Legislature(2001 - 2002)
02/07/2002 01:43 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
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HOUSE FINANCE COMMITTEE
February 07, 2002
1:43 PM
TAPE HFC 02 - 20, Side A
TAPE HFC 02 - 20, Side B
TAPE HFC 02 - 21, Side A
CALL TO ORDER
Co-Chair Mulder called the House Finance Committee meeting
to order at 1:43 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Carl Moses
MEMBERS ABSENT
Representative Jim Whitaker
ALSO PRESENT
Caren Robinson, Chair, Alaska Mental Health Trust Authority;
Nelson Page Budget Chair, Alaska Mental Health Trust
Authority; Jeff Jesse, Executive Director, Alaska Mental
Health Trust Authority.
PRESENT VIA TELECONFERENCE
There were no teleconference testifiers.
GENERAL SUBJECT(S):
Alaska Mental Health Trust Authority
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 22nd Legislative Session, contact 465-
2156. After the 22nd Legislative Session they will be
available through the Legislative Library at 465-3808.
LOG SPEAKER DISCUSSION
TAPE HFC 02 - 20 ALASKA MENTAL HEALTH TRUST
SIDE A AUTHORITY
000 CAREN ROBINSON, CHAIR, Greeted the Committee and
ALASKA MENTAL HEALTH provided members with a copy of
TRUST AUTHORITY their presentation. (copy on
file).
320 Ms. Robinson She reviewed the history of
Trust's formation. It resulted
from litigation that had been
ongoing for 13 years. The state
would have been required to
reconstitute the old Trust and
was incurring millions of dollars
in litigation costs and lost
resources from lost development
opportunities. The mental health
community paralyzed and
fractured.
328 Ms. Robinson She discussed the key terms of
settlement:
• Trust Authority was free to use
Trust resources to act as a
catalyst for change;
• Trust Authority funding
recommendations considered in a
single appropriation bill;
• Trust Authority to aid in
comprehensive planning for
mental health; and
Mental Health Trust Lands and
associated state lands were
released for development.
448 Ms. Robinson She noted that the Trust's
beneficiaries are: people with
mental illness; people with
mental retardation & similar
disabilities; chronic alcoholics
with psychosis; and people with
Alzheimer's disease & other
dementia.
512 Ms. Robinson The Trustees are:
Caren Robinson, Chair
John Pugh, Vice Chair
Susan LaBelle,
Secretary/Treasurer
Tom Hawkins, Asset Management
Chair
Nelson Page, Budget Chair
John Malone, Program & Planning
Chair
Phil Younker Sr.
541 Nelson Page Budget Discussed the Asset management of
Chair, Alaska Mental the settlement.
Health Trust Authority
He noted that intent is to: 1)To
protect and enhance the value of
Alaska Mental Health Trust Lands;
and 2) to maximize revenues from
Trust Lands over time. Emphasized
that the intent has been to
generate income to pay for
programs for beneficiaries.
820 Mr. Nelson Discussed the Trust Land Office's
major accomplishments 1996 -
2001:
Gross revenue increased from
$300,000 thousand to $7.5 million
dollars by Fiscal Year 2001.
Timber sales through Fiscal Year
2001 totaled over 125 million
board feet.
Initiated an active minerals
program.
Offered over 100,000 acres in the
Cook Inlet Basin for oil and gas
exploration development with
leases executed on over 40,000
acres.
903 Mr. Nelson Stressed that the efforts of the
Trust Land office has benefited
communities. Facilitated
agreement that resolved API
replacement issues resulting in a
new site for API.
1002 Representative John Pointed out that the only good
Davies access in point to the Tanana
River was on Mental Health Lands.
There was a serious of
arrangements with the Department
of Transportation and Public
Facilities and Department of
Natural Resources to provide a
fair market disposal.
1048 Vice-Chair Bunde Pointed out that there are groups
that believe that revenues from
Trust lands should not be
maximized.
1113 Mr. Nelson Reviewed the Community
Enhancement Program in Southeast
Alaska. He noted that MTH lands
surround many of the communities.
He observed that there were
concerns that lands would be
clear-cut. They created a
program, which allowed the
federal government to purchase
the rights to log the lands.
