Legislature(1993 - 1994)
01/25/1993 03:00 PM House HES
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* first hearing in first committee of referral
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+ teleconferenced
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HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
January 25, 1993
3:00 p.m.
MEMBERS PRESENT
Rep. Cynthia Toohey, Co-Chair
Rep. Con Bunde, Co-Chair
Rep. Gary Davis, Vice Chair
Rep. Tom Brice
Rep. Bettye Davis
Rep. Pete Kott
Rep. Irene Nicholia
Rep. Harley Olberg
Rep. Al Vezey
MEMBERS ABSENT
None
OTHER LEGISLATORS PRESENT
Rep. Jim Nordlund
COMMITTEE CALENDAR
Overview of the Department of Health and Social Services,
Division of Public Assistance
WITNESS REGISTER
Jay Livey, Deputy Commissioner
Department of Health and Social Services
P.O. Box 110601
Juneau, Alaska 99811-0601
(907) 465-3030
Jan Hansen, Director
Division of Public Assistance
Department of Health and Social Services
P.O. Box 110640
Juneau, Alaska 99811-0640
(907) 465-2680
ACTION NARRATIVE
TAPE 93-4, SIDE A
Number 000
CO-CHAIR CON BUNDE called the meeting to order at 3 p.m.,
noted members present, and announced he would chair the
meeting. He noted that the purpose of the meeting was to
hear a 90-minute overview presentation on the Department of
Health and Social Service's Division of Public Assistance.
JAY LIVEY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES (DHSS), turned the presentation over to Ms.
Jan Hansen.
JAN HANSEN, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, began her
presentation. She announced her intention to describe the
various and complex welfare programs the division
administers so as to help the committee understand proposed
program changes both in Alaska and the rest of the nation.
She said she would describe client characteristics and
program achievements to provide a context for proposed
changes the department plans for FY94. She acknowledged
that national and state increases in welfare rolls and
program expenditures were raising new interest in meeting
such problems.
MS. HANSEN said welfare rolls and expenses were tied to and
grow along with economic factors, such as unemployment and
worker migration, and with social factors such as teen
parenthood.
MS. HANSEN introduced key staffers: Randy Moore, the
division's administrative officer; Curt Lomas, program
officer for the Aid to Families with Dependent Children
(AFDC) program; and Sandy Armstrong, program coordinator for
the Job Opportunities and Basic Skills (JOBS) program.
MS. HANSEN referred to two documents: a FY94 program
overview of the division (Attachment 1); and an article in
the January 1993 issue of "Alaska Economic Trends," entitled
"Welfare in Alaska -- Help or Hindrance to Self-
Sufficiency?" (Attachment 2)
MS. HANSEN referred to page one of Attachment 1, showing the
division's program in a chart form. Cash assistance
programs included AFDC and Adult Public Assistance (APA).
Assistance for specific needs includes programs for medical,
home energy, food, emergency shelter and burial needs, and
the specific programs that provide them. In providing such
services, the division works cooperatively with the Division
of Public Health, the Departments of Labor, Education,
Revenue and Community and Regional Affairs, and with private
industry councils for various health, education and training
programs.
MS. HANSEN also described the division's programs to
increase self-sufficiency among welfare recipients. The
JOBS program, with a wide range of specific programs, is a
key element of this effort, but there is also a program
requiring some recipients of food stamps to enter education,
job search and placement programs. Other programs provide
recipients with child care and Medicaid for a year after
they take jobs to ease the transition from welfare to full
employment.
MS. HANSEN briefly described the division's quality control
function, which she said ensures that benefits go only to
those truly qualified; and its fraud investigation function,
which investigates and refers for prosecution cases of
welfare fraud. She described a complex computerized
eligibility information system, which stores information on
applicants and helps division workers assess applicants'
eligibility.
Number 196
MS. HANSEN referred to page two of Attachment 1, showing
FY92 expenditures of $182 million ($79 million from state
general funds and $103 million from direct and matching
federal funds) and how those expenditures were allocated
among various programs. She noted that AFDC is paid on a
50-50 federal-state split basis and food stamps are paid
directly from the federal government to the recipients,
though the state and federal governments split
administrative costs 50-50, with the state's share of AFDC
administrative costs at approximately $5 million.
MS. HANSEN referred to a graph on page three showing the
annual totals of people on AFDC, APA, food stamps and
Medicare programs, totalling some 64,000 people, though some
recipients were enrolled in more than one program.
