Legislature(2023 - 2024)ADAMS 519

05/11/2023 01:30 PM House FINANCE

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Audio Topic
02:08:33 PM Start
02:26:55 PM HB193
02:42:53 PM HB89
03:31:58 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 8:00 am 5/12/23 --
-- Delayed to 30 Minutes After Session --
<Pending Referral>
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SB 55 Out of Committee
Heard & Held
Heard & Held
                  HOUSE FINANCE COMMITTEE                                                                                       
                       May 11, 2023                                                                                             
                         2:08 p.m.                                                                                              
2:08:33 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 2:08 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Bryce Edgmon, Co-Chair                                                                                           
Representative Neal Foster, Co-Chair                                                                                            
Representative DeLena Johnson, Co-Chair                                                                                         
Representative Julie Coulombe                                                                                                   
Representative Mike Cronk                                                                                                       
Representative Alyse Galvin                                                                                                     
Representative Sara Hannan                                                                                                      
Representative Andy Josephson                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Will Stapp                                                                                                       
Representative Frank Tomaszewski                                                                                                
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Mercedes   Colbert,   Staff,  Senator   Bill   Wielechowski,                                                                    
Sponsor; Kris  Curtis, Legislative Auditor,  Alaska Division                                                                    
of  Legislative Audit;  Sylvan Robb,  Director, Division  of                                                                    
Corporations,    Business   and    Professional   Licensing,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Laib  Allensworth,   Staff,  Representative   Bryce  Edgmon;                                                                    
Daniel  Robbins,   Staff,  Representative   Julie  Coulombe;                                                                    
Heather  Carpenter, Health  Care Policy  Advisor, Department                                                                    
of  Health;   Representative  Zach   Fields;  Representative                                                                    
Jennie    Armstrong;   Representative    Justin   Ruffridge;                                                                    
Representative Jesse Sumner.                                                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
Jen Griffis, Public Policy Manager, thread, Anchorage.                                                                          
CSSB 55(FIN)                                                                                                                    
          EXTND BDS: MEDICAL, DIRECT-ENTRY MIDWIVES                                                                             
          CSSB 55(FIN) was REPORTED out of committee with a                                                                     
          "do pass" recommendation and with one previously                                                                      
         published fiscal impact note: FN2 (CED).                                                                               
HB 193    INTERNET FOR SCHOOLS                                                                                                  
          HB 193 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 89     DAY CARE ASSIST./CHILD CARE GRANT PROGRAM                                                                             
          HB 89 was HEARD and HELD in committee for further                                                                     
Co-Chair Foster reviewed the meeting agenda.                                                                                    
CS FOR SENATE BILL NO. 55(FIN)                                                                                                
     "An Act extending the termination  date of the Board of                                                                    
     Certified   Direct-Entry    Midwives;   extending   the                                                                    
     termination  date  of  the  State  Medical  Board;  and                                                                    
     providing for an effective date."                                                                                          
2:09:51 PM                                                                                                                    
MERCEDES   COLBERT,   STAFF,  SENATOR   BILL   WIELECHOWSKI,                                                                    
SPONSOR,  thanked the  committee for  hearing the  bill. She                                                                    
explained that  the bill would  extend the  termination date                                                                    
of  the Board  of  Certified Direct-Entry  Midwives and  the                                                                    
termination  date of  the State  Medical Board.  She relayed                                                                    
that  the state  auditor recommended  a four-year  extension                                                                    
date  through  June 30,  2027  for  the Board  of  Certified                                                                    
Direct-Entry  Midwives and  an eight-year  extension through                                                                    
June 30, 2031  for the State Medical Board.  She deferred to                                                                    
Kris Curtis, legislative auditor  for details on the audits.                                                                    
Additionally,  the  Department  of Commerce,  Community  and                                                                    
Economic Development  (DCCED) was  available to  address the                                                                    
fiscal note.                                                                                                                    
Co-Chair Foster asked for a review of the audit.                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT, began  with the  audit findings  for the                                                                    
State  Medical Board  (copy on  file).  The audit  concluded                                                                    
that the board developed  and adopted regulations to protect                                                                    
the  public,  improve  the  licensing  process,  and  expand                                                                    
access  to  healthcare  during the  pandemic.  Further,  the                                                                    
board served the public's  interest by effectively licensing                                                                    
physicians, osteopaths, and  podiatrists; however, emergency                                                                    
courtesy licenses  for physician assistants were  not always                                                                    
issued in  accordance with  law. The  audit also  found that                                                                    
the board's workload had  increased substantially during the                                                                    
audit period.  The board  met frequently,  sometimes weekly,                                                                    
to consider  pandemic-related regulations and the  number of                                                                    
license applications  considered by  the board  increased 28                                                                    
percent compared  to the pre-pandemic period.  She explained                                                                    
the increase  was a  result of  physicians traveling  to the                                                                    
state to help  meet the need for  healthcare services during                                                                    
the  pandemic  and  out  of  state  practitioners  providing                                                                    
services via telehealth.                                                                                                        
Ms. Curtis  relayed that board  turnover and  vacancies were                                                                    
common  during   the  audit  period,   but  even   with  the                                                                    
challenges, the audit found  the board operated effectively.                                                                    
The  audit recommended  an eight-year  extension, which  was                                                                    
the  maximum allowed  in statute.  She  directed members  to                                                                    
page 8  of the audit  report showing  licensing information.                                                                    
As  of March  2022,  there were  5,878  active licenses  and                                                                    
permits  for  the board.  Page  10  showed the  schedule  of                                                                    
revenues and  expenses, showing that  as of March  2022, the                                                                    
board had a surplus of approximately $506,000.                                                                                  
Ms. Curtis directed  members to page 14 of  the audit report                                                                    
and  highlighted  two   recommendations.  First,  the  audit                                                                    
recommended that  the board's executive director  ensure all                                                                    
board  meetings were  adequately public  noticed. The  audit                                                                    
found that six  of 32 meetings were not  publicly noticed or                                                                    
not   publicly  noticed   accurately.   Second,  the   audit                                                                    
recommended  that  the  board ensure  emergency  regulations                                                                    
comply with  statute. The  audit found  that when  the board                                                                    
established  the  physician   assistant  emergency  courtesy                                                                    
license regulation,  they did not ensure  that the applicant                                                                    
had  a  collaborative  plan with  a  supervising  physician,                                                                    
which  was   a  statutory  requirement.  She   relayed  that                                                                    
management's response  to the  audit began  on page  25. She                                                                    
reported that  the governor,  commissioner, and  board chair                                                                    
concurred with the findings  and recommendations. She stated                                                                    
that overall, it was a fairly clean audit.                                                                                      
2:14:29 PM                                                                                                                    
Ms. Curtis  addressed the  audit findings  for the  Board of                                                                    
Certified Direct-Entry  Midwives (copy  on file).  The audit                                                                    
concluded  that the  board served  the public's  interest by                                                                    
conducting  its   meetings  in   an  effective   manner,  by                                                                    
supporting statutory  changes when deemed necessary,  and by                                                                    
actively  working  towards  amending  its  regulations.  The                                                                    
audit  also concluded  that the  board and  the Division  of                                                                    
Corporations,  Business  and Professional  Licensing  (CBPL)                                                                    
staff did  not consistently certify midwives  and apprentice                                                                    
midwives   in  accordance   with   the   law.  Further,   an                                                                    
investigation that  concerned a  potential threat  to public                                                                    
safety  was  not  addressed  by  CBPL  investigators  in  an                                                                    
efficient  manner.  The  audit recommended  the  legislature                                                                    
extend the  board four years,  which was half of  the eight-                                                                    
year  maximum  allowed  in statute.  The  reduced  extension                                                                    
recommendation  was   based  on  a  need   for  more  timely                                                                    
oversight of  the board and on  the fact that the  board had                                                                    
some draft  regulations that would significantly  change how                                                                    
it licensed midwives in the future.                                                                                             
