Legislature(2019 - 2020)ADAMS ROOM 519
03/12/2019 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Fy 20 Budget Overview: Department of Health and Social Services | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 12, 2019
1:35 p.m.
1:35:03 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:35 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Tammie Wilson, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Dan Ortiz, Vice-Chair
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick (via teleconference)
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
Representative Ben Carpenter
ALSO PRESENT
Lacey Sanders, Budget Director, Office of Management and
Budget; Sana Efird, Administrative Services Director,
Department of Health and Social Services, Office of
Management and Budget; Adam Crum, Commissioner, Department
of Health and Social Services.
PRESENT VIA TELECONFERENCE
Representative Kelly Merrick
SUMMARY
FY 20 BUDGET OVERVIEW: DEPARTMENT OF HEALTH AND SOCIAL
SERVICES
1:36:17 PM
Co-Chair Foster reviewed the meeting agenda.
^FY 20 BUDGET OVERVIEW: DEPARTMENT OF HEALTH AND SOCIAL
SERVICES
1:37:30 PM
SANA EFIRD, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES (DHSS), OFFICE OF MANAGEMENT AND
BUDGET introduced a PowerPoint presentation titled "FY2020
Governor's Amended Budget Department of Health and Social
Services Overview" dated March 12, 2019 (copy on file). She
began with the department's seven core services on slide 3.
She detailed that the core services had come from an
exercise undertaken by the department about five years
earlier as a part of a results-based budgeting effort that
included the entire department. She relayed that the
department would do the exercise again with the new
commissioner and administration (likely in the coming
summer) to determine whether the core services were still
reflective of the department's priorities. She noted the
department's total budget had been aligned to meet the core
services.
1:39:18 PM
Co-Chair Foster recognized that Representative Merrick had
called into the meeting but there had been some technical
difficulties.
Vice-Chair Johnston asked whether the core service to
manage health care coverage involved United Technologies.
Ms. Efird replied that the service did not have a
relationship to the managed care organization. She detailed
that the item was a core service that DHSS divisions
(through their budgets) contributed to meeting for
Alaskans. She referenced slide 3 and highlighted the
department's mission to promote and protect the health and
well-being of Alaskans. She reported that the department's
responsibility for health and the public welfare were
included in Article VII, Sections 4 and 5 of the Alaska
Constitution.
1:40:34 PM
Vice-Chair Ortiz appreciated the list of core services and
the dollar figures that went to meet the needs of those
services (slide 3); however, he believed a list of programs
that fell underneath each of the services was needed to
provide better information. He asked if there was a backup
document that listed programs associated with the core
services.
Ms. Efird replied that DHSS had the document and would
provide it.
LACEY SANDERS, BUDGET DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, reported that the document had been provided to the
committee co-chair's offices and could be distributed as
needed.
Representative Knopp asked which committee co-chair had
received the document.
Ms. Sanders replied that the document had been provided to
Co-Chair Foster's office.
Ms. Efird continued on slide 4 that showed the department's
funding comparison (on the left) and budgeted position
comparison (on the right) between the FY 19 management plan
and the FY 20 governor's amended budget. The department's
FY 19 management plan funding totaled $3,249,951,500
compared to the governor's proposed budget of
$2,468,798,400, a difference of $781,153,100 or a 25
percent reduction. The governor's proposed FY 20 budget was
comprised of approximately 58 percent federal funding at
$1,439,683,000; 5 percent in other funds (the largest
portion was interagency receipts); and 36 percent in
general funds, comprised of 90 percent undesignated general
funds (UGF) and 10 percent designated general funds (DGF).
She detailed that a large percentage of DGF was made up of
Pioneer Home receipts from residents for room and board,
child support collections and foster care base rate,
background check and application fees for the residential
licensing programs, and birth and death certificate fees
collected in Vital Statistics.
Ms. Efird addressed the budgeted position comparison on the
right side of slide 4. There was a decrease in 291
positions from the FY 19 management plan to the governor's
amended FY 20 budget. The bulk of the difference was
reflected in the Alaska Psychiatric Institute (API)
reorganizational structure change. She added that the funds
in the contractual line and the positions with the
reorganization were reflected under a contract. The other
positions proposed for deletion were associated with the
Nome Youth Facility; 11 of 16 positions were filled and
would result in layoffs or transfers.
1:44:59 PM
Representative Knopp pointed to the funding comparison on
slide 4 and asked if the $400 million loss in federal
dollars [between the FY 19 management plan and governor's
FY 20 budget] was directly related to the reduction in
General Fund dollars.
Ms. Efird replied in the affirmative; the majority of the
funds were with the Medicaid program.
Representative Knopp observed that the proposed budget
appeared to be reduced by approximately $300 million in
General Fund dollars and $400 million in federal funds.
Ms. Efird agreed and noted that the next slide would show
the changes in the funding sources.
Representative Knopp noted that the reduction was almost
dollar for dollar. He thought that the rates were a bit
better than that ratio (e.g. 75/25 or 90/10).
1:46:24 PM
Ms. Sanders responded there were additional decreases to
DHSS specific to general funds that did not have the
required match. The information on slide 4 was an overall
budget picture. She remarked that the Medicaid reduction
was not a dollar for dollar reduction. The presentation
would provide further details later on.
Vice-Chair Johnston asked if the department's efforts to
renegotiate the state's position with the federal
government would potentially mean a smaller decrease in
federal funding.
Ms. Sanders answered that DHSS was still working with the
Centers for Medicare and Medicaid Services (CMS) to
determine the changes it was able to make and what the
impacts would be to federal funds. Her understanding was
that the report would be out at the end of March.
Vice-Chair Ortiz asked how the reduction of nearly $800
million would result in opportunity costs in relationship
to the department's ability to meet its mission to protect
the health and wellbeing of Alaskans.
