Legislature(2019 - 2020)GRUENBERG 120

03/26/2019 03:00 PM House STATE AFFAIRS

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                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         March 26, 2019                                                                                         
                           3:04 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Zack Fields, Co-Chair                                                                                            
Representative Jonathan Kreiss-Tomkins, Co-Chair                                                                                
Representative Gabrielle LeDoux                                                                                                 
Representative Andi Story                                                                                                       
Representative Adam Wool                                                                                                        
Representative Sarah Vance                                                                                                      
Representative Laddie Shaw                                                                                                      
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 96                                                                                                               
"An Act relating to Alaska Pioneers' Home and Alaska Veterans'                                                                  
Home rates and services."                                                                                                       
     - HEARD & HELD                                                                                                             
HOUSE BILL NO. 71                                                                                                               
"An Act relating to hiring for positions in state service based                                                                 
on substitution of military work experience or training for                                                                     
required civilian work experience or training."                                                                                 
     - HEARD & HELD                                                                                                             
HOUSE BILL NO. 31                                                                                                               
"An Act making a special appropriation to the Alaska permanent                                                                  
fund; and providing for an effective date."                                                                                     
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 96                                                                                                                   
SHORT TITLE: PIONEERS' HOME AND VETERANS' HOME RATES                                                                            
SPONSOR(s): REPRESENTATIVE(s) FIELDS                                                                                            
03/15/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/15/19       (H)       STA, HSS                                                                                               
03/26/19       (H)       STA AT 3:00 PM GRUENBERG 120                                                                           
BILL: HB 71                                                                                                                   
SHORT TITLE: STATE PERSONNEL ACT: VETERANS' EXPERIENCE                                                                          
SPONSOR(s): REPRESENTATIVE(s) STORY                                                                                             
02/25/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/25/19       (H)       MLV, STA                                                                                               
03/12/19       (H)       MLV AT 2:00 PM GRUENBERG 120                                                                           
03/12/19       (H)       Heard & Held                                                                                           
03/12/19       (H)       MINUTE(MLV)                                                                                            
03/14/19       (H)       MLV AT 2:00 PM GRUENBERG 120                                                                           
03/14/19       (H)       Moved HB 71 Out of Committee                                                                           
03/14/19       (H)       MINUTE(MLV)                                                                                            
03/19/19       (H)       MLV AT 2:00 PM GRUENBERG 120                                                                           
03/19/19       (H)       Moved HB 71 Out of Committee                                                                           
03/19/19       (H)       MINUTE(MLV)                                                                                            
03/20/19       (H)       MLV RPT 4DP                                                                                            
03/20/19       (H)       DP: TARR, JACKSON, RAUSCHER, LEDOUX                                                                    
03/26/19       (H)       STA AT 3:00 PM GRUENBERG 120                                                                           
BILL: HB 31                                                                                                                   
SHORT TITLE: APPROP: EARNINGS RESERVE TO PERM FUND                                                                              
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS                                                                                    
02/20/19       (H)       PREFILE RELEASED 1/11/19                                                                               
02/20/19       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/19       (H)       STA, FIN                                                                                               
03/26/19       (H)       STA AT 3:00 PM GRUENBERG 120                                                                           
WITNESS REGISTER                                                                                                              
CLINTON LASLEY, Director                                                                                                        
Division of Alaska Pioneer Homes (DAPH)                                                                                         
Department of Health and Social Services (DHSS)                                                                                 
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the hearing on HB
GREG SMITH, Staff                                                                                                               
Representative Andi Story                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:    Answered   questions   on    behalf   of                                                             
Representative Story, prime sponsor of HB 71.                                                                                   
KEVIN MCGOWAN, Staff                                                                                                            