Ms. Curtis turned to page 5  of the audit report and relayed                                                                    
that  there  were  47   certified  midwives  and  apprentice                                                                    
midwives  as of  June  2022.  Page 7  showed  a schedule  of                                                                    
revenues  and expenses  showing a  surplus of  approximately                                                                    
$68,000   as   of   March  2022.   The   audit   made   four                                                                    
recommendations  for improvement  beginning  on  page 9.  In                                                                    
regard to the investigations that  were not done timely, the                                                                    
audit  recommended that  the commissioner  consult with  the                                                                    
governor's  office and  other policy  makers to  improve the                                                                    
recruitment and retention of  investigators. She stated that                                                                    
because recruitment  and retention was a  statewide problem,                                                                    
it  should be  addressed at  a statewide  policy level.  The                                                                    
second  recommendation was  similar in  regard to  improving                                                                    
the  recruitment and  retention  of  licensing staff,  which                                                                    
contributed  to  the  licensing  errors  discovered  in  the                                                                    
Ms.  Curtis  turned to  page  11  of  the audit  report  and                                                                    
addressed the audit recommendation  for the director to work                                                                    
with  the  board  to ensure  the  online  renewal  licensing                                                                    
application form  was sufficient to monitor  compliance with                                                                    
continuing education.  Additionally, the  license referenced                                                                    
incorrect  regulations,  which  should be  cleaned  up.  The                                                                    
fourth recommendation, located on  page 12, recommended that                                                                    
the  Office   of  the  Governor's  Boards   and  Commissions                                                                    
director  work   with  the  board  to   identify  interested                                                                    
applicants to fill  board vacancies in a  timely manner. She                                                                    
detailed that  the board  was composed  of five  members and                                                                    
for 20 months  it was down two positions and  for two months                                                                    
it   was  down   three  positions.   She  shared   that  the                                                                    
commissioner, board  chair, and governor's  office concurred                                                                    
with the findings and  recommendations. She highlighted that                                                                    
on page 26,  the chair asked for an  eight-year extension as                                                                    
opposed  to  a four-year  extension.  The  request was  made                                                                    
because  the recommendations  were mainly  addressed to  the                                                                    
department and governor's office.                                                                                               
2:17:46 PM                                                                                                                    
Representative Hannan  noted that the  audit recommendations                                                                    
did  not  really  pertain  to  actions  by  the  board.  She                                                                    
considered  various extension  options including  four, six,                                                                    
and  eight  years. She  reasoned  it  was incumbent  on  the                                                                    
agency  to  ensure  the board  was  adequately  staffed  and                                                                    
[investigations]  were   done  in   a  timely   manner.  She                                                                    
considered herself  to be a  fairly new legislator,  but she                                                                    
recalled  renewing the  board once  before.  She thought  it                                                                    
seemed there would always be a  sort of panic to get on step                                                                    
when  they  were  down  on   staff  and  the  concerns  were                                                                    
timeliness but  not actions of  the board. She asked  if she                                                                    
was missing something.                                                                                                          
Ms. Curtis replied  it was a common  question whenever there                                                                    
were recommendations  addressed to the division  and not the                                                                    
board. She stated it was  a legislative oversight mechanism.                                                                    
She recommended  taking a  look at  the board  again earlier                                                                    
rather   than   later   because   the   board   planned   to                                                                    
significantly    change    how   it    licensed    midwives.                                                                    
Additionally, she believed  it was important to  keep an eye                                                                    
on  the  investigations for  a  board  that impacted  public                                                                    
safety.  She noted  it was  the second  time there  had been                                                                    
issues with the investigations.                                                                                                 
Representative Hannan  asked Ms. Curtis to  elaborate on any                                                                    
communications the  auditors had  with the  department about                                                                    
their focus  and ability to  address the concerns  raised in                                                                    
the   audit.  She   asked  if   the   department  had   more                                                                    
investigators.  She   wondered  if  the  deficits   [in  the                                                                    
division] would remain in four  years. She did not recall an                                                                    
increase in  the division's budget for  an investigator. She                                                                    
believed  the positions  were unfilled.  She wondered  about                                                                    
filling  or addressing  the positions  and turning  licenses                                                                    
and investigations around in a timelier fashion.                                                                                
2:20:22 PM                                                                                                                    
Ms.  Curtis  answered  that  the  licensing  issue  was  not                                                                    
necessarily   about  timing   but  about   not  having   the                                                                    
appropriate documentation  in the files or  not following up                                                                    
on certain things. She stated  it was attributed to turnover                                                                    
and  vacancies.  She  stated  the same  was  true  with  the                                                                    
investigations. She  relayed that the particular  case was a                                                                    
threat  to public  safety  and had  been  identified in  the                                                                    
audit  three years  earlier. She  reported that  no progress                                                                    
had  been made  on the  issue. She  detailed that  the chief                                                                    
investigator stated  the division had an  untenable workload                                                                    
due to  a high number of  cases and a high  number of vacant                                                                    
positions and  that efforts to  hire had  been unsuccessful.                                                                    
She relayed it was a  statewide issue. She explained that it                                                                    
may not be  a budgetary situation if the  division could not                                                                    
find  someone  to  apply  for  a position  or  remain  in  a                                                                    
position. She  considered it  may indicate  a need  for more                                                                    
statewide policy pertaining to recruitment and retention.                                                                       
Representative  Josephson asked  if the  board and  midwives                                                                    
had to pay the  audit fees if they had to  come back in four                                                                    
Ms.  Curtis  answered   that  there  was  no   cost  to  the                                                                    
department for a  sunset; it was just  the department's time                                                                    
and  energy dealing  with the  auditors. She  explained that                                                                    
sunset  audits  were part  of  the  Division of  Legislative                                                                    
Audit's  budget.  She explained  that  if  there were  seven                                                                    
sunsets in  a given year,  more of the  division's resources                                                                    
would  go towards  the audits  as opposed  to doing  special                                                                    
audits at the request of the committee.                                                                                         
Representative Josephson  asked from the perspective  of the                                                                    
midwives and  board chair  why it was  so important  for the                                                                    
board  to receive  a seven-year  extension  versus four.  He                                                                    
asked if it felt insulting to the board and licensees.                                                                          
Ms.  Curtis answered  that the  individuals were  passionate                                                                    
about their  work and the  volunteers worked very  hard. She                                                                    
stated  that   time  and  time   again  she  saw   that  the                                                                    
individuals felt like  it was like a grade  on their report.                                                                    
She stated they wanted an "A"  and did not feel that a four-                                                                    
year  extension indicated  an A.  She acknowledged  that the                                                                    
individuals  were doing  a wonderful  job, they  worked very                                                                    
hard, and the  recommendation was not a  reflection of their                                                                    
Co-Chair Foster noted  that both of the  boards would expire                                                                    
June  30, 2023  if the  bill was  not passed.  He asked  Ms.                                                                    
Colbert if  she had anything to  add prior to the  review of                                                                    
the fiscal note.                                                                                                                
Ms. Colbert thanked  the committee for hearing  the bill and                                                                    
thanked the  senator's intern for  carrying the bill  in the                                                                    
other body.                                                                                                                     
Co-Chair Foster asked for a review of the fiscal note.                                                                          
2:23:43 PM                                                                                                                    
SYLVAN  ROBB, DIRECTOR,  DIVISION OF  CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY  AND ECONOMIC  DEVELOPMENT,  highlighted that  the                                                                    
total annual cost to extend  both boards was $25,200 from FY                                                                    
25 through  FY 29. She noted  there were no costs  shown for                                                                    
FY  24 because  per statute,  if boards  were not  extended,                                                                    
there  was  a  one-year  wind down  period;  therefore,  the                                                                    
