Legislature(2019 - 2020)Anch LIO Lg Conf Rm
04/15/2020 10:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Update: Cares Act Coronavirus Aid, Relief, and Economic Security Act | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
ANCHORAGE LIO
April 15, 2020
10:04 a.m.
10:04:50 AM
[Note: meeting took place in the Anchorage LIO and was
recorded from Juneau.]
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 10:04 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair (via teleconference)
Representative Ben Carpenter (via teleconference)
Representative Andy Josephson (via teleconference)
Representative Bart LeBon (via teleconference)
Representative Kelly Merrick (via teleconference)
Representative Colleen Sullivan-Leonard(via teleconference)
Representative Cathy Tilton (via teleconference)
Representative Adam Wool (via teleconference)
MEMBERS ABSENT
Representative Gary Knopp
PRESENT VIA TELECONFERENCE
Pat Pitney, Director, Legislative Finance Division; Megan
Wallace, Director, Legislative Legal Services, Alaska State
Legislature; Representative Bryce Edgmon; Representative
Sara Hannan Representative Dan Ortiz, Vice-Chair;
Representative Ben Carpenter; Representative Andy
Josephson; Representative Bart LeBon; Representative Kelly
Merrick; Representative Colleen Sullivan-Leonard;
Representative Cathy Tilton; Representative Adam Wool.
SUMMARY
UPDATE: CARES ACT CORONAVIRUS AID, RELIEF, AND ECONOMIC
SECURITY ACT
10:06:20 AM
Co-Chair Foster reviewed the meeting agenda.
^UPDATE: CARES ACT CORONAVIRUS AID, RELIEF, AND ECONOMIC
SECURITY ACT
10:08:08 AM
PAT PITNEY, DIRECTOR, LEGISLATIVE FINANCE DIVISION (via
teleconference), referenced two documents including the
"Federal CARES Act Summary," dated April 15, 2020 (copy on
file). She reviewed the four categories listed on slide 2
titled CARES Act Provisions:
The CARES Act is comprehensive. Legislative Finance
produced a CARES Act Summary organized in four
categories:
(1) Federal funds a State will receive directly
(2) Federal funds to non-state entities, (tribal,
local government entity, or owners of a
medical hospital / facility)
(3) Federal funds to Federal agencies for grant
programs that may be available to the state
or non-state entities
(4) General items of interest
*This presentation addresses the categories in reverse
order.
10:10:14 AM
Co-Chair Foster recognized that Representative Bryce
Edgmon, Speaker of the House, joined the meeting online.
Ms. Pitney turned to slide 3 titled CARES Act Provisions:
• General items of interest (Section 4 Page 16):
• Extends Real ID deadline to Sept. 30, 2021.
• Provides a direct payment of up to $1,200 to
Alaskans with $500 for each dependent child under
17 years old.
• Small Business Administration (SBA) emergency
grants of up to $10,000 to provide immediate
relief for operating costs, can cover six months
of payments for businesses with existing SBA
loans with rent, mortgage and utility costs
forgiveness, and loans for personnel costs can be
reimbursed 100% through tax credits to
participating businesses. (UA's Small Business
Development Center for additional information)
• Corporation for Public Broadcasting to make
fiscal stabilization grants to public television
and radio stations $75 million.
• Requires coverage of COVID-19 testing in health
plans.
Ms. Pitney addressed general items of interest in the CARES
Act. She reviewed other items on the slide including the
direct payments to individuals of up to $1,200. She
reported that the University Small Business Development
Center was the primary resource for the SBA loans and in
addition, the act required health plans to cover COVID-19
testing.
10:13:55 AM
Ms. Pitney moved to slide 4 titled CARES Act Provisions:
• Federal $4.3 billion to support federal, state,
and local public health agencies
• $1.5 billion for grants or cooperative
agreements to carry out surveillance,
epidemiology, mitigation, communications and
other preparedness and response activities
• $400 million in election security grants in
the 2020 federal election cycle.
• $40.7 million for establishing a grant
program for geriatric education and training
programs
• $5 billion for the Community Development
Block Grant (CDBG) program
• $1 billion to states to distribute to
eligible local entities (Community Action
Agencies or CAAs) to design and implement
anti-poverty programs
• $2 billion from U.S. Housing and Urban
Development to existing grantees
• $4 billion for Homeless Assistance Grants
• $250 million as grants or cooperative
agreements with grantees or sub-grantees of
the Hospital Preparedness Program.
• $100 billion for grants to hospitals, public
entities, not-for-profit entities, and
Medicare- and Medicaid-enrolled suppliers
and institutional providers. Helps cover
unreimbursed health care- related expenses
or lost revenue as a result of COVID-19.
