Legislature(2017 - 2018)HOUSE FINANCE 519

01/24/2018 01:30 PM House FINANCE

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01:30:29 PM Start
01:31:25 PM Overview: Alaska Mental Health Trust Authority
02:14:26 PM Overview: Department of Revenue
02:36:49 PM Overview: Department of Administration
03:35:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ FY19 Dept. Budget Overviews: TELECONFERENCED
- AK Mental Health Trust Authority
- Dept. of Revenue
- Dept. of Administration
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 24, 2018                                                                                           
                         1:30 p.m.                                                                                              
1:30:29 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 1:30 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
ALSO PRESENT                                                                                                                  
Mary  Jane  Michael,  Chair,   Alaska  Mental  Health  Trust                                                                    
Authority;  Sheldon  Fisher,   Commissioner,  Department  of                                                                    
Revenue;   Leslie   Ridle,   Commissioner,   Department   of                                                                    
Administration;  Cheryl  Lowenstein, Director,  Division  of                                                                    
Administrative   Services,  Department   of  Administration;                                                                    
Emily  Ricci, Health  Care Policy  Administrator, Department                                                                    
of  Administration. Mike  Abbott,  Chief Executive  Officer,                                                                    
Alaska Mental Health Trust Authority.                                                                                           
HB 285    APPROP: MENTAL HEALTH BUDGET                                                                                          
          HB 285 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 286    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          HB 286 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
FY 19 BUDGET OVERVIEWS:                                                                                                         
            ALASKA MENTAL HEALTH TRUST AUTHORITY                                                                                
            DEPARTMENT OF REVENUE                                                                                               
            DEPARTMENT OF ADMINISTRATION                                                                                        
Co-Chair Seaton reviewed the agenda for the day.                                                                                
HOUSE BILL NO. 285                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
HOUSE BILL NO. 286                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs;    capitalizing   funds;   amending                                                                    
     appropriations;  making   supplemental  appropriations;                                                                    
     making  appropriations  under   art.  IX,  sec.  17(c),                                                                    
     Constitution  of   the  State   of  Alaska,   from  the                                                                    
     constitutional budget  reserve fund; and  providing for                                                                    
     an effective date."                                                                                                        
^OVERVIEW: ALASKA MENTAL HEALTH TRUST AUTHORITY                                                                               
1:31:25 PM                                                                                                                    
MARY  JANE  MICHAEL,  CHAIR,   ALASKA  MENTAL  HEALTH  TRUST                                                                    
AUTHORITY, introduced  herself and the other  members of the                                                                    
board:  Chris Cooke,  vice chair;  Laraine Derr,  secretary;                                                                    
Paula Easley;  Greg Jones; Jerome Selby;  and Carlton Smith.                                                                    
She  highlighted   that  the  Alaska  Mental   Health  Trust                                                                    
Authority (AMHTA) was established  as a "perpetual trust" to                                                                    
improve  the  lives  of beneficiaries.  She  recognized  the                                                                    
trust's  "partnership   with  the  state"   considering  the                                                                    
changed  fiscal  "landscape"  of the  state.  The  authority                                                                    
wanted  to implement  broader systemic  changes to  create a                                                                    
"progressive  and  sustainable"  structure. She  listed  the                                                                    
trust's investments in criminal  justice reform and Medicaid                                                                    
expansion  as  examples  of  systemic  change  efforts.  She                                                                    
acknowledged the departure of  the long-term Chief Executive                                                                    
Officer  (CEO),  Jeff Jesse.  She  reported  that the  trust                                                                    
examined  its internal  governance  structure and  operating                                                                    
procedures   and   hired    an   organizational   management                                                                    
consultant,  Catherine Wood,  Raven Management  Consultants.                                                                    
She  believed the  process lead  to a  "good foundation  for                                                                    
moving  forward."  She   spoke  of  internal  organizational                                                                    
changes   and   announced   that   "the   organization   was                                                                    
financially and organizationally healthy."                                                                                      
1:35:34 PM                                                                                                                    
MIKE ABBOTT,  CHIEF EXECUTIVE OFFICER, ALASKA  MENTAL HEALTH                                                                    
TRUST  AUTHORITY,   introduced  himself  and   reviewed  the                                                                    
PowerPoint  presentation:  "Legislative Presentation:  House                                                                    
Finance  Committee."  He  moved  to  slide  3  titled  "FY19                                                                    
Anticipated  Available  Funding"   that  contained  a  table                                                                    
titled "Distributable  Funds   Based on  4-year averages for                                                                    
     Payout $21,137,000                                                                                                         
     Prior Years Carried Forward $3,042,000                                                                                     
     Land Office Average Spendable Income $4,974,000                                                                            
     Interest Average $285,000                                                                                                  
     Total $29,438,000                                                                                                          
Mr.  Abbott noted  that in  FY 2019  the trust  would expend                                                                    
$29.5  million for  trust beneficiaries.  He indicated  that                                                                    
the payout was derived  from its invested resources totaling                                                                    
$550 million; $500  million of those funds  were invested in                                                                    
the  Alaska  Permanent  Fund   Corporation  (APFC)  and  the                                                                    
remainder  managed by  the Department  of Revenue  (DOR). He                                                                    
explained that  the trust  used a  4-year average  payout of                                                                    
4.25   percent    from   its   investments.    The   trust's                                                                    
distributable funds  increased approximately 1 to  4 percent                                                                    
per year and the upward trend was anticipated to continue.                                                                      
Mr.  Abbott discussed  slide 4:  "Trust  Land Office  Annual                                                                    
Revenue."  The slide  contained  a graph  that depicted  the                                                                    
trust land  revenue stream. He  noted the 5  categories that                                                                    
comprised  the trust  land revenue:  minerals, oil  and gas,                                                                    
land's activity, timber, and real  estate. He cautioned that                                                                    
not all the  revenue was expendable, some of  the land trust                                                                    
revenue  was  required  to  be   invested  via  statute.  He                                                                    
continued to  slide 5 titled:  "Trust Land  Office Principal                                                                    
and  Income  Revenue" depicted  as  bars  on the  graph.  He                                                                    
indicated  that  the  value   of  the  investments  exceeded                                                                    
"spendable" revenues.                                                                                                           
1:39:56 PM                                                                                                                    
Mr. Abbott explained slide 6 titled "FY19 Budget":                                                                              
     Administrative Operations, $8,703.7                                                                                        
     Inclusive of Trust Authority and Land Office                                                                               
     Authority Grants, $9,895.5                                                                                                 
     Designated to community providers, nonprofits, local                                                                       
     governments and Tribal organizations                                                                                       
     MHTAAR, $10,838.4                                                                                                          
     Designated to state agencies and approved by the                                                                           
Mr. Abbott stressed that the  trust's funds required trustee                                                                    
authorization for  spending and some categories  of spending                                                                    