Everyone has benefited.
1256 Ms. Robinson Noted that the first installment
was in Sitka from a hillside that
the community wanted protected.
They are continued to work with
communities to return lands so
that they can develop them as
they wanted.
1404 Mr. Jesse Noted that the lands in question
were not appealing to the timber
industry.
1518 Mr. Jesse He pointed out that the Trust has
put 125 million board feet of
timber on the market. The
settlement brought the
environmental community in with
the timber industry and local
government. They focused
replacement lands where timber
has already been developed.
1553 Co-Chair Williams Concluded that the state got
their cake and ate it too.
1615 Mr. Jesse Pointed out that the land office
is innovated and gave the example
of buffer requirements. They
worked out a deal to give larger
buffers with the option to pick
the parcels.
1719 Ms. Robinson Observed that all the timber
sales that have occurred in the
last year and a half have been on
trust lands.
1742 Representative Hudson Noted problems in the Southeast
Alaska's timber industry. He
questioned what costs have been
accrued in order to provide
timberlands to communities.
1834 Mr. Nelson Did not know the cost of
providing timber sales versus the
return from timber sales.
1903 Mr. Jesse Explained that the Land Office
successfully concluded a RFP with
the Division of Forestry for
their land sales at a competitive
rate.
2027 Representative Croft Referred to page 5 of the
handout, which discussed the Land
Office.
2103 Mr. Nelson Observed that there are
fluctuations depending on the
cost to develop resources.
2135 Co-Chair Mulder Asked if the growth potential
would result in a greater gap
between costs and revenues.
2222 Mr. Nelson Affirmed but could not predict
how large they would be.
2251 Mr. Jesse Pointed out that there was a
large advance payment in FY01,
which accounted for the extent of
separation between revenues and
costs.
2336 Vice-Chair Bunde Questioned how the Trust would
assure that overhead remained
down.
2367 Mr. Jesse Noted that the Land Office is
funded through beneficiary
dollars and must submit a plan
for their projects, which show
the cost effectiveness of
projects.
2461 Ms. Robinson Discussed the Trust's mission and
vision. The Alaska Mental Health
Trust Authority administers the
Mental Health Trust established
in perpetuity. It has a fiduciary
responsibility to its
beneficiaries to enhance and
protect the Trust; to provide
leadership in advocacy, planning,
implementation; to assist in
funding a comprehensive
integrated mental health program;
and to improve the lives and
circumstances of its
beneficiaries.
2556 Ms. Robinson Noted that they are attempting to
bring their comprehensive plan
on-line. It is developed every 2
years.
2618 Ms. Robinson Discussed the Trust's major
accomplishments in 1996-2001. She
noted that the assisted living
rate increase resulted through
the cooperation of all of the
Boards. The completed the Healthy
Families Impact study. They
pioneered mental health courts,
which they believe work and
should continue to receive more
funding. She noted the importance
of partnering with AFCAN to
develop telepsychiatry. She
stressed the success of the
partnership with the Denali
Commission to include MH/SA in
new clinics Developed women's
mental health unit in
corrections.
2733 Mr. Nelson Discussed the Trust Funds status.
He noted that $72.3 million was
paid out since inception. [The
Current value of fund to date is
277.8 million] The payout rate is
3.5 percent, which is sustainable
over an indefinite period of
time.
2837 Co-Chair Mulder Referred to the payout and asked
for clarification regarding the
level of payout.
3022 Mr. Nelson Explained that the rate is
sustainable. The Trust chose a
conservative payout. The current
principle reserve fund is $27.9
million. The Trust lost $30
million dollars in value on the
stock market last year. He
explained that they will payout
3.5 percent on the asset value
regardless of the market by
taking the difference from the
Principal Reserve Fund. This
provides a reasonably secure
stream of funding.
3048 Co-Chair Mulder Observed that the rate was
conservative in the beginning in
order to allow the fund to grow.
He noted that the highest
recommended rate was 4.5 to 5
percent.
3129 Mr. Jesse Observed that the earnings for
the Permanent Fund were taken to
create the 400 percent reserve.
