Legislature(2019 - 2020)ADAMS ROOM 519

03/12/2019 01:30 PM House FINANCE

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Audio Topic
01:35:03 PM Start
01:36:17 PM Fy 20 Budget Overview: Department of Health and Social Services
03:21:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ FY20 Dept. Budget Overview: Dept. of Health & TELECONFERENCED
Social Services
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 12, 2019                                                                                            
                         1:35 p.m.                                                                                              
1:35:03 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster called the House Finance Committee meeting                                                                      
to order at 1:35 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Tammie Wilson, Co-Chair                                                                                          
Representative Jennifer Johnston, Vice-Chair                                                                                    
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick (via teleconference)                                                                               
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Ben Carpenter                                                                                                    
ALSO PRESENT                                                                                                                  
Lacey  Sanders, Budget  Director, Office  of Management  and                                                                    
Budget;  Sana   Efird,  Administrative   Services  Director,                                                                    
Department  of   Health  and  Social  Services,   Office  of                                                                    
Management and  Budget; Adam Crum,  Commissioner, Department                                                                    
of Health and Social Services.                                                                                                  
PRESENT VIA TELECONFERENCE                                                                                                    
Representative Kelly Merrick                                                                                                    
FY 20 BUDGET OVERVIEW: DEPARTMENT OF HEALTH AND SOCIAL                                                                          
1:36:17 PM                                                                                                                    
Co-Chair Foster reviewed the meeting agenda.                                                                                    
^FY  20 BUDGET  OVERVIEW:  DEPARTMENT OF  HEALTH AND  SOCIAL                                                                  
1:37:30 PM                                                                                                                    
SANA EFIRD, ADMINISTRATIVE  SERVICES DIRECTOR, DEPARTMENT OF                                                                    
HEALTH AND SOCIAL SERVICES (DHSS),  OFFICE OF MANAGEMENT AND                                                                    
BUDGET introduced  a PowerPoint presentation  titled "FY2020                                                                    
Governor's Amended  Budget Department  of Health  and Social                                                                    
Services Overview" dated March 12,  2019 (copy on file). She                                                                    
began with the department's seven  core services on slide 3.                                                                    
She  detailed  that  the  core services  had  come  from  an                                                                    
exercise  undertaken  by  the department  about  five  years                                                                    
earlier as a  part of a results-based  budgeting effort that                                                                    
included  the  entire  department.   She  relayed  that  the                                                                    
department  would  do  the  exercise   again  with  the  new                                                                    
commissioner  and  administration   (likely  in  the  coming                                                                    
summer) to  determine whether the  core services  were still                                                                    
reflective  of the  department's priorities.  She noted  the                                                                    
department's total budget had been  aligned to meet the core                                                                    
1:39:18 PM                                                                                                                    
Co-Chair Foster  recognized that Representative  Merrick had                                                                    
called into  the meeting but  there had been  some technical                                                                    
Vice-Chair  Johnston  asked  whether  the  core  service  to                                                                    
manage health care coverage involved United Technologies.                                                                       
Ms.  Efird  replied   that  the  service  did   not  have  a                                                                    
relationship to the managed  care organization. She detailed                                                                    
that  the  item  was  a core  service  that  DHSS  divisions                                                                    
(through   their  budgets)   contributed   to  meeting   for                                                                    
Alaskans.  She  referenced  slide   3  and  highlighted  the                                                                    
department's mission  to promote and protect  the health and                                                                    
well-being of  Alaskans. She reported that  the department's                                                                    
responsibility  for  health  and  the  public  welfare  were                                                                    
included  in Article  VII, Sections  4 and  5 of  the Alaska                                                                    
1:40:34 PM                                                                                                                    
Vice-Chair Ortiz  appreciated the list of  core services and                                                                    
the  dollar figures  that went  to meet  the needs  of those                                                                    
services (slide 3); however, he  believed a list of programs                                                                    
that  fell underneath  each of  the services  was needed  to                                                                    
provide better information.  He asked if there  was a backup                                                                    
document  that  listed  programs associated  with  the  core                                                                    
Ms.  Efird replied  that  DHSS had  the  document and  would                                                                    
provide it.                                                                                                                     
LACEY  SANDERS, BUDGET  DIRECTOR, OFFICE  OF MANAGEMENT  AND                                                                    
BUDGET, reported that the document  had been provided to the                                                                    
committee  co-chair's offices  and could  be distributed  as                                                                    
Representative  Knopp  asked  which committee  co-chair  had                                                                    
received the document.                                                                                                          
Ms. Sanders replied  that the document had  been provided to                                                                    
Co-Chair Foster's office.                                                                                                       
Ms. Efird continued on slide  4 that showed the department's                                                                    
funding  comparison  (on  the left)  and  budgeted  position                                                                    
comparison (on the right) between  the FY 19 management plan                                                                    
and the  FY 20 governor's  amended budget.  The department's                                                                    
FY  19   management  plan  funding   totaled  $3,249,951,500                                                                    
compared    to   the    governor's   proposed    budget   of                                                                    
$2,468,798,400,  a  difference  of   $781,153,100  or  a  25                                                                    
percent reduction. The governor's  proposed FY 20 budget was                                                                    
comprised  of approximately  58 percent  federal funding  at                                                                    
$1,439,683,000;  5  percent  in  other  funds  (the  largest                                                                    
portion  was  interagency  receipts);   and  36  percent  in                                                                    
general funds, comprised of  90 percent undesignated general                                                                    
funds (UGF)  and 10 percent designated  general funds (DGF).                                                                    
She detailed that  a large percentage of DGF was  made up of                                                                    
Pioneer  Home receipts  from residents  for room  and board,                                                                    
child  support  collections  and   foster  care  base  rate,                                                                    
background check  and application  fees for  the residential                                                                    
licensing  programs, and  birth and  death certificate  fees                                                                    
collected in Vital Statistics.                                                                                                  
Ms. Efird addressed the budgeted  position comparison on the                                                                    
right  side  of  slide  4.  There  was  a  decrease  in  291                                                                    
positions from the  FY 19 management plan  to the governor's                                                                    
amended  FY  20  budget.  The bulk  of  the  difference  was                                                                    
reflected   in  the   Alaska  Psychiatric   Institute  (API)                                                                    
reorganizational structure change. She  added that the funds                                                                    
in  the   contractual  line  and  the   positions  with  the                                                                    
reorganization were  reflected under  a contract.  The other                                                                    
positions  proposed for  deletion were  associated with  the                                                                    
Nome  Youth Facility;  11 of  16 positions  were filled  and                                                                    
would result in layoffs or transfers.                                                                                           
1:44:59 PM                                                                                                                    
Representative Knopp  pointed to  the funding  comparison on                                                                    
slide  4 and  asked  if  the $400  million  loss in  federal                                                                    
dollars [between  the FY 19  management plan  and governor's                                                                    
FY  20 budget]  was  directly related  to  the reduction  in                                                                    
General Fund dollars.                                                                                                           
Ms. Efird  replied in the  affirmative; the majority  of the                                                                    
funds were with the Medicaid program.                                                                                           
Representative  Knopp  observed  that  the  proposed  budget                                                                    
appeared  to be  reduced  by approximately  $300 million  in                                                                    
General Fund dollars and $400 million in federal funds.                                                                         
Ms. Efird  agreed and noted  that the next slide  would show                                                                    
the changes in the funding sources.                                                                                             
Representative  Knopp noted  that the  reduction was  almost                                                                    
dollar  for dollar.  He thought  that the  rates were  a bit                                                                    
better than that ratio (e.g. 75/25 or 90/10).                                                                                   
1:46:24 PM                                                                                                                    
Ms.  Sanders responded  there were  additional decreases  to                                                                    
DHSS  specific  to  general  funds that  did  not  have  the                                                                    
required match.  The information on  slide 4 was  an overall                                                                    
budget  picture. She  remarked that  the Medicaid  reduction                                                                    
was  not a  dollar  for dollar  reduction. The  presentation                                                                    
would provide further details later on.                                                                                         
Vice-Chair  Johnston asked  if the  department's efforts  to                                                                    
renegotiate   the   state's   position  with   the   federal                                                                    
government  would potentially  mean  a  smaller decrease  in                                                                    
federal funding.                                                                                                                
Ms. Sanders  answered that DHSS  was still working  with the                                                                    
Centers  for   Medicare  and  Medicaid  Services   (CMS)  to                                                                    
determine  the changes  it was  able  to make  and what  the                                                                    
impacts  would be  to federal  funds. Her  understanding was                                                                    
that the report would be out at the end of March.                                                                               
Vice-Chair  Ortiz asked  how the  reduction  of nearly  $800                                                                    
million would  result in  opportunity costs  in relationship                                                                    
to the department's  ability to meet its  mission to protect                                                                    
the health and wellbeing of Alaskans.                                                                                           
1:48:55 PM                                                                                                                    
Ms. Efird  replied that she  would highlight  which programs                                                                    
the   department  had   submitted   in   its  proposal   for                                                                    
reductions. There  were some reductions  in the  budget that                                                                    
hit various populations. She turned  to slide 5 and reported                                                                    
that the budget was proposed on the governor's core tenets:                                                                     