1:48:55 PM
Ms. Efird replied that she would highlight which programs
the department had submitted in its proposal for
reductions. There were some reductions in the budget that
hit various populations. She turned to slide 5 and reported
that the budget was proposed on the governor's core tenets:
• Focus on core services
• Expenditures cannot exceed existing revenue
• Maintain and protect our reserves
• Does not take additional funds from Alaskans through
taxes or the PFD
• Must be sustainable, predictable, and affordable
Ms. Efird reported that the department had taken the tenets
into consideration when it had proposed reductions and had
tried to balance the programs it was reducing with other
areas where those constituencies received other funding.
She noted that the budget was not flat; there were
reductions and there would be effects.
Co-Chair Wilson directed a question to the commissioner.
She referenced the core tenet specifying that expenditures
could not exceed existing revenue. She stated that one of
the biggest issues was a supplemental budget of $200
million and growing in recent years. She asked how the
commissioner would do things differently in order to meet
the moving target.
ADAM CRUM, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, replied that more detail would be available in
coming weeks. He agreed that asking for large supplementals
in the past couple of years was a shock to the legislature.
He relayed the department would have more details as it
worked on its plan to avoid the issue; part of the
department's primary goal was to ensure [budget]
projections were as accurate as possible.
Co-Chair Wilson spoke to the necessity of working with
federal partners. She asked about the timetables related to
the changes to maintenance of effort and changes made via
legislation that required federal approval.
Commissioner Crum answered that the department's deputy
commissioner was currently meeting with CMS in Washington
D.C. to get timelines on implementation. One of the
department's goals was an amortized schedule showing when
items could be in place and the effects.
Co-Chair Wilson asked if quite a few of the ideas included
in the presentation would be implemented by July 1.
Commissioner Crum replied in the affirmative; a substantial
number of the ideas could be implemented for FY 20.
Co-Chair Foster referenced the position count on slide 4.
He thanked the department for meeting with his office
regarding the Nome Youth Facility. He asked if Ms. Efird
had reported that 11 positions would be deleted from the
youth facility. He thought the number was 13 and asked if
that meant 2 positions would have to be picked up
elsewhere.
Ms. Efird replied that two of the positions were currently
vacant - the positions would be eliminated but were not
currently filled.
1:53:47 PM
Co-Chair Foster believed it was the committee's feeling
that the governor's proposed budget may not result in the
savings the governor was hoping for. He noted the
legislature would be working through that issue in the
subcommittee process, which would include dialogue with the
administration. He wanted the public to understand the
legislature was paying attention and working on the issue.
Representative Josephson spoke to Medicaid reduction. He
believed the 1115 waiver system required the department to
show an alternative means of achieving a federal or
statutory goal. He wondered how it was possible to cut $225
million and be within that requirement. He highlighted that
the presentation gave no indication of who would get hurt
in the process. He needed to know more than the cut would
be made and somehow it would all work out. He had not
received the information and would not vote on the
governor's proposal without the information. He referenced
the presenters' indication a letter in late March was
forthcoming, but he needed to know how the proposal was
going to evolve into a budgetary component before mid-June
"when we get close to the edge" [when the new fiscal year
of July 1 was looming].
1:56:03 PM
Ms. Sanders answered that the information the committee
would receive regarding the Medicaid changes would be
substantial and would not be limited to a memorandum or
letter. She elaborated that details on the impacts of the
proposed changes would be provided. She communicated OMB's
understanding that the committee needed details in order to
make decisions. She anticipated that OMB would put forward
any technical budget related amendments to address the
changes that would be necessary in providing a plan to
accompany a proposal.
Co-Chair Foster recognized Representative Merrick online.
Ms. Efird continued with slide 5 showing changes in the
budget by funding source from FY 19 to FY 20. She moved to
slide 6 and highlighted major changes in the General Fund
budget. She began with the Alaska Pioneer Homes Division.
She reported there had been a budget structure change
within the division, reflected by a new payment assistance
budget component. She explained that payment assistance was
wrapped up within the Pioneer Home component currently,
which made it difficult to see how the payment assistance
supplemented the payments. She elaborated that general
funds in the Pioneer Home budget had been reduced and
partially replaced in a separate payment assistance
component of $15 million general funds. She furthered that
DGF had been increased to receive fees from increasing
Pioneer Home rates. She clarified that the governor's
proposed budget did not evict residents from the Pioneer
Homes. The governor's budget reflected the administration's
proposal to put forth regulations to increase the rates to
show the true cost of care for each of the levels of care
in the Pioneer Homes.
1:59:42 PM
Co-Chair Wilson pointed to the $16.792 million General Fund
and $16.386 million General Fund/Mental Health related to
the Alaska Pioneer Homes on slide 6. She noted that both
funding sources were general funds and asked if the two
amounts were to be added together.
Ms. Efird replied that the amounts highlighted by Co-Chair
Wilson were reductions because both were general funds. The
Pioneer Home budget was originally around $33 million in
general funds. The amount had been reduced and $15 million
had been shifted to a payment assistance general funds
budget component. There was a reduction in the UGF
component, which was replaced with additional DGF for the
increase in the rates to collect fees.
Co-Chair Wilson stated that typically the numbers had
negative signs to indicate reductions.
Ms. Efird apologized and clarified that parenthesis were
used in the presentation to indicate negative numbers;
numbers with no parenthesis were positive. She highlighted
that $15 million in general funds for the payment
assistance component had been added as a structure change
and two reductions were listed in a separate bullet point.
Co-Chair Wilson referenced slide 5 and noted the DGF showed
an increase of $11.358 million, yet she thought it sounded
like the DGF had the potential to be over $16 million in
relation to the Pioneer Homes. She asked why there was a $5
million difference between the two figures.
Ms. Efird replied that slide 5 showed the overall total for
the entire department. She explained there were numerous
technical adjustments that added up to the total in the
budget. For example, there were some SB 74 reductions that
included DGF. Slide 5 included the biggest portion of DGF,
but there were some offsetting decreases in other DGF
components.
Co-Chair Wilson stated that if a person was paying their
own way [to live in the Pioneer Homes], no financials were
required, which she agreed with. She asked how the
reduction had been determined. She asked how the reduction
would not be a decrement to the Pioneer Home.