Once the reserve was created the
payout was incrementally
increased, each time the payout
is increased half of a percent, 2
percent of value needs to be
placed into the reserve to retain
the 400 percent. The market went
down before they were able to
fully pay the reserve. Once the
market returns they will be able
to return the Fund to it's
assured sustainability level.
3252 Representative Croft Clarified that 400 percent of the
yearly payout needs to be in
reserve.
3326 Mr. Jesse Agreed and provided examples.
Four years of the payout needs to
be in reserve.
3354 Co-Chair Mulder Recalled that the 1999 House
fiscal plan allowed a higher
payout because a secondary
account of 500 percent already
existed.
3433 Mr. Nelson In response to a question by
Representative Hudson, explained
that the original payout was $200
million dollars in cash. He noted
that the state had not added to
the original amount. The
administrative cost of trust
management is approximately 7
percent. The majority of funds
are spent in conjuncture with
legislative approval.
3718 Mr. Nelson Observed that capital
expenditures on behalf of the
beneficiaries were spent by the
Trust in conjunction with funds
by the Legislature to develop
Alaska Psychiatric Institute.
3740 Representative John Clarified that the 3.5 percent
Davies pay out rate includes the reserve
amount.
3801 Mr. Nelson Explained that in addition to the
3.5 percent payout the Trust
spends money received from Trust
Fund Office each year and
interest from money in the
Department of Revenue. They
actually paid out 4.2 percent for
FY01. He observed that $2.5 - $3
million dollars is contributed
from the lands for overall
operations. Their permanent fund
provides $11 million dollars for
operations.
4015 Co-Chair Mulder The total expenditures would be
$146 million dollars. He added
that 10 percent of their
expenditures come from the land
and cash and the state supplies
the rest.
4038 Mr. Nelson Noted that the Alaska Mental
Health Trust Authority submits
the budget. The legislature and
governor must show cause for
anything that is not funded.
4059 Mr. Nelson Observed that the state is still
primarily responsible for
providing services. The Trust is
not intended to remove the
state's responsibility. They are
an adjunct. If the state failed
in its duty the Trust would take
them to court.
4215 Representative Croft Asked how much was the actual
growth of general fund.
4243 Mr. Jesse Noted that growth of the General
Fund has been modest:
approximately $2 million a year.
4349 Ms. Robinson Emphasized the importance of
partnering with the state and
pointed out that the Trust would
not be able to cover all of the
needs. The Trust worked with the
state for a women's shelter that
was later placed under the
state's budget.
4457 Representative Hudson Asked if all of the lands have
been selected.
4492 Mr. Jesse Stated that all of the lands have
been selected. The land list was
approved and conveyed.
4526 Co-Chair Mulder Observed that there was a 15
percent increase in the current
year.
4555 Mr. Jesse Noted that only 1.5 percent was
received last year
4601 Ms. Robinson Observed that the needs are
higher than the funding is able
to cover.
TAPE HFC 02 - 20, Side B
4613 Mr. Jesse Noted that the range of options
was provided with an
acknowledgement of the fiscal
difficulties of the state.
4534 Representative Hudson Questioned if they could
demonstrate the effects of a 5
percent reduction if it were
necessary to ask for one.
4450 Mr. Nelson Responded that they would work
with the state to minimize
damage, but that it would be
significant.
4423 Ms. Robinson Pointed out that they would have
to work closely with the Boards
and departments, which work
closely with the consumers. Money
has been placed into the
departments for services provided
on their behalf.
4347 Ms. Robinson Observed that four boards advise
the Trust:
Alaska Mental Health Board;
Governor's Council on
Disabilities Special Education;
Advisory Board on Alcoholism &
Drug Abuse; and
Alaska Commission on Aging
4306 Ms. Robinson Discussed the Comprehensive
Integrated Mental Health Plan.
The Authority is responsible for
preparation of a plan for an
integrated comprehensive mental
health program that is
coordinated with federal, state,
regional, local and private
entities involved in mental
health services.
4145 Ms. Robinson Observed that the purpose of the
Plan is to guide policy and
budget decisions; identify key
indicators to measure results;
communicate the direction of the
comprehensive integrated state
mental health program; and foster
collaboration in service design.
