
circumstances.  She  then  exampled a  situation  where  a child  in                                                            
custody of the  Division of Family and Youth Services,  and whom the                                                            
Department  believes is  Medicaid eligible,  would receive  Medicaid                                                            
funded treatment.  However,  she continued,  it would be  determined                                                            
that the child  is not covered. She  characterized these  charges as                                                            
resulting from a wide variety of situations.                                                                                    
                                                                                                                                
Co-chair  Green observed that  the Department  of Health and  Social                                                            
Service's  miscellaneous  charges "are  about ten  times higher  the                                                            
rest of the entire State."                                                                                                      
                                                                                                                                
Co-chair Green announced that the Departments' projected expenses                                                               
must be addressed in order to mitigate next year's supplement                                                                   
request.                                                                                                                        
                                                                                                                                
The bills were HELD in Committee.                                                                                               

Document Name Date/Time Subjects