Representative Jonathan Kreiss-Tomkins                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:   Co-presented   HB   31   on   behalf   of                                                             
Representative Kreiss-Tomkins,  prime sponsor, with the  use of a                                                               
PowerPoint presentation.                                                                                                        
ANGELA RODELL, Chief Executive Officer                                                                                          
Alaska Permanent Fund Corporation (APFC)                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the  hearing on HB
ALEXI PAINTER, Fiscal Analyst                                                                                                   
Legislative Finance Division                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during the hearing on HB
ACTION NARRATIVE                                                                                                              
3:04:55 PM                                                                                                                    
CO-CHAIR JONATHAN  KREISS-TOMKINS called the House  State Affairs                                                             
Standing   Committee    meeting   to    order   at    3:04   p.m.                                                               
Representatives LeDoux,  Story, Vance, Shaw, Fields,  and Kreiss-                                                               
Tomkins were present  at the call to order.   Representative Wool                                                               
arrived as the meeting was in progress.                                                                                         
         HB 96-PIONEERS' HOME AND VETERANS' HOME RATES                                                                      
3:05:54 PM                                                                                                                    
CO-CHAIR  KREISS-TOMKINS  announced  that   the  first  order  of                                                               
business would be  HOUSE BILL NO. 96, "An Act  relating to Alaska                                                               
Pioneers' Home and Alaska Veterans' Home rates and services."                                                                   
3:06:21 PM                                                                                                                    
CO-CHAIR  FIELDS, as  prime sponsor  of HB  96, relayed  that the                                                               
proposed legislation  would establish predictable  rate increases                                                               
pegged to inflation to improve  the financial stability of Alaska                                                               
Pioneer Homes  (APH) while providing certainty  and affordability                                                               
to  the residents.   He  stated  that APH  are uniquely  Alaskan;                                                               
they've existed  since 1913 when  the first home opened  in Sitka                                                               
to  serve the  new  incorporated  territory.   He  said that  the                                                               
newest  home was  built in  Juneau in  1988; in  2007 the  Palmer                                                               
Pioneer Home became certified by  the U.S. Department of Veterans                                                               
Affairs  (VA)  to become  the  Alaska  Veterans &  Pioneers  Home                                                               
(AVPH).    There are  also  Pioneer  Homes in  Sitka,  Anchorage,                                                               
Fairbanks,  and  Ketchikan;  together,  APH  have  always  served                                                               
Alaska seniors  as they  age in  The Last  Frontier.   He offered                                                               
that given  the frontier nature  of the state, APH  have provided                                                               
key places for  seniors to age in place near  their families.  He                                                               
continued by  saying that APH  create important space  for family                                                               
members to  age in place  safely, in their home  communities, and                                                               
close to  the communities that  Alaska elders helped build.   The                                                               
APH  are   statutorily  established  and  operated   through  the                                                               
Department  of   Health  and  Social  Services   (DHSS)  and  for                                                               
generations,  the legislature  has provided  very modest  general                                                               
fund  (GF) support  to keep  them  affordable for  elders and  to                                                               
ensure that  elders can age here  in Alaska instead of  moving to                                                               
the Lower 48.                                                                                                                   
CO-CHAIR FIELDS  relayed that [Governor Michael  J. Dunleavy] has                                                               
proposed  two  significant policy  changes  that  would undo  the                                                               
State of Alaska's historic commitment to  APH:  1) an $18 million                                                               
undesignated  fund cut  - a  53  percent reduction,  and 2)  very                                                               
large rate  increases for residents -  up to $15,000 per  month -                                                               
proposed  by  DHSS.    Co-Chair  Fields  maintained  that  it  is                                                               
important to  recognize that  the two  policy proposals  exist in                                                               
tandem  with one  another; under  the  governor's direction,  APH                                                               
have  been mandated  to shift  in  the direction  of being  self-                                                               
supporting.   Co-Chair Fields emphasized  that he  considers this                                                               
shift to  be unsustainable, and it  fails to keep the  faith with                                                               
Alaska elders  that has  been supported  by legislators  for many                                                               
generations.   He relayed that  these proposals have  shocked and                                                               
concerned many  caregivers, family members, and  residents of the                                                               
homes.  He has heard about  these concerns directly from those at                                                               