    Focus on core services                                                                                                   
    Expenditures cannot exceed existing revenue                                                                              
    Maintain and protect our reserves                                                                                        
    Does not take additional funds from Alaskans through                                                                     
     taxes or the PFD                                                                                                           
    Must be sustainable, predictable, and affordable                                                                         
Ms. Efird reported that the  department had taken the tenets                                                                    
into consideration  when it had proposed  reductions and had                                                                    
tried to  balance the  programs it  was reducing  with other                                                                    
areas  where those  constituencies  received other  funding.                                                                    
She  noted  that  the  budget   was  not  flat;  there  were                                                                    
reductions and there would be effects.                                                                                          
Co-Chair  Wilson directed  a question  to the  commissioner.                                                                    
She referenced  the core tenet specifying  that expenditures                                                                    
could not  exceed existing revenue.  She stated that  one of                                                                    
the  biggest  issues  was  a  supplemental  budget  of  $200                                                                    
million  and growing  in  recent years.  She  asked how  the                                                                    
commissioner would  do things differently  in order  to meet                                                                    
the moving target.                                                                                                              
ADAM  CRUM, COMMISSIONER,  DEPARTMENT OF  HEALTH AND  SOCIAL                                                                    
SERVICES,  replied that  more detail  would be  available in                                                                    
coming weeks. He agreed that  asking for large supplementals                                                                    
in the past couple of years  was a shock to the legislature.                                                                    
He  relayed the  department would  have more  details as  it                                                                    
worked  on  its  plan  to  avoid  the  issue;  part  of  the                                                                    
department's   primary   goal   was   to   ensure   [budget]                                                                    
projections were as accurate as possible.                                                                                       
Co-Chair  Wilson  spoke to  the  necessity  of working  with                                                                    
federal partners. She asked about  the timetables related to                                                                    
the changes  to maintenance of  effort and changes  made via                                                                    
legislation that required federal approval.                                                                                     
Commissioner  Crum  answered  that the  department's  deputy                                                                    
commissioner was  currently meeting  with CMS  in Washington                                                                    
D.C.  to  get  timelines   on  implementation.  One  of  the                                                                    
department's goals  was an  amortized schedule  showing when                                                                    
items could be in place and the effects.                                                                                        
Co-Chair Wilson asked  if quite a few of  the ideas included                                                                    
in the presentation would be implemented by July 1.                                                                             
Commissioner Crum replied in  the affirmative; a substantial                                                                    
number of the ideas could be implemented for FY 20.                                                                             
Co-Chair Foster  referenced the position  count on  slide 4.                                                                    
He  thanked  the  department for  meeting  with  his  office                                                                    
regarding the  Nome Youth  Facility. He  asked if  Ms. Efird                                                                    
had reported  that 11  positions would  be deleted  from the                                                                    
youth facility.  He thought the  number was 13 and  asked if                                                                    
that  meant  2   positions  would  have  to   be  picked  up                                                                    
Ms. Efird replied  that two of the  positions were currently                                                                    
vacant  - the  positions would  be eliminated  but were  not                                                                    
currently filled.                                                                                                               
1:53:47 PM                                                                                                                    
Co-Chair  Foster believed  it  was  the committee's  feeling                                                                    
that the  governor's proposed budget  may not result  in the                                                                    
savings  the   governor  was  hoping   for.  He   noted  the                                                                    
legislature  would  be working  through  that  issue in  the                                                                    
subcommittee process, which would  include dialogue with the                                                                    
administration.  He  wanted  the public  to  understand  the                                                                    
legislature was paying attention and working on the issue.                                                                      
Representative  Josephson spoke  to  Medicaid reduction.  He                                                                    
believed the  1115 waiver system required  the department to                                                                    
show  an  alternative  means  of   achieving  a  federal  or                                                                    
statutory goal. He wondered how  it was possible to cut $225                                                                    
million and be within  that requirement. He highlighted that                                                                    
the presentation  gave no indication  of who would  get hurt                                                                    
in the  process. He needed to  know more than the  cut would                                                                    
be  made and  somehow  it would  all work  out.  He had  not                                                                    
received  the   information  and  would  not   vote  on  the                                                                    
governor's proposal  without the information.  He referenced                                                                    
the  presenters'  indication  a  letter in  late  March  was                                                                    
forthcoming,  but he  needed to  know how  the proposal  was                                                                    
going to  evolve into a budgetary  component before mid-June                                                                    
"when we  get close to the  edge" [when the new  fiscal year                                                                    
of July 1 was looming].                                                                                                         
1:56:03 PM                                                                                                                    
Ms.  Sanders answered  that  the  information the  committee                                                                    
would  receive  regarding  the  Medicaid  changes  would  be                                                                    
substantial  and would  not be  limited to  a memorandum  or                                                                    
letter. She  elaborated that details  on the impacts  of the                                                                    
proposed changes  would be provided. She  communicated OMB's                                                                    
understanding that the committee  needed details in order to                                                                    
make decisions.  She anticipated that OMB  would put forward                                                                    
any  technical  budget  related amendments  to  address  the                                                                    
changes  that would  be  necessary in  providing  a plan  to                                                                    
accompany a proposal.                                                                                                           
Co-Chair Foster recognized Representative Merrick online.                                                                       
Ms.  Efird continued  with slide  5 showing  changes in  the                                                                    
budget by funding  source from FY 19 to FY  20. She moved to                                                                    
slide 6  and highlighted major  changes in the  General Fund                                                                    
budget. She  began with the  Alaska Pioneer  Homes Division.                                                                    
She  reported  there  had been  a  budget  structure  change                                                                    
within the  division, reflected by a  new payment assistance                                                                    
budget component. She explained  that payment assistance was                                                                    
wrapped  up within  the  Pioneer  Home component  currently,                                                                    
which made  it difficult to  see how the  payment assistance                                                                    
supplemented  the  payments.  She  elaborated  that  general                                                                    
funds  in  the Pioneer  Home  budget  had been  reduced  and                                                                    
partially   replaced  in   a  separate   payment  assistance                                                                    
component of  $15 million general funds.  She furthered that                                                                    
DGF  had  been increased  to  receive  fees from  increasing                                                                    
Pioneer  Home  rates.  She  clarified  that  the  governor's                                                                    
proposed  budget did  not evict  residents from  the Pioneer                                                                    
Homes. The governor's  budget reflected the administration's                                                                    
proposal to put  forth regulations to increase  the rates to                                                                    
show the  true cost of care  for each of the  levels of care                                                                    
in the Pioneer Homes.                                                                                                           
1:59:42 PM                                                                                                                    
Co-Chair Wilson pointed to the  $16.792 million General Fund                                                                    
and $16.386  million General  Fund/Mental Health  related to                                                                    
the Alaska  Pioneer Homes  on slide 6.  She noted  that both                                                                    
funding  sources were  general funds  and asked  if the  two                                                                    
amounts were to be added together.                                                                                              
Ms. Efird  replied that the amounts  highlighted by Co-Chair                                                                    
Wilson were reductions because both  were general funds. The                                                                    
Pioneer  Home budget  was originally  around $33  million in                                                                    
general funds. The  amount had been reduced  and $15 million                                                                    
had  been  shifted to  a  payment  assistance general  funds                                                                    
budget  component.   There  was  a  reduction   in  the  UGF                                                                    
component, which  was replaced  with additional DGF  for the                                                                    
increase in the rates to collect fees.                                                                                          
Co-Chair  Wilson  stated  that  typically  the  numbers  had                                                                    
negative signs to indicate reductions.                                                                                          
Ms.  Efird apologized  and clarified  that parenthesis  were                                                                    
used  in  the  presentation to  indicate  negative  numbers;                                                                    
numbers with  no parenthesis were positive.  She highlighted                                                                    
that  $15   million  in  general   funds  for   the  payment                                                                    
assistance component  had been  added as a  structure change                                                                    
and two reductions were listed in a separate bullet point.                                                                      
Co-Chair Wilson referenced slide 5  and noted the DGF showed                                                                    
an increase of  $11.358 million, yet she  thought it sounded                                                                    
like the  DGF had the  potential to  be over $16  million in                                                                    
relation to the Pioneer Homes. She  asked why there was a $5                                                                    
million difference between the two figures.                                                                                     
Ms. Efird replied that slide  5 showed the overall total for                                                                    
the  entire department.  She explained  there were  numerous                                                                    
technical  adjustments that  added up  to the  total in  the                                                                    
budget. For example,  there were some SB  74 reductions that                                                                    
included DGF. Slide  5 included the biggest  portion of DGF,                                                                    
but  there  were  some offsetting  decreases  in  other  DGF                                                                    
Co-Chair Wilson  stated that  if a  person was  paying their                                                                    
own way [to  live in the Pioneer Homes],  no financials were                                                                    
required,  which   she  agreed  with.  She   asked  how  the                                                                    
reduction had  been determined. She asked  how the reduction                                                                    