Ms. Efird replied that DHSS was still analyzing the numbers
for the Pioneer Homes. Currently, there were 451 filled
beds in the Pioneer Homes. She detailed that 51 percent of
residents were on private pay, but that was under the
current structure where all residents were being subsidized
because residents did not pay based on their level of care.
She expounded that 29 percent were on payment assistance
and 20 percent were under Medicaid waiver. She reiterated
that DHSS was still looking at the numbers and had started
with $15 million. The Pioneer Home financial unit was
trying to make an estimate and projection of calculations
to determine whether the number was correct or whether a
change was needed.
2:03:51 PM
Co-Chair Foster noted that Representative LeBon had joined
the meeting.
Representative Josephson asked how the $15 million payment
assistance was sustainable.
Ms. Efird answered that the amount was the cost of taking
care of the state's seniors in the Pioneer Homes. She
reported it was a policy decision to continue funding the
cost.
Representative Josephson remarked that the $30 million
subsidy was two-tenths of 1 percent of the deficit. He
thought that amount seemed like money well spent to help
500 seniors. He estimated that the proposal to pay $15
million was around one-tenth of 1 percent. He asked why not
continue the current payment method for the benefit of 500
Alaskan families. He stated it was a policy call and wanted
to know why the legislature should agree to the proposal.
Ms. Sanders replied that the point the administration was
trying to make was that the state was currently subsidizing
a large cost that private pay insurance or Medicaid may be
able to cover, and the state should be accessing those
payment methods if possible. She stated there was value in
supporting and subsidizing to ensure no seniors were
removed from the Pioneer Homes, but it was necessary to
address the state's costs under the current fiscal
situation. She elaborated that the budgetary change
outlined the true cost to the state and provided clarity.
The $15 million was an estimate based on existing
information. She explained the state did not have all of
the financial information on all residents. The
administration was continuing to analyze the numbers to
ensure it was putting forward a number that sufficiently
covered the costs.
2:06:38 PM
Vice-Chair Ortiz asked if it was safe to say the $15
million would decrease from year to year.
Ms. Efird answered that the figure would be based on the
makeup of the seniors in the home each year. She noted the
figure would be based on prior year information. She
detailed that seniors left the homes and new residents
moved in. She did not foresee the number going down, but
she was not yet certain. The department was still in the
process of determining the precise number necessary to
manage the population and need in the Pioneer Homes.
Vice-Chair Ortiz was glad to hear that no current residents
would be removed from the Pioneer Homes if they were unable
to afford the increased rates. However, he thought the
increased rates may make the Pioneer Homes inaccessible to
many low income seniors.
Ms. Efird replied there was an active waitlist and an
inactive waitlist for the Pioneer Homes. The active
waitlist included approximately 250-plus individuals. She
elaborated that when someone put their name on the active
waitlist, she believed it was with the anticipation they
would be ready to move into the Pioneer Home in the next 30
days. She remarked she could have the number incorrect and
the period may be a bit longer. The department did not look
at income or information before a person was taken into the
home; a person's entrance into a Pioneer Home was not based
on their ability to pay.
Vice-Chair Ortiz asked if that would continue to be the
case in the future.
Ms. Efird replied in the affirmative.
2:09:40 PM
Representative Tilton asked for detail about proposed
changes to the Pioneer Home rate structure and levels of
care.
Ms. Efird answered that the department could provide a
table showing the changes. She relayed there were currently
three levels of care in the Pioneer Homes. The proposed
change would mean increasing the levels of care to five.
She reported that the homes were not currently able to
provide care at level five. The department was working on
developing a nine-bed unit in the Anchorage Pioneer Home
that would take care of patients with higher need. She
reported that the current level two would be broken into a
level two and level three to ensure the department was
distinguishing the types of services the residents were
paying for.
Representative Tilton asked for verification that payment
assistance would be available to all residents no matter
what type of pay they were on.
Ms. Efird replied in the affirmative. She elaborated that
if a resident needed to go on payment assistance, they were
currently required by regulation to provide their income
information in order for the department to calculate the
amount of assistance the individual would need.
Vice-Chair Johnston appreciated what the administration was
doing and noted she had become aware of the ongoing effort
during the previous administration. She believed it had
been mentioned in subcommittee that the average age of new
resident was 87. She asked if her recollection was correct.
Ms. Efird believed the average age of an incoming resident
may be 81 and the average age of residents entering the
homes under level three care was 87.
Vice-Chair Johnston stated that the amount of care could be
more acute for residents, particularly at level five. She
asked for verification that some residents would be
assisted with Medicaid.
Ms. Efird replied in the affirmative.
Vice-Chair Johnston asked if the proposed General Fund
decrement accounted for the increased cost for the higher
level of care or the amount of Medicaid that may be
required in the Pioneer Home.
2:13:52 PM
Ms. Efird answered that the department was looking at all
groups that would be affected by various proposals and what
that would look like.
Vice-Chair Johnston appreciated the payment assistance and
understood that the associated $15 million increment may
not be accurate. She asked if there could be a supplemental
if the number was not accurate.
Ms. Sanders answered that the administration's hope was to
avoid coming to the committee with supplementals in the
future. She noted the number may need to be adjusted before
the process concluded if the department was able to
calculate and provide information documenting a greater
need. The intention was to provide the legislature with an
accurate funding number to get through the fiscal year.
2:15:15 PM
Representative Sullivan-Leonard commended Commissioner Crum
and the department for working to reduce the DHSS budget by
25 percent, especially because there had been steep
increases to programs in recent years that she did not
believe were sustainable. She referenced the Palmer Pioneer
Veterans Home and wondered if there had been discussion
about transitioning the facility from a Pioneer Home to a
Veterans Home that would allow [federal] Veterans
Administration (VA) funds to help cover costs. She noted
that the VA covered significantly more than Medicaid.
Ms. Efird responded that the department did receive VA
funding because the facility was a certified Veterans
Pioneer Home.
Representative Sullivan-Leonard asked if the department was
looking at making the home available to veterans only.