division would pay for the board  in FY 24 regardless of the                                                                    
status of the bill.                                                                                                             
Representative Hannan asked how  the department was doing in                                                                    
hiring the investigative position  and filling the vacancies                                                                    
that had created some demerits on the audit.                                                                                    
Ms. Robb responded that the  division had been successful in                                                                    
staffing  its investigations  unit.  She  detailed that  the                                                                    
unit had been  fully staffed until the end of  March with 23                                                                    
filled positions. An individual had  retired at the of March                                                                    
and the position had been  filled with an internal promotion                                                                    
meaning  there would  still  be a  vacancy.  She stated  the                                                                    
division  was  doing much  better  in  terms of  having  the                                                                    
investigation positions filled.                                                                                                 
Representative Hannan  asked if  the department  believed it                                                                    
would  be able  to support  the board  to fully  comply with                                                                    
statute for the next four years if the sunset was extended.                                                                     
Ms. Robb replied affirmatively.                                                                                                 
Co-Chair  Edgmon  MOVED  to  REPORT   CSSB  55(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
There being NO OBJECTION, it was so ordered.                                                                                    
CSSB 55(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation  and  with  one previously  published  fiscal                                                                    
impact note: FN2 (CED).                                                                                                         
HOUSE BILL NO. 193                                                                                                            
     "An Act relating to funding for Internet services for                                                                      
     school districts; and providing for an effective                                                                           
2:26:55 PM                                                                                                                    
REPRESENTATIVE   BRYCE  EDGMON,   CO-CHAIR,  HOUSE   FINANCE                                                                    
COMMITTEE, SPONSOR, reviewed that  the bill that would allow                                                                    
for improved  internet services  for schools  qualifying for                                                                    
the  federal E-rate  across the  state.  The E-rate  program                                                                    
flowed  down through  the  federal Communication  Commission                                                                    
Universal  Services Fund  to the  state broadband  programs.                                                                    
The federal matching rate for Alaska  was $8 to $9 for every                                                                    
state dollar put  forward. He explained the  program got its                                                                    
start in Alaska with  the state Broadband Assistance [Grant]                                                                    
(BAG) program put  into law in 2014 to implement  a speed of                                                                    
10  megabytes   [megabits]  per  second.  For   context,  he                                                                    
referenced  individuals in  the Capitol  Building who  could                                                                    
not access their  internet recently. He had  been told their                                                                    
current speed  was about  5 megabytes  per second.  He asked                                                                    
members  to  imagine  how  slow 10  megabits  would  be.  He                                                                    
relayed that in  2020 the legislature upped  the 10 megabits                                                                    
per second  threshold to  25 megabits  per second.  The bill                                                                    
proposed to increase the number to 10 megabytes.                                                                                
Co-Chair  Edgmon asked  committee  members to  keep in  mind                                                                    
that  the  committee heard  a  bill  setting up  the  Alaska                                                                    
Broadband Office,  the advisory committee,  and establishing                                                                    
the  framework  in  statute  to  open  opportunities  for  a                                                                    
massive  amount of  incoming federal  money to  provide high                                                                    
speed, affordable,  and equitable broadband services  to all                                                                    
user groups  across the state.  The current bill  before the                                                                    
committee addressed  the numerous  schools hampered  by slow                                                                    
internet  without  the   ability  to  do  videoconferencing,                                                                    
standardized testing, basic emails  and coursework. The bill                                                                    
proposed  to increase  the threshold  from  25 megabits  per                                                                    
second to 100  megabits per second. He was  told there would                                                                    
be  a  bill from  the  other  body  possibly coming  to  the                                                                    
committee soon.  The intent  of the  current hearing  was to                                                                    
explain the big picture to the committee.                                                                                       
2:30:47 PM                                                                                                                    
Representative  Coulombe stated  that  she  had chaired  the                                                                    
Department of  Education and Early  Development subcommittee                                                                    
and it  was obvious  the upgrade needed  to take  place. She                                                                    
noted schools  were really struggling.  She observed  that a                                                                    
backup  document primarily  showed GCI  and ACS  [as service                                                                    
providers]. She  asked if  Starlink could  be used  with the                                                                    
grants  or  if  the  BAG  program  was  limited  to  certain                                                                    
LAIB  ALLENSWORTH,   STAFF,  REPRESENTATIVE   BRYCE  EDGMON,                                                                    
replied  that the  contracts were  individually bid  upon by                                                                    
school  districts and  districts were  able to  choose their                                                                    
provider. He  was not  certain about  Starlink's involvement                                                                    
and  whether it  had the  capacity to  provide the  level of                                                                    
service provided for a school district.                                                                                         
Co-Chair  Edgmon added  that the  program would  provide the                                                                    
flexibility to  work with GCI or  ACS and to ensure  the 100                                                                    
megabits per second threshold  included download speeds (the                                                                    
signal coming to  the school) and upload  speeds (the signal                                                                    
leaving the  school). He stated  that perhaps in  some cases                                                                    
Starlink  could provide  the service,  but there  were other                                                                    
instances where GCI and ACS would provide the service.                                                                          
Representative  Hannan was  startled to  learn the  specific                                                                    
download  rate was  set in  statute. She  reasoned that  the                                                                    
statute  would need  to  be updated  every  couple of  years                                                                    
because no one  decreased in speed needs. She  recalled as a                                                                    
teacher  when   there  had  been  mandatory   state  testing                                                                    
conducted online, but schools had  been unable to plug their                                                                    
students  in on  the same  day  or time.  She supported  and                                                                    
believed faster  internet and a  grant program  were needed.                                                                    
She asked if  there was a mechanism to avoid  having to make                                                                    
a statutory change every two  to four years. She wondered if                                                                    
the adjustment  could be made  via regulation and  grants in                                                                    
the budgetary process.                                                                                                          
Co-Chair  Edgmon   replied  that  ideally  there   would  be                                                                    
fiberoptic cable available in the  next several years in the                                                                    
middle and final  mile capacity to schools far  and wide. He                                                                    
remarked there was  a fiscal note attached to  the bill that                                                                    
was eyepopping in number, but it  was a number that built in                                                                    
all of the schools qualifying  for the program if they could                                                                    
get infrastructure  in place. He  considered the  current E-                                                                    
rate  program as  a bridge  program so  that going  into the                                                                    
future there  should not have  to be numerous  iterations of                                                                    
the bill going forward. He thought  it could be the case for                                                                    
some  small schools  that could  not take  advantage of  the                                                                    
federal    funding   coming    in   through    the   federal                                                                    
Infrastructure Investment and Jobs Act (IIJA).                                                                                  
2:34:45 PM                                                                                                                    
Co-Chair Foster  noted that Representative Stapp  had joined                                                                    
the meeting.                                                                                                                    
Representative Galvin  stated the  topic was  relatively new                                                                    
to  her,  although she  was  familiar  with E-rate  and  its                                                                    
importance  to rural  Alaska. She  believed the  legislation                                                                    
referred  to more  than 20  school  districts. She  presumed                                                                    
they were  school districts that  had historically  used and                                                                    
needed  extra  support  for  internet.   She  asked  if  her                                                                    
statement was accurate.                                                                                                         
Co-Chair  Edgmon replied  affirmatively.  He explained  that                                                                    
much of  the internet had  been satellite driven  or through                                                                    
microwave  transmission  and   perhaps  fiberoptic  in  some                                                                    
smaller  instances for  online  school.  He elaborated  that                                                                    
fiberoptic  cable  was  finding  its  way  down  the  Yukon-                                                                    
Kuskokwim (YK) region in the  next couple of years. He added                                                                    
that Quintillion  line was  being laid  around the  state up                                                                    
north and in  Co-Chair Foster's region. He  remarked that it                                                                    