would not be a decrement to the Pioneer Home.                                                                                   
Ms. Efird replied that DHSS  was still analyzing the numbers                                                                    
for  the Pioneer  Homes. Currently,  there  were 451  filled                                                                    
beds in the  Pioneer Homes. She detailed that  51 percent of                                                                    
residents  were  on private  pay,  but  that was  under  the                                                                    
current structure where all  residents were being subsidized                                                                    
because residents did not pay  based on their level of care.                                                                    
She  expounded that  29 percent  were on  payment assistance                                                                    
and 20  percent were  under Medicaid waiver.  She reiterated                                                                    
that DHSS was  still looking at the numbers  and had started                                                                    
with  $15  million.  The Pioneer  Home  financial  unit  was                                                                    
trying to  make an  estimate and projection  of calculations                                                                    
to determine  whether the  number was  correct or  whether a                                                                    
change was needed.                                                                                                              
2:03:51 PM                                                                                                                    
Co-Chair Foster  noted that Representative LeBon  had joined                                                                    
the meeting.                                                                                                                    
Representative Josephson  asked how the $15  million payment                                                                    
assistance was sustainable.                                                                                                     
Ms. Efird  answered that the  amount was the cost  of taking                                                                    
care  of  the state's  seniors  in  the Pioneer  Homes.  She                                                                    
reported it  was a policy  decision to continue  funding the                                                                    
Representative  Josephson  remarked  that  the  $30  million                                                                    
subsidy  was two-tenths  of  1 percent  of  the deficit.  He                                                                    
thought that  amount seemed  like money  well spent  to help                                                                    
500  seniors. He  estimated  that the  proposal  to pay  $15                                                                    
million was around one-tenth of  1 percent. He asked why not                                                                    
continue the current  payment method for the  benefit of 500                                                                    
Alaskan families. He stated it  was a policy call and wanted                                                                    
to know why the legislature should agree to the proposal.                                                                       
Ms. Sanders  replied that the  point the  administration was                                                                    
trying to make was that  the state was currently subsidizing                                                                    
a large cost  that private pay insurance or  Medicaid may be                                                                    
able  to cover,  and  the state  should  be accessing  those                                                                    
payment methods if  possible. She stated there  was value in                                                                    
supporting  and  subsidizing  to   ensure  no  seniors  were                                                                    
removed  from the  Pioneer Homes,  but it  was necessary  to                                                                    
address  the   state's  costs   under  the   current  fiscal                                                                    
situation.   She  elaborated   that  the   budgetary  change                                                                    
outlined the  true cost to  the state and  provided clarity.                                                                    
The  $15   million  was  an   estimate  based   on  existing                                                                    
information. She  explained the  state did  not have  all of                                                                    
the   financial   information    on   all   residents.   The                                                                    
administration  was continuing  to  analyze  the numbers  to                                                                    
ensure  it was  putting forward  a number  that sufficiently                                                                    
covered the costs.                                                                                                              
2:06:38 PM                                                                                                                    
Vice-Chair  Ortiz  asked if  it  was  safe  to say  the  $15                                                                    
million would decrease from year to year.                                                                                       
Ms. Efird  answered that  the figure would  be based  on the                                                                    
makeup of the  seniors in the home each year.  She noted the                                                                    
figure  would  be  based  on  prior  year  information.  She                                                                    
detailed  that  seniors left  the  homes  and new  residents                                                                    
moved in.  She did  not foresee the  number going  down, but                                                                    
she was  not yet  certain. The department  was still  in the                                                                    
process  of  determining  the precise  number  necessary  to                                                                    
manage the population and need in the Pioneer Homes.                                                                            
Vice-Chair Ortiz was glad to  hear that no current residents                                                                    
would be removed from the  Pioneer Homes if they were unable                                                                    
to  afford  the increased  rates.  However,  he thought  the                                                                    
increased rates  may make the Pioneer  Homes inaccessible to                                                                    
many low income seniors.                                                                                                        
Ms.  Efird  replied there  was  an  active waitlist  and  an                                                                    
inactive  waitlist   for  the  Pioneer  Homes.   The  active                                                                    
waitlist  included approximately  250-plus individuals.  She                                                                    
elaborated that  when someone put  their name on  the active                                                                    
waitlist,  she believed  it was  with the  anticipation they                                                                    
would be ready to move into  the Pioneer Home in the next 30                                                                    
days. She remarked  she could have the  number incorrect and                                                                    
the period may be a bit  longer. The department did not look                                                                    
at income or information before  a person was taken into the                                                                    
home; a person's entrance into  a Pioneer Home was not based                                                                    
on their ability to pay.                                                                                                        
Vice-Chair  Ortiz asked  if that  would continue  to be  the                                                                    
case in the future.                                                                                                             
Ms. Efird replied in the affirmative.                                                                                           
2:09:40 PM                                                                                                                    
Representative  Tilton  asked   for  detail  about  proposed                                                                    
changes to  the Pioneer  Home rate  structure and  levels of                                                                    
Ms.  Efird  answered that  the  department  could provide  a                                                                    
table showing the changes. She  relayed there were currently                                                                    
three  levels of  care in  the Pioneer  Homes. The  proposed                                                                    
change would  mean increasing  the levels  of care  to five.                                                                    
She  reported that  the  homes were  not  currently able  to                                                                    
provide care  at level five.  The department was  working on                                                                    
developing  a nine-bed  unit in  the Anchorage  Pioneer Home                                                                    
that  would take  care  of patients  with  higher need.  She                                                                    
reported that the  current level two would be  broken into a                                                                    
level  two and  level  three to  ensure  the department  was                                                                    
distinguishing  the types  of  services  the residents  were                                                                    
paying for.                                                                                                                     
Representative  Tilton asked  for verification  that payment                                                                    
assistance  would be  available to  all residents  no matter                                                                    
what type of pay they were on.                                                                                                  
Ms. Efird  replied in the  affirmative. She  elaborated that                                                                    
if a resident needed to  go on payment assistance, they were                                                                    
currently  required by  regulation to  provide their  income                                                                    
information  in order  for the  department to  calculate the                                                                    
amount of assistance the individual would need.                                                                                 
Vice-Chair Johnston appreciated  what the administration was                                                                    
doing and noted  she had become aware of  the ongoing effort                                                                    
during  the previous  administration.  She  believed it  had                                                                    
been mentioned in  subcommittee that the average  age of new                                                                    
resident was 87. She asked if her recollection was correct.                                                                     
Ms. Efird believed  the average age of  an incoming resident                                                                    
may  be 81  and the  average age  of residents  entering the                                                                    
homes under level three care was 87.                                                                                            
Vice-Chair Johnston stated that the  amount of care could be                                                                    
more acute  for residents,  particularly at level  five. She                                                                    
asked  for   verification  that  some  residents   would  be                                                                    
assisted with Medicaid.                                                                                                         
Ms. Efird replied in the affirmative.                                                                                           
Vice-Chair  Johnston  asked  if the  proposed  General  Fund                                                                    
decrement accounted  for the increased  cost for  the higher                                                                    
level  of  care  or  the  amount of  Medicaid  that  may  be                                                                    
required in the Pioneer Home.                                                                                                   
2:13:52 PM                                                                                                                    
Ms. Efird  answered that the  department was looking  at all                                                                    
groups that would be affected  by various proposals and what                                                                    
that would look like.                                                                                                           
Vice-Chair Johnston  appreciated the payment  assistance and                                                                    
understood  that the  associated $15  million increment  may                                                                    
not be accurate. She asked  if there could be a supplemental                                                                    
if the number was not accurate.                                                                                                 
Ms. Sanders  answered that the administration's  hope was to                                                                    
avoid  coming to  the committee  with  supplementals in  the                                                                    
future. She noted the number  may need to be adjusted before                                                                    
the  process  concluded  if  the   department  was  able  to                                                                    
calculate  and  provide  information documenting  a  greater                                                                    
need. The intention  was to provide the  legislature with an                                                                    
accurate funding number to get through the fiscal year.                                                                         
2:15:15 PM                                                                                                                    
Representative Sullivan-Leonard  commended Commissioner Crum                                                                    
and the department for working  to reduce the DHSS budget by                                                                    
25  percent,   especially  because  there  had   been  steep                                                                    
increases  to programs  in  recent years  that  she did  not                                                                    
believe were sustainable. She  referenced the Palmer Pioneer                                                                    
Veterans  Home and  wondered if  there  had been  discussion                                                                    
about transitioning  the facility from  a Pioneer Home  to a                                                                    
Veterans   Home   that   would  allow   [federal]   Veterans                                                                    
Administration  (VA) funds  to help  cover costs.  She noted                                                                    