MS. HANSEN referred to page three, which described the
qualifications for AFDC, the level of payments to families
of various sizes, the number of families enrolled,
comparisons with other states and federal averages, and
other information. She differentiated between AFDC Basic,
the traditional welfare program aimed at children of single
mothers, and Unemployed Parent (UP), a federally-mandated
program, which, as of October 1990, required states to
include two-parent households in which one parent is
unemployed. The requirement resulted in larger caseloads in
Alaska, and makes up about 40 percent of the increase in
caseloads. The AFDC program was supposed to be a short-term
benefit for families, not a permanent means of support, she
said.
MS. HANSEN stated that approximately 5.6 percent of the
state's 586,000 residents (200,000 families) receive AFDC
benefits, representing the poorest segment of the
population.
Number 338
MS. HANSEN referred to page four of Attachment 1, a graph
based on a client survey, showing reasons why people were
enrolled in AFDC, including the inability to find work, low
wages, poor job skills, and lack of child care or health
insurance.
MS. HANSEN referred to pages five and six of Attachment 1,
containing graphs breaking down AFDC cases by geographic
location, race, and months of participation. Fifty-five
percent of AFDC cases have been on the rolls for less than
two years, and 39 percent of current cases have been on the
rolls for more than three years, she said.
Number 371
MS. HANSEN referred to page seven, displaying average
caseloads per month since FY88, and showing growth from
7,657 in FY88 to a projected 13,858 in FY94. The increase
is due both to the expansion into the UP program, and also
increases in basic AFDC cases. The page also showed an
increase in the budget from $58 million in FY88 to a
projected $125 million in FY94.
MS. HANSEN referred to page eight, describing the Adult
Public Assistance programs. A federal supplemental income
program pays APA recipients $434 per month, which APA
supplements with up to $374 per month. An interim state
assistance program pays up to $280 per month to those
waiting for the federal government to determine whether they
are eligible for supplemental security income.
Number 375
MS. HANSEN referred to charts on page nine, showing average
APA caseloads rising from 6,030 in FY88 to a projected 9,664
in FY94, and a projected growth rate of 8.5 percent.
Program costs also rose from $120 million in FY88 to a
projected $36 million in FY94.
CURT LOMAS, AFDC PROGRAM OFFICER, noted that APA funds were
paid entirely from state general funds, with no federal
match.
Number 403
MS. HANSEN referred to page 10, which showed information
including that 43,500 people in Alaska received food stamps,
representing 7.4 percent of the population, below the 10
percent national average. She compared the 5.6 percent of
the population on AFDC with the estimated 11.8 percent of
the population living below the poverty level in the state.
She said Alaskans living in rural areas, where marketbasket
surveys show that food costs more, received higher food
stamp benefits.
MS. HANSEN referred to page 11, showing the food stamp
caseload increased from 9,701 in FY88 to a projected 15,536
in FY94. Another graph showed the cost for the program rose
from $27.2 million in FY88 to $52.6 million in FY94.
Number 426
MS. HANSEN spoke on the division's fourth major program, the
federal Job Opportunities and Basic Skills (JOBS) program,
as outlined on page 12, which is aimed at helping welfare
recipients who are least able to get jobs to do so. She
stated that the 39 percent who remain on AFDC for more than
three years consume too much of the program money. Teenage
parenthood and the lack of a high-school diploma are prime
indicators of long-term welfare dependency, she said.
Number 458
REP. TOM BRICE asked where funds for JOBS came from.
MS. HANSEN responded that the program is funded by the
federal government at varying matching levels for different
elements of the program. The division also uses the
services of other state and federal agencies for the JOBS
program, she said.
MS. HANSEN returned to page 12, briefly describing the
services provided under JOBS, and the barriers to successful
training and employment.
Number 475
MS. HANSEN referred to page 13, which showed graphs
outlining the different programs being used, such as basic
education, job readiness, or post-secondary education, by
the program's 930 participants as of December 1992. The
federal government will increase the required percentage of
AFDC recipients to be enrolled in the JOBS program which,
she said, will help increase the participation from 930 to
1,340 people in FY94.
Number 500
MS. HANSEN began to explain why the AFDC caseload is growing
in Alaska. She said the national trend since July 1989 has
been steady growth, to record levels. She referred to page
14. While Alaska ranked fifth in the nation last year in
percentage of the population on AFDC, the state now ranks
eighth, she said.