also required  legislative approval.  He explained  that the                                                                    
pie chart on the slide  was roughly proportioned into thirds                                                                    
representing  the three  categories  of  AMHTA spending.  He                                                                    
related   that  two   agencies  serviced   the  Trust;   the                                                                    
Department of Natural Resources (DNR) and DOR.                                                                                  
Mr.   Abbott  continued   to  slide   7  titled   "  Current                                                                    
     Current Priorities                                                                                                         
     ? Medicaid Reform                                                                                                          
     ? Criminal Justice Reform & Reinvestment                                                                                   
     Established Focus Areas                                                                                                    
     ? Disability Justice                                                                                                       
     ? Substance Abuse Prevention & Treatment                                                                                   
     ? Beneficiary Employment & Engagement                                                                                      
     ? Housing and Long-term Services & Supports                                                                                
Mr. Abbott  discussed the current  priorities of  the Trust.                                                                    
The  Trust had  been  the  key investor  in  the reform  and                                                                    
expansion of  Medicaid and invested  over $10 million  for a                                                                    
multi-year  program.  He  offered  that  many  new  Medicaid                                                                    
beneficiaries  covered  under   expansion  were  also  trust                                                                    
beneficiaries. Mr. Abbott reported  that the second priority                                                                    
of AMHTA  was the criminal justice  reform and reinvestment.                                                                    
He mentioned the trust's investment  in the criminal justice                                                                    
program and  reforms and noted the  "over-representation" of                                                                    
trust beneficiaries  within the criminal justice  system. He                                                                    
stated the  trust's strong support and  continued commitment                                                                    
to criminal  justice reform  and reinvestment.  He commented                                                                    
that  the trust  was required  to operate  under a  two-year                                                                    
budget  cycle and  FY  19  was the  second  of the  two-year                                                                    
1:46:26 PM                                                                                                                    
Mr. Abbott advanced to slide 8 titled "Operating Budget":                                                                       
     Operating Budget                                                                                                           
     ? Governor's budget is very similar to trustee-                                                                            
     approved budget, with one exception                                                                                        
     ? Governor's budget includes $18 million increase in                                                                       
     GF/MH for comprehensive continuum of care for                                                                              
     substance use disorder services                                                                                            
Mr. Abbott  reported that the governor's  budget was "almost                                                                    
identical"  to  the  trustee's  recommended  budget  and  he                                                                    
supported the increase for substance use disorder services.                                                                     
1:48:26 PM                                                                                                                    
Mr. Abbott detailed slide 9 titled " Capital Budget":                                                                           
     ? Homeless Assistance Project and Special Needs Grant                                                                      
            Trustees recognize the housing and homelessness                                                                     
          crisis in the state                                                                                                   
            Trustees respectfully requested an increase of                                                                      
          $5.3 million in state funds to address this issue                                                                     
Mr.  Abbott  reported  that  the  trust  had  hoped  for  an                                                                    
increase to  help the homeless  in the amount of  $5 million                                                                    
and provide  increased access to  housing. He  reported that                                                                    
statistics  have proven  that  permanent supportive  housing                                                                    
made  a significant  difference to  the homeless  addressing                                                                    
addiction;  substance  abusers  were  unable  to  deal  with                                                                    
addiction  issues while  homeless. He  pointed out  that the                                                                    
funding  would support  two areas  of housing;  increase the                                                                    
number  of  permanent  supportive  housing  and/or  increase                                                                    
rapid rehousing funding. He noted  that rent support through                                                                    
rapid rehousing  was one  way of  helping to  secure housing                                                                    
for  the homeless.  He reiterated  that  data was  available                                                                    
showing  the success  in combating  addition with  permanent                                                                    
housing, which  reduced other  state spending  attributed to                                                                    
addiction. He  offered that the  trust was fully  engaged in                                                                    
investing in permanent supportive housing.                                                                                      
1:51:59 PM                                                                                                                    
Mr.  Abbott  turned  to slide  10  titled  "  Administrative                                                                    
     Trust Authority                                                                                                            
     ? Trustees approved: $4,135.3                                                                                              
     ? Governor's proposed budget: $3,867.4                                                                                     
     Trust Land Office                                                                                                          
     ? Trustees approved: $4,568.4                                                                                              
     ? Governor's proposed budget: $4,213.2                                                                                     
     Total difference: $623.1                                                                                                   
     Impacts our ability to generate revenue and provide                                                                        
     grants and oversight of existing programs for                                                                              
Mr. Abbott  identified the trust's administrative  budget as                                                                    
one  area the  Board  of  Trustees did  not  agree with  the                                                                    
governor's  recommended budget.  The shortfall  would affect                                                                    
the Trust's ability to "make  smart decision" when deploying                                                                    
resources and managing the assets  to gain maximum value. He                                                                    
reiterated that  the funds requested were  exclusively AMHTA                                                                    
funds and could not be used for other expenditures.                                                                             
1:54:10 PM                                                                                                                    
Mr.  Abbott  scrolled  to  slide  11  titled  "  Legislative                                                                    
     ? Protect Criminal Justice Reform                                                                                          
     ? Pass SB 76, Title 4 Revisions                                                                                            
     ? Pass Trust Investment Legislation                                                                                        
Mr.   Abbott  reviewed   the   legislative  priorities.   He                                                                    
reiterated  the   trust's  "ardent"  support   for  criminal                                                                    
justice  reform. He  shared that  the  University of  Alaska                                                                    
(UA)  was  measuring  the  impacts of  10  key  elements  of                                                                    
criminal justice reform. The  recent findings indicated that                                                                    
8 elements were found to  reduce criminal activity and state                                                                    
costs. The  UA project was  funded by the trust  and focused                                                                    
on  criminal activity,  recidivism, and  state expenditures.                                                                    
The  study  would be  ongoing.  He  remarked  that SB  76  -                                                                    
Alcoholic  Beverage  Control;   Alcohol  Reg,  sponsored  by                                                                    
Senator Micciche,  represented a cooperative  effort between                                                                    
the  alcohol  industry  and other  stakeholders  to  address                                                                    
"long needed  reform" in alcohol related  statutes. Finally,                                                                    