that the VA covered significantly more than Medicaid.                                                                           
Ms.  Efird  responded that  the  department  did receive  VA                                                                    
funding  because  the  facility  was  a  certified  Veterans                                                                    
Pioneer Home.                                                                                                                   
Representative Sullivan-Leonard asked  if the department was                                                                    
looking at making the home available to veterans only.                                                                          
Commissioner Crum  answered that veterans accounted  for the                                                                    
primary population  in the  Palmer facility.  The department                                                                    
had not explored transitioning  to a veterans-only facility;                                                                    
DHSS liked  making the home  available to  Alaskan residents                                                                    
as  well. The  department was  exploring the  creation of  a                                                                    
designated  unit  for  an  advanced level  of  care  at  the                                                                    
Pioneer  Home, which  would bring  in a  greater portion  of                                                                    
federal funding through the VA.                                                                                                 
2:17:15 PM                                                                                                                    
Vice-Chair  Ortiz  referenced  Ms. Efird's  testimony  there                                                                    
were 451  filled beds in  the Pioneer Homes. He  asked about                                                                    
the total system capacity.                                                                                                      
Ms. Efird  replied that  there was a  total of  496 licensed                                                                    
beds  in  the homes.  The  department  had been  working  on                                                                    
increasing and  meeting a 96  percent occupancy  rate, which                                                                    
was the  industry standard. She  reported the  Pioneer Homes                                                                    
were approaching that rate. She  detailed that the Fairbanks                                                                    
Pioneer Home had recently hit  the 95 percent occupancy rate                                                                    
and  DHSS was  working to  meet the  target in  each of  the                                                                    
Vice-Chair Ortiz  asked if the  homes were falling  short of                                                                    
the  target rate  due  to  the time  it  took to  transition                                                                    
between outgoing  and incoming residents.  Alternatively, he                                                                    
asked if it  was due to a lack of  adequate funding to staff                                                                    
the facilities.                                                                                                                 
Ms.  Efird responded  that the  95 percent  target tried  to                                                                    
account for outgoing and  incoming residents. She elaborated                                                                    
that budget reductions  in the past five  years had resulted                                                                    
in  the  loss  of  23 (or  more)  full-time  positions.  The                                                                    
administration at  the time  had chosen to  meet the  cut by                                                                    
closing beds.  Consequently, the current  administration had                                                                    
determined closing  beds meant a  reduction in income  and a                                                                    
double hit  to resources. The administration  was working to                                                                    
fill the  beds, which would  bring in income and  mean staff                                                                    
would be needed to staff those beds.                                                                                            
Ms. Sanders added  that many of the  waitlists were location                                                                    
specific, which  hindered the  department's ability  to fill                                                                    
beds in specific areas.                                                                                                         
2:20:17 PM                                                                                                                    
Representative  Tilton asked  if  some of  the challenge  of                                                                    
filling beds was having beds  available for the needed level                                                                    
of care.                                                                                                                        
Ms.  Efird responded  affirmatively. She  explained that  an                                                                    
increased number of incoming  residents needed higher levels                                                                    
of  care. She  detailed that  staffing the  homes for  those                                                                    
different needs also affected the ability to fill beds.                                                                         
Ms. Efird  moved to  the next  item on  slide 6  showing the                                                                    
change in budgeting for API.  The governor's budget proposal                                                                    
included an organizational  restructuring; therefore, all of                                                                    
the money from all of the  line items for API had been moved                                                                    
to  the contractual  line to  adjust  to the  organizational                                                                    
restructuring.  The  budget  showed positions  being  zeroed                                                                    
out; the change would be a different way of managing API.                                                                       
2:21:46 PM                                                                                                                    
Vice-Chair  Johnston asked  what effect  the removal  of 248                                                                    
positions  from the  state's employment  pool would  have on                                                                    
the  Public  Employees'  Retirement System  (PERS)  unfunded                                                                    
liability. She  considered the  change from  the perspective                                                                    
of an employer where  termination studies had been required.                                                                    
She realized  the state did  not need to have  a termination                                                                    
study, but  she wondered if  the decrement of  employees was                                                                    
accounted for somewhere in the budget.                                                                                          
Ms.  Sanders replied  that  she  was not  an  expert in  the                                                                    
field, but she explained that  the state benefits of current                                                                    
employees would  end because they  would no longer  be state                                                                    
employees  under the  proposal. She  detailed that  out-year                                                                    
benefits for the  former state employees would  no longer be                                                                    
accounted for, but they would  be eligible for benefits they                                                                    
had earned.                                                                                                                     
Co-Chair  Foster  asked   whether  Donna  Arduin,  Director,                                                                    
Office of  Management and  Budget wanted  to respond  to the                                                                    
Vice-Chair Johnston  explained that  her question  was about                                                                    
the  fact  that  the  state  would not  be  paying  for  the                                                                    
positions  going  forward  and  how that  would  affect  the                                                                    
overall pension fund.                                                                                                           
Ms.   Sanders  offered   to   follow   up  with   additional                                                                    
2:24:04 PM                                                                                                                    
Representative   Josephson  referenced   the  proposed   $28                                                                    
million transfer  to contractual services for  API. He asked                                                                    
about the  anticipated expense of privatizing  API including                                                                    
per diem.                                                                                                                       
Ms. Efird answered that there  was a current contract for FY                                                                    
19 with some deliverables that  needed to be met to continue                                                                    
with the contract in FY  20. The contract was posted online;                                                                    
the  department may  come  back to  the  legislature with  a                                                                    
different number  than currently  shown associated  with the                                                                    
change for API.                                                                                                                 
Representative Josephson  asked there was a  rough number at                                                                    
present. He asked if the current figure was $38 million.                                                                        
Ms.  Efird  believed the  contract  was  about $43  million,                                                                    
which  was not  all general  funds; the  figure was  part of                                                                    
what the department was making  sure to calculate correctly.                                                                    
She detailed that currently the  capacity was around 35 beds                                                                    
and the department was working  to increase the number to 80                                                                    
beds.  She  explained  that  the  change  could  produce  an                                                                    
increase in Medicaid  funds or other coverage  of funds. The                                                                    
department  was currently  looking  at the  breakout of  the                                                                    
funding sources needed for FY 20 coverage.                                                                                      
Vice-Chair  Ortiz  asked  if the  budgeted  figure  for  the                                                                    
privatization of  API reflected  the cost of  the associated                                                                    
Ms. Efird  replied that  the correct amount  was not  yet in                                                                    
the  governor's FY  20 proposal.  The department  working on                                                                    
determining  a [more  precise] figure  that would  likely be                                                                    
presented in an amended budget request.                                                                                         
Vice-Chair Ortiz asked  if it was safe to  assume the number                                                                    
would increase rather than decrease.                                                                                            
Ms. Efird replied in the affirmative.                                                                                           
2:27:09 PM                                                                                                                    
Representative  Sullivan-Leonard asked  if Wellpath  was the                                                                    
organization that  would take on  the contract for  API. She                                                                    
asked about the anticipated savings.                                                                                            
Commissioner  Crum affirmed  that Wellpath  was the  name of                                                                    
the contractor.  The change to privatization  was also about                                                                    
long-term  cost avoidance.  He explained  that bringing  the                                                                    
hospital up  to full  capacity would enable  API to  serve a                                                                    
larger  population, which  would  result  in cost  avoidance                                                                    
throughout  the  rest  of the  system.  He  elaborated  that                                                                    
currently many  patients were in emergency  rooms, which had                                                                    
a higher  Medicaid cost. He  furthered that API  would treat                                                                    
patients much faster. Additionally,  the department hoped to                                                                    
increase  the  size  of API's  forensic  unit,  which  would                                                                    
enable  individuals  to  be moved  from  the  Department  of                                                                    
Corrections more rapidly for evaluation to stand trial.                                                                         
Representative Sullivan-Leonard asked  for verification they                                                                    
did not yet have a dollar amount.                                                                                               
Commissioner  Crum replied  the  department  was working  on                                                                    
projections. He reported the savings would be tremendous.                                                                       
Representative  Josephson  respected  the goal  of  avoiding                                                                    
emergency  room  expenses  and  getting  people  where  they                                                                    
should be. He was reminded  of the Medicaid cut [proposed by                                                                    
the administration]  and the cost  that could  be associated                                                                    
with shifting care  to the emergency room. He  hoped to hear                                                                    
from CMS that the issue was covered.                                                                                            
Representative  Knopp referenced  the potential  $43 million                                                                    
appropriation to  contract out services [for  API]. He asked                                                                    
if  Wellpath would  do all  of the  private [insurance]  and                                                                    