would be  fiber optic driven and  a lot of schools  would be                                                                    
able to enjoy  the same amount of broadband  that schools in                                                                    
urban Alaska  provide. He  had been  told recently  that the                                                                    
broadband used  in the Capitol Building  was several hundred                                                                    
megabytes  per  second.  The bill  talked  about  getting  a                                                                    
school  (e.g.,   Nome-Beltz  High   School  with   500  plus                                                                    
students) to maybe 100 megabytes.  He stated there was still                                                                    
a  lot of  catching  up  to do.  He  was optimistic  because                                                                    
hopefully in  the future it  would not be as  funding source                                                                    
challenged as it was in the past.                                                                                               
2:36:52 PM                                                                                                                    
Representative Galvin surmised the  bill aimed to ensure the                                                                    
minimum  speed was  met  in the  school  districts and  that                                                                    
funding was available.                                                                                                          
Co-Chair  Edgmon answered,  "To qualify  through the  E-rate                                                                    
program." He  added there  may be  other means  that schools                                                                    
used. He explained they were  talking about a lot of schools                                                                    
across the  state. He relayed  that his staff  could provide                                                                    
an exact number.                                                                                                                
Representative  Galvin  underscored  the importance  of  the                                                                    
issue.  She   knew  that  many   districts  would   like  to                                                                    
participate in opportunities for  online learning, but after                                                                    
signing  up they  did  not  have the  bandwidth  to make  it                                                                    
happen. She appreciated providing a  bit more equity for all                                                                    
of Alaska's students.                                                                                                           
Co-Chair  Foster  noted  Co-Chair  Johnson  had  joined  the                                                                    
Representative Cronk looked at the  fiscal note and asked if                                                                    
the installation of fiber optic  would eliminate or decrease                                                                    
the need for the funds in the note.                                                                                             
Co-Chair  Edgmon answered  that  the number  [in the  fiscal                                                                    
note]  projected outward  as if  every school  qualified for                                                                    
the  federal E-rate  program and  had the  infrastructure to                                                                    
participate in  the delivery of  service. He relayed  that a                                                                    
provider  had cautioned  earlier in  the day  that it  would                                                                    
take time.  The number was at  the ceiling of what  could be                                                                    
out  there. In  the meantime,  fiber optic  cable was  going                                                                    
through the  Dillingham region and  extended up  through the                                                                    
YK region  and Bethel area.  He remarked it would  take some                                                                    
of  the  schools  off  the  list  that  would  otherwise  be                                                                    
competing for the federal E-rate money.                                                                                         
2:39:01 PM                                                                                                                    
Co-Chair Edgmon thanked the committee  for hearing the bill.                                                                    
He  stressed  the importance  of  the  issue and  hoped  and                                                                    
looked  forward  to an  additional  hearing  perhaps of  the                                                                    
Senate bill.                                                                                                                    
HB  193  was  HEARD  and   HELD  in  committee  for  further                                                                    
2:39:49 PM                                                                                                                    
AT EASE                                                                                                                         
2:42:45 PM                                                                                                                    
HOUSE BILL NO. 89                                                                                                             
     "An  Act relating  to the  day care  assistance program                                                                    
     and the child care grant  program; and providing for an                                                                    
     effective date."                                                                                                           
2:42:53 PM                                                                                                                    
REPRESENTATIVE   JULIE   COULOMBE,  SPONSOR,   thanked   the                                                                    
committee  for hearing  the bill.  She  introduced the  bill                                                                    
with prepared remarks:                                                                                                          
     HB 89 strengthens  the childcare system in  a number of                                                                    
     ways.  It  expands  the  number  of  families  who  can                                                                    
     utilize daycare  vouchers and aligns the  subsidy level                                                                    
     to  reflect  the  actual  cost  of  daycare.  It  makes                                                                    
     childcare expenditures and  cash or equivalent accepted                                                                    
     by  daycare facilities  and payments  to employees  for                                                                    
     the purpose of offsetting  childcare costs eligible for                                                                    
     tax credits.  It increases  the maximum  individual tax                                                                    
     credit  limit, develops  a sliding  fee  scale to  make                                                                    
     grants  less generous  for higher  income families  and                                                                    
     lower  income  families  and provides  grants  for  the                                                                    
     highest  performing   and  highest   quality  childcare                                                                    
Representative  Coulombe explained  that at  the outset  the                                                                    
bill did two  things including the commission of  a study to                                                                    
find  out the  actual cost  of daycare.  She explained  that                                                                    
currently  there was  a market  survey, which  was basically                                                                    
rates  providers were  currently charging;  however, it  was                                                                    
not  working   because  daycares   were  going   under.  She                                                                    
explained it  was not enough  to keep daycares  in business.                                                                    
The  department  was conducting  a  survey  to identify  the                                                                    
actual cost of care. The bill  would adjust the amount up in                                                                    
consideration  of vouchers.  Second, the  bill would  expand                                                                    
the opportunity  for families of different  income levels to                                                                    
access care. She  shared that when she had  first started as                                                                    
a legislator, she had heard  from many people in the private                                                                    
sector who  were struggling  with workforce  and one  of the                                                                    
largest  problems  was  daycare.  She  elaborated  that  she                                                                    
managed numerous people in her line  of work and the lack of                                                                    
childcare caused  employees to  miss work, arrive  late, and                                                                    
leave  early.  She considered  the  bill  as a  support  for                                                                    
families and  workforce. She requested her  staff to provide                                                                    
a brief presentation.                                                                                                           
DANIEL  ROBBINS,   STAFF,  REPRESENTATIVE   JULIE  COULOMBE,                                                                    
provided  a  PowerPoint  presentation titled  "HB  89  Child                                                                    
Care"  (copy on  file). He  began on  slide 2  and discussed                                                                    
that the bill  aimed to fix the lack  of affordable, quality                                                                    
childcare. The  lack of childcare worsened  labor shortages,                                                                    
endangered    children,   undermined    families'   economic                                                                    
security, and decreased  workforce participation. He relayed                                                                    
that the solution was to  strengthen the childcare sector to                                                                    
improve access for  families and help parents  return to the                                                                    
workforce (slide 3).                                                                                                            
Mr.  Robbins   detailed  that  the  bill   strengthened  the                                                                    
childcare system in a number of ways (slide 4):                                                                                 
    Expands the number of families who can utilize daycare                                                                   
    Aligns the subsidy level to reflect the actual cost of                                                                   
    Incentivizes tax breaks for employers to donate to                                                                       
     daycare facilities                                                                                                         
    Increases the maximum tax credit                                                                                         
    Eliminates sudden drop-off of subsidies for higher                                                                       
     income families                                                                                                            
    Provides grants to the highest performing/quality                                                                        
     daycare facilities                                                                                                         
2:47:03 PM                                                                                                                    
Mr. Robbins  reviewed that Alaska's childcare  was in crisis                                                                    
as a result  of low wages, labor shortages,  and a declining                                                                    
number of childcare providers (slide  5). The graph on slide                                                                    
6 showed  that during the  height of the  COVID-19 pandemic,                                                                    
there was  a large dip  in the number of  childcare workers.                                                                    
While the number  had rebounded, it had not  returned to its                                                                    
level  prior  to the  pandemic.  He  moved  to slide  7  and                                                                    
discussed that  childcare subsidies were inadequate  and did                                                                    
not reflect  the actual  cost of  care. He  stated it  was a                                                                    
problem  because  it  impacted  lower  income  families  and                                                                    
middle  class families.  He  explained  that subsidies  were                                                                    