he remarked that a special  legislative audit related to the                                                                    
investments  the trust  made over  the prior  5 to  8 years,                                                                    
initiated  in December  2016 was  in progress.  The findings                                                                    
would be  available to  the legislature  in March  2018. The                                                                    
trust recommended the legislature  introduce a bill prior to                                                                    
the completion of  the audit due in the  following month. He                                                                    
hoped clarifying legislation would be offered soon.                                                                             
Mr.  Abbott thanked  the committee  for  the opportunity  to                                                                    
2:00:27 PM                                                                                                                    
Co-Chair Seaton  asked about the total  difference of $623.1                                                                    
thousand in  the budget on  slide 10. He wondered  where the                                                                    
difference  came   from.  Mr.  Abbott  responded   that  the                                                                    
administrative  budget was  short funded  in the  prior year                                                                    
while   experiencing   some   increased   expenditures.   He                                                                    
elaborated  that  the  trust   land  office  anticipated  an                                                                    
"aggressive  year" with  the Southeast  land exchange  and a                                                                    
large mineral project in the Icy  Cape region of the Gulf of                                                                    
Alaska.  In   addition,  the  Trust  Authority   office  was                                                                    
attempting  to shift  to a  "fund and  measure approach"  to                                                                    
spending that impacted personnel and contract services.                                                                         
Co-Chair Seaton  indicated that Representative  Grenn joined                                                                    
the meeting.                                                                                                                    
Representative Ortiz returned to slide  9 and cited the $5.3                                                                    
million increase  request for homelessness. He  wondered how                                                                    
funding for  the homeless would  be distributed.  Mr. Abbott                                                                    
responded that  the money would fund  community based grants                                                                    
that  would  be  allocated  via a  merit  based  process  in                                                                    
concert with  Alaska Housing Finance Corporation  (AHFC). He                                                                    
mentioned  the brick  and mortar  and rapid  rehousing grant                                                                    
types  and noted  the possibility  of other  housing related                                                                    
grants as well.                                                                                                                 
2:03:19 PM                                                                                                                    
Representative Wilson  asked about the 40  thousand Alaskans                                                                    
that  were served  resulting  from  Medicaid expansion.  She                                                                    
asked whether  Mr. Abbott knew  how many more  services were                                                                    
available to  the expanded  population with  substance abuse                                                                    
or behavioral  health. Mr. Abbott  replied in  the negative.                                                                    
He  relayed  that  the  Department   of  Health  and  Social                                                                    
Services  (DHSS) had  informed  him that  an additional  $50                                                                    
million in  claims for behavioral  health were  funded since                                                                    
expansion.   Representative   Wilson    offered   that   the                                                                    
Department of Corrections (DOC)  was considering opening the                                                                    
Palmer  facility.   She  heard  of   conversations  underway                                                                    
regarding  use of  the facility  for  behavioral health  and                                                                    
substance abuse in concert with  Medicaid. She asked whether                                                                    
the  trust  had had  conversations  with  DOC regarding  the                                                                    
issue.   She   preferred   a   treatment   facility   versus                                                                    
incarceration.  Mr.  Abbott  was  unaware  of  the  specific                                                                    
proposal. He voiced  that if offered a  similar proposal the                                                                    
trust would consider supporting the initiative.                                                                                 
2:05:22 PM                                                                                                                    
Representative Grenn  referenced the  last slide  related to                                                                    
criminal   justice  reform   and  the   measured  8   of  10                                                                    
benchmarks.  He  asked  for  more  information.  Mr.  Abbott                                                                    
reiterated the  information concerning  the trust  funded UA                                                                    
study  measuring   criminal  justice  reform   impacts  that                                                                    
discovered 8  of 10  positive results.  Representative Grenn                                                                    
would like to see the information.                                                                                              
Co-Chair Seaton directed Mr. Abbott  to send the information                                                                    
to his office for distribution to committee members.                                                                            
Vice-Chair Gara sympathized with  projects for the homeless.                                                                    
He  asked for  details regarding  the effective  use of  the                                                                    
funds.  He  wondered why  the  governor's  inclusion of  $18                                                                    
million for substance use disorder  services for a four year                                                                    
program was  not included in  the capital budget  instead of                                                                    
the operating  budget. Mr. Abbott  was unsure  and concurred                                                                    
with the later statement.                                                                                                       
Representative  Guttenberg  asked   how  Medicaid  expansion                                                                    
impacted the trust's budget. He  wondered how the governor's                                                                    
proposed $18  million budget  increase affected  the trust's                                                                    
two-year  budget cycle.  Mr. Abbott  replied that  the trust                                                                    
facilitated  services for  beneficiaries  and  did not  fund                                                                    
direct  services; consequently,  Medicaid expansion  did not                                                                    
impact trust  funding. The governor's proposed  increase was                                                                    
in general funds (GF) and was not expending trust dollars.                                                                      
2:08:14 PM                                                                                                                    
Representative  Tilton   inquired  whether  the   trust  was                                                                    
applying "some sort  of metrics" to determine  the impact of                                                                    
the grant  dollars in  each of  the communities.  Mr. Abbott                                                                    
responded  in  the  affirmative.  He added  that  the  trust                                                                    
employed an "aggressive  evaluation process" associated with                                                                    
the  grants. He  offered to  provide further  information to                                                                    
the committee.                                                                                                                  
Co-Chair  Seaton referred  to  slide  7 regarding  substance                                                                    
abuse prevention  and treatment priorities. He  relayed that                                                                    
whether the  AMHTA could use  its funding on  prevention was                                                                    
in question.  He wondered how  the AMHTA was  endeavoring to                                                                    
reduce  its number  of beneficiaries.  Mr. Abbott  responded                                                                    
that  in  previous  times  the Trust  had  not  invested  in                                                                    
prevention activities  but currently  the trust  was funding                                                                    
prevention  in targeted  activities, which  the Trust  would                                                                    
continue to fund.                                                                                                               
Co-Chair Seaton thanked Mr. Abbott for his presentation.                                                                        
2:11:47 PM                                                                                                                    
AT EASE                                                                                                                         
2:14:11 PM                                                                                                                    
^OVERVIEW: DEPARTMENT OF REVENUE                                                                                              
2:14:26 PM                                                                                                                    
SHELDON   FISHER,  COMMISSIONER,   DEPARTMENT  OF   REVENUE,                                                                    