• $275 million in cooperative agreements and
grants to expand services and capacity for
rural hospitals
10:17:59 AM
Ms. Pitney moved to slide 5 titled CARES Act Provisions:"
Federal funds to Federal agencies for grant programs
that may be available to the state or non-state
entities (Section 3, Page 10)
• Substance Abuse and Mental Health Services
Administration (SAMHSA)
.notdef $425 million to the for mental health and
substance use with certified community
behavioral health clinics
.notdef $250 million in grants using the Certified
Community Behavioral Health Clinic Expansion
Grant program
• $50 million specifically allocated for
suicide prevention
• $15 million shall be specifically allocated
to tribes, tribal organizations, urban
Indian health organizations, or health or
behavioral health service providers to
tribes.
square4 $100 million in grants for a pilot program
for rural broadband access.
square4 $25 million to support the Distance Learning
and Telemedicine program
square4 $10 billion in FAA, Airport Improvement
Program
square4 $100 million in additional funding for Safe
Schools and Citizenship Education
square4 $45 million for grants to states to support
the child welfare needs of families during
this crisis
10:19:32 AM
Ms. Pitney turned to slide 6 titled "CARES Act Provisions:"
and continued to review the Provisions:
square4 $10 million available for service coordinators and
the continuation of existing congregate service
grants for residents of assisted housing projects.
o $955 million to the Administration for
Community Living (ACL) services for seniors and
disabled individuals as well as their
caregivers
o $85 million for independent living centers
currently receiving federal grant funding,
o $29 million for each fiscal year through FY
2025 for Telehealth network and telehealth
resource centers grant programs.
o $150 million in Grants for Construction of
State Extended Care Facilities.
o $14.4 billion for VA programs, including the
Health Care for Homeless Veterans
o $850 million for the Byrne JAG program grants
to help enable States, among other eligible
entities, to utilize emerging and evidence-
based approaches to address the COVID-19
pandemic. The funds will allow state and local
police departments and jails to meet local
needs.
10:21:10 AM
Ms. Pitney noted that slides 7 and 8 were almost identical
- she skipped slide 7. She addressed slide 8 titled "CARES
Act Provisions
Federal funds available directly to a non-state
entities, local government entities or owners of a
medical hospital or facility (Section 2, Page 8)
$750 million in additional funding to the Head
Start program to continue serving eligible
children
$25 billion for transit systems
$453 million for the Bureau of Indian Affairs
to prepare for and respond to the coronavirus,
including for public safety and justice
programs, welfare assistance and social
services programs, and other tribal government
assistance.
Indian Health Service (IHS) $1.032 billion for
public health support, electronic health record
modernization, telehealth, and other
information
technology upgrades, $65 million of the funding
will be used for electronic health record
stabilization and support and $450 million will
be distributed through IHS directly operated
programs
$100 million for the Food Distribution Program
on Indian Reservations program (FDPIR) to
prevent, prepare for, and respond to
coronavirus.
o $50 million shall be for facility improvements
and equipment upgrades.
o $50 million shall be for the costs relating to
additional food purchases.
All federally recognized Tribes in Alaska are all
eligible to administer FDPIR.
$8 billion of Coronavirus Relief Fund is aside
for tribal governments nation-wide for expenses
based on increased COVID-19 related
expenditures of each such tribal government (or
a tribally-owned entity of such tribal
government) relative to aggregate expenditures
in fiscal year 2019.
Ms. Pitney elaborated on the Head Start program funding.
She commented that Head Start funding typically required a
local match covered by the state. The CARES Act funding
provided the funding without the local match requirement
and included funding for summer programs.
10:24:00 AM
Ms. Pitney advanced to slide 9 titled "CARES Act
Provisions. She reminded committee members that the dollar
figures in the presentation were the federal numbers and
Alaska would receive a portion based on a formula.
Federal funds states will receive directly (Section 1,
Page 2)
$45 billion nation-wide for the Disaster Relief
Fund (DRF) for the immediate needs
$1.4 billion nation-wide for deployments of the
National Guard.
Expanded unemployment insurance from three to
four months, and provides temporary
unemployment compensation of $600 per week for
up to 4 months
$500 billion Economic Stabilization lending
fund for businesses, cities, and states.
$56 million provided nationwide to maintain
existing Essential Air Service (EAS) to rural
communities.
$8.8 billion nationally in additional funds
through September 30, 2021 to support federal
child nutrition programs.
$450 million for the Emergency Food Assistance
Program (TEFAP) including $150 million for
costs associated with the distribution of
commodities.