inadequate.  He  detailed  that providers  lost  money  when                                                                    
offering  care to  lower  income  families and  consequently                                                                    
they were raising  rates on middle class  families, which in                                                                    
turn  forced additional  families  out of  the workforce  to                                                                    
stay home and care for children.                                                                                                
Mr.  Robbins addressed  who was  eligible  for subsidies  on                                                                    
slide  8.  Currently,  the   eligibility  threshold  was  85                                                                    
percent of  the state median  income ($60,144 in  Alaska for                                                                    
one earner with  one child). The threshold left  most of the                                                                    
middle class  without affordable care and  resulted in labor                                                                    
shortages in every  industry in Alaska. The  bill raised the                                                                    
eligibility  threshold to  105 percent  of the  state median                                                                    
income ($73,920  in Alaska for  one earner with  one child).                                                                    
He stated the department would  scale subsidy level based on                                                                    
need. He explained that the  expanded number of families who                                                                    
could afford care  would result in more  Alaskans going back                                                                    
to work.                                                                                                                        
2:49:32 PM                                                                                                                    
Mr. Robbins discussed the subsidy  rate calculation on slide                                                                    
9. The subsidy rate was  currently based on a market survey;                                                                    
however,  it  underestimated the  cost  of  care, which  put                                                                    
providers in  greater financial risk  and resulted  in lower                                                                    
income   families  not   being  able   to  obtain   adequate                                                                    
subsidies.  The situation  resulted in  increased rates  for                                                                    
middle income  families, which priced families  out of care.                                                                    
The bill  aligned subsidy  rates with  actual cost  of care,                                                                    
which    improved   provider    financial   stability    and                                                                    
affordability for the middle class.                                                                                             
He turned  to slide 10  and explained  that a family  with a                                                                    
household income of  $60,000 per year should  not spend more                                                                    
than  $4,200 per  year on  childcare costs.  Currently those                                                                    
families  were spending  $6,600. He  moved to  slide 11  and                                                                    
discussed that  parents had  reported that  childcare issues                                                                    
had  caused   them  to  go   from  full-time   to  part-time                                                                    
employment and  had prevented them  from accepting  jobs. He                                                                    
shared that  Missouri had proposed  a tax credit  to daycare                                                                    
facilities  for  making  capital  improvements  (slide  12).                                                                    
North Dakota was  spending over $70 million per  year on its                                                                    
childcare program  aiming to  make childcare  affordable and                                                                    
improve availability and quality (slide 13).                                                                                    
2:51:15 PM                                                                                                                    
Mr. Robbins provided  a recap on slide 14.  The solution was                                                                    
to  expand the  number  of families  who  were eligible  for                                                                    
childcare  subsidies under  the Child  Care Program  Office,                                                                    
which would help more parents  afford childcare and get back                                                                    
to work.                                                                                                                        
Representative Coulombe relayed there  was an issue with the                                                                    
phone system and  the committee may have to wait  to ask the                                                                    
department questions.                                                                                                           
Representative  Josephson stated  that  the  Senate had  $15                                                                    
million for  block grants. He  asked if the funding  was for                                                                    
the program in the bill or something different.                                                                                 
Representative  Coulombe replied  that the  [Senate] funding                                                                    
was for  childcare block grants to  help subsidize childcare                                                                    
centers.  She  clarified  that   HB  89  addressed  vouchers                                                                    
parents  applied for  that also  went to  childcare centers.                                                                    
She  stated that  daycare centers  were a  terrible business                                                                    
model  for profit.  The facilities  would never  be able  to                                                                    
charge  what  it  actually  cost  to  provide  the  service;                                                                    
therefore, they  would always  be subsidized.  She explained                                                                    
that  the grants  [referenced  by Representative  Josephson]                                                                    
and the  vouchers helped make  a difference. She  added that                                                                    
some  of  the items  in  the  bill  had come  as  amendments                                                                    
throughout the  committee process  (e.g., the  tax credits).                                                                    
She  was  open to  other  things.  She reiterated  that  the                                                                    
vouchers  and  daycare grants  ultimately  ended  up at  the                                                                    
childcare  center,  but  the [childcare  grants]  were  more                                                                    
direct from the department to the centers.                                                                                      
2:53:57 PM                                                                                                                    
Representative  Josephson looked  at slide  13 and  asked if                                                                    
Mr.  Robbins  had  stated that  North  Dakota  invested  $70                                                                    
million per year or $7 million per year.                                                                                        
Mr. Robbins replied, "$70 million."                                                                                             
Representative  Josephson  remarked  that North  Dakota  had                                                                    
just a few thousand more residents than Alaska.                                                                                 
Representative Galvin looked at the  bullet point on slide 4                                                                    
that read  "incentivizes tax breaks  or employers  to donate                                                                    
to daycare  facilities." She  asked if  it meant  tax breaks                                                                    
would be  given to those  donating to daycare. She  asked if                                                                    
it  was  similar to  the  University  system where  donating                                                                    
businesses received a tax break.                                                                                                
Mr. Robbins  answered that  it was  similar. The  bill would                                                                    
give tax breaks for businesses donating to daycare centers.                                                                     
Representative Galvin  asked for verification that  the bill                                                                    
would give tax breaks to incentivize donations.                                                                                 
Mr. Robbins agreed.                                                                                                             
Representative Galvin  looked at  slide 8 and  remarked that                                                                    
the bill would  increase the number of  families with access                                                                    
to  childcare.  She  asked  if   there  was  available  data                                                                    
indicating what the expansion would look like.                                                                                  
Mr. Robbins replied  that the Child Care  Program Office did                                                                    
not provide  hard numbers indicating the  number of families                                                                    
the bill would help.                                                                                                            
Representative    Galvin    echoed    comments    made    by                                                                    
Representative  Josephson.   She  remarked  that   over  $70                                                                    
million was  invested in North  Dakota. She  elaborated that                                                                    
the  issue  had been  present  in  Alaska for  decades.  She                                                                    
highlighted  that investing  in a  child's early  years with                                                                    
high  quality early  learning standards  resulted in  a much                                                                    
higher workforce.  She thanked  the sponsor for  calling the                                                                    
committee's attention to North Dakota.                                                                                          
2:58:02 PM                                                                                                                    
Representative   Ortiz   thanked   the   sponsor   for   the                                                                    
legislation.  He looked  at  the bottom  bullet  on slide  4                                                                    
specifying  that  the  bill  would  provide  grants  to  the                                                                    
highest performing/quality daycare  facilities. He asked who                                                                    
determined which facilities were the highest performing.                                                                        
Mr. Robbins  replied that there  were quality  standards. He                                                                    
detailed there  were different levels  [of quality]  and the                                                                    
number was  displayed at each daycare  facility. He believed                                                                    
the  maximum level  was 5  and there  were no  facilities in                                                                    
Alaska exceeding  level 3.  He stated the  goal would  be to                                                                    
get to higher levels by providing grants.                                                                                       
Representative Coulombe elaborated  that the item referenced                                                                    
by  Representative Ortiz  was an  amendment that  came later                                                                    
[in  a  prior  committee  of referral].  She  explained  the                                                                    
amendment  aimed to  incentivize a  higher quality  of care.                                                                    
She relayed  there was currently  a rating  scale of 1  to 5                                                                    
and each  daycare had a  licensed childcare rating.  She did                                                                    
not want  to make the  requirement yet; therefore,  the bill                                                                    
included  an  option  for  the  department  that  a  daycare                                                                    
facility rated 3 or higher  could get additional funding for                                                                    
