Legislature(2005 - 2006)HOUSE FINANCE 519
02/02/2005 01:30 PM House FINANCE
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HOUSE FINANCE COMMITTEE
February 2, 2005
1:35 P.M.
CALL TO ORDER
Co-Chair Chenault called the House Finance Committee meeting
to order at 1:35:51 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Richard Foster
Representative Mike Hawker
Representative Jim Holm
Representative Mike Kelly
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
Representative Eric Croft
Representative Reggie Joule
ALSO PRESENT
Jeff Jesse, Executive Director, Alaska Mental Health Trust
Authority; John Pugh, Chair, Alaska Mental Health Trust;
Nelson Page, Finance Chair, Alaska Mental Health Trust;
Wendy Woolf, Deputy Director, Land Trust Office, Alaska
Mental Health Trust
GENERAL SUBJECT(S):
Overview:
Alaska Mental Health Trust
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 24th Legislative Session, contact 465-
6814. After the 24th Legislative Session they will be
available through the Legislative Library at 465-3808.
TIME SPEAKER DISCUSSION
1:36:35 PM Co-Chair Convened the House Finance Committee
Chenault meeting in order to hear a presentation
by the Alaska Mental Health Trust
(AMHT).
ALASKA MENTAL HEALTH TRUST
1:39:09 PM JOHN PUGH, Introduced members of the Alaska Mental
CHAIR, ALASKA Health Trust staff, Chief Executive
MENTAL HEALTH Officer, Jeff Jesse, Finance Chair,
TRUST Nelson Page, Wendy Woolfe, Deputy
Director of the Land Trust Office and
members of the Land Trust Board. Mr.
Pugh pointed out that the Board
consists of 7 members. He stated that
Mr. Jesse would provide historical
data, having one of the attorneys on
that case.
1:40:36 PM JEFF JESSE, Distributed handouts. (Copy on File).
EXECUTIVE Mr. Jesse explained before statehood,
DIRECTOR, Alaska had a "barbaric" mental health
ALASKA MENTAL system. There were little supports
HEALTH TRUST available. He addressed trials and
AUTHORITY convictions pertaining to "insanity"
and then the person being imprisoned.
He pointed out that the history of
statehood was held up for a couple of
years because of national concerns with
the mental health system in Alaska.
Eventually, a three point strategy was
determined:
· Capital appropriation that built
the original Alaska Psychiatric
Institute (API) and purchased the
original motel in Valdez that
became the Harborview Medical
Center;
· Operating money that was reduced
for eight years to wean off the
federal government; and
· Offering of a one million acre
land trust that the State would
use for generating income to pay
for mental health services. Great
lands were chosen. As Alaska
grew, the land would become more
valuable.
1:42:27 PM Mr. Jesse Over the next 25-years, about half of
the land was taken from the Trust. It
all came undone when local government's
selected some of the Trust lands.
1:43:25 PM Mr. Jesse In 1979, the Legislature, in an attempt
to solve the problem, declared that all
Trust land was general State land. The
Legislature then pledged 1.5% of the
income from all-State lands into the
account to pay for mental health
services. The Legislature never made
any deposits into that account.
1:44:11 PM Mr. Jesse In 1982, a lawyer in Fairbanks, Steve
Cooper, filed the original Mental
Health Lands Trust lawsuit.
1:44:34 PM Mr. Jesse Pointed out that the litigation went on
for over a decade. The final
resolution was that the State would
reconstitute the million acres of land.
That did not make up for the value of
the land lost, as it originally had
been a $2 million dollar endowment.
The most important development was the
appointment of the 7-member board or
trustees, appointed by the Governor, to
oversee the management of the assets
and spend Trust income to improve the
life of the beneficiaries.
1:45:35 PM Vice-Chair Noted his appreciation of the work of
Stoltze the Board. Vice Chair Stoltze asked
for more discussion regarding whom the
original beneficiaries were and how
that has evolved.
1:46:28 PM Mr. Pugh Commented that he would discuss the
beneficiaries. The original
beneficiaries where the people being
sent out to Morningside with mental
health needs. At that time in the
territorial days, there was not a clear
definition of who those people were.