$15.5 billion for a Contingency Reserve Fund
within SNAP to support waiver authorities
included in the Families First Coronavirus
Pandemic Response Act (PL 116-127)
$1 billion for Community Services Block Grant
(CSBG), which provides funds to states to distribute
to eligible local entities (Community Action
Agencies or CAAs) to design and implement anti-
poverty programs.
$900 million supplemental funding for the LIHEAP
program to further support low-income, disabled, and
elderly populations
Ms. Pitney elucidated that the unemployment insurance was
additive on top of Alaska's unemployment funds and
increased payments by $600 per week. The payments were
extended to traditionally non-eligible workers; those in
the gig economy or self-contractors. The money equated to
100 percent wage replacement for someone earning $60,000
per year. She related that the Department of Labor and
Workforce Development (DOL) was working diligently on
application and distribution procedures to ensure prompt
disbursement of funds.
10:29:03 AM
Ms. Pitney turned to slide 10 titled "CARES Act
Provisions." and reviewed the federal funds states would
receive:
Federal funds states will receive directly
$30.75 billion nation-wide for an Education
Stabilization Fund for states, school districts
and institutions of higher education.
.notdef $3 billion is shared by the states for
governors to allocate at their discretion for
emergency support grants.
.notdef $13.2 billion available for formula Elementary
and Secondary Education grants to states, which
will then distribute 90% of funds to LEAs based
on their proportional allocation of Elementary
and Secondary Education Act Title I-A funds.
.notdef $14 billion for emergency relief for
Institutions of Higher Education
$150 billion Coronavirus Relief Fund for state,
local and tribal governments to be paid out
within 30 days of enactment.
.notdef Alaskas expects $1.25 billion.
.notdef Alaska has no municipalities with a population
over 500,000, and would likely retain the full
$1.25 billion. The Act allowed for 45% set
aside for localities with a population over
500,000.
10:31:13 AM
Ms. Pitney elaborated that 99.5 percent of the funds of
Alaska's portion of the $13.2 billion would go to school
districts. She indicated that Alaskas portion of the $14
billion emergency relief funding for higher education was
approximately $10 million, of which $7.5 million was for
the University of Alaska. She added that much of the higher
education funding was intended for students based on the
Pell Grant formula. She learned that the tribal government
funding would be distributed by April 24, 2020. The state
expected to receive the entire $1.25 billion along with 18
other states, which was the minimum amount. Since Alaska
lacked municipalities with a population over 500,000, the
state would manage the funding. She pointed to slide 11
titled Guidance to Date on the Coronavirus Relief Fund:
Ms. Pitney read from slide 11:
.notdef The CARES Act requires that the payments from the
Coronavirus Relief Fund (Sec. 5001) only be used to
cover expenses that
(1) are necessary expenditures incurred due to
the public health emergency with respect to the
Coronavirus Disease 2019 (COVID19);
(2) were not accounted for in the budget most
recently approved as of March 27, 2020 (the
date of enactment of the CARES Act) for the
State or government; and
(3) were incurred during the period that begins
on March 1, 2020 and ends on December 30, 2020.
.notdef Additional information on eligible uses of Fund
disbursements by governments will be posted as
it becomes available.
Ms. Pitney anticipated that the treasury department would
be sending additional guidance any day. She shared that the
guidance she received from federal officials thus far was
sparse; the funding was for costs associated with the
COVID-19 outbreak from March 2020 through the end of
December 2020. She concluded her presentation and was
available for questions.
10:35:21 AM
Co-Chair Foster recognized that Representative Sarah Hannan
had joined the meeting in Juneau.
Co-Chair Johnston cited slide 10 regarding the Education
Stabilization Fund. She asked if the state currently, could
accept the funds because of having an established formula
in place. She was trying to ascertain what items the
legislature would need to give receipt authority to and
what items contained no appropriating vehicle.
10:37:15 AM
Ms. Pitney answered that the formula in place was set up by
the federal government. She delineated that both the
Department of Education and Early Development (DEED) and
the University of Alaska (UA) had existing federal
appropriations. The degree to which the additional funds
exceeded federal receipt authority would require additional
legislative action. Depending on the use of the education
funds there were currently federal appropriations that
could potentially be increased by the Revised Program
Legislative (RPL) process. She believed that Legislative
Legal Services would cover the range of actions that may be
necessary. Co-Chair Johnston wanted clarification on the
budget process before going to the legal process. She felt
that it would be helpful regarding the block grants and
wondered whether the grants go through the state or went
directly to communities. She wanted to understand where the
state's responsibility was. Ms. Pitney answered that some
pieces of the block grants went to the state and others
went directly to communities. She pointed out that items
like the $25 million in transit funding was distributed
directly to communities. Co-Chair Johnston suggested that
it would be helpful to understand where funding from the
CARES Act was already in place so the legislature could
properly address the needs.