introduced   himself    and   introduced    the   PowerPoint                                                                    
presentation: "Department of Revenue Overview."                                                                                 
2:15:05 PM                                                                                                                    
Commissioner Fisher turned to  slide 2 titled "Department of                                                                    
Revenue -  The mission  of the Department  of Revenue  is to                                                                    
collect, distribute  and invest  funds for  public purposes"                                                                    
He  reported that  the department  had 4  primary divisions:                                                                    
the   Tax  Division,   Treasury  Division,   Permanent  Fund                                                                    
Dividend Division, and the  Child Support Services Division.                                                                    
He listed the basic responsibilities of each division.                                                                          
Commissioner Fisher  turned to the  chart on slide  3 titled                                                                    
"Authorities,  Corporations,  and  Boards"  and  listed  the                                                                    
     Alaska Housing Finance Corporation (AHFC) Invest and                                                                       
     Alaska Permanent Fund Corporation (APFC) Invest                                                                            
     Alaska Retirement Management Board (ARMB) Invest                                                                           
     Alaska Mental Health Trust Authority (AMHTA)                                                                               
     Alaska Municipal Bond Bank Authority (AMBBA)                                                                               
2:17:03 PM                                                                                                                    
Commissioner Fisher  advanced to slide 4  titled "DOR Budget                                                                    
Compared  to  All Agencies."  He  indicated  that the  graph                                                                    
depicted the GF portion of  DOR's budget and how it compared                                                                    
to other agencies. The department's  budget declined both in                                                                    
terms of  absolute dollars and  in terms of a  percentage of                                                                    
agency  operations.  He  reported  that  the  FY  19  budget                                                                    
declined by  $640 thousand  from FY 18.  A large  portion of                                                                    
the decline, $525 thousand, reflected  a shift in allocation                                                                    
from  the Treasury  Division to  the ARMB  budget associated                                                                    
with a  decline in  state assets and  a reallocation  of the                                                                    
cost of  managing the  assets. He noted  a reduction  in the                                                                    
Child  Support  Services  Division  in the  amount  of  $425                                                                    
thousand, which $145  thousand was GF. He  noted an increase                                                                    
of  $31 thousand  in the  AMHTA budget  associated with  the                                                                    
long-term care ombudsmen.                                                                                                       
Commissioner Fisher continued to  slide 5 titled "DOR Budget                                                                    
Line  Items   All  Funds"  He pointed  out  that  the  chart                                                                    
represented the entire  DOR budget. He noted  that the green                                                                    
portion of the bar graphs  were associated with AHFC grants.                                                                    
The red  portion of the  bars that represented  services was                                                                    
the  cost of  managing the  state's assets.  The costs  were                                                                    
growing, which meant the assets  were growing. He pointed to                                                                    
the  blue  portion  of  the   bars  that  depicted  personal                                                                    
services, which  were growing. He qualified  that the growth                                                                    
was  beneficial because  the increase  was  due to  bringing                                                                    
more asset management in-house in Juneau at a reduced rate.                                                                     
2:20:20 PM                                                                                                                    
Commissioner  Fisher   advanced  to  slide  6   titled  "DOR                                                                    
AppropriationsGF  Only"  He relayed that the  graph provided                                                                    
the  same information  that had  been presented  in a  prior                                                                    
slide  but showed  a view  over time.  He remarked  that the                                                                    
blue line  at the  top portrayed  the taxation  and treasury                                                                    
functions. He  pointed to  the steep  decline between  FY 15                                                                    
and FY  16 when significant  reductions were made.  He noted                                                                    
generally   declining  budgets   in  other   areas  of   the                                                                    
department over  the prior  few years. He  moved to  slide 7                                                                    
titled "DOR  AppropriationsAll  Funds." He  highlighted that                                                                    
the  APFC   budget  increased  primarily  as   a  result  of                                                                    
increased asset  management fees  as a result  of a  rise in                                                                    
Permanent   Fund  asset   values.  The   remainder  of   the                                                                    
department maintained  a flat budget with  a modest decrease                                                                    
in AHFC.                                                                                                                        
2:22:36 PM                                                                                                                    
Representative Grenn  cited the sharp increase  in the AMHTA                                                                    
budget.  He  asked  for  further  information.  Commissioner                                                                    
Fisher replied that  the increase occurred between  FY 14 to                                                                    
FY 15  from $410  thousand to   $911 thousand.  The increase                                                                    
was  associated  with  a fetal  alcohol  syndrome  awareness                                                                    
Representative Ortiz  asked about the  significant reduction                                                                    
in the taxation and treasury line  from FY 15 through FY 19.                                                                    
He  wondered  if  the  decline   reflected  a  reduction  in                                                                    
auditing  staff.  Commissioner  Fisher  responded  that  the                                                                    
reductions  resulted from  2 issues.  The first  was due  to                                                                    
automating  the  financial  system.  The  change  allowed  a                                                                    
reduction  of   19  positions,  mostly   through  attrition.                                                                    
Representative   Ortiz   asked    whether   the   reductions                                                                    
interfered with  the ability of  the auditing staff  to keep                                                                    
up with oil tax audits.  Commissioner Fisher answered in the                                                                    
negative. He admitted that oil  tax audits were experiencing                                                                    
a "significant  delay" but  did not  attribute the  delay to                                                                    
staff reduction.                                                                                                                
2:25:21 PM                                                                                                                    
Commissioner Fisher  turned to slide  8, slide 9,  and slide                                                                    
10  that   provided  information   related  to   DOR's  core                                                                    
divisions and corporations. The  information showed the same                                                                    
information for  each division  in a  table format.  He drew                                                                    
attention to slide 8 relating  to the number of positions in                                                                    
the Tax Division. He highlighted  that 107 positions existed                                                                    
and  91 were  full, with  a number  of the  vacant positions                                                                    
recently being  filled. He noted  the complexity  of certain                                                                    
jobs within  the Tax Division  made the jobs  more difficult                                                                    
to  fill. He  mentioned  the same  issue  with the  Treasury                                                                    
Division  and noted  that the  vacant positions  were mostly                                                                    
investment officers  and noted  that recently 3  were hired.                                                                    
He also  called attention to the  effectiveness ratings that                                                                    
were  ranked  as  follows:  exceptional,  highly  effective,                                                                    
effective,  moderately  effective,  and  low  effective.  He                                                                    
strongly  endorsed  the   ranking  system  that  established                                                                    
standards and measured performance against the standards.                                                                       
2:28:26 PM                                                                                                                    