the Anchorage Pioneer Home.                                                                                                     
CO-CHAIR  FIELDS  offered that  fortunately  the  House Health  &                                                               
Social Services Finance Subcommittee  has restored $20 million in                                                               
funds - half in GF and  half through the ability to bill Medicaid                                                               
- effectively negating  the need for the  massive rate increases.                                                               
He  stated  that  as  DHSS  has played  a  part  in  keeping  APH                                                               
affordable through the  budget, the legislature must  do its part                                                               
in terms  of legislation to  provide sustainable  and predictable                                                               
price increases rather than massive  price increases.  He offered                                                               
his concern that  without HB 96, there could be  a "death spiral"                                                               
for APH, in  which the majority of APH residents  who are private                                                               
payers would  be incentivized  to seek  lower cost  facilities in                                                               
the Lower 48.  He asserted  that the socio-economic mix in APH is                                                               
an  important part  of the  institution; it  is important  that a                                                               
significant percentage of residents be  able to pay their own way                                                               
as they always have and as most of them do today.                                                                               
3:10:38 PM                                                                                                                    
REPRESENTATIVE FIELDS  opined, "I  think we can  do better.   The                                                               
legislature  always has  done  better than  this.   We've  always                                                               
supported the Pioneer  Homes ..."  He stressed  that the proposed                                                               
legislation  would  provide   predictable,  fair  rate  increases                                                               
linked to  the consumer price  index (CPI).   He said  that there                                                               
are about two  dozen [Alaska] statutes that link to  CPI; it is a                                                               
common  measure   for  trying   to  establish   predictable  rate                                                               
increases so that the cost of  a given program does not grow over                                                               
time without necessary adjustments.                                                                                             
CO-CHAIR  FIELDS related  that  the prices  of  APH have  changed                                                               
about four times  over the past decade;  the proposed legislation                                                               
would  increase rates  at a  faster pace  than seen  in the  past                                                               
decade.  He  said that the rate increases have  been sporadic and                                                               
uneven; and HB 96 would establish a more predictable process.                                                                   
CO-CHAIR  FIELDS  concluded  by  recognizing the  hard  work  and                                                               
public service of  APH employees.  He shared that  the age of APH                                                               
residents  has   increased  dramatically;  the  average   age  is                                                               
currently  87; many  have dementia-related  disorders; therefore,                                                               
the work  of the  employees has become  more difficult  in recent                                                               
years.    The  employees  do  incredible  work  under  incredibly                                                               
difficult  circumstances.   He mentioned  that the  employees are                                                               
very innovative; they  have started a new  dementia care training                                                               
program for certified nursing assistants  (CNAs); it is the first                                                               
of its kind  in the state and  serves as a model  for the private                                                               
sector.   He asked  for legislative  support for  APH recognizing                                                               
not just the contribution of  the elders, but the incredible work                                                               
of APH employees to honor elders.                                                                                               
3:12:29 PM                                                                                                                    
REPRESENTATIVE LEDOUX asked to know  the portion of APH fees paid                                                               
by Medicare.                                                                                                                    
REPRESENTATIVE  FIELDS responded  that the  overall payer  source                                                               
breakdown for residents  is as follows:  51  percent private pay;                                                               
20  percent Medicaid  waiver; and  29 percent  of residents  have                                                               
some  sort  of  payment  assistance.   He  relayed  that  another                                                               
innovation  by DHSS  and  the Division  of  Alaska Pioneer  Homes                                                               
(DAPH) in the  past few years has  been identifying opportunities                                                               
to have  Medicaid pay a  growing share of  APH bills.   He stated                                                               
that there are different levels of  care in APH:  individuals for                                                               
whom Medicaid pays a significant portion  of the bills tend to be                                                               
in the third  level of care [Level III] -  higher need and higher                                                               
acuity care.  Level I and II -  lower levels of care - tend to be                                                               
in the "self-pay" group.                                                                                                        
REPRESENTATIVE  LEDOUX  asked  whether   there  was  any  way  to                                                               