MS. HANSEN referred to page 15 and to graphs showing that
unemployment rates have generally been higher over the past
three years, which she said was a partial cause of increased
AFDC caseloads. She also said client surveys showed that
the Exxon Valdez oil spill and attendant expectations for
employment opportunities drew workers to Alaska from the
depressed Lower 48 states. Tourism ads in Outside
publications also tempt former Alaska residents to return to
the state, the survey showed.
MS. HANSEN said that federally mandated increases in the
Medicaid program, aimed at drawing pregnant, low-income
women into prenatal care, also attracted some people to the
AFDC rolls who had not previously known they might be
eligible. Other reasons for the increase in caseloads were
increases in high school dropouts, teen pregnancies and
unwed mothers, single-parent households, immigrants, and the
poor, she said.
Number 560
MS. HANSEN referred to page 16, which included charts
showing the reasons why those on welfare came to Alaska, and
the percentage of recipients who have been in the state less
than one year, broken down by geographical area.
Number 572
Answering a question from REP. HARLEY OLBERG, Ms. Hansen
said the division compared 1992 rates to 1985 rates because
the 1985 statistics were the only past numbers available.
REP. CYNTHIA TOOHEY asked whether the division made
allowances for seasonal fluctuations in unemployment rates
as reflected in a chart on page 15.
MS. HANSEN answered that the department did not, but before
1990 the AFDC caseloads did decrease in the summer. She
said the absence of seasonal job opportunities in recent
years, in such fields as fishing or construction, has caused
caseloads to stabilize, but not decrease, in the summer.
Number 600
MS. HANSEN began speaking of efforts to contain growth in
AFDC caseloads, which she called a more realistic goal than
trying to reduce the load. She referred to page 17.
According to Ms. Hansen, the first step is a rigorous
application process, somewhat akin to a mortgage
application, which included computerized database cross-
references in an effort to screen out unqualified
applicants. A quality control effort in recent years has
reduced the error rate from 19 percent in 1980, the nation's
worst, to 3.3 percent in 1992, she said. The federal
government allows a 6 percent error rate, but rebates 1
percent of its contribution to AFDC (in this case, $1.2
million) for each percentage point reduction the state
realizes. The state received $3.6 million in rebates last
year, she said, justifying the staffing expense.
Number 642
MS. HANSEN stated another tactic in lowering caseloads is
the requirement that recipients submit monthly income and
assets statements, which the department verifies. An early
fraud detection effort allows the department to check out
suspicious new applicants before activating a claim. Last
year the department checked out 400 applicants, 40 percent
of which were found to be fraudulent. A post-certification
fraud detection effort catches a few offenders. Ms. Hansen
said the division works with the Department of Law to
prosecute deliberate fraud, and handles intentional
noncriminal fraud by itself, suspending eligibility and
deducting the amount fraudulently obtained from any future
grant if those committing fraud are still enrolled, or
requiring repayment if they are not. The JOBS program
represents a long-term effort to reduce AFDC caseloads by
helping the recipients find jobs, according to Ms. Hansen.
Number 666
MS. HANSEN discussed cost-containment efforts in the AFDC
program. She said the department is interested in lowering
the level of benefits for some AFDC recipients. They plan
to suspend the cost of living allowance (COLA) normally
granted at the start of a new calendar year. They plan to
begin paying welfare recipients less than their full needs,
lowering the rates to the 1991 level for the AFDC program
and to the 1990 level for the APA program. The change would
cut $53 from the maximum AFDC monthly benefit, but would cut
$8.6 million from the program overall, she said.
MS. HANSEN noted that welfare reform generally takes three
forms: changing behavior, saving money, and restructuring
welfare systems; and Alaska is taking the money-saving
approach.
Number 700
MS. HANSEN said the division will attempt to eliminate
inequalities between the basic AFDC program and the
unemployed parent program (AFDC-UP). The AFDC-UP program
pays $1,040 per month to a family with two parents and one
child, compared to $950 to a mother with two children.
Lowering the AFDC-UP rate by $90 per month to equal the AFDC
rate would save the division about $1.9 million per year,
she said.
TAPE 93-4, SIDE B
Number 000
MS. HANSEN stated the department will also require those on
Adult Public Assistance who receive the $280 monthly interim
benefit while waiting for a determination of eligibility for
federal supplemental income benefits to repay those benefits
to the state after they receive their retroactive payments
of $434 per month from the federal government.
MS. HANSEN noted another small effort to reduce costs would
be to prorate benefits from the date of application instead
of from the first day of the month in which they apply.