Medicaid  billings. He  asked if  revenues  would be  funded                                                                    
back  to  the state  or  spent.  He  asked how  the  process                                                                    
Ms. Efird  answered that the  department would bill  for all                                                                    
other  funding sources.  She  detailed  that the  contractor                                                                    
(Wellpath) would  be paid its  amount and all  other funding                                                                    
sources that  could be recouped  would be recouped.  She did                                                                    
not know  the details, but  she assumed DHSS would  bill for                                                                    
Medicaid payments.                                                                                                              
2:30:17 PM                                                                                                                    
Representative   Knopp    asked   if   there    were   other                                                                    
administrative  services  functions   the  department  would                                                                    
still do under the privatization.                                                                                               
Ms. Efird  replied that Wellpath  was managing  the clinical                                                                    
aspects  for  API.  The  department  would  continue  to  be                                                                    
responsible for  building maintenance, utilities,  and other                                                                    
related things.                                                                                                                 
Representative Knopp  asked if the legislature  would expect                                                                    
to  see indirect  expenditure  line  items [associated  with                                                                    
Ms. Efird replied in the affirmative.                                                                                           
2:31:15 PM                                                                                                                    
Ms. Efird addressed  the third bullet point on  slide 6. She                                                                    
reported  that   the  department  was   receiving  increased                                                                    
federal awards  to meet the  opioid crisis  currently facing                                                                    
all states. There  were some federal grants  coming into the                                                                    
Divisions  of Behavioral  Health and  Public Health  for the                                                                    
opioid  and epidemiology  funding. She  relayed there  was a                                                                    
workgroup collaborating on a state  grant that also included                                                                    
the   Department  of   Public  Safety   and  Department   of                                                                    
Corrections  because there  was opioid  funding coming  into                                                                    
those departments as well. The  state wanted to make sure to                                                                    
use the funding in a cohesive and collaborative way.                                                                            
Vice-Chair Ortiz asked if the  money was one-time funding or                                                                    
Ms. Efird answered that she  did not know the specifics. She                                                                    
reported that federal grants  were generally multi-year. She                                                                    
would follow up with the details.                                                                                               
Ms. Efird moved to the last  bullet point on slide 6 related                                                                    
to the Nome  Youth Facility. The governor's  proposal was to                                                                    
retain  the youth  probation services  in Nome  and transfer                                                                    
youth  needing detention  and  treatment  services to  other                                                                    
state facilities (i.e. McLaughlin Youth Center or other).                                                                       
Vice-Chair   Johnston  asked   if  DHSS   had  looked   into                                                                    
partnering  with   the  Indian  Health  Service   (IHS)  for                                                                    
detention and treatment services.                                                                                               
Commissioner Crum answered the  department was exploring the                                                                    
interest of  regional partners to  potentially use  the Nome                                                                    
facility for  something like substance abuse  treatment. The                                                                    
department believed there may  be funding mechanisms through                                                                    
its 1115  substance use disorder  (SUD) waiver.  He believed                                                                    
there  was  a  bit  of  interest,  but  it  was  an  ongoing                                                                    
negotiation.  He  noted  the  [Nome]  facility  would  be  a                                                                    
valuable item in that region of Alaska.                                                                                         
2:34:17 PM                                                                                                                    
Co-Chair  Wilson stated  that  a youth  facility could  mean                                                                    
kids  that  needed  more  parenting   or  were  in  severely                                                                    
troubled  situations.  She asked  about  the  makeup of  the                                                                    
youth  facility and  the  average number  of  youths in  the                                                                    
Commissioner Crum replied that the  facility was at 50 to 60                                                                    
percent    capacity.   He    mentioned   juvenile    justice                                                                    
Co-Chair  Wilson stated  that  50 percent  capacity did  not                                                                    
mean  much  without  knowing the  total  capacity.  She  was                                                                    
talking  specifically   about  the  youth  portion   of  the                                                                    
facility.  She  referenced   discussion  that  had  occurred                                                                    
several times over the years  about whether the facility was                                                                    
overkill  in terms  of the  number of  staff required  for a                                                                    
handful of  juveniles. She posed  the idea of a  foster care                                                                    
type situation  for youths who  were not  violent offenders;                                                                    
it would enable youth to  remain in the community instead of                                                                    
sending  them  to urban  areas  without  any family  nearby.                                                                    
However,  she questioned  how it  was possible  to look  for                                                                    
other  ideas without  understanding the  level of  offences.                                                                    
She asked the department to get back to the committee.                                                                          
Co-Chair Wilson  recalled there had  been only four  or five                                                                    
youth [in  the facility]  at a time.  She continued  that it                                                                    
did not matter if there were  50 youths in the facility or 5                                                                    
or 6,  the facility  still required  staff around  the clock                                                                    
for health  needs and  the rest. She  reasoned that  all the                                                                    
money could  have been  used directly  on helping  the youth                                                                    
instead.  She  estimated they  had  been  talking about  the                                                                    
issue  for at  least four  years. She  hoped the  department                                                                    
would  come  up  with  a  solution.  She  guessed  Nome  was                                                                    
probably  not the  only community  with so  few youths  in a                                                                    
facility that it was not cost effective.                                                                                        
2:36:48 PM                                                                                                                    
Commissioner  Crum  replied  that the  Nome  Youth  Facility                                                                    
averaged approximately eight kids per day.                                                                                      
Co-Chair Wilson  commented on  money that  could be  used on                                                                    
treatment  if  it  was  not spent  on  staffing  a  facility                                                                    
housing eight youths per day.                                                                                                   
Co-Chair  Foster discussed  that  capacity was  down in  the                                                                    
facility and the  state was looking for ways  to save money.                                                                    
He contended there were other costs  and he did not know the                                                                    
real savings.  He elaborated that  if kids were sent  off to                                                                    
other  locations (e.g.  McLaughlin Youth  Center) throughout                                                                    
the state, the youths still had  to be sent back to Nome for                                                                    
court  hearings  and  so forth.  He  highlighted  costs  for                                                                    
travel, a  chaperone accompanying  the youth  during travel,                                                                    
securely  holding youths  overnight when  they traveled  for                                                                    
their court hearing, heating  a facility (probation officers                                                                    
would  still work  in  the facility  in  Nome), housing  the                                                                    
youths at  other facilities,  and more.  He added  that with                                                                    
two flights  per day it  was not always  easy to fly  in the                                                                    
morning and  leave at night.  He highlighted  weather delays                                                                    
that could cause an additional expense.                                                                                         
Co-Chair Foster continued that even  if it was assumed there                                                                    
were some  savings [in transferring detention  and treatment                                                                    
to  other   facilities],  the  policy  issue   remained.  He                                                                    
detailed  that  the  governor  had   made  public  safety  a                                                                    
priority and  he believed the  youth facility could  help in                                                                    
the  endeavor. He  reported that  the  committee could  work                                                                    
with its subcommittee members and  the administration on the                                                                    
issue. He  appreciated that  the administration  had reached                                                                    
out to  him. He  noted the  issues involved  tough decisions                                                                    
all around.                                                                                                                     
2:39:29 PM                                                                                                                    
Ms.  Efird  moved  to  slide   7.  The  first  bullet  point                                                                    
highlighted  a proposed  reduction of  $14.7 million  GF for                                                                    
Adult  Public Assistance.  The  program provided  assistance                                                                    
payments to blind  and disabled residents age  65 and older.                                                                    
The  program   also  provided  the  maintenance   of  effort                                                                    
required   for  the   department's  Medicaid   program.  She                                                                    
detailed  that here  were two  methodologies to  calculate a                                                                    
state's maintenance  of effort for adult  public assistance.                                                                    
Alaska  was  currently  under a  total  expenditure  method,                                                                    
which  meant it  was  required  to meet  the  same level  of                                                                    
expenditures from  the prior  year. The  governor's proposal                                                                    
was to move  to the 1983 payment levels,  which would change                                                                    
the payments and result in a savings of $14.7 million.                                                                          
Ms. Efird  moved to the second  bullet point on slide  7 and                                                                    
reviewed  the governor's  proposal to  reduce the  Temporary                                                                    
Assistance for  Needy Families (TANF) maintenance  of effort                                                                    
by  $16.9 million.  The  department  currently provided  the                                                                    
funding to its seven  tribal partners who administered their                                                                    
own TANF  programs. The payment  was a supplement  to tribes                                                                    
providing  the   TANF  program  to  their   recipients.  The                                                                    
proposal would  require the federal  government to  agree to                                                                    
the  reduction.   The  department   was  still   working  on                                                                    
obtaining agreement from the federal government.                                                                                
Vice-Chair  Ortiz asked  for the  current funding  total for                                                                    
the TANF maintenance of effort.                                                                                                 
Ms.  Efird  believed  the   current  maintenance  of  effort                                                                    
required  from the  state  was $36  million.  The total  for                                                                    