Commissioner Crum answered that veterans accounted for the
primary population in the Palmer facility. The department
had not explored transitioning to a veterans-only facility;
DHSS liked making the home available to Alaskan residents
as well. The department was exploring the creation of a
designated unit for an advanced level of care at the
Pioneer Home, which would bring in a greater portion of
federal funding through the VA.
2:17:15 PM
Vice-Chair Ortiz referenced Ms. Efird's testimony there
were 451 filled beds in the Pioneer Homes. He asked about
the total system capacity.
Ms. Efird replied that there was a total of 496 licensed
beds in the homes. The department had been working on
increasing and meeting a 96 percent occupancy rate, which
was the industry standard. She reported the Pioneer Homes
were approaching that rate. She detailed that the Fairbanks
Pioneer Home had recently hit the 95 percent occupancy rate
and DHSS was working to meet the target in each of the
homes.
Vice-Chair Ortiz asked if the homes were falling short of
the target rate due to the time it took to transition
between outgoing and incoming residents. Alternatively, he
asked if it was due to a lack of adequate funding to staff
the facilities.
Ms. Efird responded that the 95 percent target tried to
account for outgoing and incoming residents. She elaborated
that budget reductions in the past five years had resulted
in the loss of 23 (or more) full-time positions. The
administration at the time had chosen to meet the cut by
closing beds. Consequently, the current administration had
determined closing beds meant a reduction in income and a
double hit to resources. The administration was working to
fill the beds, which would bring in income and mean staff
would be needed to staff those beds.
Ms. Sanders added that many of the waitlists were location
specific, which hindered the department's ability to fill
beds in specific areas.
2:20:17 PM
Representative Tilton asked if some of the challenge of
filling beds was having beds available for the needed level
of care.
Ms. Efird responded affirmatively. She explained that an
increased number of incoming residents needed higher levels
of care. She detailed that staffing the homes for those
different needs also affected the ability to fill beds.
Ms. Efird moved to the next item on slide 6 showing the
change in budgeting for API. The governor's budget proposal
included an organizational restructuring; therefore, all of
the money from all of the line items for API had been moved
to the contractual line to adjust to the organizational
restructuring. The budget showed positions being zeroed
out; the change would be a different way of managing API.
2:21:46 PM
Vice-Chair Johnston asked what effect the removal of 248
positions from the state's employment pool would have on
the Public Employees' Retirement System (PERS) unfunded
liability. She considered the change from the perspective
of an employer where termination studies had been required.
She realized the state did not need to have a termination
study, but she wondered if the decrement of employees was
accounted for somewhere in the budget.
Ms. Sanders replied that she was not an expert in the
field, but she explained that the state benefits of current
employees would end because they would no longer be state
employees under the proposal. She detailed that out-year
benefits for the former state employees would no longer be
accounted for, but they would be eligible for benefits they
had earned.
Co-Chair Foster asked whether Donna Arduin, Director,
Office of Management and Budget wanted to respond to the
question.
Vice-Chair Johnston explained that her question was about
the fact that the state would not be paying for the
positions going forward and how that would affect the
overall pension fund.
Ms. Sanders offered to follow up with additional
information.
2:24:04 PM
Representative Josephson referenced the proposed $28
million transfer to contractual services for API. He asked
about the anticipated expense of privatizing API including
per diem.
Ms. Efird answered that there was a current contract for FY
19 with some deliverables that needed to be met to continue
with the contract in FY 20. The contract was posted online;
the department may come back to the legislature with a
different number than currently shown associated with the
change for API.
Representative Josephson asked there was a rough number at
present. He asked if the current figure was $38 million.
Ms. Efird believed the contract was about $43 million,
which was not all general funds; the figure was part of
what the department was making sure to calculate correctly.
She detailed that currently the capacity was around 35 beds
and the department was working to increase the number to 80
beds. She explained that the change could produce an
increase in Medicaid funds or other coverage of funds. The
department was currently looking at the breakout of the
funding sources needed for FY 20 coverage.
Vice-Chair Ortiz asked if the budgeted figure for the
privatization of API reflected the cost of the associated
contract.
Ms. Efird replied that the correct amount was not yet in
the governor's FY 20 proposal. The department working on
determining a [more precise] figure that would likely be
presented in an amended budget request.
Vice-Chair Ortiz asked if it was safe to assume the number
would increase rather than decrease.
Ms. Efird replied in the affirmative.
2:27:09 PM
Representative Sullivan-Leonard asked if Wellpath was the
organization that would take on the contract for API. She
asked about the anticipated savings.
Commissioner Crum affirmed that Wellpath was the name of
the contractor. The change to privatization was also about
long-term cost avoidance. He explained that bringing the
hospital up to full capacity would enable API to serve a
larger population, which would result in cost avoidance
throughout the rest of the system. He elaborated that
currently many patients were in emergency rooms, which had
a higher Medicaid cost. He furthered that API would treat
patients much faster. Additionally, the department hoped to
increase the size of API's forensic unit, which would
enable individuals to be moved from the Department of
Corrections more rapidly for evaluation to stand trial.
Representative Sullivan-Leonard asked for verification they
did not yet have a dollar amount.
Commissioner Crum replied the department was working on
projections. He reported the savings would be tremendous.
Representative Josephson respected the goal of avoiding
emergency room expenses and getting people where they
should be. He was reminded of the Medicaid cut [proposed by
the administration] and the cost that could be associated
with shifting care to the emergency room. He hoped to hear
from CMS that the issue was covered.
Representative Knopp referenced the potential $43 million
appropriation to contract out services [for API]. He asked
if Wellpath would do all of the private [insurance] and
Medicaid billings. He asked if revenues would be funded
back to the state or spent. He asked how the process
worked.
Ms. Efird answered that the department would bill for all
other funding sources. She detailed that the contractor
(Wellpath) would be paid its amount and all other funding
sources that could be recouped would be recouped. She did
not know the details, but she assumed DHSS would bill for
Medicaid payments.
2:30:17 PM
Representative Knopp asked if there were other
administrative services functions the department would
still do under the privatization.