Representative Guttenberg  referred to  the increase  in the                                                                    
AMHTA budget and  wondered why the media campaign  was not a                                                                    
capital  budget item.  Commissioner Fisher  was not  sure of                                                                    
the  details  but  guessed  the  operating  budget  was  the                                                                    
appropriate budget for the type of expenditure.                                                                                 
Co-Chair Seaton  had a question concerning  tax auditors. He                                                                    
did  not  see the  additional  positions  in the  governor's                                                                    
budget. He asked if DOR would  be hiring the 2 tax auditors.                                                                    
Commissioner Fisher  replied that the tax  auditors had been                                                                    
hired  and were  performing  their  duties. Co-Chair  Seaton                                                                    
asked whether DOR had a  policy regarding the number of days                                                                    
positions would  remain open before  a new hire  was brought                                                                    
on  in  order to  fund  the  positions. Commissioner  Fisher                                                                    
pointed to the vacancies in  the Tax Division and noted that                                                                    
the number  was higher than the  departments overall vacancy                                                                    
factor. He reported  that the vacancies were  less by design                                                                    
and  due to  the nature  of filling  technical jobs.  He was                                                                    
uncertain whether a delay in  hiring was necessary and would                                                                    
follow up with answers. Co-Chair  Seaton asked for a written                                                                    
or generalized policy  regarding a length of  time a vacancy                                                                    
needed  to remain  open.  Commissioner  Fisher replied  that                                                                    
none  of  the  divisions  had a  policy  regarding  delaying                                                                    
hiring or a vacancy factor.                                                                                                     
2:33:29 PM                                                                                                                    
Representative Kawasaki  asked if  the committee  would hear                                                                    
from  Alaska Housing  Finance  Corporation (AHFC).  Co-Chair                                                                    
Seaton replied in the negative.                                                                                                 
Representative   Kawasaki   requested  further   information                                                                    
regarding  AHFC  grant funding  for  specific  grants to  be                                                                    
distributed  to   different  agencies.  He  was   trying  to                                                                    
determine  how  the  grants  worked  together.  Commissioner                                                                    
Fisher responded that he would follow up.                                                                                       
2:35:09 PM                                                                                                                    
AT EASE                                                                                                                         
2:36:46 PM                                                                                                                    
^OVERVIEW: DEPARTMENT OF ADMINISTRATION                                                                                       
2:36:49 PM                                                                                                                    
LESLIE  RIDLE, COMMISSIONER,  DEPARTMENT OF  ADMINISTRATION,                                                                    
introduced   herself.   She    introduced   the   PowerPoint                                                                    
presentation: "Department  of Administration  Overview." She                                                                    
began with slide 2 titled " Department of Administration":                                                                      
     The mission of the Department of Administration is to                                                                      
     provide  consistent and  efficient support  services to                                                                    
     state agencies so that they may better serve Alaskans.                                                                     
Ms. Ridle  moved to the  Department of  Administration (DOA)                                                                    
flow  chart on  slide  3. She  mentioned  that DOA  directly                                                                    
served  the public  through the  Division of  Motor Vehicles                                                                    
(DMV),  Office  of Public  Advocacy  (OPA),  and the  Public                                                                    
Defender Agency (PDA).                                                                                                          
2:38:56 PM                                                                                                                    
CHERYL  LOWENSTEIN,  DIRECTOR,  DIVISION  OF  ADMINISTRATIVE                                                                    
SERVICES,  DEPARTMENT OF  ADMINISTRATION, reported  that the                                                                    
first  4 slides  were  supplied by  the Legislative  Finance                                                                    
Division (LFD). She  reviewed slide 4 that  depicted a chart                                                                    
representing  the  DOA  Share  of  Total  Agency  Operations                                                                    
(General   Fund  (GF)   only).  She   delineated  that   the                                                                    
department's budget  peaked at  $111 million  in FY  15 then                                                                    
steadily declined. The  FY 19 budget contained  a $1 million                                                                    
increase each for OPA and PDA.                                                                                                  
2:40:12 PM                                                                                                                    
Ms.  Lowenstein   reviewed  the   chart  on  slide   5  that                                                                    
represented  DOA's line  items  in all  funds. She  reported                                                                    
that the bulk  of DOA's budget was in  Services and Personal                                                                    
Services. She  continued to slide  6 that contained  a graph                                                                    
portraying   "Appropriations   within  the   Department   of                                                                    
Administration (GF  Only)." She  highlighted that  Legal and                                                                    
Advocacy Services comprised  50 percent of the  budget or 60                                                                    
percent counting Undesignated General  Funds (DGF) only; DMV                                                                    
was the second largest budget  component and was 100 percent                                                                    
receipt driven; it  returned money to GF.  The third highest                                                                    
budget  component  was Centralized  Administrative  Services                                                                    
that  was  comprised of  four  areas:  Division of  Finance,                                                                    
Division  of  Personnel  and Labor  Relations,  Division  of                                                                    
Retirement    and   Benefits,    and   HPA    Health   Plans                                                                    
Administration.  She  reported  that  slide  7  showed  "All                                                                    
Funds." She elucidated that the  agency budget was comprised                                                                    
of 31 percent UGF and  Designated General Funds (DGF) and 69                                                                    
percent  other   funds,  which  was   primarily  interagency                                                                    
2:42:27 PM                                                                                                                    
Ms. Lowenstein  moved to  slide 8  depicting a  chart titled                                                                    
"DOA Budget  by Division    GF Only."  She reported  that in                                                                    
all  the divisions  that provided  services to  the agencies                                                                    
DOA continued  to find efficiencies  and reduced  GF without                                                                    
raising rates.                                                                                                                  
{Secretary Note: The remainder  of the slides were presented                                                                    
in   chart  form   containing  information   regarding  each                                                                    
division or area of the agency.]                                                                                                
Ms.  Ridle reviewed  slide 9  titled "Division  of Finance."                                                                    
She reported  that the division launched  the new accounting                                                                    
system, Integrated  Resource Information System  (IRIS). She                                                                    
moved to slide  10 titled " Division of  Personnel and Labor                                                                    
Relations." She  noted that the  division was  negotiating 7                                                                    
public employee  contracts. She  pointed out that the agency                                                                    
did not have  a policy to hold vacant  positions open before                                                                    
2:44:39 PM                                                                                                                    
Ms.  Ridle  continued  to  slide   12  titled  "Division  of                                                                    
Retirement & Benefits." She mentioned  that the division was                                                                    
engaged in  a new  effort, the AK  Reform Group,  to discuss                                                                    
health care  in the state;  the appropriation for  the group                                                                    