maintenance of  effort was 80  percent of the  total federal                                                                    
grant coming  into the state.  She would follow up  with the                                                                    
2:42:36 PM                                                                                                                    
Ms. Efird addressed  the third bullet point on slide  7 - to                                                                    
repeal the  Hold Harmless Program. She  explained that under                                                                    
the program,  an amount was deducted  from each individual's                                                                    
Permanent Fund Dividend  (PFD) and put into  a hold harmless                                                                    
fund  to hold  public  assistance  recipients harmless  from                                                                    
losing  their  benefits  when  they  receive  the  PFD.  The                                                                    
governor's proposal was to repeal  the statute. She reported                                                                    
legislation was  forthcoming. The  proposal looked  at other                                                                    
ways  to  mitigate  the  loss   of  those  benefits  through                                                                    
possibly providing the PFD on a monthly basis or other.                                                                         
Co-Chair Wilson  understood it may  be a good way  of paying                                                                    
but she wondered if it was  still possible to end up kicking                                                                    
individuals  off the  program who  were on  the border.  She                                                                    
recognized the dividend amount would  make a difference. She                                                                    
asked  what would  happen if  a  person was  $100 away  from                                                                    
being eligible. She wondered if  a person would have to wait                                                                    
to  see what  the dividend  amount would  be every  year and                                                                    
divide it by  12 to determine whether they  would be removed                                                                    
from numerous services that the $100 could not fix.                                                                             
Ms.  Efird  replied it  could  be  possible, which  was  the                                                                    
reason   DHSS  was   looking  at   ways   to  mitigate   the                                                                    
possibility. Each  of the programs  had different  levels of                                                                    
eligibility;  therefore, it  was  necessary to  look at  the                                                                    
programs separately  to project  individuals who may  or may                                                                    
not be over the limit.                                                                                                          
Co-Chair Wilson  used a  family of  four receiving  a $2,000                                                                    
PFD per  person as an  example. She considered  that because                                                                    
the amount was counted as  income, if the family made $8,000                                                                    
[from the PFD] they would  not get services. Yet, someone in                                                                    
the  Hold  Harmless  Program would  get  the  services.  She                                                                    
thought  the  Hold Harmless  Program  had  been likely  been                                                                    
implemented because when individuals  received the PFD, they                                                                    
were bumped from receiving  their assistance payments, which                                                                    
resulted  in substantial  paperwork the  following month  to                                                                    
get people  back on public assistance.  She wondered whether                                                                    
it  was   fair  for  working  individuals   to  not  receive                                                                    
services, yet another group was treated differently.                                                                            
2:45:36 PM                                                                                                                    
Ms.  Efird replied  that the  department  could provide  the                                                                    
committee with  the number of recipients  under each program                                                                    
that were held harmless under  the program. She believed the                                                                    
largest  number were  the Adult  Public Assistance  payments                                                                    
for individuals age 65 and older and blind and disabled.                                                                        
Co-Chair  Wilson stated  the information  would be  helpful.                                                                    
She did not  want to take services  from individuals working                                                                    
two jobs and put them at a disadvantage to others.                                                                              
Ms. Efird  moved to the fourth  bullet point on slide  7 and                                                                    
reviewed  the  governor's  proposal  to  repeal  the  Senior                                                                    
Benefits Payment  Program. In  FY 18  there had  been 11,283                                                                    
program recipients.                                                                                                             
Co-Chair Foster  asked for a  review of the  program's three                                                                    
Ms.  Efird replied  that there  were three  tiers and  noted                                                                    
reductions had been  made to the program in  the past. Under                                                                    
the current program  there were cash payments  of $76, $175,                                                                    
and $250 depending on applicant's income levels.                                                                                
Co-Chair Foster asked for the highest income level.                                                                             
Ms.  Efird listed  the program  requirement  that an  Alaska                                                                    
resident have income  below $26,565 for a  single person and                                                                    
$36,015  for a  couple. She  would  provide a  table to  the                                                                    
committee showing all of the income levels.                                                                                     
Co-Chair  Foster reviewed  that  under  the Senior  Benefits                                                                    
Program couples with income  below approximately $36,500 and                                                                    
individuals  with income  below  approximately $26,500  were                                                                    
eligible for one of the three tiers.                                                                                            
2:48:13 PM                                                                                                                    
Vice-Chair Ortiz  asked if  the most  a single  senior could                                                                    
earn to qualify for the $75 per month was $26,500.                                                                              
Ms. Efird agreed.                                                                                                               
Vice-Chair Ortiz  asked what the income  requirement was for                                                                    
a  senior to  receive the  maximum amount.  He asked  if the                                                                    
amount was monthly.                                                                                                             
Ms. Efird replied that the  income requirement was an annual                                                                    
amount and  the payment was  monthly. She reported  that the                                                                    
income  level for  the highest  payment was  $11,385 for  an                                                                    
individual and $15,435 for a married couple.                                                                                    
Vice-Chair Ortiz asked if there were 19,000 recipients.                                                                         
Ms. Efird clarified there were  11,283 program recipients in                                                                    
FY  18.  The  department  did  not  yet  have  the  complete                                                                    
information for FY 19.                                                                                                          
Vice-Chair  Ortiz asked  how many  individuals received  the                                                                    
maximum benefit.                                                                                                                
Ms.  Efird  answered  that  1,742   had  received  the  $250                                                                    
payment, 5,124 had received the  $175 payment, and 4,713 had                                                                    
received the $76 payment.                                                                                                       
2:50:26 PM                                                                                                                    
Vice-Chair Ortiz  asked if the  administration had  done any                                                                    
research on how the  reduction would impact recipients prior                                                                    
to making the decision [to repeal the program].                                                                                 
Ms.  Efird  replied in  the  affirmative.  She reported  the                                                                    
decision  and  proposal  had been  difficult  to  make.  She                                                                    
detailed that the  department tried to look at  the array of                                                                    
services  going to  each  population  group. She  recognized                                                                    
that low  income seniors  need help  and she  reiterated her                                                                    
earlier testimony that the budget  had on individual groups.                                                                    
The administration  wanted to keep  and hold  harmless other                                                                    
programs  providing  funding  for waiver  services  and  for                                                                    
seniors to  remain in  their homes.  She offered  to provide                                                                    
the  committee  with  the array  of  services  seniors  were                                                                    
receiving  across DHSS.  The goal  had been  to balance  the                                                                    
services  [provided to  population groups].  The funds  came                                                                    
from a total UGF pot of money.                                                                                                  
Vice-Chair  Ortiz responded  that he  would appreciate  more                                                                    
2:52:18 PM                                                                                                                    
Representative   Josephson  requested   information  showing                                                                    
which programs  benefitting seniors had been  held harmless.                                                                    
He referenced Ms. Efird's testimony  that the funds were all                                                                    
GF. He asked if there was no TANF matching fund.                                                                                
Ms.  Efird clarified  she had  been speaking  to the  Senior                                                                    
Benefits Program that was all general funds.                                                                                    
Representative  Josephson  noted  that slide  7  reduced  or                                                                    
repealed  a  number of  programs  that  benefit seniors.  He                                                                    
asked if  a senior would  be eligible for  multiple programs                                                                    
shown on the slide.                                                                                                             
Ms. Efird  replied in the  affirmative. She provided  a list                                                                    
of  other  programs  providing  funding  to  seniors.  Adult                                                                    
Public Assistance  provided benefits to seniors,  age 65 and                                                                    
above.  She  would follow  up  with  the number  of  seniors                                                                    
receiving   benefits  under   the   program.  Other   public                                                                    
assistance programs included  temporary assistance payments,                                                                    
general  relief  assistance   payments,  heating  assistance                                                                    
payments, supplemental nutrition  food stamp payments. Other                                                                    
assistance  was  provided   through  Medicaid  programs  and                                                                    
waivers, and behavioral health funds.  She would be happy to                                                                    
provide the detail to the committee.                                                                                            
2:54:15 PM                                                                                                                    
Representative Josephson  asked what  the 1983  standard was                                                                    
[shown on slide 7 related to Adult Public Assistance].                                                                          
Ms. Efird answered  that the reference [on slide  7] was the                                                                    
total amount  of the Adult  Public Assistance  payments that                                                                    
went out  in 1983. She  would provide the committee  with an                                                                    
informational  sheet showing  the calculations.  The federal                                                                    
government gave DHSS two options  to meet the maintenance of                                                                    
effort  requirement:  1) the  state  could  go back  to  the                                                                    
amounts it had  funded in 1983, or 2) each  year DHSS had to                                                                    
meet the current payment level for the following year.                                                                          
Representative  Josephson  assumed  the 1983  payments  were                                                                    
inflation adjusted.                                                                                                             
Ms.  Efird   believed  cost   of  living   adjustments  were                                                                    