performance. Part  of the performance  included interaction,                                                                    
educational opportunities,  the number of adults  per child,                                                                    
nutrition, and  one other item.  She stated it was  a pretty                                                                    
standardized system  and she was  amenable to  the amendment                                                                    
because it did not implement  anything new and would use the                                                                    
existing structure to incentivize  childcare centers doing a                                                                    
great job. Unfortunately, there  was not currently a daycare                                                                    
center  above   level  3.  The   goal  was   to  incentivize                                                                    
facilities to get a level 5 rating.                                                                                             
Representative  Ortiz asked  if there  was someone  from the                                                                    
department  visiting  the  various  daycare  centers  around                                                                    
Alaska  determining that  thus far,  no one  had exceeded  a                                                                    
level 3.  She remarked that  the department would  likely be                                                                    
able to provide more details.                                                                                                   
3:01:10 PM                                                                                                                    
HEATHER  CARPENTER, HEALTH  CARE POLICY  ADVISOR, DEPARTMENT                                                                    
OF  HEALTH,  responded  to the  question  by  Representative                                                                    
Ortiz.  She highlighted  that the  department  had plans  to                                                                    
dive into metrics around the  grant portion of childcare and                                                                    
the subsidizing  of high quality care  facilities. She noted                                                                    
that  unfortunately  the   program  expert  was  unavailable                                                                    
during the current  meeting. She elaborated that  one of the                                                                    
reasons  the governor  had created  a taskforce  to look  at                                                                    
childcare was  to task the  department with  determining how                                                                    
to stabilize  the sector and  to consider what needed  to be                                                                    
looked  at when  considering  how to  reimburse things  like                                                                    
quality. She reminded the  committee that childcare licenses                                                                    
ranged  from small  providers in  a  home with  a couple  of                                                                    
children to large facilities  serving numerous children. She                                                                    
noted  the department  wanted to  account for  the different                                                                    
types  of  facilities  when applying  quality  metrics.  She                                                                    
remarked that  it was  never a  simple answer  and childcare                                                                    
was  an incredibly  complicated sector  when thinking  about                                                                    
levers and options to consider.                                                                                                 
Representative Ortiz  discussed the concept of  offering tax                                                                    
credits.  He remarked  it assumed  that childcare  providers                                                                    
were  paying  some  tax.  He   asked  if  even  the  smaller                                                                    
providers were  paying a tax  they may qualify for  a credit                                                                    
for. Alternatively, he asked if  only corporate centers that                                                                    
paid corporate taxes would get the credit.                                                                                      
Mr.  Robbins   answered  that  the  tax   credits  were  for                                                                    
businesses  providing  any  kind of  assistance  to  daycare                                                                    
facilities for things such as capital improvements.                                                                             
Representative Coulombe  responded that  it was  a corporate                                                                    
tax. For example,  the amendment was intended to  apply to a                                                                    
business like  ConocoPhillips for having a  childcare center                                                                    
in  the building  or helping  their families  pay for  their                                                                    
childcare. She was not aware  of any related taxes for small                                                                    
Representative Ortiz  surmised that smaller  providers would                                                                    
not benefit from the tax credit portion of the bill.                                                                            
Representative    Coulombe    agreed.   She    stated    her                                                                    
understanding  there would  not be  a significant  number of                                                                    
opportunities for the particular  benefit. She stated it was                                                                    
also on  a case by  case basis  and depended on  the daycare                                                                    
center.  She believed  the amendment  was focused  on larger                                                                    
3:04:41 PM                                                                                                                    
Co-Chair   Edgmon   thanked  Representative   Coulombe   for                                                                    
bringing the bill forward. He viewed  the bill as one of the                                                                    
more  innovative  pieces  of  legislation  that  would  come                                                                    
forward  during the  current  session.  He underscored  that                                                                    
Alaska had  significant outmigration  challenges, especially                                                                    
with younger  people and younger  families. He  believed the                                                                    
bill  and taskforce  could help  with that  outflow. He  had                                                                    
heard from  statewide associations  that wages  in childcare                                                                    
centers were in  the $12 to $13 per hour  range. He stressed                                                                    
the providers could not compete  when it was possible to get                                                                    
a job at Walmart paying $18  to $20 an hour. He referenced a                                                                    
Hunt Institute summit on February  5 in Juneau that half the                                                                    
committee  had  attended. He  relayed  that  the summit  had                                                                    
talked  about how  Virginia, Mississippi,  and North  Dakota                                                                    
were making  childcare assistance an integral  part of their                                                                    
workforce  development. He  hoped  the  bill received  swift                                                                    
Representative  Coulombe  thanked  Co-Chair Edgmon  for  his                                                                    
comments.  She shared  there had  been someone  representing                                                                    
the  Kenai private  sector economic  community  at a  recent                                                                    
House Ways  and Means Committee meeting.  The individual had                                                                    
stated there  were three things government  needed to solve:                                                                    
daycare, transportation,  and housing.  She stated  that she                                                                    
heard  from  individuals  across   the  private  sector  all                                                                    
reporting  that daycare  was an  issue. She  recognized that                                                                    
there  were   issues  with  the   public  sector   too.  She                                                                    
considered it  to be a  workforce and pro-family  issue. She                                                                    
thought it fit with the  governor's efforts to make Alaska a                                                                    
pro-family, pro-life state.                                                                                                     
Co-Chair  Foster recognized  Representative  Zach Fields  in                                                                    
the audience.                                                                                                                   
Representative  Hannan thanked  Representative Coulombe  for                                                                    
taking on  the issue. She  recalled in the early  1990s when                                                                    
high  tech  companies and  hospitals  were  competing for  a                                                                    
limited  work  pool  by offering  childcare  on  their  work                                                                    
premises. She referenced  the tax incentive in  the bill for                                                                    
corporations and asked if  Representative Coulombe had heard                                                                    
from corporations  that the bill  would incentivize  them to                                                                    
open on-premises facilities for their workforce.                                                                                
Representative  Coulombe answered  that she  had not  talked                                                                    
with  corporations  personally.  She had  spoken  with  many                                                                    
businesses and  believed they  would jump  at the  chance to                                                                    
help people get steadier daycare.                                                                                               
Representative Hannan  noted there was  a legal memo  in the                                                                    
bill  packet  about  changing the  rates.  She  referred  to                                                                    
Representative  Coulombe's reference  to the  current market                                                                    
survey method versus the actual  cost of care [being used to                                                                    
determine  rates].  She recalled  that  when  she was  first                                                                    
elected there had been an  inadequate response to the market                                                                    
survey but  the rate had been  set for two years.  She asked                                                                    
if the bill would get the  state into a problem with federal                                                                    
subsidies if  the state  changed from  a market  survey. She                                                                    
stated  her understanding  the  market  survey was  mandated                                                                    
based on respondents  and not the actual cost of  care.  She                                                                    
asked if the  cost of care study  was in place or  if it was                                                                    
something the bill dictated the department to do.                                                                               
3:09:49 PM                                                                                                                    
Ms. Carpenter  replied that the  department had  worked with                                                                    
the entire Juneau delegation on  the issue. She noted it had                                                                    
been one  of the  first issues  she had  worked on  when she                                                                    
started  with the  Department of  Health  (DOH). She  stated                                                                    
there were two methodologies  the federal Administration for                                                                    
Children  and  Families  (ACF)  allowed  the  state  to  use                                                                    
including  the market  rate survey  and the  actual cost  of                                                                    
care. She elaborated that the  intention (facilitated by the                                                                    
work of  the task force  and commissioner) was  to determine                                                                    