formulate  a  program so  that  the  state  is not  charging  the                                                               
private   pay  residents   more,  but   those  getting   Medicaid                                                               
assistance, because there is a federal match.                                                                                   
REPRESENTATIVE FIELDS  stated that  a Medicaid waiver  is granted                                                               
for residential  long-term care; it  is referred to as  a 1915(c)                                                               
[Home- and  Community-Based Services (HCBS) waiver  under Section                                                               
1915 of the  Social Security Act]; it pays a  daily rate of $162.                                                               
He expressed  his concern  that the  proposed rate  increases [by                                                               
the administration]  greatly exceed what the  state would receive                                                               
through  a Medicaid  waiver.   He  agreed that  the state  should                                                               
pursue  rate  increases that  are  designed  to maximize  federal                                                               
revenue.   He  offered that  the proposed  rate increases  are so                                                               
steep  that they  do not  correspond  to what  Medicaid can  pay.                                                               
Comparing the  rate of  $15,000 per  month with  the $162-per-day                                                               
Medicaid  1915(c)  waiver rate  reveals  a  huge gap  which  most                                                               
likely would not be paid.  At  that rate the life savings of most                                                               
residents would be  liquidated very quickly.   He maintained that                                                               
it  is pointless  to have  such a  high advertised  rate, knowing                                                               
that most people  would not be able to pay  it and Medicaid would                                                               
not  pay  it.   He  emphasized  that  the state  should  maximize                                                               
federal  revenue,   and  the  theoretical  high   rates  are  not                                                               
strategically designed  to maximize  federal revenue.   He shared                                                               
that the current monthly rate for Level III is $6,700.                                                                          
REPRESENTATIVE  LEDOUX  asked  how   people  pay  for  Providence                                                               
[Health & Services Alaska] Extended Care.                                                                                       
REPRESENTATIVE FIELDS answered  that in order to  be eligible for                                                               
certain Medicaid  programs, one  must effectively  liquidate most                                                               
of one's savings and place  the remainder in a Miller [qualifying                                                               
income] Trust.   He stated  that essentially one cannot  have too                                                               
much  in assets  to  qualify; and  there  are different  Medicaid                                                               
rates for different types of care.   He noted that a Pioneer Home                                                               
is  an  assisted  living  facility, which  is  different  from  a                                                               
skilled nursing facility; the two  have different rates.  He said                                                               
that the  reality is that APH  provide a very high  level of care                                                               
among assisted  living facilities  - much  higher than  one would                                                               
find in a  home-based Medicaid waiver setting.   For that reason,                                                               
Agnew::Beck [Consulting] has recommended  that Alaska establish a                                                               
new  daily rate  for  higher acuity  assisted living  facilities,                                                               
recognizing that facilities like APH should  be able to bill at a                                                               
higher rate  than the average  home-based Medicaid provider.   He                                                               
maintained that it  is a logical recommendation but  one that has                                                               
been overlooked in the rate increase proposals.                                                                                 
3:17:58 PM                                                                                                                    
CO-CHAIR KREISS-TOMKINS asked for a definition of higher acuity.                                                                
REPRESENTATIVE FIELDS  responded that  higher acuity refers  to a                                                               
greater need  for services.   He explained  that there  are three                                                               
levels of care:   1) The lowest  level is for people  who want to                                                               
age  in  APH  but  live  independently.   They  are  a  shrinking                                                               
percentage.  2) People in Levels II and III may have dementia-                                                                  
related disorders  or be in  a wheel chair.   They are  a growing                                                               
percentage.  Higher acuity represents  higher intensity care, and                                                               
these  residents  pay higher  rates  under  the existing  payment                                                               
REPRESENTATIVE  LEDOUX  asked  for  an  explanation  of  Medicaid                                                               
REPRESENTATIVE FIELDS explained that  Medicaid waiver is obtained                                                               
by an individual  to pay for living in a  long-term care assisted                                                               
living  setting.   He  added that  there  are different  Medicaid                                                               
waivers for different  services.  There are  Medicaid waivers for                                                               
personal  care  services;  these   services  are  different  from                                                               
residential supported living, which is what APH are.                                                                            
REPRESENTATIVE LEDOUX asked, "A waiver from what?"                                                                              