Developmentally disable individuals
were also placed in institutions. When
the settlement came about, lawyers
attempted to reconstruct who were the
beneficiaries. AMHT determined that
they were:
· People with mental illness
· People with developmental
disabilities
· People with chronic alcoholism
· People with traumatic brain
injuries, a new expanded area.
1:48:16 PM Mr. Pugh Those injuries can look like mental
illness; consequently, the Trust has
taken that group under their umbrella.
1:48:50 PM Vice-Chair Asked if there had been any
Stoltze prioritization in the settlement.
Mr. Jesse advised that the only
prioritization was for beneficiaries
at-risk of institutionalization and was
tied to Morningside.
1:49:23 PM Mr. Pugh Continued, in the legislation passed by
the Legislature creating the Trust,
there is an advisory board, which acts
as a key piece in the comprehensive and
budget planning. He introduced the
directors of each of those boards.
1:50:43 PM Mr. Pugh Added that in recent years, the
Legislature added the Suicide
Prevention Council. He pointed out
that there is a bill to extend the life
of that Board.
1:51:15 PM Mr. Pugh Those boards make recommendations to
the budget and advocate for their
populations. He requested that Mr.
Page discuss land and resources.
1:51:39 PM NELSON PAGE, Explained that this Trust is like any
FINANCE CHAIR, other Trust developed. There are
ALASKA MENTAL property and assets, which are managed
HEALTH TRUST on behalf of the beneficiaries by the
Board. He discussed the assets and how
they are managed.
He pointed out that an endowment had
been established by the Legislature and
invested like the Permanent Fund.
1:52:49 PM Mr. Page The investment has been managed as an
endowment and each year percentage of
the asset value is taken and it is
spent on behalf of the beneficiaries.
In 2005, $11-$12 million dollars was
paid out. The percent of market pay
out has been increased and raised from
3.5% to 3.75%, projecting somewhere
between $13 and $14 million dollars
this year.
1:53:53 PM Mr. Page Added, in addition, the Trust received
a settlement of land. He noted the
types of lands and assets as listed on
Page 3, Attachment #1. (Copy on File).
There are a total of 957,000 acres,
broken down into mineral estates and
rights to coal, oil and gas in some of
the acreage. The Trust attempts to
generate revenue from that land for the
beneficiaries and it has been very
successful.
1:55:04 PM Mr. Page In 1997, the Trust generated about $2
million dollars total revenue some of
which was in the form of land sales and
the sale of minerals. When there are
sales of resources that are not
replaceable, those funds are turned
back into the Permanent Fund of the
Trust principle. When things are sold
that are replaceable, such as leased
land, that is considered income and the
money is spent in the fiscal year that
it is earned.
In 1997, the income available to be
spent was $785 thousand dollars and by
2004, the Trust almost quadrupled that
amount. Income generated from a
variety of things such as timber sales
and management of land. He reiterated
that is a success story of the ability
of the Trust to manage it assets.
1:56:28 PM Representative Asked to which Board would the resource
Weyhrauch lands fall into the consideration of.
1:56:55 PM Mr. Page Replied that Mr. Hawkins is the Chair
of the Resource Management Committee.
He does have the expertise.
1:57:16 PM Representative Referenced Page 3,the anticipated
Weyhrauch revenues.
Mr. Page pointed out the chart on Page
3. He stated that the projected
revenues were substantially succeeded.
1:57:57 PM Representative Noted the 3.5% to 3.75% increase. He
Weyhrauch asked if it was an annualized decision
made by the Board.
Mr. Page clarified that was a decision
made to increase the payout. It is not
anticipated that it would be changed
from year to year.
1:58:46 PM Representative Asked if it would be annually.
Weyhrauch Mr. Page clarified that they went from
a 3.5% to a 3.75% payout. He added
that the money is generated and to the
extend that will be used, it is moved
into a series of accounts within the
Department of Revenue.
1:59:17 PM Representative Asked about the use of the funds.
Weyhrauch Mr. Page explained that is the reason
it is moved from the Permanent Fund to
"more liquid funds" within the
Department of Revenue.