4124 Vice-Chair Bunde Questioned what duplications
exist and how can they be
streamlined.
4111 Ms. Robinson Observed that placing the boards
on the same floor has helped
collaborations.
4053 Mr. Jesse Noted that their data systems are
terrible and it is difficult to
get the data. There is a plan to
provide data on program outcomes,
which would allow programs
information for their own use.
Currently there are two systems
with two different software
programs.
3902 Vice-Chair Bunde The funding will be predicated on
the ability to reduce employees.
Technology should result in a
savings in personnel.
3812 Ms. Robinson Observed that the two-year budget
cycle will enable them to find a
savings and to have more time to
implement the work.
3713 Mr. Nelson Added that the two-year budget
cycle changes the emphasis or the
distance of the vision, which
should provide better planning.
3652 Mr. Jesse Did not think that the two-year
budget cycle would result in
fewer employees. The process
would allow the employees to be
engaged in other activities. The
cycle corresponds to the
legislative cycle.
3591 Ms. Robinson Noted that there were four
result-based planning areas:
health, safety, economic
security, and living with
dignity.
3459 Ms. Robinson Enhance quality of life through
appropriate services for people
with mental and cognitive
disabilities and substance abuse
disorders. Promote Healthy births
and early intervention to reduce
risk factors for disabilities and
mitigate impacts. Reduce
substance abuse to protect
health, safety and quality of
life. Reduce the number of
suicides in Alaska
3321 Mr. Jesse Discussed the number of days in
the month when mental health was
reported "not good" by age. He
noted that 3 people would report
bad mental health days 3 - 5 days
a month. Two would report bad
days a week or more every month.
3226 Mr. Jesse Reviewed improvement through
treatment.
(DHSS Measure target Adults 25%,
Children 20%)
Total
served %
Improved
FY00 Adults 10,110
FY01 Adults 10,507
FY00 Children 6,355
FY01 Children 6,396
3127 Mr. Jesse Pointed out that there is a good
improvement rate and compared
improvement with colon cancer.
3057 Co-Chair Mulder Pointed out that how you measure
improvement can set up success or
failure.
3024 Mr. Jesse Stressed the need to consistently
apply the same measures overtime
and have the ability to look at
programs from standardized
assessment.
2948 Vice-Chair Bunde Referred to substance abuse
disorders. He questioned if every
addict has a disorder. He
questioned if the adults served
from year to year remained the
same. At what point does the
increase get so small that it is
not a positive indicator?
2755 Mr. Jesse Responded that the data helps to
identify failure. High rates of
incarceration or treatment are
indicators that programs are not
working. He acknowledged that
they would never be at zero. He
referred to the Harborview
facility.
2634 Mr. Jesse Reviewed the healthy birth
indicator. He noted that the
highest predictor is a child with
fetal alcohol syndrome (FAS).
Therefore if they can get the
alcoholic mothers into treatment
there will be the highest
reduction in the indicator.
2355 Co-Chair Mulder Questioned if 5 percent of the
population are causing 90 percent
of the problem in relationship to
FAS.
2259 Mr. Jesse Acknowledged that a significant
percentage is a relatively small
group.
2139 Mr. Jesse Pointed out that the act of
measuring can affect the outcome.
For instance, the fact that it
became less socially acceptable
to drink while pregnant may have
affected the rate.
2102 Co-Chair Mulder Noted that there was a heightened
awareness [of the affects of
alcohol on fetuses] in the mid
90's [which corresponded to a
reduction in the rate].
2038 Mr. Jesse Referred to alcoholism
indicators. He noted that since
1997 the state has reduced
alcohol grants. Alcohol programs
have also experienced a 4 percent
reduction through the cost of
living.
1941 Vice-Chair Bunde Questioned if the data is based
on self-reporting.
1925 Mr. Jesse Confirmed that they are the
results of questionnaires given
every year.
1845 Representative John Observed that the rate of alcohol
Davies abuse in Natives is not
improving. He questioned what
could be done.
1749 Mr. Jesse Stated that treatment works and
that more funding for treatment
would drive the numbers down.
1726 Mr. Jesse Observed that funding has been
focused on family camps and other
wellness and village based
counseling. There is no easy fix.