10:40:28 AM
Representative Josephson asked for clarification on several
items. He referenced a legal memo by Megan Wallace,
Director, Legislative Legal Services, Alaska State
Legislature. He related that the memo stated emergency
funding cannot be used to supplement regular budget items
not affected by the coronavirus. He deduced that the budget
from the prior year determined whether an item was related
to COVID 19. Ms. Pitney replied in the affirmative. She
indicated that the funding was for the extra expenses that
were incurred at the time the CARES Act was enacted. The FY
21 budget and the FY 20 supplemental were passed after the
enactment of the CARES Act. She deferred further answer to
Ms. Wallace to set the stage.
Representative Josephson considered the $1.25 billion in
federal funding. He thought that the funding should be a
focus but noted the importance of understanding all
categories of the CARES Act funding relative to the RPL
process. He ascertained that while the $1.25 billion in
funding was critical there was other Cares Act funding to
consider. He asked whether his statement was accurate. Ms.
Pitney responded in the affirmative. She reported that it
was important to know if the state had the existing
mechanism to accept and implement the funding for grants
from other federal agencies. She exemplified the Temporary
Assistance for Needy Families (TANF) program where the RPL
process could be used to authorize the CARES Act funding
that exceeded the existing authority. She reiterated that
Ms. Wallace's testimony regarding the range of options for
funding distribution authority framed the discussion
regarding specific funding.
Co-Chair Foster set aside any legal questions related to
the $1.2 billion and the RPL process for the moment. He
would have Ms. Wallace answer the question later.
10:45:19 AM
Representative Wool asked about the additional $600 per
week to compensate for a $60,000 per year job in
Unemployment Insurance (UI) benefits. He did not understand
how the numbers added up. Ms. Pitney answered that if a
person earned $60,000 per year prior to losing their job,
the $600 per week plus Alaska's existing maximum benefit of
$370 per week would replace the income in full. She voiced
that if a person made $60,000 or less the extra $600 would
replace the wage. Representative Wool stated that that
total amounted to $52,000 per year. Ms. Pitney clarified
that there were additional funds for a family of four.
Representative Wool asked for an estimate of the number of
applicants based on the current trajectory. Ms. Pitney
answered that she was receiving weekly updates from DOL and
indicated that the applications were up significantly from
the previous year. She would provide the data following the
meeting. She added that anyone who applied and was eligible
for UI was automatically awarded the $600 per week in
federal funds in addition to the funds provided by the
state.
10:48:41 AM
Representative Wool referenced Alaskas $10 million portion
of the $30 billion for the Education Stabilization Fund. He
asked whether there was any other fund that would help the
University besides the $7.5 million cited in the
presentation. Ms. Pitney confirmed that out of the $10
million coming to the state associated with higher
education the University would receive 7.5 million. Other
colleges in the state would receive some of the funds. The
portion not sent to the students would be available to the
university, but it was a small amount. She was unaware of
other funds available to help cover other losses at the
University.
Representative LeBon asked about the support for hospitals
in the amount of $100 billion cited on slide 4. He asked
how the funds would be distributed to medical facilities
throughout the state. Ms. Pitney answered that the grants
were managed and distributed by the Centers for Medicare
and Medicaid Services (CMS) or another federal Health and
Social Service entity. The hospitals were working directly
with the federal agencies to secure the funds. The medical
facility funding belonged to the category of money
available in grants from the federal government.
10:52:34 AM
Vice-Chair Ortiz referenced the potential monies to
businesses that had been shut down and individual
contractors who worked for the businesses. He noted that it
had been described as a loan program, but he heard that the
loans may be forgiven. He wondered if the individual
business would apply directly for the funds to the federal
government or through the state. Ms. Pitney referenced the
program through the Small Business Administration (SBA).
Vice-Chair Ortiz interjected a question regarding the slide
number. Ms. Pitney directed attention to slide 3 of the
presentation or on page 16 of the summary document titled
Explanation of Federal Stimulus Bill (copy on file). She
elaborated that the best resource for help in applying for
the program was the Small Business Development Center
(SBDC) at the University of Alaska. The SBDC was
specifically set up to link small businesses with the SBA.
The SBA loans were administered through a bank. She listed
the three types of assistance: a $10,000 grant; a short-
term loan with forgiveness if used for payroll and other
business related expenses; and a loan that could be repaid
through future tax credits.