REPRESENTATIVE  FIELDS  replied  that  it  is  a  waiver  for  an                                                               
individual  to receive  Medicaid (indisc.)  to pay  for long-term                                                               
REPRESENTATIVE  SHAW asked  for the  percentage of  APH residents                                                               
who pay the full rate.                                                                                                          
REPRESENTATIVE  FIELDS responded  that  51  percent are  self-pay                                                               
REPRESENTATIVE SHAW  offered his  understanding that the  AVPH in                                                               
Palmer is  split into  three [payment]  sources:   the VA  pays a                                                               
portion;  the state  pays a  portion; and  the individual  pays a                                                               
CO-CHAIR FIELDS concurred and added  that 49 percent of residents                                                               
are  private pay;  the other  half pay  through a  mix of  public                                                               
sources, with the VA contributing the greatest share.                                                                           
REPRESENTATIVE  WOOL  asked  for confirmation  that  Medicare  is                                                               
medical insurance  for those over 65  but does not pay  for long-                                                               
term care.                                                                                                                      
REPRESENTATIVE FIELDS  expressed his understanding  that Medicare                                                               
pays for healthcare and does  not pay for assisted living, hence,                                                               
the need for a Medicaid waiver.                                                                                                 
3:21:40 PM                                                                                                                    
REPRESENTATIVE STORY  expressed that the rate  increases proposed                                                               
- 138 percent  - is extreme and poses challenges  for seniors and                                                               
their families to plan; however, the  rates have been low and the                                                               
cost  of care  needs adjustment.    She asked  whether the  rates                                                               
should be adjusted before being subjected to the CPI formula.                                                                   
REPRESENTATIVE FIELDS replied that  he would welcome an amendment                                                               
to address that issue.   He suggested applying inflation rates or                                                               
CPI healthcare inflation  rates to the [APH] cost of  care from a                                                               
decade ago and using  that as a starting point.   He said that he                                                               
also would  be open  to more  levels of  care; there  is research                                                               
that  supports doing  so.   He  said that  he  agrees that  rates                                                               
should  be  predictable  and  transparent,   and  APH  should  be                                                               
competitive and affordable for Alaska elders.                                                                                   
CO-CHAIR KREISS-TOMKINS  noted that Section  5 of HB 96  [page 3,                                                               
starting  on  line 19]  codifies  the  three  levels of  care  in                                                               
statute.    He  asked  whether  the  three  levels  of  care  are                                                               
currently in statute or exist in regulation only.                                                                               
CO-CHAIR FIELDS answered  that the three levels  are currently in                                                               
regulation.   He  reiterated that  he is  open to  discussion and                                                               
REPRESENTATIVE VANCE asked what the  actual costs of care are for                                                               
the three levels - the costs incurred by the homes.                                                                             
REPRESENTATIVE FIELDS responded  that the cost of  care for Level                                                               
I services  is $3,623 and the  monthly rate is $2,588;  for Level                                                               
II, the  cost of care  ranges from  $6,569 to $11,185;  for Level                                                               
III, the cost  of care ranges from 11,185 to  $13,333.  He stated                                                               
that DHSS  has proposed  added a  new level  - Level  V -  with a                                                               
proposed  rate  of  $15,000.     He  referred  to  Representative                                                               
LeDoux's  question  regarding   maximizing  federal  revenue  and                                                               
stated that  the residential  supported living  [Medicaid] waiver                                                               
rate is $162  per day or about  $4,881 per month.   He added that                                                               
currently many  individuals at the  higher levels of care  are in                                                               
the Medicaid waiver population.                                                                                                 
3:26:57 PM                                                                                                                    
REPRESENTATIVE VANCE  asked what  the costs  would be  when based                                                               
upon the proposed daily rates under HB 96.                                                                                      
REPRESENTATIVE FIELDS responded that  the rates for APH residents                                                               
would correspond to what DHSS believes  to be the cost.  He added                                                               
that  the governor  has made  a policy  decision that  APH should                                                               
follow a self-sustaining model.                                                                                                 
REPRESENTATIVE VANCE asked how HB 96 would change that outcome.                                                                 
REPRESENTATIVE  FIELDS  replied  that  the  proposed  legislation                                                               
would  set rate  increases  to correspond  to inflation,  thereby                                                               