included, but she would double check.                                                                                           
Representative  Josephson asked  how the  proposed reduction                                                                    
to TANF would impact federal matching funds.                                                                                    
Ms.  Efird answered  that  if  the state  did  not meet  its                                                                    
maintenance of effort it would  be fined by that amount. The                                                                    
state would  still have  to meet the  level of  payment from                                                                    
state funds to receive federal funds.                                                                                           
Representative Josephson believed Ms.  Efird was saying that                                                                    
the  state   would  know  if   the  maintenance   of  effort                                                                    
requirement was  not met. He  stated his  understanding that                                                                    
the state would  be fined and would not  receive the federal                                                                    
Ms. Efird answered  that the state would be  fined but would                                                                    
still receive  its federal  award. At  some point  the award                                                                    
would be reduced  in that one year and the  state would have                                                                    
to make  it up with  a General  Fund fine. She  believed the                                                                    
state  would  still  receive  the  same  federal  award  the                                                                    
following year.                                                                                                                 
2:57:00 PM                                                                                                                    
Co-Chair Foster asked the department  to provide the summary                                                                    
chart of senior  programs to his office  for distribution to                                                                    
committee members. He referenced  Ms. Efird's testimony that                                                                    
the state provided heating assistance  payments. He asked if                                                                    
he was  correct that  the state program  had ended,  but the                                                                    
state still accepted federal money.                                                                                             
Ms. Efird confirmed  there were federal funds,  but no state                                                                    
funds [for heating assistance].                                                                                                 
Representative Knopp  referenced the proposal to  repeal the                                                                    
Senior Benefits Payment  Program. He asked if  Ms. Efird had                                                                    
testified  that some  of the  seniors receiving  the benefit                                                                    
were receiving benefits from other programs as well.                                                                            
Ms.  Efird   affirmed  there   would  be   some  overlapping                                                                    
benefits.  She could  follow  up with  a  chart showing  the                                                                    
number of  seniors receiving senior  benefits who  were also                                                                    
in other programs.                                                                                                              
Representative  Knopp  surmised that  individuals  currently                                                                    
receiving  senior benefits  only, would  potentially qualify                                                                    
for  other  benefits. He  imagined  the  criteria for  Adult                                                                    
Public  Assistance was  different  than the  for the  Senior                                                                    
Benefit   Program.   He   stated  his   understanding   that                                                                    
individuals over  the age  of 62 or  65 received  the senior                                                                    
benefits  based on  income. He  asked  for verification  the                                                                    
Senior Benefits  Program was the remainder  of the Longevity                                                                    
Bonus Program.                                                                                                                  
Ms.  Efird  answered  that   the  former  [Longevity  Bonus]                                                                    
program  had  been  changed to  a  needs-based,  low  income                                                                    
Representative Knopp  pointed out  that the amount  of money                                                                    
received by  seniors under the  Senior Benefits  Program was                                                                    
not  high. He  asked  if seniors  severely  impacted by  the                                                                    
elimination of the program would  be eligible for assistance                                                                    
through another program.  He did not know  the details about                                                                    
eligibility  for other  programs  and planned  to follow  up                                                                    
with the department.                                                                                                            
2:59:40 PM                                                                                                                    
Ms. Efird  addressed the last  bullet point on slide  7, the                                                                    
governor's proposal  to reduce  public health nursing  by $2                                                                    
million. The  reduction would  be realized  though exploring                                                                    
other  efficiencies   by  leveraging  federal   funding  and                                                                    
piloting  innovative   delivery  models  with   partners  to                                                                    
provide the services.                                                                                                           
Vice-Chair Ortiz  asked how the  $2 million  reduction would                                                                    
be carried out. He wondered if  it would mean a reduction in                                                                    
nurses in particular communities.                                                                                               
Ms.  Efird  answered  that the  department  was  looking  at                                                                    
partners  in different  communities that  could provide  the                                                                    
services  if there  was  a reduction  in  any public  health                                                                    
nursing  services in  a community.  The  department was  not                                                                    
proposing the closure of any  public health nursing centers.                                                                    
She  explained  that DHSS  was  exploring  how the  services                                                                    
could be provided in a more innovative way.                                                                                     
Co-Chair Foster  noted that DHSS Deputy  Commissioner Albert                                                                    
Wall was available online for any questions related to API.                                                                     
Ms.  Efird   turned  to  slide  8   and  addressed  proposed                                                                    
reductions to  Medicaid. She detailed that  Medicaid was the                                                                    
largest percentage  of the department's  UGF budget  at over                                                                    
60  percent.  She  elaborated that  Medicaid  accounted  for                                                                    
$662,118,000  GF  in  FY  19  compared  to  FY  19  [20]  at                                                                    
$412,901,000; the  reduction was close to  $250 million. The                                                                    
department  was  looking  to implement  current  initiatives                                                                    
within the DHSS budget that  the department had control over                                                                    
and felt it could achieve  in FY 20. The department's Deputy                                                                    
Commissioner Donna Steward was  currently in Washington D.C.                                                                    
working with  CMS to look  at other waiver  possibilities or                                                                    
other  innovative  options   to  cover  Alaska's  vulnerable                                                                    
Co-Chair Wilson stated she had  received some information on                                                                    
Medicaid about the reason "we're  at a 50/50." She explained                                                                    
that  some of  the issue  was about  the state's  ability to                                                                    
pay. She  asked if  the Permanent  Fund corpus  and Earnings                                                                    
Reserve  Account (ERA)  worked against  the state  when they                                                                    
[the  federal  government] tried  to  discern  how much  the                                                                    
state  could pay.  She elaborated  that some  [other states]                                                                    
received a  75/25 federal to  state ratio, while  Alaska was                                                                    
at the lowest level at 50/50.                                                                                                   
Ms. Efird replied  that the calculation was on  a per capita                                                                    
basis.  She did  not  know whether  the  Permanent Fund  was                                                                    
included, but she would follow up.                                                                                              
Co-Chair  Wilson had  considered  a  resolution "asking  for                                                                    
that." She believed that including  the Permanent Fund would                                                                    
make the  state look  very wealthy in  terms of  per capita.                                                                    
She remarked  that increasing the [federal]  rate would keep                                                                    
services in place and aid in holding the state harmless.                                                                        
3:04:16 PM                                                                                                                    
Representative Josephson spoke to  the $225 million Medicaid                                                                    
cut  that the  department  was hoping  to  receive a  waiver                                                                    
related to.  He referenced the administration's  proposal to                                                                    
spend the remaining balance of  the Statutory Budget Reserve                                                                    
(SBR),  which  he was  not  objecting  to on  principle.  He                                                                    
stated that  $172 million  in the SBR  was $53  million less                                                                    
than the  governor's proposed cut  to Medicaid.  He wondered                                                                    
what the impact was.                                                                                                            
Ms. Efird  answered that the  safety net language  was based                                                                    
on  a timeline  to work  with CMS  to get  the second  phase                                                                    
(discussed  previously by  Commissioner Crum)  approved. The                                                                    
department would  be forthcoming with the  information about                                                                    
what it felt was under its  control to achieve in FY 20. The                                                                    
department was  working to  achieve the  governor's proposed                                                                    
reduction to Medicaid in FY 20,  some of that was out of the                                                                    
department's control  and in  CMS's control.  She reiterated                                                                    
that Deputy  Commissioner Steward  was currently  working on                                                                    
the issue  [in D.C.]. The  safety net language was  there in                                                                    
the event  the state  could not  work through  the deadlines                                                                    
and requirements  with CMS  to achieve  the second  phase of                                                                    
3:06:07 PM                                                                                                                    
Vice-Chair Ortiz  addressed a bullet  point that  showed the                                                                    
elimination of  adult dental Medicaid benefit  in the amount                                                                    
of  $26 million  to $27  million. He  asked how  many people                                                                    
across the  state would not  receive any dental care  if the                                                                    
cut occurred. He asked if the  cut would mean no dental care                                                                    
coverage including basic cleaning.                                                                                              
Ms. Efird answered that the  department had provided a chart                                                                    
with the number  of recipients based on age  group for adult                                                                    
preventative  dental.   She  elaborated   that  preventative                                                                    
services  would be  cut for  adults, but  children would  be                                                                    
covered  under  Medicaid.  Any  emergency  dental  would  be                                                                    
covered in  the traditional Medicaid program.  She explained                                                                    
that  the  preventative  dental  was  an  optional  Medicaid                                                                    
service. She  relayed that DHSS touched  people and impacted                                                                    
people. The decisions  had been very difficult  to make. She                                                                    
reiterated  that  service  was optional,  and  adults  would                                                                    
still  have   coverage  for  emergency  dental   care  under                                                                    
Vice-Chair Ortiz asked how many  adults would not be able to                                                                    
access basic cleaning services if the cut came to fruition.                                                                     
