Legislature(2003 - 2004)
04/06/2004 03:40 PM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSHB 494(FIN)-ELECTRONIC PAYMENT FOR STATE BUSINESS CHAIR GARY STEVENS announced CSHB 494(FIN) to be up for consideration. SUE STANCLIFF, staff to Speaker Kott, paraphrased the following sponsor statement: CSHB 494(FIN) makes necessary changes to the methods of how the State of Alaska disburses funds. This change will save the state costs of issuing checks and warrants and resolve issues pertaining to time of disbursement and undistributed collections. Currently, the state issues approximately 96,500 checks and warrants per month. Unemployment Insurance Benefits: 28,000 Division of Finance to vendors & non-venders: 50,000 Child Support recipients: 13,000 PERS & TRS Retirees: 2,500 Payroll- active employees 3,000 This legislation has the potential of saving the State of Alaska considerable funds when factoring in the reduction of check fraud, reissuing of lost or stolen checks, postage, check printing cost, reduced bank service fees, and reduced labor cost. In addition, this would benefit businesses and citizens that receive funds via direct deposit or mail delivery. There would be no check cashing fees, it would reduce liability of check fraud, and customers could use debit or credit cards at businesses. She said it's worth noting that since 1994, the administration has gone from no direct deposits to 89 percent direct deposits in 2003. This is a considerable change, but there are more savings to be had. For instance, the Division of Finance currently works with 50,000 venders and just 500 of those are set up to handle electronic transfers. That number could be improved and there are a number of other areas such as Workers Compensation that are ready for review. CHAIR GARY STEVENS asked her to speak to the issue of fraud and electronic transfers. MS. STANCLIFF opined that check fraud is already an issue and electronic transfers would eliminate that. SENATOR STEDMAN referred to page 6, line 18 and asked whether people that aren't comfortable with electronic transfer could opt out of electronic transfer and have a warrant issued. MS. STANCLIFF said that would be an option. CHAIR GARY STEVENS asked Kim Garnero whether she had any comments. KIM GARNERO, Director, Division of Finance, stated that the State of Alaska is enthusiastic about this business procedure and noted that the 500 venders that receive electronic transfers will receive over $1 billion from the State this year. They are in the process of making it possible for consumers to use electronic transfers as well. The rules are somewhat different than the ones for business, but the Division of Finance expects to have that capability by the end of the year. However, there are exceptions and risk management has advised that they don't favor electronic transfers for Worker's Compensation because it may be a disincentive to return to work. Currently they are in the process of updating their procurement boilerplate and although they can't impose it retroactively, it will be a requirement for new agreements. Finally, they are looking at a statewide debit card. SENATOR COWDERY asked how difficult it would be to opt out of electronic payments in favor of a warrant. MS. GARNERO said it's optional at this point and the Department of Law has advised that a hardship waiver would be necessary if electronic payments became mandatory. CHAIR GARY STEVENS asked for a motion. SENATOR COWDERY motioned to move CSHB 494(FIN) from committee with individual recommendations and attached fiscal note. He also asked for unanimous consent. There being no objection, it was so ordered.
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