1542 Mr. Jesse Suicide he observed that they are
working with communities to bring
the numbers down.
1510 Ms. Robinson Discussed the safety result area.
She observed that the goal is to:
provide appropriate referral and
treatment for mental illness and
substance abuse as an alternative
to inappropriate incarceration;
protect children and vulnerable
adults from abuse, neglect and
exploitation; and improve the
quality of behavioral health care
provided to the public.
1448 Mr. Jesse Discussed the safety indicator
and observed that local
government discontinued services
with the result of an increase in
incarceration. He emphasized that
inappropriate criminalization of
beneficiaries does not make sense
fiscally.
1241 Co-Chair Mulder Observed that jails are the place
of last resort. He acknowledged
the cost of treatment. He
questioned who the clients are
and what is the nature of
recidivism. He asked how the
cycle of 5 percent of the people
causing 80 percent of the problem
could be broken.
1130Mr. Jesse Noted that they can be
` involuntarily treated and that
treatment works. High end users
can be identified.
1040 Vice-Chair Bunde Did not think that public
drunkenness was a crime in
Anchorage.
1024 Mr. Jesse Observed that there are non-
criminal holds, which makes the
jails the last resort. Clients
are held for 24 hours.
938 Ms. Robinson Pointed out that the beds are
full.
919 Vice-Chair Bunde Questioned at what point the
state becomes an enabler by
taking care of chronic abusers.
851 Mr. Jesse Stressed the need to get chronic
alcoholics treatment. He pointed
out that chronic alcoholics do
not stop overnight. He noted that
programs that allow the alcoholic
control are successful.
738 Mr. Nelson Stated that it is not efficient
to have jails to hold public
inebriates. He stressed the need
for programs that will get
clients out of the cycle.
640 Representative John Observed that the city of
Davies Fairbanks has appointed a task
force to address the problem of
the "revolving door." He observed
that there is a problem of not
enough beds.
535 Representative Lancaster Clarified that non-criminal holds
include substance abuse.
515 Ms. Robinson Observed that the goal of
economic security is to make it
possible for all Alaskans to live
in dignity with adequate food,
shelter and medical care and
increase work opportunities for
Alaskans with disabilities and/or
cognitive disorders.
446 Mr. Jesse Asked the question: How do we get
clients away from government
programs? Noted that one way is
by starting small businesses that
allow people to get around their
illness. Coordinated
transportation has been
emphasized to provide
beneficiaries with a means to
work. The most exciting
initiative is the development of
individual accounts. They take
earned income and match it, then
shelter it to buy appreciable
assets and encourage and reward
people to get off of public
benefits.
224 Ms. Robinson Stated that the goal of living
with dignity is to: provide
options so people are able to
live in appropriate housing in
the community; assure that
Alaskans with disabilities have
the opportunity to complete their
education; reduce stigma
associated with mental illness,
substance abuse, developmental
disabilities and age related
dementia.
159 Mr. Jesse Housing is a critical need for
beneficiaries. He stressed the
value of working with AHFC and
HUD. They are beginning to work
with Native housing developments
to provide housing to elders and
other beneficiaries in their
villages.
TAPE HFC 02 - 21, Side A
021 Representative John Referred number of children with
Davies reports of harm. He observed that
there is 10,600 and 11,800 cases
or 29 - 32 reports a day, which
is unacceptable. He observed that
the number increased in 1997.
117 Mr. Jesse Observed that in 1996 the alcohol
budget was cut by $1.3 million
dollars and programs have failed
to keep pace with inflation or
need. He pointed out that the
increased cases of children in
need are responses to the alcohol
problems.
230 Representative John Asked for programs with the most
Davies success to address.
248 Mr. Jesse Stressed that the cost of health
insurance is going up. Programs
are diverting resources that
could be used to provide services
or discarding health insurance,
which results in a recruitment
problem. As funding has been
reduced from $22.7 million in
1992 to $19.9 million dollars in
1999, there has been 20 percent
increase in the cost of living
and disproportioning increases in
health care and an additional
increase in need.
400 Co-Chair Mulder Thanked the Trustees for their
results based information.
ADJOURNMENT The meeting was adjourned at 3:24
PM
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