was $250  thousand. She hoped  to produce a  "blueprint" for                                                                    
health care in Alaska by the  year's end. She pointed to the                                                                    
$750  thousand  appropriation  to   continue  to  study  the                                                                    
consolidation  of  state  and school  district  health  care                                                                    
plans.  She cited  the $3.7  million  appropriation for  the                                                                    
implementation  of an  enhanced Employee  Group Waiver  Plan                                                                    
(EGWP), which was  a federal subsidy for  the retiree health                                                                    
prescription   drug  benefit.   The  agency   was  typically                                                                    
reimbursed at the end of the  year ($10 million in the prior                                                                    
year), but the  new plan would reimburse the  state as funds                                                                    
were expended.  She expected $30  million to $40  million in                                                                    
Co-Chair Seaton pointed to  Health Plans Administration that                                                                    
designated  zero  employees  and   asked  for  clarity.  Ms.                                                                    
Lowenstein  responded that  the Health  Plans Administration                                                                    
was  paid  to the  third  party  administrator (AETNA)  that                                                                    
received  an additional  $3.7 million  to  manage EGWP.  Co-                                                                    
Chair Seaton deduced  that the state contracted  out all the                                                                    
work  and did  not utilize  state employees.  Ms. Lowenstein                                                                    
responded affirmatively.                                                                                                        
Representative Guttenberg  asked about the  healthcare spend                                                                    
noted on the chart and read the following:                                                                                      
     $700M health care spend; new cost share & plan design                                                                      
     provisions reduce employee health plan cost trend less                                                                     
     than 4%, below nat'l avg.                                                                                                  
Representative  Guttenberg  wondered  how  the  state  could                                                                    
manage an "out  of control" system. Ms. Ridle  deferred to a                                                                    
later slide that contained more detail.                                                                                         
2:49:51 PM                                                                                                                    
Representative Kawasaki  cited a  one-time increment  in the                                                                    
Comprehensive  Health  Insurance  Fund   that  might  be  an                                                                    
inappropriate  use  of  the  fund. He  asked  Ms.  Ridle  to                                                                    
address the issue. Ms. Ridle  responded that a bill would be                                                                    
introduced  to  correct   the  fund  source.  Representative                                                                    
Kawasaki mentioned the Alaska  Mental Health Trust Authority                                                                    
(AMHTA) feasibility studies  that were contained in  SB 74 -                                                                    
Medicaid Reform;Telemedicine;Drug  Database [CHAPTER  25 SLA                                                                    
16  -  06/21/2016]  that  were   utilized  as  part  of  the                                                                    
consolidation study Ms. Ridle  cited. He remembered that the                                                                    
study  was funded  in a  fiscal note  as part  of HB  74. He                                                                    
asked  for clarity.  Ms. Lowenstein  replied that  the study                                                                    
had  been  completed  and the  non-perm  position  had  been                                                                    
fulfilled.  Representative Kawasaki  asked about  the report                                                                    
and whether it had been  completed. Ms. Ridle indicated that                                                                    
3  reports  were  generated  and  were  available  on  DOA's                                                                    
website.  The   appropriation  she   referred  to   was  for                                                                    
2:52:12 PM                                                                                                                    
Ms.  Ridle briefly  mentioned slide  13 titled  "Division of                                                                    
Risk Management." She discussed  "Shared Services of Alaska"                                                                    
on slide 14.  She noted the $500  thousand appropriation for                                                                    
the  Business   Transformation  Office,  which   was  funded                                                                    
through a  1.5 percent vendor  fee. The office  helped other                                                                    
agencies  create   more  efficient   processes  and   was  a                                                                    
successful  effort.  She  mentioned  the  increase  of  $138                                                                    
thousand  for  state  surplus for  staff  due  to  increased                                                                    
online   sales.  The   department   acted  aggressively   to                                                                    
consolidate  space and  negotiate  leases and  had saved  $1                                                                    
Representative  Wilson  noticed  that three  positions  that                                                                    
were part of Shared Services  had returned to the Governor's                                                                    
office and  wondered why. Ms.  Ridle did not know  and would                                                                    
provide the information.                                                                                                        
Ms.   Ridle  scrolled   to  slide   15  titled   "Office  of                                                                    
Information Technology" (OIT). She  spoke to the first phase                                                                    
of consolidating technology as  mandated by the governor the                                                                    
prior  year.  Seven agencies  had  been  rolled in  and  the                                                                    
remainder would be added by the  end of the fiscal year. The                                                                    
second phase would begin next year.                                                                                             
2:56:40 PM                                                                                                                    
Representative   Guttenberg   declared   that   he   had   a                                                                    
significant issue around the  state's broadband services. He                                                                    
thought  it was  very costly  for the  state to  operate and                                                                    
conduct business  in areas of  the state  lacking broadband.                                                                    
He voiced that the private  sector was not providing service                                                                    
and the  state lacked a  plan. He favored  the consolidation                                                                    
of services,  but the lack  of broadband was  very expensive                                                                    
to the state.  He noted every department  would benefit from                                                                    
better broadband. He wanted to  see a breakdown of broadband                                                                    
costs.  He mentioned  several communities  and the  need for                                                                    
broadband.  He asked  what the  administration was  doing to                                                                    
enhance  the ability  of  the state  to  function in  places                                                                    
without broadband. He opined that  Alaska was operating as a                                                                    
third  world country.  He believed  that the  state was  not                                                                    
dealing with  a vital  issue. Ms.  Ridle responded  that the                                                                    
Office  of   Information  Technology's   consolidation  plan                                                                    
consolidated the work  of the 17 state agencies  and did not                                                                    
involve  broadband. She  indicated  that broadband  delivery                                                                    
was not in DOA's budget. She  was not an expert in broadband                                                                    
and was  unaware of a  plan. She offered to  provide further                                                                    
information. Representative  Guttenberg stated that  "if not                                                                    
you  who" regarding  Ms. Ridle's  response.  He pointed  out                                                                    
that DOA  was charging  departments for computer  use across                                                                    
the state and should create  efficiencies for use instead of                                                                    
maintaining the  "status quo," which was  very expensive. He                                                                    
noted that  all departments were advancing  various distance                                                                    
delivery services  for services like  telehealth, education,                                                                    
and court hearings.  He countered that the  state was unable                                                                    
to  deliver  the  services.  Ms.  Lowenstein  was  aware  of                                                                    
several things  OIT was  working on.  She admitted  that the                                                                    
network was  old and OIT  was undertaking a  network refresh                                                                    