10:55:49 AM
Representative LeBon interjected with his understanding of
the SBA program. He informed the committee that there were
several programs. He contended that the banks did not
manage the $10,000 maximum loan program and reported that
it was managed by the SBA. However, the banks managed the
Paycheck Protection Program (PPP). He relayed that he had
been helping his prior bank employer process the PPP loans
and had processed over 250 loans valued at over $30
million. He elucidated that the repayment period was two
years and interest only applied for six months. The loan
could be used for business related expenses but, if the
business used most of the money for payroll related
expenses, that amount could be forgiven.
Vice-Chair Ortiz cited slide 9 related to $500 billion in
economic stabilization lending funds for businesses,
cities, and states. He asked whether the item was related
to the SBA funds. Ms. Pitney answered in the negative and
related that the item was completely different. She
elaborated that he was referring to a major debt
refinancing mechanism for states and cities that utilized
low interest mechanisms through the federal government.
10:58:24 AM
Representative Josephson referred to the discussion
regarding the $100 billion for hospitals and Medicaid
providers, etc. He inquired whether the legislature would
be privy to the information regarding the grant recipients
who received awards directly from the federal government.
He reasoned that the state may need the information when
disbursing limited resources in FY 22. The state may want
to provide resources to entities that did not receive
federal aid.
Co-Chair Johnston replied that some of the information may
be coming from the reporting requirements spelled out in SB
241 [SB 241 - Extending COVID 19 Declaration/Relief -
Chapter 10 SLA 20 - 04/09/2020]. She communicated that the
administration was required to send monthly reports. She
did not know whether they would receive information
regarding federal monies that went directly to nonprofits.
She believed that they would see the information related to
CMS.
11:01:14 AM
Vice-Chair Ortiz referenced the $500 billion on slide 9. He
thought a comment had been made by Ms. Pitney that perhaps
some of the funds could go towards a larger contribution to
Public Employees' Retirement System (PERS) and Teachers'
Retirement System (TRS). He asked if there was a
legislative mechanism in place for that to happen. Ms.
Pitney answered that several years back a pension
obligation bond bill had been passed and had not been used
by the administration. She maintained that the legislation
would require another piece of legislation to authorize a
transaction between the state and federal government. The
legislation would work similarly to the current pension
obligation bond provisions currently in place. She
cautioned that the financial terms would be a deciding
factor when weighing the benefits of such an option. Vice-
Chair Ortiz considered it was an issue for a later time.
Ms. Pitney agreed with the statement.
11:03:43 AM
Representative Sullivan-Leonard asked if there was a
specific federal formula directing how the CARES Act funds
would be dispersed. Ms. Pitney answered that there were 100
or more provisions in the CARES Act. She relayed that some
of the provisions came with a distribution formula. She
provided the example of the Education Stabilization Fund
that had a distribution formula for each state. The $1.25
billion relief fund lacked any guidance other than the
funds must be used for unanticipated expenses related to
the COVID 19 preparation, mitigation, and response. She
reiterated that the funds would be deposited into the state
treasury by the 24th of April. Representative Sullivan-
Leonard referenced $88 million in funding cited by Senator
Lisa Murkowski for tribal entities. The senator was waiting
for specifics regarding distribution. She wondered whether
Alaska was putting the cart before the horse and should
wait for further federal guidance before distributing the
funds.
11:06:43 AM
Ms. Pitney believed that there were many questions yet to
be answered and there would be many moving parts and the
issues would be addressed as necessary over time. She noted
that the $88 billion that Senator Murkowski cited was
different from the $1.25 billion coming to Alaska.
11:07:38 AM
Representative Tilton referenced slide 10 and considered
the $1.25 billion. She thought there may be something
missing regarding economic impact. She asked for
clarification. Ms. Pitney answered that the COVID-19 relief
fund focused on unanticipated expenditures related to the
COVID-19 pandemic response. She recounted that in the
budget that was adopted there was funding for the Division
of Public Health and open ended federal receipt authority
in the public health area for outbreak response. She
deduced that to the degree that federal and state money was
spent directly in the public health arena - the
administration had the spending authority at present. The
state's budget accommodated the use of the funds for public
health response. Any amount of the funding that could be
used for an economic response was not currently part of the
budget.
11:09:46 AM
Co-Chair Johnston clarified that the unlimited receipt
authority was in the mental health trust budget. She asked
for verification that it had passed prior to the enactment
of the CARES Act. Ms. Pitney responded in the affirmative.
Representative Tilton referenced the federal stimulus
dollars being distributed to individuals and families. She
learned that about 40,000 Alaskans would not qualify based
on 2018 and 2019 tax returns. She asked for an update. Ms.
Pitney was unable to answer the question.