1:59:29 PM Representative Commented on the restriction of the use
Weyhrauch of the funds and the uniqueness of the
program. Representative Weyrauch
encouraged linking asset management and
workings with the concerns of the
Board. (inaudible)
Mr. Page explained that there is a
strategic plan in place and that it is
part of the settlement requirement that
the Trust works with the Department of
Health & Social Services.
2:00:35 PM Mr. Page The first of those plans was adopted
four years ago and was implemented
after a great deal of work with
Advisory Boards within that Department.
2:01:23 PM Representative Asked if the highest and best use for
Weyhrauch all the acreage has been identified.
2:02:01 PM Mr. Pugh Emphasized that there is a planning
process in place in the Land Office
regarding establishing objectives.
Capital money is set aside to address
those concerns.
2:02:27 PM WENDY WOOLF, Advised that AMTA develops an annual
DEPUTY work plan. The office has turned from
DIRECTOR, LAND being reactive in management to being
TRUST OFFICE pro active and capable of responding to
applications coming to the Trust. The
Trust looks at properties in places
like Anchorage and Juneau and actively
partners with those communities. The
planning process is long and involved.
She noted that there has been
competitive leasing on some parcels.
She stressed that they use the highest
and best use for lands and direct land
sales, which are sometimes held in
order to sell until they are in their
best markets.
Some of the larger lots are subdivided.
When property is disposed of, the Trust
determines the best way to handle it.
2:04:35 PM Ms. Woolf Added that asset management plans are
done by area and resource category.
2:05:01 PM Mr. Page Noted that Page 4, highlights what is
available for the beneficiaries. The
chart indicates where the funds come
from.
Co-Chair Chenault asked if they were
renewable.
Mr. Page replied the income is
renewable.
2:05:55 PM Mr. Page Referenced Page 4. In FY06, it is
expected that the Trust will be able to
provide $20 million dollars to fund
programs on behalf of beneficiaries.
2:07:23 PM Mr. Page Stated that the next portion of the
handout indicates recommendations for
funding the FY06 budget and that $11
would go into operating programs. The
total recommendations for funding are
$19 million dollars.
2:07:38 PM Representative Remembered the meeting from two years
Hawker ago, in which the Trust committed to
pursue an independent audit and annual
report. He requested an update on that
project.
2:08:16 PM Mr. Jesse Advised that the first year audit was
completed and was "clean" with no
discrepancies found.
2:08:44 PM Mr. Page Stated that the Trust could provide the
"judgment letter" to Committee members.
2:08:57 PM Mr. Page Addressed the recommendations being
presented on spending the fund. It is
the Trust's responsibility to have a
careful and rigorous process of review.
The Trust believes that they are a
catalyst for change. The programs must
be efficient and responsive and
effective to the needs of the
beneficiaries.
2:10:01 PM Mr. Page Last year, the process was revamped. A
collaborative planning process has been
created and the Trust has taken the
leadership to make recommendations to
where the emphasis of the program
should be.
2:10:45 PM Mr. Pugh The planning process involved extensive
work with the Department of Health &
Social Services. Commissioner
Gilbertson wanted to make sure that the
Trust was working in concert with the
Department for making progress.
2:11:39 PM Mr. Pugh The areas chosen were the four listed
on Page 5:
· Bring the kids home
· Affordable housing
· Justice for persons with
disabilities
· Trust Beneficiary Group
Initiatives in which beneficiaries
come together to service one
another to determine what works
best for that group.
2:15:04 PM Vice-Chair Asked about homelessness and if the
Stoltze initiative had been targeted toward
those with mental illness.
2:15:39 PM Mr. Jesse Replied that when housing was selected
as a focus area, it was realized that
housing is a major need for all Trust
beneficiaries. He stated that when a
person looses their living opportunity
after hospitalization, they then become
homeless. That includes people coming
out of prisons. Housing is looked at
from a broad perspective. He added
that there are specific initiatives
focused on the homeless issue alone.
2:16:42 PM Mr. Jesse The Trust participated in the Alaska
Interagency Council on the Homeless.