and was  installing devices in  rural areas to  increase the                                                                    
speed  and   availability  of  the  network.   In  addition,                                                                    
circuits were being  consolidated. Representative Guttenberg                                                                    
believed the old network should be completely scrapped.                                                                         
3:02:27 PM                                                                                                                    
Ms. Ridle scrolled  through slide 16 titled  "SATS and ALMR"                                                                    
and  slide 17  titled "  Administrative Services  Division."                                                                    
She moved to  slide 18 titled "Division  of Motor Vehicles."                                                                    
She reported that  DMV returned $39 to $42  million per year                                                                    
to  state government.  She offered  that  DOA was  utilizing                                                                    
public  and  private  partnership to  deliver  services  and                                                                    
collected and distributed over $18  million in motor vehicle                                                                    
registration tax  changes to communities.  The wait  time at                                                                    
DMV was reduced  from 40 minutes to 8  minutes. She declared                                                                    
that    the   improvements    were   accomplished    through                                                                    
reorganization and process efficiencies.                                                                                        
Representative Guttenberg  agreed that  DMV had  been turned                                                                    
around. He thanked the department for their effort.                                                                             
3:04:09 PM                                                                                                                    
Ms. Ridle  continued to  slide 19  titled "Office  of Public                                                                    
Advocacy."  She related  that  OPA  received $86.7  thousand                                                                    
from AMHTA to  hire one public guardian.  The department was                                                                    
requesting $1  million to hire  9 more public  guardians and                                                                    
one guardian ad  litem. She elaborated that  the courts send                                                                    
over 100  wards to  OPA, which burdened  the staff  with the                                                                    
high volume of  caseloads. The division had  raised its fees                                                                    
and  had collected  more funding  than  expected. She  added                                                                    
that the OPA had a 40  percent criminal and 60 percent civil                                                                    
case load.                                                                                                                      
Vice-Chair Gara spoke  of the guardian ad  litems and stated                                                                    
that they  carry the  highest caseloads  in the  country. He                                                                    
asked the  commissioner to talk to  the administration about                                                                    
doing  something   different  or   adding  funding   to  the                                                                    
supplemental budget.                                                                                                            
Representative   Wilson  asked   about   the  "Parent   CINA                                                                    
Representation/Civil"  listed   under  the   "Allocation  or                                                                    
Service"  grid  on slide  19.  Ms.  Ridle replied  that  OPA                                                                    
represented both  children and  parents in Children  In Need                                                                    
of AID (CINA) cases.  Representative Wilson deduced that OPA                                                                    
and  PDA were  involved on  both  sides of  some cases.  She                                                                    
asked for the budget breakdown for guardian ad litems.                                                                          
3:08:15 PM                                                                                                                    
Ms.  Ridle   reviewed  slide  20  titled   "Public  Defender                                                                    
Agency." She  noted the  amount of $193.8  from AMHTA  for a                                                                    
project in  Bethel for a  wholistic defense model  study. In                                                                    
addition,  $453 thousand  was appropriated  for  Rule 39  to                                                                    
supplement prior underfunding based on faulty estimates.                                                                        
Co-Chair  Seaton asked  her  to define  Rule  39. Ms.  Ridle                                                                    
explained  that  Rule  39 was  the  payment  the  department                                                                    
received from the Permanent Fund Dividend.                                                                                      
Ms.   Ridle   reviewed   slide    21   titled   "Office   of                                                                    
Administrative Hearings."   She highlighted that  the office                                                                    
was highly  effective and had  eliminated its backlog  via a                                                                    
new caseload management system that  was cost efficient. She                                                                    
turned  to slide  22 titled  "  Violent Crimes  Compensation                                                                    
Board." She  commented that the Violent  Crimes Compensation                                                                    
Board (VCCB) budget  was derived from federal  funds and DOA                                                                    
merely  administered its  budget. She  advanced to  slide 23                                                                    
titled "Alaska Public Offices  Commission." She offered that                                                                    
Alaska Public  Offices Commission  (APOC) budget was  cut in                                                                    
half recently and that DOA only administered its budget.                                                                        
Representative  Kawasaki  asked  how many  vacant  positions                                                                    
were within the  commission. Ms. Ridle replied  that two out                                                                    
of  the 8  positions  were  vacant. Representative  Kawasaki                                                                    
suggested  that other  boards  and  commissions were  funded                                                                    
through  fee collection.  He suggested  that  APOC could  be                                                                    
funded  similarly and  wondered  why it  was  not. He  asked                                                                    
where  the fines  and judgments  administered  by APOC  were                                                                    
deposited. Ms. Ridle responded that  a part of APOC's budget                                                                    
was   supported  by   fee   collection.   She  agreed   with                                                                    
Representative  Kawasaki and  would  be happy  to work  with                                                                    
someone  on  legislation  to restructure  or  increase  APOC                                                                    
3:12:48 PM                                                                                                                    
Ms.   Ridle  reported   that  the   "Alaska   Oil  and   Gas                                                                    
Conservation Commission"  on slide 24 was  basically its own                                                                    
commission funded by industry  and chaired by Hollis French.                                                                    
She   reviewed  slide   25   titled  "Public   Communication                                                                    
Services."  She   reported  that  the   Public  Broadcasting                                                                    
Commission (PBC) administered its grants.                                                                                       
Representative Ortiz  noted the  reduction of  $902 thousand                                                                    
since FY 2009 in funding for  Public Radio. He asked how the                                                                    
decrease  impacted public  radio.  Ms. Ridle  was unable  to                                                                    
answer  the question  and  would  follow up.  Representative                                                                    
Ortiz asked whether it was  possible for someone from PBC to                                                                    
advocate  for  its  funding.  Ms.   Ridle  answered  in  the                                                                    
Representative  Wilson  asked  whether the  PBC  grants  had                                                                    
parameters it  had to follow  for expenditure of  the funds.                                                                    
Ms.  Ridle  replied  that the  commission  administered  and                                                                    
directed   its   grants.   She   addressed   the   Satellite                                                                    
Infrastructure  allocation and  informed the  committee that                                                                    
the infrastructure was a critical  piece and backbone of the                                                                    
Emergency Broadcasting System (EMS).                                                                                            
3:16:02 PM                                                                                                                    
Representative  Guttenberg   was  aware  that   Senator  Ted                                                                    
Stevens   had  been   a   strong   supporter  of   Satellite                                                                    
Infrastructure.  He  asked   what  part  the  infrastructure                                                                    
funding  played in  the early  warning and  EMS system.  Ms.                                                                    
Lowenstein reported  that the funding  was for  the entirety                                                                    