Ms. Efird replied that Wellpath was managing the clinical
aspects for API. The department would continue to be
responsible for building maintenance, utilities, and other
related things.
Representative Knopp asked if the legislature would expect
to see indirect expenditure line items [associated with
API].
Ms. Efird replied in the affirmative.
2:31:15 PM
Ms. Efird addressed the third bullet point on slide 6. She
reported that the department was receiving increased
federal awards to meet the opioid crisis currently facing
all states. There were some federal grants coming into the
Divisions of Behavioral Health and Public Health for the
opioid and epidemiology funding. She relayed there was a
workgroup collaborating on a state grant that also included
the Department of Public Safety and Department of
Corrections because there was opioid funding coming into
those departments as well. The state wanted to make sure to
use the funding in a cohesive and collaborative way.
Vice-Chair Ortiz asked if the money was one-time funding or
ongoing.
Ms. Efird answered that she did not know the specifics. She
reported that federal grants were generally multi-year. She
would follow up with the details.
Ms. Efird moved to the last bullet point on slide 6 related
to the Nome Youth Facility. The governor's proposal was to
retain the youth probation services in Nome and transfer
youth needing detention and treatment services to other
state facilities (i.e. McLaughlin Youth Center or other).
Vice-Chair Johnston asked if DHSS had looked into
partnering with the Indian Health Service (IHS) for
detention and treatment services.
Commissioner Crum answered the department was exploring the
interest of regional partners to potentially use the Nome
facility for something like substance abuse treatment. The
department believed there may be funding mechanisms through
its 1115 substance use disorder (SUD) waiver. He believed
there was a bit of interest, but it was an ongoing
negotiation. He noted the [Nome] facility would be a
valuable item in that region of Alaska.
2:34:17 PM
Co-Chair Wilson stated that a youth facility could mean
kids that needed more parenting or were in severely
troubled situations. She asked about the makeup of the
youth facility and the average number of youths in the
facility.
Commissioner Crum replied that the facility was at 50 to 60
percent capacity. He mentioned juvenile justice
[indecipherable].
Co-Chair Wilson stated that 50 percent capacity did not
mean much without knowing the total capacity. She was
talking specifically about the youth portion of the
facility. She referenced discussion that had occurred
several times over the years about whether the facility was
overkill in terms of the number of staff required for a
handful of juveniles. She posed the idea of a foster care
type situation for youths who were not violent offenders;
it would enable youth to remain in the community instead of
sending them to urban areas without any family nearby.
However, she questioned how it was possible to look for
other ideas without understanding the level of offences.
She asked the department to get back to the committee.
Co-Chair Wilson recalled there had been only four or five
youth [in the facility] at a time. She continued that it
did not matter if there were 50 youths in the facility or 5
or 6, the facility still required staff around the clock
for health needs and the rest. She reasoned that all the
money could have been used directly on helping the youth
instead. She estimated they had been talking about the
issue for at least four years. She hoped the department
would come up with a solution. She guessed Nome was
probably not the only community with so few youths in a
facility that it was not cost effective.
2:36:48 PM
Commissioner Crum replied that the Nome Youth Facility
averaged approximately eight kids per day.
Co-Chair Wilson commented on money that could be used on
treatment if it was not spent on staffing a facility
housing eight youths per day.
Co-Chair Foster discussed that capacity was down in the
facility and the state was looking for ways to save money.
He contended there were other costs and he did not know the
real savings. He elaborated that if kids were sent off to
other locations (e.g. McLaughlin Youth Center) throughout
the state, the youths still had to be sent back to Nome for
court hearings and so forth. He highlighted costs for
travel, a chaperone accompanying the youth during travel,
securely holding youths overnight when they traveled for
their court hearing, heating a facility (probation officers
would still work in the facility in Nome), housing the
youths at other facilities, and more. He added that with
two flights per day it was not always easy to fly in the
morning and leave at night. He highlighted weather delays
that could cause an additional expense.
Co-Chair Foster continued that even if it was assumed there
were some savings [in transferring detention and treatment
to other facilities], the policy issue remained. He
detailed that the governor had made public safety a
priority and he believed the youth facility could help in
the endeavor. He reported that the committee could work
with its subcommittee members and the administration on the
issue. He appreciated that the administration had reached
out to him. He noted the issues involved tough decisions
all around.
2:39:29 PM
Ms. Efird moved to slide 7. The first bullet point
highlighted a proposed reduction of $14.7 million GF for
Adult Public Assistance. The program provided assistance
payments to blind and disabled residents age 65 and older.
The program also provided the maintenance of effort
required for the department's Medicaid program. She
detailed that here were two methodologies to calculate a
state's maintenance of effort for adult public assistance.
Alaska was currently under a total expenditure method,
which meant it was required to meet the same level of
expenditures from the prior year. The governor's proposal
was to move to the 1983 payment levels, which would change
the payments and result in a savings of $14.7 million.
Ms. Efird moved to the second bullet point on slide 7 and
reviewed the governor's proposal to reduce the Temporary
Assistance for Needy Families (TANF) maintenance of effort
by $16.9 million. The department currently provided the
funding to its seven tribal partners who administered their
own TANF programs. The payment was a supplement to tribes
providing the TANF program to their recipients. The
proposal would require the federal government to agree to
the reduction. The department was still working on
obtaining agreement from the federal government.
Vice-Chair Ortiz asked for the current funding total for
the TANF maintenance of effort.
Ms. Efird believed the current maintenance of effort
required from the state was $36 million. The total for
maintenance of effort was 80 percent of the total federal
grant coming into the state. She would follow up with the
data.
2:42:36 PM
Ms. Efird addressed the third bullet point on slide 7 - to
repeal the Hold Harmless Program. She explained that under
the program, an amount was deducted from each individual's
Permanent Fund Dividend (PFD) and put into a hold harmless
fund to hold public assistance recipients harmless from
losing their benefits when they receive the PFD. The
governor's proposal was to repeal the statute. She reported
legislation was forthcoming. The proposal looked at other
ways to mitigate the loss of those benefits through
possibly providing the PFD on a monthly basis or other.