The role for the Trust in that type
process is an attempt to keep everyone
going in the same direction. There
were attempts to determine the common
element that connects these issues.
2:17:42 PM Mr. Jesse Reiterated that the Trust attempts to
serve their beneficiaries and the
broader and more complicated issues.
Vice-Chair Stoltze thought that the
definition was too basic and not
addressing what homelessness is
accurately. He noted his personal
focus in that precious resources be
used for highest and best use of all
concerns. He favored assisting young
adults with developmental disabilities
over the drug addicts claiming
services.
2:19:27 PM Mr. Pugh Clarified expenditures from the Trust
Authority and that affordable housing
has been the major issue. The Trust
has been working with Alaska Housing
Finance Corporation (AHFC). He
stressed that concerns voiced by Vice
Chair Stoltze have been a focus for the
Trust.
Vice-Chair Stoltze commented on the
assisted living center in Chugiak,
acknowledging that contribution from
the Trust.
2:20:44 PM Representative Observed that there is no information,
Holm providing data on how to lower these
numbers. He pointed out that only the
process is highlighted and that he
wanted to see a statement of goals to
lessen the rates.
2:22:24 PM Mr. Pugh Advised that there are performance
measures placed on each of the
initiatives for every fiscal year. He
offered to provide that information to
the Committee.
2:22:50 PM Mr. Page Noted that since the beginning of the
Trust, there has been insistence that
there be results. He spoke to the
comprehensive plans drafted, requiring
information to be objectively measured.
2:23:38 PM Representative Appreciated addressing the intent of
Holm the legislative process. He wanted to
guarantee that this work is not about
process only. He acknowledged that the
work of the Trust is large. He
reiterated that he would like to see
the definitions of goals, outcomes and
measurements.
2:24:57 PM Mr. Pugh Stated that there are two other major
initiatives:
· Behavioral Health Workforce
Development - Work Force
Development issue and what it will
require building out the system.
Together with the University of
Alaska to match funding to move
forward.
· Adult Preventive & Restorative
Dental.
2:26:16 PM Mr. Pugh Continued, the last initiative works
with Medicaid. The Department of
Health & Social Services came to the
Trust to see if they would be willing
to partner with them to execute the
program. The Trust knows that it is an
expansion of Medicaid and would prevent
other dental problems.
2:27:23 PM Mr. Jesse Addressed the top priorities in the
FY06 budget.
· Medicaid is critical
· AHFC funding is critical to
providing affordable housing
· Support extension/expansion of
Senior Care program
· Address DD waitlist
· Alcohol prevention and treatment
Trust has about $26 million dollars per
year.
2:28:25 PM Mr. Jesse Stated that the Legislature and the
Department of Health & Social Services
are looking for dollars for Medicaid
expansion. Medicaid is critical. For
the last seven years, the Trust has
relied on Medicaid for primary funding.
Medicaid is a medical based model,
which is not the best situation to be
in when attempting to get people to
become more productive members of
society.
The Trust does not have the grant
resources and is more dependant than
ever on the Medicaid program. A policy
decision has been made that Medicaid
will be the primary funding source for
most of the mental health programs. It
is critical that investment be
maintained.
2:30:17 PM Mr. Jesse The Trust is attempting to make the
programs more efficient and effective.
2:30:35 PM Mr. Jesse Noted that AHFC is very beneficial to
the State. It is closely linked to the
Trust. The consequences of the State
removing out large sums of money from
AHFC is that the Trust is then no
longer able to create long-term, stable
and secure housing for its members.
He urged the Legislature to help assist
AHFC in how to retain as much of their
assets by securing a safe and secure
housing stock.
2:31:29 PM Representative Asked if the special needs housing
Hawker program in AHFC was functioning well.
Mr. Jesse responded that it is
functioning well but at a fraction of
the capacity that it needs to be. The
housing allowance is at $7.85 million
dollars.
2:32:20 PM Mr. Jesse Extensively addressed the AHFC working
programs.
2:33:04 PM Representative Asked about private sector support.