of  the satellite  system  and was  imperative  for the  EMS                                                                    
Ms.  Ridle   moved  to  slide  26   titled  "Miscellaneous".                                                                    
relating  to several  miscellaneous services  and allocation                                                                    
within the agency. Ms. Ridle  continued to slide 27 titled "                                                                    
DOA Health Care Costs." She deferred to Ms. Lowenstein.                                                                         
Ms. Lowenstein  reported that the  slide was a look  back at                                                                    
health  care  cost  trends;  the amount  DOA  paid  per  PCN                                                                    
(Position Control  Number) for health care  contribution and                                                                    
workers compensation.  In FY  19 the  amount was  $764.8 and                                                                    
was based  on 1,224  PCN's at the  time the  information was                                                                    
provided. She added that the  total DOA health care amounted                                                                    
to $341,218.4 thousand and was 6.2 percent of the budget.                                                                       
3:18:57 PM                                                                                                                    
Ms.  Ridle  addressed  slide 28  titled  "AlaskaCare  Annual                                                                    
Savings." She relayed  that the slide showed  the changes to                                                                    
Alaska Care  that would  bring down costs  to the  state. In                                                                    
addition to  items listed on  the chart, the  department was                                                                    
constantly attempting to find ways  to bring down costs. She                                                                    
commented  that the  department  recently  issued RFP's  for                                                                    
travel, pharmacy,  and a  best value RFP  for a  third party                                                                    
plan administrator.  She reiterated that the  department was                                                                    
working on implementing the EGWP  to save $40 to $60 million                                                                    
in savings.  The department was  working diligently  to save                                                                    
health care costs.                                                                                                              
Co-Chair  Seaton referenced  an  individual  bid system  and                                                                    
asked  whether the  state  was engaged  in  the system.  Ms.                                                                    
Ridle  replied  that  the  department  did  obtain  as  many                                                                    
providers under  contract as possible  to offer  employees a                                                                    
better  price. She  added that  the  third party  administer                                                                    
also tried to  bring in as many providers  as possible under                                                                    
the network. Co-Chair Seaton restated  that he referred to a                                                                    
bid  within  the network  that  included  travel. Ms.  Ridle                                                                    
responded that the  travel RFP addressed travel  to a doctor                                                                    
outside the  network. The  RFP allowed  the travel  and made                                                                    
the arrangements for the patient.  The travel RFP would save                                                                    
the  state  money by  allowing  and  arranging travel  to  a                                                                    
doctor  that  provided  less  expensive  services.  Co-Chair                                                                    
Seaton understood the  process was left to  the employee. He                                                                    
mentioned  a   bid  process  that  offered   less  expensive                                                                    
services including  travel. He  asked whether the  state was                                                                    
considering  the bid  based service.  Ms. Ridle  deferred to                                                                    
the health care policy administrator.                                                                                           
3:25:48 PM                                                                                                                    
EMILY  RICCI, HEALTH  CARE POLICY  ADMINISTRATOR, DEPARTMENT                                                                    
OF  ADMINISTRATION, responded  that she  understood the  Co-                                                                    
Chair's description was that if  someone required a specific                                                                    
specialty  procedure a  bid  process  existed among  network                                                                    
providers  and  the  patient would  travel  to  receive  the                                                                    
lowest  bided service.  She answered  that the  scenario was                                                                    
not an idea contemplated before, but she would follow up.                                                                       
Representative  Guttenberg  mentioned  speaking  to  a  plan                                                                    
administrator  who sent  everyone  out of  state  for a  hip                                                                    
replacement.  The plan  covered travel  for the  patient and                                                                    
spouse hotel  and for  the procedure.  He reported  that the                                                                    
plan was saving a lot of money.                                                                                                 
Representative   Kawasaki  referenced   the  Department   of                                                                    
Education and  Early Development  (DEED) health  care totals                                                                    
and noted its health care  totals were one-quarter of DOA's.                                                                    
He  wondered  why.  Ms.  Ridle  was  unable  to  answer  the                                                                    
question and would follow up.                                                                                                   
Co-Chair  Seaton  mentioned  DOA's percent  of  health  care                                                                    
costs at  5.9 percent in  FY 18 going  to 6.2 percent  in FY                                                                    
19. He  asked what drove  the increase. Ms.  Ridle responded                                                                    
that the  largest change was  the employee count  rising due                                                                    
to  the increase  in shared  services employees  moving into                                                                    
the department from other agencies.                                                                                             
3:29:57 PM                                                                                                                    
Representative Wilson  asked why  Medicaid was  separate and                                                                    
part of the Department of  Health and Social Services (DHSS)                                                                    
budget.  Ms.  Ricci responded  that  both  Medicaid and  the                                                                    
public  employer   health  plans  functioned   in  different                                                                    
regulatory  environments.  In  addition,  types  of  service                                                                    
utilization  differed. She  delineated  that long-term  care                                                                    
services  and behavioral  health services  were much  higher                                                                    
with  Medicaid compared  to the  commercial plans  while the                                                                    
medical care  services were  essentially the  same. However,                                                                    
how  the  plans  were  reimbursed were  different;  fee  for                                                                    
service  versus a  strict  regulatory  system. She  declared                                                                    
that it  was not as  easy to compare  the two systems  as it                                                                    
seemed. Representative  Wilson opined that  pooling services                                                                    
or administration between the plans would save money.                                                                           
Co-Chair  Seaton   responded  that  he  read   studies  that                                                                    
concluded  that  pooling  employee plans  and  Medicaid  was                                                                    
unworkable due to the  federal regulations and prohibitions.                                                                    
He deduced that pooling would  probably prove to be costlier                                                                    
to the state.                                                                                                                   
Representative Wilson  was suggesting that services  such as                                                                    
travel could  be shared  and believed  that cost  savings in                                                                    
health care  should be able  to cross over plans.  Ms. Ricci                                                                    
reported  that the  two departments  had been  communicating                                                                    
over the last  year about how to share some  of the services                                                                    
such as a medical director or some pharmacy services.                                                                           
Co-Chair Seaton reviewed the agenda for the following day.                                                                      
3:35:57 PM                                                                                                                    
The meeting was adjourned at 3:35 p.m.                                                                                          

Document Name Date/Time Subjects
2018 Leg PowerPoint HFIN FINAL.pdf HFIN 1/24/2018 1:30:00 PM
HFIN - AMHTA Budget Overview
DOR Budget Overview for HFC 1-24-18.pdf HFIN 1/24/2018 1:30:00 PM
HFIN-DOR Budget Overview
Department of Administration HFIN 2018 Overview FINAL.pdf HFIN 1/24/2018 1:30:00 PM
HFIN - DOA Budget Overview
AMHT Response HFIN AJIC ACJP cost analysis .pdf HFIN 1/24/2018 1:30:00 PM
AMHT Response HFIN ajic.2017-10-02.ajic-results-first.media.pdf HFIN 1/24/2018 1:30:00 PM