whether the department could set  up a cost of care analysis                                                                    
and  the  methodology  would  have to  be  approved  by  the                                                                    
federal government.  The intention was to  continue with the                                                                    
market  rate survey  during  the cost  of  care analysis  to                                                                    
ensure the department was looking  at the rates and bringing                                                                    
them  more up  to date.  The plan  was to  determine whether                                                                    
using the  cost of  care methodology was  the better  way to                                                                    
pay for care.  She referenced the legal  memo by Legislative                                                                    
Legal  Services about  increasing  the  threshold paid.  She                                                                    
detailed that ACF  capped payment for care at  85 percent of                                                                    
the state median  income. She explained it  meant that under                                                                    
the  bill anything  between  86 percent  to  105 percent  of                                                                    
state  median income  would have  to be  covered by  general                                                                    
Representative  Hannan asked  if that  was reflected  in the                                                                    
bill's  fiscal  note.  Alternatively, she  wondered  if  the                                                                    
fiscal note  reflected the  cost of  the study  to determine                                                                    
how many people would be in the new gap area.                                                                                   
Ms.  Carpenter  answered  that   the  fiscal  note  did  not                                                                    
currently  include what  it would  cost. She  explained that                                                                    
the fiscal note  system did not allow the  department to add                                                                    
an indeterminate on  the front page of the  grants line. The                                                                    
note  showed  the cost  of  positions  the department  would                                                                    
need. The page noted  the indeterminate cost. The department                                                                    
did  not know  the  number of  families  that would  enroll,                                                                    
which made  estimating the cost  difficult. She  shared that                                                                    
as  of   February  there   were  2,739   children  currently                                                                    
receiving  subsidies through  the Childcare  Program Office.                                                                    
She  detailed that  96  of  the 2,739  (or  3 percent)  were                                                                    
served  at the  highest rate  (75 percent  to 85  percent of                                                                    
state  median  income).  She explained  that  the  higher  a                                                                    
family's  income, the  higher  their  copay. She  elaborated                                                                    
that a  parent stayed home  with the kids in  some families.                                                                    
The department  did not know  if the change would  be enough                                                                    
to  incentivize. She  added that  currently, nothing  in the                                                                    
bill directed DOH  to decrease copays made  by families. The                                                                    
copay  was on  a  sliding scale  and  the legislature  could                                                                    
direct the department  to look at the lever.  She thought it                                                                    
warranted  a   conversation  about   whether  a   copay  was                                                                    
affordable when a family was making more money.                                                                                 
3:13:47 PM                                                                                                                    
Representative Hannan  thought one  of the downsides  of the                                                                    
fiscal note was that it did  not show the lost economic cost                                                                    
to Alaska  due to inadequate childcare.  She appreciated the                                                                    
efforts on  the bill. She  remarked that  it would not  be a                                                                    
single  fiscal  note.  She  highlighted  that  the  cost  of                                                                    
providing  more childcare  would  create  an economic  wheel                                                                    
that  would  result  in  more   working  Alaskans  and  more                                                                    
revenue. She stated it would benefit everyone.                                                                                  
Co-Chair Foster stated the  information would be interesting                                                                    
to see in the fiscal note, but hard to quantify.                                                                                
Representative  Tomaszewski  referred   to  the  individuals                                                                    
currently  covered (those  up  to 85  percent  of the  state                                                                    
median income).  He believed Ms. Carpenter  had stated there                                                                    
were  about   2,700  individuals.  He  asked   how  much  it                                                                    
currently cost in general funds and federal funds.                                                                              
Ms.  Carpenter  did  not  have   the  number  on  hand.  She                                                                    
clarified  that the  funding was  all federal  and paid  for                                                                    
with a block grant.                                                                                                             
Representative  Tomaszewski  asked   for  verification  that                                                                    
anything  from  85 percent  to  105  percent [of  the  state                                                                    
median income] would be paid for with state general funds.                                                                      
Ms. Carpenter agreed.                                                                                                           
Representative Tomaszewski  asked Ms. Carpenter to  review a                                                                    
chart in members' packets.                                                                                                      
Ms.  Carpenter  noted  that Representative  Tomaszewski  was                                                                    
referring to a chart showing  what a family's copay would be                                                                    
based  on their  income  and number  of  individuals in  the                                                                    
house ["Family Income and  Contribution Schedule" revised on                                                                    
February  21,  2022  (copy on  file)].  She  explained  that                                                                    
individuals at the lowest of  state median income would have                                                                    
a 1  percent copay.  At that  lowest rate,  the copay  for a                                                                    
two-person  household (one  parent and  one child)  would be                                                                    
$1.  She  elaborated  that a  two-person  household  earning                                                                    
$5,012 per month  would pay 9 percent of  its income towards                                                                    
the  copay ($451  per month).  She explained  that when  the                                                                    
department  worked   with  a   daycare  enrolled   with  the                                                                    
Childcare Program Office, the  department took out the copay                                                                    
the  parent should  pay and  paid the  rate directly  to the                                                                    
childcare  facility.  She  noted that  what  the  department                                                                    
helped  pay  for the  family  was  separate from  the  grant                                                                    
program contemplated in the legislation.                                                                                        
3:17:31 PM                                                                                                                    
Representative Stapp  thanked Representative Coulombe  for a                                                                    
bill aimed at tackling a  challenging issue. He had a couple                                                                    
of  concerns with  some  of  the sections  in  the bill.  He                                                                    
considered  the long-term  fiscal  impact, specifically  the                                                                    
tripling  of the  existing  tax credit.  He  noted the  bill                                                                    
stated that  after 2030 there  would be a  five-year rolling                                                                    
inflation  adjustment indexed  to the  Consumer Price  Index                                                                    
(CPI) for  all urban  consumers for  urban Alaska.  He noted                                                                    
the CPI was very different  for Fairbanks and Juneau than it                                                                    
was for  Anchorage, which made  it difficult to  calculate a                                                                    
long-term fiscal note.  He did not know how  it was possible                                                                    
to  project the  cost  with the  inclusion  of the  specific                                                                    
provision. He asked for comment.                                                                                                
Ms. Carpenter  responded that the  section was  not overseen                                                                    
by the department.                                                                                                              
Representative Coulombe  replied that  the topic came  up in                                                                    
one of  the prior committees  during a hearing on  the bill.                                                                    
She asked if Representative Stapp was referring to page 7.                                                                      
Representative  Stapp  replied  that  he  was  referring  to                                                                    
repeating language on pages 3, 6,  9, 12, 15, 18, and 21. He                                                                    
referenced lines 11 to 16.                                                                                                      
Representative  Coulombe  asked  if  Representative  Stapp's                                                                    
concern was the connection to inflation.                                                                                        
Representative Stapp  agreed and  stated that  the provision                                                                    
effectively put increases on autopilot in perpetuity.                                                                           
Representative  Coulombe  replied  that  the  provision  was                                                                    
connected to the  amount in place in the  past. She believed                                                                    
the  concern  was valid  and  she  would  follow up  on  the                                                                    
Co-Chair Foster moved to invited testimony.                                                                                     
3:21:05 PM                                                                                                                    
JEN GRIFFIS,  PUBLIC POLICY MANAGER, THREAD,  ANCHORAGE (via                                                                    
teleconference), thanked  the committee for  the opportunity                                                                    
to testify  on the  current challenges facing  childcare and                                                                    
families  and to  discuss how  the bill  could help  address                                                                    
some  of the  challenges. She  explained that  thread was  a                                                                    
statewide  nonprofit that  had  been  serving the  childcare                                                                    
sector  in  Alaska  for  over  35  years.  The  organization                                                                    
provided direct  services to families, early  educators, and                                                                    
childcare  programs  throughout  the state.  She  read  from                                                                    
prepared remarks (copy on file):                                                                                                