This change, which could be easily achieved, would save
$475,000 in the APA program, she said.
MS. HANSEN explained that the reduction in welfare rates as
of July 1 (the start of FY94) will have the largest impact
on welfare expenditures.
MS. HANSEN referred to the division's effort to determine
barriers to self-sufficiency among welfare recipients,
including a survey of clients and staff, focus meetings, and
analysis of federal waiver restrictions and of other state's
welfare waiver programs. The study showed that those on
welfare want to work but face barriers. Results of the
study are contained in Attachment 2, an article from the
January 1993 issue of "Alaska Economic Trends" entitled
"Welfare in Alaska -- Help or Hindrance to Self-
Sufficiency?"
MS. HANSEN said the division plans to put most of its hopes
into the JOBS program, both because she believes it will be
effective at winning jobs for long-term welfare recipients,
and because the federal government requires that it be
expanded. She stated the department will also budget more
money to give division staffers time during client contact
to ask about welfare applicants' employment plans and
capabilities, and to direct them toward appropriate basic
employment and training resources.
Number 165
MS. HANSEN mentioned the job sampling program, which allows
JOBS participants to visit job sites to observe those in an
occupation of interest. She mentioned a $120,000 federal
grant to an alternative school in Wasilla, which is being
used as a model of how to keep teen mothers in school. She
discussed a system that allows the division to cooperate
with the Department of Labor to track JOBS program
participants to see if they found jobs in the fields for
which they trained, their pay levels, and other information.
Number 213
MS. HANSEN noted other initiatives not yet decided upon.
She said the division knows it would like waivers of some
federal welfare program requirements that are disincentives
to quit AFDC and go to work. She would like to see those on
AFDC who find jobs be able to keep more of their pay instead
of having their welfare benefits reduced. She would like
waivers of a federal rule barring welfare payments to anyone
working more than 100 hours a month, even if the resulting
wages are low enough to qualify for welfare, which she said
discourages people from taking low-paying but available
jobs. She would like waivers of the restrictions that
disqualify welfare recipients who own cars worth more than a
certain amount of money, which she said prevents such people
from owning the reliable transportation they need to hold
jobs.
MS. HANSEN stated the federal government requires rigorous
study and evaluation of any waiver project, and requires a
year-long demonstration project for half of the case load,
that would also require outside evaluation. Given such
restrictions, she said, the up-front costs of such work,
when applied to the relatively small client load in Alaska,
do not balance out the projected savings through waivers.
Demonstration programs for such waivers of disincentives
would cost $750,000 over three years, she estimated.
Number 267
With President Bill Clinton coming to office promising
welfare reform, and with other states finding problems with
the waiver process requirements, MS. HANSEN suggested it
would be better to spend a year working with the American
Public Welfare Association, the National Governors'
Association and the U.S. Department of Health and Social
Services to encourage Congress to lighten the legal
strictures for waiver demonstration projects in hopes of
later imposing a full set of waivers.
Number 282
MS. HANSEN mentioned other possible efforts, including
offering vouchers to provide parents receiving AFDC with
vouchers for child care, possibly on a 50-50 federal-state
split, to allow such parents freedom to find a job, at which
time they qualify for regular child care benefits. Another
possibility would be to allow welfare recipients, who will
see their needs level decrease from $950 to $893 on July 1
(the start of FY94), to earn back that $53 difference, or
more, without penalty. However, raising the needs standard
to increase that difference would expand the pool of people
qualified for AFDC and Medicaid, thus costing the state.
Such changes are more attractive than waivers, she said,
because they do not require the lengthy and expensive waiver
process.
Number 346
CHAIR BUNDE asked Ms. Hansen to present her final points to
allow time for committee questions. Chair Bunde thanked her
for the presentation and for her division's efforts at
welfare reform.
Responding to a question from CHAIR BUNDE, Ms. Hansen stated
the current poverty level for a three-person household was
$1,205 per month.
CHAIR BUNDE mentioned Department of Health and Social
Service Commissioner Ted Mala's proposal to inform all
welfare applicants about the JOBS program, and expressed a
desire to speak with Ms. Hansen about it in the future.
Number 364
In response to a question from REP. BRICE, Ms. Hansen said
there is no differences in AFDC benefits or poverty levels
for geographic differences, though there are such allowances
for food stamp allotments.
MR. LIVEY explained that the poverty level for Alaska was
set at a level 25 percent higher than in other states.