Hawker Mr. Jesse replied that it is not
realistic for the State to assume all
of the responsibility; he spoke of
other funding agencies such as Housing
and Urban Development & the Denali
Commission. He reiterated that it is
difficult when the major funding driver
(AHFC) has $100 million dollars in
assets pulled out of it every year.
Representative Hawker observed that the
entities referenced are public
activities; he asked about the private
sector.
Mr. Jesse replied that safe and
affordable housing is not going to
happen without the private sector.
Housing gets developed through private
developers. Mr. Jesse mentioned tax
credits. He addressed housing trusts
to pin point the long-term strategic
plans. The Trust has allocated dollars
to explore what they could look like
for Alaska.
2:36:46 PM Mr. Jesse Reviewed the goals of support
extension/expansion of the:
· Senior Care programs and income
limits;
· DD waitlist; and
· Alcohol prevention and treatment.
2:38:20 PM Mr. Jesse Referred Page 8, noting statistics
revolving around injuries related to
alcohol involvement. He highlighted
Page 8, payment sources for injury and
hospitalizations involving alcohol.
Page 10 depicts the costs of alcohol.
Mr. Jesse emphasized the need for
prevention and treatment to deter those
costs. He recommended that an alcohol
tax increase does have merit.
2:41:52 PM Representative Questioned if there is a correlation
Weyhrauch between alcohol intake and a tax.
Mr. Jesse stressed that in certain
areas there is, especially where youth
are involved.
Representative Weyhrauch rephrased his
question, stressing dollar for dollar
treatment and prevention. Discussion
on that followed between Representative
Weyrauch and Mr. Jesse.
2:43:50 PM Mr. Jesse Claimed that alcohol is a manageable
disease and that no one would ever
suggest that treatment should be
stopped. Relapse does happen and at
some point and it must be decided what
the investment should be.
2:44:50 PM Mr. Pugh Pointed out that the national trend
indicates that the Wellness Court has
succeeded; it is a tightly run
organization. He reiterated impact
from the results of the Wellness
Courts.
2:45:46 PM Mr. Jesse Acknowledged that money cannot just be
thrown at the problem; there needs to
be concrete performance measures and
the Department must be held accountable
for getting those results. He stressed
that it is proven that impacts can be
made.
2:46:15 PM Mr. Jesse Referenced Page 10 & 11, the priorities
for the Alaska Mental Health Board. He
pointed out that this year, SB 63 will
be up and addresses seat belt usage.
He asked that legislation be supported
to help address brain injury concerns.
2:46:57 PM Representative Commented on the program issues and the
Weyhrauch work done by the Trust. He voiced his
appreciation of the time and energy
exerted by the Trust.
2:47:50 PM Representative Mentioned the quickly approaching Gross
Kelly Domestic Product (GDP) and concerns for
the next generation. He commented on
the individual and personal
accountability and responsibility. He
asked how to fund "reentering" issues
and the dollars associated with that.
2:49:33 PM Mr. Pugh Commented that Wellness Courts have a
strong plan on how people take
responsibility. They have to pay for
their own monitors and that most of
them have lost their Permanent Fund.
The Legislature has collected it back
when possible. Most drug and alcohol
programs have a strong accountability
model.
2:50:20 PM Mr. Pugh Regarding mental illness, the
accountability standards are different.
The model is called recovery. There is
a national trend to change the way
treatment programs are being operated.
2:51:12 PM Mr. Jesse Added that one of the problems is the
"benefits mentality" that people get
into. The system often promotes it,
such as Social Security benefits (SSI).
A person cannot accumulate any assets
and could loose their health care. He
stressed that home ownership is a huge
issue. If a renter looses there home
that is huge. If you own a home, there
is a different approach. The Trust is
attempting to get their beneficiaries
more into an independent mode, which is
part of a long-term solution.
2:53:03 PM Mr. Page Added, that one of the four major focus
of the Trust is the "Trust Beneficiary
Focus", which attempts to make
beneficiaries more responsible. The
Trust attempts to afford beneficiaries
resources to be responsible.
2:53:56 PM Representative Appreciated the work done by the Trust.
Kelly
2:55:13 PM Co-Chair ADJOURNMENT
Chenault
The meeting was adjourned at 2:56 P.M.
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