Co-Chair Wilson understood it may be a good way of paying
but she wondered if it was still possible to end up kicking
individuals off the program who were on the border. She
recognized the dividend amount would make a difference. She
asked what would happen if a person was $100 away from
being eligible. She wondered if a person would have to wait
to see what the dividend amount would be every year and
divide it by 12 to determine whether they would be removed
from numerous services that the $100 could not fix.
Ms. Efird replied it could be possible, which was the
reason DHSS was looking at ways to mitigate the
possibility. Each of the programs had different levels of
eligibility; therefore, it was necessary to look at the
programs separately to project individuals who may or may
not be over the limit.
Co-Chair Wilson used a family of four receiving a $2,000
PFD per person as an example. She considered that because
the amount was counted as income, if the family made $8,000
[from the PFD] they would not get services. Yet, someone in
the Hold Harmless Program would get the services. She
thought the Hold Harmless Program had been likely been
implemented because when individuals received the PFD, they
were bumped from receiving their assistance payments, which
resulted in substantial paperwork the following month to
get people back on public assistance. She wondered whether
it was fair for working individuals to not receive
services, yet another group was treated differently.
2:45:36 PM
Ms. Efird replied that the department could provide the
committee with the number of recipients under each program
that were held harmless under the program. She believed the
largest number were the Adult Public Assistance payments
for individuals age 65 and older and blind and disabled.
Co-Chair Wilson stated the information would be helpful.
She did not want to take services from individuals working
two jobs and put them at a disadvantage to others.
Ms. Efird moved to the fourth bullet point on slide 7 and
reviewed the governor's proposal to repeal the Senior
Benefits Payment Program. In FY 18 there had been 11,283
program recipients.
Co-Chair Foster asked for a review of the program's three
tiers.
Ms. Efird replied that there were three tiers and noted
reductions had been made to the program in the past. Under
the current program there were cash payments of $76, $175,
and $250 depending on applicant's income levels.
Co-Chair Foster asked for the highest income level.
Ms. Efird listed the program requirement that an Alaska
resident have income below $26,565 for a single person and
$36,015 for a couple. She would provide a table to the
committee showing all of the income levels.
Co-Chair Foster reviewed that under the Senior Benefits
Program couples with income below approximately $36,500 and
individuals with income below approximately $26,500 were
eligible for one of the three tiers.
2:48:13 PM
Vice-Chair Ortiz asked if the most a single senior could
earn to qualify for the $75 per month was $26,500.
Ms. Efird agreed.
Vice-Chair Ortiz asked what the income requirement was for
a senior to receive the maximum amount. He asked if the
amount was monthly.
Ms. Efird replied that the income requirement was an annual
amount and the payment was monthly. She reported that the
income level for the highest payment was $11,385 for an
individual and $15,435 for a married couple.
Vice-Chair Ortiz asked if there were 19,000 recipients.
Ms. Efird clarified there were 11,283 program recipients in
FY 18. The department did not yet have the complete
information for FY 19.
Vice-Chair Ortiz asked how many individuals received the
maximum benefit.
Ms. Efird answered that 1,742 had received the $250
payment, 5,124 had received the $175 payment, and 4,713 had
received the $76 payment.
2:50:26 PM
Vice-Chair Ortiz asked if the administration had done any
research on how the reduction would impact recipients prior
to making the decision [to repeal the program].
Ms. Efird replied in the affirmative. She reported the
decision and proposal had been difficult to make. She
detailed that the department tried to look at the array of
services going to each population group. She recognized
that low income seniors need help and she reiterated her
earlier testimony that the budget had on individual groups.
The administration wanted to keep and hold harmless other
programs providing funding for waiver services and for
seniors to remain in their homes. She offered to provide
the committee with the array of services seniors were
receiving across DHSS. The goal had been to balance the
services [provided to population groups]. The funds came
from a total UGF pot of money.
Vice-Chair Ortiz responded that he would appreciate more
information.
2:52:18 PM
Representative Josephson requested information showing
which programs benefitting seniors had been held harmless.
He referenced Ms. Efird's testimony that the funds were all
GF. He asked if there was no TANF matching fund.
Ms. Efird clarified she had been speaking to the Senior
Benefits Program that was all general funds.
Representative Josephson noted that slide 7 reduced or
repealed a number of programs that benefit seniors. He
asked if a senior would be eligible for multiple programs
shown on the slide.
Ms. Efird replied in the affirmative. She provided a list
of other programs providing funding to seniors. Adult
Public Assistance provided benefits to seniors, age 65 and
above. She would follow up with the number of seniors
receiving benefits under the program. Other public
assistance programs included temporary assistance payments,
general relief assistance payments, heating assistance
payments, supplemental nutrition food stamp payments. Other
assistance was provided through Medicaid programs and
waivers, and behavioral health funds. She would be happy to
provide the detail to the committee.
2:54:15 PM
Representative Josephson asked what the 1983 standard was
[shown on slide 7 related to Adult Public Assistance].
Ms. Efird answered that the reference [on slide 7] was the
total amount of the Adult Public Assistance payments that
went out in 1983. She would provide the committee with an
informational sheet showing the calculations. The federal
government gave DHSS two options to meet the maintenance of
effort requirement: 1) the state could go back to the
amounts it had funded in 1983, or 2) each year DHSS had to
meet the current payment level for the following year.
Representative Josephson assumed the 1983 payments were
inflation adjusted.
Ms. Efird believed cost of living adjustments were
included, but she would double check.
Representative Josephson asked how the proposed reduction
to TANF would impact federal matching funds.
Ms. Efird answered that if the state did not meet its
maintenance of effort it would be fined by that amount. The
state would still have to meet the level of payment from
state funds to receive federal funds.
Representative Josephson believed Ms. Efird was saying that
the state would know if the maintenance of effort
requirement was not met. He stated his understanding that
the state would be fined and would not receive the federal
payments.