MS. HANSEN, responding to a question from REP. BRICE, said
the $950 monthly AFDC benefit level, representing 77 percent
of the federal poverty level, was derived from the
cumulative addition of COLA adjustments to the basic federal
needs standard set in the early 1980s.
Number 403
REP. TOOHEY commended the division for the low error rate.
Number 412
REP. IRENE NICHOLIA asked if the department considered the
individual communities in setting needs levels, or set a
statewide level.
MS. HANSEN answered that she could not answer precisely, as
records did not show how the needs levels were set.
However, she said, social workers had usually set needs
levels in the past, but not based on precise methods, and
possibly based on legislative funding levels or historical
rates. She continued, saying that there are geographic
differentials for food stamps and for some housing
assistance and energy assistance programs. Given those
other allowances for geographic differences, it was not
clear that it was necessary to include more allowances in
AFDC benefits, Ms. Hansen said.
Number 441
In response to a question from REP. NICHOLIA, Ms. Hansen
said approximately 20,600 children were receiving benefits
through AFDC.
(Rep. Jim Nordlund was recognized by Chair Bunde as being
present in the audience.)
REP. JIM NORDLUND asked whether the department planned to
notify AFDC recipients about the impending reduction in
welfare benefit rates planned to take effect July 1, the
start of FY94.
Number 470
MS. HANSEN responded that no, they had not, though they had
started talking about the issue, which, along with making
the actual program changes and reprogramming, must be done
to effect the change.
Number 476
MS. HANSEN answered a question from REP. OLBERG by saying
the division will wait until January 1, 1994, to suspend the
COLA adjustments to AFDC because that is when the
adjustments will otherwise take effect.
Number 489
MS. HANSEN, responding to a question from REP. OLBERG,
attributed much of the near doubling in the cost of AFDC
from the expansion of the program to include the unemployed
parent program, which will bring in an additional 2,000
families in FY93 and 2,300 in FY94. She further attributed
it to the COLA adjustments and to the increased needs for
the service due to increased unemployment and other factors.
Number 500
Responding to a question from REP. PETE KOTT, Ms. Hansen
said none of the benefit reductions she discussed would
require waivers, but they would require a change in the
state welfare plan and state regulations.
Number 525
MS. HANSEN, answering a question from REP. KOTT, said she
believed there was a good chance federal laws would change
to make waivers easier, and it would not be cost-effective
to proceed with starting a waiver demonstration project at
the same time it worked to ease the waiver process. She
referred to other information available on the waiver
process, both information from the self-sufficiency study
done by her staffer, Christina Klein, and a federal
publication, "The Rush to Reform," on states' efforts to
reform welfare, upon which she based her judgments.
Number 537
REP. KOTT asked the reason behind the projected decrease in
APA expenditures in FY94.
MS. HANSEN answered that the decrease resulted from the
suspension of COLA and the reductions in the welfare benefit
rate, despite a projected 8.5 percent growth in the
caseload. Without the cuts, she said, APA FY94 costs would
have risen $4.3 million over FY93 costs.
Number 554
REP. TOOHEY asked if the federal social supplement would
increase to compensate for any reduction or loss of the
longevity bonus.
MS. HANSEN said no, the bonus was not now considered in
setting aid levels, but without the $250 per month would
still leave the maximum AFDC benefit for an adult over 65 at
more than the poverty level.
Number 574
REP. NORDLUND asked whether the department had considered
the economic impact, especially in smaller rural communities
with limited cash economies, of the reduction in welfare
benefit rates and suspension of COLA planned to take effect
July 1.
MS. HANSEN answered that the department had made no such
analysis. But, she noted, food stamps would increase by
about one-third, somewhat mitigating the impact of the loss.
She further noted that total AFDC outlay to Bush communities
would rise along with the increasing caseloads, despite the
benefit and COLA reductions.
Number 598
REP. BRICE asked about any possible cuts in funding for job
training, child care, and other programs that were related
to APA benefits.
MS. HANSEN answered that the federal Jobs Training
Partnership Act, a significant element of federal job
training, would see a budget cut in FY94, requiring a
compensatory increase in state funding for such work.
Number 616
REP. BUNDE asked about the possibility of waivers allowing
children to work and save their money, possibly for
education, without it reducing the family's welfare
benefits.
MS. HANSEN said she would study the idea.
CHAIR BUNDE reminded the committee of a meeting on January
26 in the regular HESS committee room, but a meeting on
January 27 would once again be held in the House Resources
committee room. There being no other questions, he
ADJOURNED the meeting at 4:25 p.m.
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