limiting  them.   Under  HB  96, residents  would  pay more  than                                                               
currently  but  significantly  less  than  under  the  governor's                                                               
REPRESENTATIVE VANCE asked for  confirmation that residents would                                                               
pay less than the actual cost.                                                                                                  
CO-CHAIR FIELDS answered, yes.                                                                                                  
REPRESENTATIVE   VANCE  referred   to   the   fiscal  note   (FN)                                                               
[Identifier:    HB096-DHSS-PH-3-22-2019,  OMB  Component  Number:                                                               
2671] analysis [page 2] which read:                                                                                             
       Under this legislation, the State will continue to                                                                       
        subsidize the cost of services to all residents,                                                                        
     including those with private pay ability.                                                                                  
REPRESENTATIVE VANCE asked  how it would be determined  who is in                                                               
greatest need for access to APH.                                                                                                
REPRESENTATIVE  FIELDS explained  that  statute  states that  APH                                                               
rates  need not  reflect the  cost of  care; this  is due  to the                                                               
longstanding  legislative   decision  to  keep   APH  affordable.                                                               
Statute  also  states that  residents  will  not be  evicted  for                                                               
inability  to  pay.    The   APH  accept  residents  based  on  a                                                               
transparent  and  fair  waitlist   process  and  admit  residents                                                               
regardless of  ability to  pay.   When wait-listed  residents are                                                               
accepted,  they have  a  limited  length of  time  to accept  the                                                               
offer,  move into  the home,  and work  with staff  on a  payment                                                               
plan.  Payment may be through self-pay or payment assistance.                                                                   
3:30:07 PM                                                                                                                    
REPRESENTATIVE LEDOUX asked whether  there are facilities outside                                                               
of APH  that have long-term  care.  She mentioned  the Providence                                                               
Extended Care facility near Boniface  Parkway.  She asked to know                                                               
the rates for that facility.                                                                                                    
REPRESENTATIVE FIELDS  referred to a recent  presentation by DHSS                                                               
providing cost comparisons to the  House Health & Social Services                                                               
[Finance Subcommittee].   He stated that costs at  a private care                                                               
facility vary significantly depending  on whether the facility is                                                               
assisted living  or skilled nursing.   He said that  DHSS relayed                                                               
that in Seattle, the average  cost at an assisted living facility                                                               
is  $5,720 per  month;  the  average cost  at  a skilled  nursing                                                               
facility  is more  than  twice  that amount.    In Portland,  the                                                               
average cost at an assisted  living facility is just under $5,000                                                               
per  month; the  average cost  at a  skilled nursing  facility is                                                               
nearly twice that  amount.  In Anchorage, the average  cost at an                                                               
assisted living facility  is about $6,000 per  month; the average                                                               
cost at a skilled nursing facility is in excess of $20,000.                                                                     
CO-CHAIR  FIELDS continued  by posing  the question:   If  people                                                               
were not in APH, would they  be in an assisted living facility or                                                               
in a  skilled nursing  facility?  He  expressed his  concern that                                                               
Alaska would  have prices for  APH that  were so high  that self-                                                               
paying assisted living  residents would have no choice  but to go                                                               
to private assisted living facilities  and those facilities would                                                               
most likely  be in the  Lower 48  because of the  limited private                                                               
sector options  in Alaska.   He  acknowledged that  Anchorage has                                                               
ample in-home care, but not  facilities providing care comparable                                                               
to APH.                                                                                                                         
REPRESENTATIVE  LEDOUX asked  whether Marlow  Manor [an  assisted                                                               
living facility  in Anchorage] and Providence  [Health & Services                                                               
Alaska] accept residents under the Medicaid rates.                                                                              
REPRESENTATIVE FIELDS  replied that  he does  not know  the payer                                                               
mix at Marlow  Manor or Prestige Care  [and Rehabilitation Center                                                               
of Anchorage].                                                                                                                  
REPRESENTATIVE LEDOUX suggested that  virtually no one would have                                                               
the ability  to pay  $20,000 per month  and speculated  that they                                                               
would be under Medicaid rates.                                                                                                  