Co-Chair Johnston interjected that anyone with a direct
deposit from the federal government would receive their
checks such as social security recipients that did not file
a tax return. She acknowledged that checks would be issued
later in the year and it may take time to identify eligible
individuals who were not on direct deposit. She noted that
for those lacking a direct deposit with the federal
government the Department of Treasury had put up an
application link for the stimulus checks.
11:12:28 AM
Representative Tilton mentioned the unemployment program
for individuals operating as independent contractors, gig
workers, or other self-employed individuals. She asked for
more information. Ms. Pitney answered that once the federal
and state systems were in place to assist those workers,
anyone who had applied would be in line for assistance when
operational. Representative Tilton disclosed that anyone
who had applied prior to the expanded unemployment benefits
had been kicked out of the system. She asked whether
anyone currently applying before the expanded benefit
system was in place would remain in the systems queue. Ms.
Pitney replied in the affirmative. She recommended that
individuals seeking benefits should request clarity from
DOL. Representative Tilton asked about items like assisted
living and congregate meals connected to federal programs
listed on slide 6. She asked if the funds would go directly
to organizations or through the state. Ms. Pitney responded
that Representative Tilton was referring to grant programs
from federal agencies. She indicated that unless the grant
program was a consolidated statewide request, each
individual operator had to apply. The definitive answer
would be based on provisions sent out by the federal
agency. Representative Tilton surmised it would be up to
individual providers to check on what they could apply and
qualify for.
11:15:54 AM
Representative Wool referenced the municipal distribution
for communities over 500,000 in population. He noted that
Alaska lacked a municipality of that size. He asked whether
there was any obligation to disperse funds to localities
under 500,000 in population. Ms. Pitney responded that
there was an expectation based on the provisions of the act
that the state would manage disbursement to smaller
communities. The federal government did not want to manage
smaller chunks of money and left it as an expectation of
the state to manage the funding. She was uncertain exactly
how funding would have been calculated per 500,000
population centers. The 45 percent calculation was based on
the macroeconomics of state versus local government. She
ascertained that an expectation and not necessarily an
obligation existed to distribute the funds.
11:18:36 AM
Representative Wool surmised that the federal government
assumed that a municipal government serving a population
over 500,000 had the infrastructure and ability to utilize
the funding versus smaller municipalities, where it was
left to the state to distribute the funding. Ms. Pitney
replied that ultimately, the federal government did not
want to manage distributing funds at a smaller level due to
overhead costs.
Representative Josephson referenced the COVID 19 testing
covered by the CARES Act at the bottom of slide 3. He asked
if it could be used for fishing industry workers and
processing personnel. Ms. Pitney answered that the testing
required an insurance provider of a plan like AlaskaCare to
cover the COVID-19 testing. She determined that a better
provision would be to set up a testing system in the health
mitigation and response area that allowed for the ability
to test fishermen.
11:21:40 AM
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE (via teleconference), focused mainly on
the legal issues surrounding the allocation of CARES Act
funding. She highlighted that her comments were
preliminary. The specific proposals and appropriations
would need to be analyzed by the source and purpose of the
funds. She spoke from the big picture perspective and
related that the CARES Act funds were federal funds and
came with restrictions attached in terms of what they could
be used on. She focused on the last group of CARES Act
dollars specifically, the $1.25 billion to be received
shortly by the state. She detailed that section 5001 of the
CARES Act detailed the restrictions on use of the funds and
were for the purpose of covering qualified COVID 19 related
expenses. The guidance from the United States Treasury was
limited and made specific analysis on how to use the
funding more broadly tricky. She added that Section 5001
contained oversight authority and an audit function to make
sure the funds received by the state were spent in
compliance with the use of funds provision - meaning they
were necessary for the COVID-19 emergency. The state may be
responsible to repay the funds if it was later determined
that the state did not use the funds for that purpose.
11:25:11 AM
Ms. Wallace continued that Article 9, Section 13 of the
Alaska Constitution stipulated that the money was
prohibited from being withdrawn from the state treasury
without an appropriation. She opined that there were three
main options for the expenditure of the CARES Act funds.
She relayed that the first option was for the legislature
to reconvene and specifically appropriate the funds from
the CARES Act. The second option, lacking legislative
appropriation, required that the administration find
existing appropriation provisions and find either open
ended receipt authority or other receipt authority to allow
the expenditure of the funds. The third option was the RPL
process. The governor would utilize the RPL process to
increase other federal appropriations in the budget where
the legislature had not previously appropriated the federal
receipts. She voiced that the legislature had not
appropriated any of the CARES Act funds. She defined
potential existing appropriations that could possibly be
used to expend the CARES Act funding. One of the provisions
had been mentioned by Ms. Pitney and was an open ended
appropriation for federal receipt authority in the Mental
Health budget for supplemental COVID 19 emergency relief
received during FY 20 (July 1, 2019 through June 30, 2020).