Ms. Efird  replied that  she had  the information  and would                                                                    
provide it to Co-Chair Foster's office.                                                                                         
3:08:38 PM                                                                                                                    
Co-Chair  Foster  noted  that   some  of  the  $250  million                                                                    
reduction would be subject to  CMS approval. He asked if the                                                                    
department  could quantify  what  portion  of the  reduction                                                                    
could be made  that was considered easier [to  make]. He had                                                                    
heard the number $100 million.                                                                                                  
Ms.  Efird  responded that  the  department  would have  the                                                                    
number  as quickly  as possible.  The  department wanted  to                                                                    
ensure the number provided was as accurate as possible.                                                                         
Commissioner  Crum added  that part  of the  goal of  Deputy                                                                    
Commissioner  Steward's current  trip  to D.C.  was to  gain                                                                    
insight  into the  timeline. He  anticipated  being able  to                                                                    
provide a  clean projection to  the committee in  the coming                                                                    
Representative  Sullivan-Leonard asked  if the  governor was                                                                    
proposing any other cuts to optional Medicaid programs.                                                                         
Ms. Efird answered that DHSS  was looking at innovative ways                                                                    
to  cover the  healthcare  coverage needs  of Alaskans.  She                                                                    
would provide a  list of the optional  Medicaid services and                                                                    
associated   costs  that   were   currently  provided.   She                                                                    
explained   that  under   the  Affordable   Care  Act   some                                                                    
previously optional  services had become mandatory,  such as                                                                    
pharmacy services.  She reported  that a number  of optional                                                                    
services for Alaska were ways  the state had chosen to cover                                                                    
what would have  been a mandatory service  under the federal                                                                    
Medicaid  program.   She  explained   the  state   had  been                                                                    
considering the  best way to  cover services for  the Alaska                                                                    
population.  She detailed  that  some of  the services  were                                                                    
considered optional, but if the  state did away with some of                                                                    
them,  the  service  would  end   up  being  mandatory.  The                                                                    
department  was   working  with  CMS  to   avoid  disrupting                                                                    
healthcare coverage for low income  Alaskans and was looking                                                                    
at innovative ways to provide the coverage.                                                                                     
3:12:16 PM                                                                                                                    
Ms.  Efird   reviewed  the  governor's   proposed  statewide                                                                    
support  executive branch  50  percent  travel reduction  of                                                                    
approximately $350,000 GF (slide 8).                                                                                            
Co-Chair  Wilson  noted  that  the  legislature  had  put  a                                                                    
substantial amount  of money into  the Office  of Children's                                                                    
Services (OCS) the previous  year for increasing caseworkers                                                                    
and  studying caseloads.  She  highlighted issues  including                                                                    
the   number   of   children  removed   from   their   home,                                                                    
reunification level, and the  termination process. She asked                                                                    
how many of the positions  were still being held and whether                                                                    
the [caseworker] turnover rate  still existed. She asked for                                                                    
an update  on how the money  (provided via HB 151)  had been                                                                    
Ms.  Efird  answered  that   the  department  would  provide                                                                    
additional  information. She  detailed that  two years  back                                                                    
OCS  had received  a  number of  positions,  which were  all                                                                    
filled.  The  majority of  the  positions  had gone  to  the                                                                    
Wasilla  office  and had  resulted  in  a reduction  in  the                                                                    
number  of  caseloads  per worker.  She  would  provide  the                                                                    
committee  with information  on the  "out of  home" children                                                                    
connected  with the  Wasilla  office.  Additionally, in  the                                                                    
previous year  there had been  16 more OCS staff  added. She                                                                    
reported that  some staff had  left since that time  and the                                                                    
department   was  looking   to  fill   the  positions.   She                                                                    
communicated  that  there  continued to  be  some  retention                                                                    
concerns within OCS.                                                                                                            
Co-Chair  Wilson  agreed that  caseloads  would  be less  if                                                                    
there  were   more  caseworkers  and  the   same  number  of                                                                    
children. She  asked if the  state was going to  continue to                                                                    
do  the same  thing it  had been  doing where  reunification                                                                    
numbers had been  very low. She did not think  there was any                                                                    
bigger crises than  taking a child from a home  if there had                                                                    
been an  option to work  things out  [and keep the  child in                                                                    
their home]. She  wondered if there were any  changes on the                                                                    
Commissioner Crum  answered that  dealing with  children was                                                                    
one of the department's  most important responsibilities. As                                                                    
more  data  came  in  about  adverse  childhood  experiences                                                                    
(ACES)  the department  was working  more  and more  towards                                                                    
determining  how to  implement family  reunification aspects                                                                    
and/or  working with  community  partners.  There were  many                                                                    
different  scenarios where  the  department  was looking  to                                                                    
gain efficiencies  to ensure things  were being done  in the                                                                    
best  way   possible  for   children  and   their  long-term                                                                    
3:15:32 PM                                                                                                                    
Co-Chair  Wilson  stressed  that  the  topic  was  a  cross-                                                                    
departmental  issue.  She  expressed  frustration  over  not                                                                    
knowing whether  growth [in the  number of  children removed                                                                    
from their  homes] was still  occurring. She  referenced the                                                                    
substantial funding that went to  the system and surmised at                                                                    
the current  cost the state  could pay to have  someone live                                                                    
in  [troubled]  homes  with  the  parent  [and  child].  She                                                                    
highlighted  the number  of professionals  involved in  each                                                                    
case  including  an  attorney   for  each  parent,  the  OCS                                                                    
attorney,  OCS  caseworker,  and   guardian  ad  litem.  She                                                                    
thought the system should stop  doing things in silos to use                                                                    
the  money  in  a  better  way.  She  hoped  that  with  the                                                                    
administrative  directors going  to  OMB it  would mean  the                                                                    
discussions would take place.                                                                                                   
Co-Chair  Wilson   found  it  heartbreaking  to   hear  from                                                                    
individuals who had been removed  from their family settings                                                                    
[as children]  and somehow, they  had gotten caught up  in a                                                                    
similar scenario  [as adults with  their own  children]. She                                                                    
thought  the state  had been  "doing it  for too  long." She                                                                    
understood that responsibility for  the problem did not only                                                                    
reside with  DHSS. She continued  that the state  had broken                                                                    
apart families for many years.  She reasoned that unless all                                                                    
agencies  worked together  to figure  out how  to do  things                                                                    
differently  there   would  be   more  crime   and  juvenile                                                                    
detention.  She  encouraged  the  department  to  work  with                                                                    
others because  the issue was hitting  numerous budgets. She                                                                    
believed the issue had been  the fastest growing program two                                                                    
years  back and  no one  was  getting the  help they  really                                                                    
Vice-Chair   Johnston  suggested   visiting  a   "wonderful"                                                                    
nonprofit  (as an  example of  best practices)  in Anchorage                                                                    
that  had  expanded  to   Fairbanks.  She  highlighted  that                                                                    
legislation  passed   in  the   previous  year   included  a                                                                    
Legislative Budget  and Audit  Committee audit.  She thought                                                                    
2018 would  be the baseline  for any improvement  brought by                                                                    
the legislation.                                                                                                                
3:18:31 PM                                                                                                                    
Vice-Chair   Ortiz   thanked    the   department   for   its                                                                    
presentation.   He  stressed   that  everyone   agreed  that                                                                    
expenditures   needed  to   match  revenues.   However,  the                                                                    
department's budget  was not saying  that. He  stressed that                                                                    
the budget reduced care for  seniors, basic dental care, and                                                                    
more  in  favor of  a  full  PFD.  He  did not  support  the                                                                    
Co-Chair  Wilson did  not believe  that was  the only  thing                                                                    
that  was being  said. She  believed it  was possible  to do                                                                    
business  differently.  She thought  the  state  was bad  at                                                                    
getting  people  off of  programs  and  believed there  were                                                                    
options to  help wean  people off. She  shared that  she had                                                                    
been contacted by people trying  to get off of programs. She                                                                    
acknowledged  there were  difficult decisions  to make.  She                                                                    
heard what  Vice-Chair Ortiz was  saying but  believed there                                                                    
were inefficiencies  and money left  on the table  that held                                                                    
back Alaskans  from owning  their own  home, having  the job                                                                    
they wanted,  and trying to  keep some of the  programs they                                                                    
needed in order to get there.                                                                                                   
Co-Chair Foster  he thanked the presenters  and reviewed the                                                                    
schedule for the following day.                                                                                                 
3:21:28 PM                                                                                                                    
The meeting was adjourned at 3:21 p.m.                                                                                          

Document Name Date/Time Subjects
FY2020 DHSS Budget presentation HFIN 3.12.19.pdf HFIN 3/12/2019 1:30:00 PM
HFIN Budget Overview DHSS
Response Qs DHSS Op Overview Alaska Pioneer Homes - proposed rates.pdf HFIN 3/12/2019 1:30:00 PM
Response Qs Budget Overview HFIN
OMB Response Qs DHSS Op Overview HFIN 3.12 HSS.pdf HFIN 3/12/2019 1:30:00 PM
Response Qs Budget Overview HFIN
Response Qs DHSS Optional Services State by State Comparison.pdf HFIN 3/12/2019 1:30:00 PM
Response Qs Budget Overview HFIN
Resonse Qs DHSS Op Overview Service Array.pdf HFIN 3/12/2019 1:30:00 PM
Response Qs Budget Overview HFIN