Ms. Efird answered that the state would be fined but would
still receive its federal award. At some point the award
would be reduced in that one year and the state would have
to make it up with a General Fund fine. She believed the
state would still receive the same federal award the
following year.
2:57:00 PM
Co-Chair Foster asked the department to provide the summary
chart of senior programs to his office for distribution to
committee members. He referenced Ms. Efird's testimony that
the state provided heating assistance payments. He asked if
he was correct that the state program had ended, but the
state still accepted federal money.
Ms. Efird confirmed there were federal funds, but no state
funds [for heating assistance].
Representative Knopp referenced the proposal to repeal the
Senior Benefits Payment Program. He asked if Ms. Efird had
testified that some of the seniors receiving the benefit
were receiving benefits from other programs as well.
Ms. Efird affirmed there would be some overlapping
benefits. She could follow up with a chart showing the
number of seniors receiving senior benefits who were also
in other programs.
Representative Knopp surmised that individuals currently
receiving senior benefits only, would potentially qualify
for other benefits. He imagined the criteria for Adult
Public Assistance was different than the for the Senior
Benefit Program. He stated his understanding that
individuals over the age of 62 or 65 received the senior
benefits based on income. He asked for verification the
Senior Benefits Program was the remainder of the Longevity
Bonus Program.
Ms. Efird answered that the former [Longevity Bonus]
program had been changed to a needs-based, low income
program.
Representative Knopp pointed out that the amount of money
received by seniors under the Senior Benefits Program was
not high. He asked if seniors severely impacted by the
elimination of the program would be eligible for assistance
through another program. He did not know the details about
eligibility for other programs and planned to follow up
with the department.
2:59:40 PM
Ms. Efird addressed the last bullet point on slide 7, the
governor's proposal to reduce public health nursing by $2
million. The reduction would be realized though exploring
other efficiencies by leveraging federal funding and
piloting innovative delivery models with partners to
provide the services.
Vice-Chair Ortiz asked how the $2 million reduction would
be carried out. He wondered if it would mean a reduction in
nurses in particular communities.
Ms. Efird answered that the department was looking at
partners in different communities that could provide the
services if there was a reduction in any public health
nursing services in a community. The department was not
proposing the closure of any public health nursing centers.
She explained that DHSS was exploring how the services
could be provided in a more innovative way.
Co-Chair Foster noted that DHSS Deputy Commissioner Albert
Wall was available online for any questions related to API.
Ms. Efird turned to slide 8 and addressed proposed
reductions to Medicaid. She detailed that Medicaid was the
largest percentage of the department's UGF budget at over
60 percent. She elaborated that Medicaid accounted for
$662,118,000 GF in FY 19 compared to FY 19 [20] at
$412,901,000; the reduction was close to $250 million. The
department was looking to implement current initiatives
within the DHSS budget that the department had control over
and felt it could achieve in FY 20. The department's Deputy
Commissioner Donna Steward was currently in Washington D.C.
working with CMS to look at other waiver possibilities or
other innovative options to cover Alaska's vulnerable
populations.
Co-Chair Wilson stated she had received some information on
Medicaid about the reason "we're at a 50/50." She explained
that some of the issue was about the state's ability to
pay. She asked if the Permanent Fund corpus and Earnings
Reserve Account (ERA) worked against the state when they
[the federal government] tried to discern how much the
state could pay. She elaborated that some [other states]
received a 75/25 federal to state ratio, while Alaska was
at the lowest level at 50/50.
Ms. Efird replied that the calculation was on a per capita
basis. She did not know whether the Permanent Fund was
included, but she would follow up.
Co-Chair Wilson had considered a resolution "asking for
that." She believed that including the Permanent Fund would
make the state look very wealthy in terms of per capita.
She remarked that increasing the [federal] rate would keep
services in place and aid in holding the state harmless.
3:04:16 PM
Representative Josephson spoke to the $225 million Medicaid
cut that the department was hoping to receive a waiver
related to. He referenced the administration's proposal to
spend the remaining balance of the Statutory Budget Reserve
(SBR), which he was not objecting to on principle. He
stated that $172 million in the SBR was $53 million less
than the governor's proposed cut to Medicaid. He wondered
what the impact was.
Ms. Efird answered that the safety net language was based
on a timeline to work with CMS to get the second phase
(discussed previously by Commissioner Crum) approved. The
department would be forthcoming with the information about
what it felt was under its control to achieve in FY 20. The
department was working to achieve the governor's proposed
reduction to Medicaid in FY 20, some of that was out of the
department's control and in CMS's control. She reiterated
that Deputy Commissioner Steward was currently working on
the issue [in D.C.]. The safety net language was there in
the event the state could not work through the deadlines
and requirements with CMS to achieve the second phase of
savings.
3:06:07 PM
Vice-Chair Ortiz addressed a bullet point that showed the
elimination of adult dental Medicaid benefit in the amount
of $26 million to $27 million. He asked how many people
across the state would not receive any dental care if the
cut occurred. He asked if the cut would mean no dental care
coverage including basic cleaning.
Ms. Efird answered that the department had provided a chart
with the number of recipients based on age group for adult
preventative dental. She elaborated that preventative
services would be cut for adults, but children would be
covered under Medicaid. Any emergency dental would be
covered in the traditional Medicaid program. She explained
that the preventative dental was an optional Medicaid
service. She relayed that DHSS touched people and impacted
people. The decisions had been very difficult to make. She
reiterated that service was optional, and adults would
still have coverage for emergency dental care under
Medicaid.
Vice-Chair Ortiz asked how many adults would not be able to
access basic cleaning services if the cut came to fruition.
Ms. Efird replied that she had the information and would
provide it to Co-Chair Foster's office.
3:08:38 PM
Co-Chair Foster noted that some of the $250 million
reduction would be subject to CMS approval. He asked if the
department could quantify what portion of the reduction
could be made that was considered easier [to make]. He had
heard the number $100 million.
Ms. Efird responded that the department would have the
number as quickly as possible. The department wanted to
ensure the number provided was as accurate as possible.