The authority would capture the moment in time when the
$1.25 billion was anticipated to be deposited. The
provision granted federal receipt authority to the
Department of Health and Social Services (DHSS), Division
of Public Health, for emergency programs specifically
responding to and mitigating the risk of the COVID-19
outbreak. She relayed that another area for potential
expenditure was the Disaster Relief Fund. She qualified
that she was unsure the money would be deposited into the
fund. The governor and president had declared the COVID 19
pandemic a public health disaster and the legislature
extended the governors declaration of disaster to November
15, 2020. The governor would only have the authority to
spend a cumulative total of $10 million of the assets of
the Disaster Relief Fund. The limit was established in SB
241.
11:29:50 AM
Ms. Wallace concurred with Ms. Pitney's statement that
while the legislature provided broad authority to the
administration to respond to the pandemic from a public
health standpoint, authority to expend CARES Act
appropriations for economic relief was lacking, absent some
other action by the legislature that legally allowed
expenditure of the funds according to federal guidelines or
through the RPL process. She explained that the RPL process
was described in the Executive Budget Act, AS 37.07.080
(h). The provision, typically used in the interim, allowed
the governor to submit a request to the Legislative Budget
and Audit Committee (LBA) to increase an appropriation item
based on the receipt of additional program receipts or
federal funding not specifically appropriated by the full
legislature. She noted that although it was not interim,
the legislature had passed the budgets for the upcoming
fiscal year and it may be a process that could be utilized
under the circumstances given the legislature's current
indefinite recess.
11:32:22 AM
Ms. Wallace continued to explain the RPL process. She
reported that the legislature included specific language in
the operating budget that allowed for the RPL approval and
appropriation process. She read from the appropriation
language as follows:
(The federal receipts) that exceed those amounts
appropriated by this Act are appropriated conditioned
on compliance with the program review provisions of AS
37.07.080(h).
Ms. Wallace explained that if the administration complied
with the program review provisions, the appropriations
could be increased. She offered that it was often
questioned whether LBA could approve the request to
increase the appropriation, or if LBA could decline the
appropriation. She elucidated that statute dictated that
once the governor submitted an RPL to the committee he had
to wait 45 days to use the funds. The committee could
reject the request, which required the governor to provide
a written justification to move forward with the request
regardless of LBAs denial. She communicated that
ultimately, the governor had the authority to expend the
funds without LBA approval of the RPL request. Typically,
the legislature already appropriated the money and the RPL
process was used to increase the appropriation. She
emphasized that it was not an appropriation itself, the RPL
was merely a mechanism to increase the amount of federal
funds that had already been appropriated by the
legislature. With respect to the CARES Act funds, Ms.
Wallaces opinion was that the strictest interpretation of
AS 37.07.080(h) and the language in the operating budget
that supplemented the provision allowed for money in excess
of the federal receipts already appropriated to be
increased via the RPL process. Specifically, the
legislature had not appropriated any CARES Act funds
therefore, one could advance an argument that the RPL
process was not appropriate for the CARES Act funding. A
less restrictive interpretation could allow the RPL process
to increase the authority for specific federal receipts the
legislature had appropriated. She declared that it was her
opinion the RPL process could not be used to increase an
appropriation where the legislature did not appropriate any
federal funds.
11:37:15 AM
Co-Chair Johnston provided a real life situation. She noted
that the legislature intended to distribute some of the
CARES Act funding to local governments through the state.
She referenced the community revenue sharing statute. She
indicated that one-third of the fund was expended through a
formula. She asked if putting CARES Act money into the fund
was a gray area in the RPL process or whether it could be
done. Ms. Wallace replied that in her opinion, utilizing
the RPL process for community assistance would not be
appropriate because the appropriation had only included
state funds. To the extent that the governor vetoed the
entire community assistance appropriation, the
appropriation could not be increased because it was no
longer in the operating budget. The legislature could enact
a new appropriation that would use CARES Act federal
receipts for distribution to communities rather than state
funds. The appropriation would differ from the specific
revenue sharing statutory program, but the legislature
could use the program as guidance.
11:41:19 AM
Co-Chair Johnston referenced a housing program in the CARES
Act outside of the $1.25 billion appropriation. She asked
whether the Alaska Housing Finance Corporation (AHFC) could
act independently or if the legislature needed to consider
it. Ms. Wallace replied that Ms. Pitney had spoken about
some HUD funds that may be available. She would have to
follow up. She did not know specific details about funds
used for AHFC. She suggested that Ms. Pitney follow up.