     As you  have heard  through the session,  childcare has                                                                    
     been struggling. While this is  not a new struggle - it                                                                    
     has always been challenging  to find and afford quality                                                                    
     childcare  - it  is a  struggle that  is increasing  as                                                                    
     early  educators continue  to leave  the workforce  and                                                                    
     childcare  programs continue  to close.  This continued                                                                    
     decline   in  childcare   availability   is  having   a                                                                    
     significant  impact  on  the  workforce  challenges  in                                                                    
    other sectors and broader economic impacts as well.                                                                         
     Historically, the  gap between availability  within all                                                                    
     early  education   settings  (pre-k,  Head   Start  and                                                                    
     childcare) and the  need in Alaska has  been about 20%.                                                                    
     Since   the  pandemic,   the   challenges  facing   the                                                                    
     childcare sector  have increased, primarily  related to                                                                    
     attracting and  retaining workforce. We are  working to                                                                    
     update  our data  regarding the  current  gap in  early                                                                    
     education, but  the self-reporting we are  hearing from                                                                    
     various  programs  and  communities  across  the  state                                                                    
     indicate  some  are   experiencing  declines  in  their                                                                    
     enrolled  capacity  as high  as  40%  due to  workforce                                                                    
     shortages. This  has resulted in classroom  and program                                                                    
     closures  further restricting  the supply  of available                                                                    
     Federal   stabilization  funds   during  the   pandemic                                                                    
     provided  support to  childcare providers.  These funds                                                                    
     were delivered  in three phases,  with the  most recent                                                                    
     phase,  Phase 3,  being distributed  in April.  Data on                                                                    
     the impact of  the Phase 2 funds has  been gathered and                                                                    
     will  be  shared  soon, but  the  preliminary  analysis                                                                    
     demonstrates  that  the  $50 million  in  stabilization                                                                    
     funds  that went  directly to  childcare providers  and                                                                    
     programs  kept  childcare  businesses open  that  would                                                                    
     have   otherwise  closed.   But  we   also  know   that                                                                    
     investment alone  was not enough  to keep  all programs                                                                    
     open or all early educators in the field.                                                                                  
     While  thread  is   advocating  for  additional  direct                                                                    
     support   for  both   early  educators   and  childcare                                                                    
     programs  during  this  coming  fiscal  year,  we  also                                                                    
     believe that  creating a  more stable  childcare sector                                                                    
     will  require shifts  in  the  current policies  around                                                                    
     Alaska's childcare  assistance programs. House  Bill 89                                                                    
     addresses  two  of  these policy  shifts  -  increasing                                                                    
     eligibility  for the  childcare assistance  program and                                                                    
     including a cost of care  model in the determination of                                                                    
     provider reimbursements.                                                                                                   
     Currently,   the    income   eligibility    limit   for                                                                    
     participating in  childcare assistance is 85%  of state                                                                    
     median income. Increasing  this eligibility limit would                                                                    
     allow  more families  to participate  in the  childcare                                                                    
     assistance  program  reducing  their  childcare  costs.                                                                    
     This  change has  the potential  to increase  workforce                                                                    
     participation across multiple sectors. Additionally,                                                                       
     Additionally,   childcare   providers   are   currently                                                                    
     reimbursed at rates  set by a market  price survey that                                                                    
     is based on  the amount providers charge  for care, not                                                                    
     what it  actually costs  childcare programs  to provide                                                                    
     quality  care. When  systems  base childcare  policies,                                                                    
     including  childcare reimbursement  rates, on  a market                                                                    
     price survey  that does not  consider the true  cost of                                                                    
     care  it   creates  an  unstable  foundation   for  the                                                                    
     childcare  system,   a  foundation  that  -   as  we've                                                                    
     witnessed  -  will  struggle to  weather  economic  and                                                                    
     societal pressures. Including cost  of care analysis in                                                                    
     policy  and fiscal  planning for  childcare provides  a                                                                    
     foundation for a more stable system.                                                                                       
     thread believes  stabilizing Alaska's  childcare system                                                                    
     and  supporting  Alaska's workforce  requires  policies                                                                    
     that reduce costs for parents  and increase support for                                                                    
     childcare providers. These  policies are the foundation                                                                    
     of HB89.  We appreciate  the sponsor for  bringing this                                                                    
     bill  forward and  continuing  the conversation  around                                                                    
     childcare  policy. While  we were  not able  to testify                                                                    
     before the  committee today  due to  other commitments,                                                                    
     if   members   have   questions  or   need   additional                                                                    
     information  as they  consider this  bill please  don't                                                                    
     hesitate to reach out. Thank you for your continued                                                                        
     support for Alaska's children and families.                                                                                
Co-Chair    Foster    recognized   Representatives    Jennie                                                                    
Armstrong, Justin  Ruffridge, and Jesse Sumner  in the room.                                                                    
He thanked Ms. Griffis for her testimony.                                                                                       
Representative  Coulombe  provided  closing remarks  on  the                                                                    
bill. She thanked  the committee for listening  to the bill.                                                                    
She relayed  that she  had heard  from some  individuals who                                                                    
were concerned  about government taking over  childcare. She                                                                    
detailed that  those concerned individuals  believed parents                                                                    
should be  staying home with  their children. She  agreed it                                                                    
was the optimal  situation, but things had  changed and were                                                                    
very  different  than when  she  had  raised her  kids.  She                                                                    
shared  that when  she had  raised her  kids there  had been                                                                    
enough  stay-at-home  moms  to  help  each  other  out.  She                                                                    
reported  that  her street  was  now  empty during  the  day                                                                    
because  everyone was  at work.  She clarified  she was  not                                                                    
intending to build  a bunch of government  run daycares. She                                                                    
was aiming  to tackle  the problems of  daycare and  she was                                                                    
open to  creative ideas. She  believed some  communities had                                                                    
mom-and-pop  daycares taking  care of  kids. She  noted that                                                                    
the  committee had  passed  an  amendment by  Representative                                                                    
Galvin to  help fund some  smaller daycares. She  stated the                                                                    
bill was  a working document and  she was open to  ideas for                                                                    
improvement. She  wanted the  bill to  be the  best possible                                                                    
and to  meet the most  needs. She  noted that was  where the                                                                    
tax credits  had come from. The  goal was to come  up with a                                                                    
creative  solution involving  partnership  with the  private                                                                    
sector,   helping   small   daycares,   subsidizing   larger                                                                    
daycares,  and ensuring  quality service.  She relayed  that                                                                    
the  bill focused  on  a  serious issue  that  needed to  be                                                                    
HB  89  was   HEARD  and  HELD  in   committee  for  further                                                                    
Co-Chair  Foster reviewed  amendment  deadlines for  various                                                                    
bills including HB 178, HB 112, SB 77, and SB 81.                                                                               
Co-Chair  Foster relayed  that he  would recess  the meeting                                                                    
until the following day at 8:00 a.m.                                                                                            
Representative Hannan  asked when  Co-Chair Foster  may know                                                                    
if the 8:00 a.m. meeting would happen.                                                                                          
Co-Chair Foster answered that hopefully they would know by                                                                      
5:00 p.m. that afternoon.                                                                                                       
Representative Ortiz asked about the amendment deadlines                                                                        
for the following day.                                                                                                          
Co-Chair Foster reread the amendment deadlines for four                                                                         
Co-Chair Foster RECESSED the meeting until the following                                                                        
morning at 8:00 a.m. [note: the meeting never reconvened].                                                                      
3:31:58 PM                                                                                                                    
The meeting was adjourned at 3:31 p.m.                                                                                          

Document Name Date/Time Subjects
HB 89 Presentation v.3.pdf HFIN 5/11/2023 1:30:00 PM
HB 89