Commissioner Crum added that part of the goal of Deputy
Commissioner Steward's current trip to D.C. was to gain
insight into the timeline. He anticipated being able to
provide a clean projection to the committee in the coming
week.
Representative Sullivan-Leonard asked if the governor was
proposing any other cuts to optional Medicaid programs.
Ms. Efird answered that DHSS was looking at innovative ways
to cover the healthcare coverage needs of Alaskans. She
would provide a list of the optional Medicaid services and
associated costs that were currently provided. She
explained that under the Affordable Care Act some
previously optional services had become mandatory, such as
pharmacy services. She reported that a number of optional
services for Alaska were ways the state had chosen to cover
what would have been a mandatory service under the federal
Medicaid program. She explained the state had been
considering the best way to cover services for the Alaska
population. She detailed that some of the services were
considered optional, but if the state did away with some of
them, the service would end up being mandatory. The
department was working with CMS to avoid disrupting
healthcare coverage for low income Alaskans and was looking
at innovative ways to provide the coverage.
3:12:16 PM
Ms. Efird reviewed the governor's proposed statewide
support executive branch 50 percent travel reduction of
approximately $350,000 GF (slide 8).
Co-Chair Wilson noted that the legislature had put a
substantial amount of money into the Office of Children's
Services (OCS) the previous year for increasing caseworkers
and studying caseloads. She highlighted issues including
the number of children removed from their home,
reunification level, and the termination process. She asked
how many of the positions were still being held and whether
the [caseworker] turnover rate still existed. She asked for
an update on how the money (provided via HB 151) had been
used.
Ms. Efird answered that the department would provide
additional information. She detailed that two years back
OCS had received a number of positions, which were all
filled. The majority of the positions had gone to the
Wasilla office and had resulted in a reduction in the
number of caseloads per worker. She would provide the
committee with information on the "out of home" children
connected with the Wasilla office. Additionally, in the
previous year there had been 16 more OCS staff added. She
reported that some staff had left since that time and the
department was looking to fill the positions. She
communicated that there continued to be some retention
concerns within OCS.
Co-Chair Wilson agreed that caseloads would be less if
there were more caseworkers and the same number of
children. She asked if the state was going to continue to
do the same thing it had been doing where reunification
numbers had been very low. She did not think there was any
bigger crises than taking a child from a home if there had
been an option to work things out [and keep the child in
their home]. She wondered if there were any changes on the
horizon.
Commissioner Crum answered that dealing with children was
one of the department's most important responsibilities. As
more data came in about adverse childhood experiences
(ACES) the department was working more and more towards
determining how to implement family reunification aspects
and/or working with community partners. There were many
different scenarios where the department was looking to
gain efficiencies to ensure things were being done in the
best way possible for children and their long-term
outcomes.
3:15:32 PM
Co-Chair Wilson stressed that the topic was a cross-
departmental issue. She expressed frustration over not
knowing whether growth [in the number of children removed
from their homes] was still occurring. She referenced the
substantial funding that went to the system and surmised at
the current cost the state could pay to have someone live
in [troubled] homes with the parent [and child]. She
highlighted the number of professionals involved in each
case including an attorney for each parent, the OCS
attorney, OCS caseworker, and guardian ad litem. She
thought the system should stop doing things in silos to use
the money in a better way. She hoped that with the
administrative directors going to OMB it would mean the
discussions would take place.
Co-Chair Wilson found it heartbreaking to hear from
individuals who had been removed from their family settings
[as children] and somehow, they had gotten caught up in a
similar scenario [as adults with their own children]. She
thought the state had been "doing it for too long." She
understood that responsibility for the problem did not only
reside with DHSS. She continued that the state had broken
apart families for many years. She reasoned that unless all
agencies worked together to figure out how to do things
differently there would be more crime and juvenile
detention. She encouraged the department to work with
others because the issue was hitting numerous budgets. She
believed the issue had been the fastest growing program two
years back and no one was getting the help they really
needed.
Vice-Chair Johnston suggested visiting a "wonderful"
nonprofit (as an example of best practices) in Anchorage
that had expanded to Fairbanks. She highlighted that
legislation passed in the previous year included a
Legislative Budget and Audit Committee audit. She thought
2018 would be the baseline for any improvement brought by
the legislation.
3:18:31 PM
Vice-Chair Ortiz thanked the department for its
presentation. He stressed that everyone agreed that
expenditures needed to match revenues. However, the
department's budget was not saying that. He stressed that
the budget reduced care for seniors, basic dental care, and
more in favor of a full PFD. He did not support the
approach.
Co-Chair Wilson did not believe that was the only thing
that was being said. She believed it was possible to do
business differently. She thought the state was bad at
getting people off of programs and believed there were
options to help wean people off. She shared that she had
been contacted by people trying to get off of programs. She
acknowledged there were difficult decisions to make. She
heard what Vice-Chair Ortiz was saying but believed there
were inefficiencies and money left on the table that held
back Alaskans from owning their own home, having the job
they wanted, and trying to keep some of the programs they
needed in order to get there.
Co-Chair Foster he thanked the presenters and reviewed the
schedule for the following day.
ADJOURNMENT
3:21:28 PM
The meeting was adjourned at 3:21 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FY2020 DHSS Budget presentation HFIN 3.12.19.pdf |
HFIN 3/12/2019 1:30:00 PM |
HFIN Budget Overview DHSS |
| Response Qs DHSS Op Overview Alaska Pioneer Homes - proposed rates.pdf |
HFIN 3/12/2019 1:30:00 PM |
Response Qs Budget Overview HFIN |
| OMB Response Qs DHSS Op Overview HFIN 3.12 HSS.pdf |
HFIN 3/12/2019 1:30:00 PM |
Response Qs Budget Overview HFIN |
| Response Qs DHSS Optional Services State by State Comparison.pdf |
HFIN 3/12/2019 1:30:00 PM |
Response Qs Budget Overview HFIN |
| Resonse Qs DHSS Op Overview Service Array.pdf |
HFIN 3/12/2019 1:30:00 PM |
Response Qs Budget Overview HFIN |