Ms. Pitney answered that AHFC had several appropriations in
different programs. The entity could act independently if
it had federal receipt authority that exceeded what it
normally received. She exemplified that if AHFC had federal
receipt authority of $10 million and had only received $5
million, it could likely expend CARES Act funding. However,
if the funding exceeded the corporations federal authority
it was more likely the RPL process was appropriate. An
examination of the emergency funding and the federal funds
the agency had received was necessary. However, she deemed
that AHFC receipt authority was a more appropriate use than
an RPL associated with the community assistance program.
11:43:58 AM
Representative Josephson referenced the RPL process and
reiterated his understanding of the process as Ms. Wallace
had explained it and asked whether he was accurate. Ms.
Wallace replied that his statement was generally correct.
She noted that the RPL process could not be used for money
that had not been appropriated. She noted that Ms. Pitney
provided the summary document that included CARES Act
funding that might be available. She deduced that many
categories of the federal funds like education, Medicaid,
and UI were areas where the RPL process was likely
appropriate; however, it was not an appropriate mechanism
for expending funds unrelated to existing appropriations
that already had federal receipt authority.
11:46:22 AM
Representative Josephson spoke about the vetoes made nine
days earlier by the governor. He asked if because the
legislature passed the operating budget after March 27,
2020, the CARES Act funding was predicated on the prior
years budget and the current years mental health budget.
Ms. Wallace responded that Section 5001 of the CARES Act
only applied to the $1.25 billion lump sum payment, the
requirements for use of the funds in subsection (d) listed
three categories of restriction [only 2 were noted]:
• Restricted use for costs incurred related to COVID-19
• The costs were not accounted for in the budget most
recently passed.
Ms. Wallace delineated that the answer was confusing, and
it was easy to get lost in discussions regarding which
budget the CARES Act applied to. The appropriations
recently vetoed by the governor were relevant because
subsection 3 of the CARES Act allowed for costs incurred
from March 1, 2020 through December 2020. The period
covered two different fiscal years; the FY 20 and FY 21
budgets. Specific to the RPL process, COVID 19 expenditures
in FY 20 were determined on the FY 20 budget. Expenditures
for FY 21, after July 31, 2020 were based on the FY 21
budget. Representative Josephson noted her statement was
helpful and he supported the governor using the CARES Act
funds to supplant his vetoes.
11:49:50 AM
Vice-Chair Ortiz referenced the three main options provided
by Ms. Wallace to appropriate the CARES Act funding. He
asked if it was safe to say the cleanest and most efficient
way would be for the legislature to reconvene and
appropriate the funds. Ms. Wallace replied that it was a
policy call for the legislature. She offered that risks
were involved and noted that there were many unknowns. The
state would receive a minimum $1.25 billion from the
federal government. She announced that the simplest thing
would be for the legislature to convene and appropriate the
funds to eliminate any speculation and confusion.
11:51:55 AM
Representative Sullivan-Leonard asked about the RPL
process. She saw that the process had been used in the past
for emergency funding, Medicaid, and the National Guard.
She referenced a response by Ms. Wallace to Senator
Wielechowski regarding limitations of the RPL process for
CARES Act expenditures concerning other program receipts.
She inquired whether Power Cost Equalization (PCE) could be
considered program receipts and used to disperse funds for
community revenue sharing and if it was applicable to the
RPL process. Ms. Wallace answered in the negative. She
explained that additional program receipts applied when a
program received more revenue than had been anticipated.
She detailed that the RPL process could be used to increase
program receipts. She detailed that PCE funds were part of
a state fund and were not program receipts. Utilization of
PCE funds were specifically appropriated by the
legislature. The RPL process could not be used to request
to expend additional funds out of a state fund.
Representative Sullivan-Leonard hoped that funding could be
dispersed by the state to the local governments as soon as
possible. She acknowledged that people in her district were
really hurting. She did not want to hold up the process and
wanted the funds dispersed quickly and effectively.
11:55:26 AM
Co-Chair Johnston echoed Representative Sullivan-Leonard's
comments. She wanted to work expediently, together with the
administration to distribute the funds in a thoughtful
manner. She offered to reach out to the administration to
ensure the funds were distributed to Alaskans as soon as
possible.
Co-Chair Foster relayed that the point of the meeting was
to gain information and use it for a plan going forward.
ADJOURNMENT
11:57:00 AM
The meeting was adjourned at 11:56 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFC Presentation CARES Act 4-15-20.pdf |
HFIN 4/15/2020 10:00:00 AM |
HFIN CARES Act Presentation |
| LFD CARES Act Summary 3-7-20.pdf |
HFIN 4/15/2020 10:00:00 AM |
HFIN CARES Act Update |