REPRESENTATIVE  FIELDS concurred  that  almost no  one could  pay                                                               
$15,000 per  month, and  Medicaid is a  standard payer  for long-                                                               
term care.  He reiterated that he  does not know the rates of the                                                               
private facilities mentioned.                                                                                                   
REPRESENTATIVE LEDOUX  offered that the disadvantage  of Medicaid                                                               
is the necessity  to liquidate one's assets.   She suggested that                                                               
liquidating assets by  being in long-term care  affects the heirs                                                               
more than the residents.                                                                                                        
CO-CHAIR FIELDS  stated that  he doesn't have  a concern  with an                                                               
Alaskan  using  his/her entire  savings  to  provide for  his/her                                                               
long-term  care in  APH.   His  concern is  the massive  "sticker                                                               
shock"  - $15,000  per  month -  and the  uncertainty  of a  rate                                                               
structure  that is  fundamentally unpayable;  the only  safeguard                                                               
against eviction  is the statute,  which could be revoked  by the                                                               
legislature  at  any  time;  and  the rate  is  three  times  the                                                               
Medicaid waiver rate.                                                                                                           
3:35:13 PM                                                                                                                    
REPRESENTATIVE WOOL  asked whether  the governor's budget  is the                                                               
impetus  for  introducing   HB  96  or  the   need  to  implement                                                               
consistent and regular rate increases  for APH.  He mentioned the                                                               
rates increases - 8.5 percent in 2016  and 5 percent in 2009.  He                                                               
asked to  know what was  wrong with  the current system  [of rate                                                               
increases], regardless of the governor's budget proposal.                                                                       
REPRESENTATIVE FIELDS  maintained that  it would  be advantageous                                                               
under  any circumstance  to have  a  predictable and  sustainable                                                               
path  for  rate  increases;  however, with  the  budget  proposal                                                               
paired  with a  regulatory proposal  there is  more urgency.   He                                                               
offered  that even  if the  legislature  rejected the  governor's                                                               
budget proposal, it would be  within the regulatory power of DHSS                                                               
to raise  rates dramatically.   He offered his  concern regarding                                                               
"driving  out" the  private payers,  who have  been an  important                                                               
population in APH.                                                                                                              
REPRESENTATIVE   WOOL  asked   if   the  private   pay  rate   is                                                               
artificially   high  to   compensate  for   the  lower   Medicaid                                                               
reimbursement rate.   He gave  as an example:   the true  cost of                                                               
care is $10,000  per month and Medicaid  reimbursement is $5,000.                                                               
He asked if state subsidies provide the balance.                                                                                
3:37:32 PM                                                                                                                    
CLINTON  LASLEY,  Director,  Division  of  Alaska  Pioneer  Homes                                                               
(DAPH), stated  that APH  rates have been  set by  regulation for                                                               
many years.   He relayed  that over  a 15-year period  there have                                                               
been four  rate increases totaling  15 percent; during  that same                                                               
time inflation was  35 percent.  He stated that  he put forward a                                                               
proposal  in the  governor's budget  for  a rate  increase to  be                                                               
reflective  of  the  true  cost  to  DAPH  to  provide  services,                                                               
understanding statute  clearly defines that a  resident cannot be                                                               
evicted  due  to inability  to  pay  and the  payment  assistance                                                               
program is  in place to protect  those who can't pay.   Under the                                                               
current system, Alaska is subsidizing  every individual who is in                                                               
APH  regardless  of need.    He  said  that  his proposal  is  to                                                               
establish a true  need-based system so that  individuals who need                                                               
assistance  would receive  it and  individuals who  can pay  more                                                               
would pay  what they can.   In response to  Representative Vance,                                                               
who asked the true cost  of providing these services, he referred                                                               
to slide  14 of  the PowerPoint presentation  from the  Office of                                                               
Management  & Budget  (OMB), included  in  the committee  packet,                                                               
which states  that the cost  of Level  I services is  $3,623; the                                                               
cost of Level III services is $13,333.                                                                                          
MR. LASLEY offered  that the $15,000 rate is for  a subsection of                                                               
the  population for  whom the  state is  currently not  providing                                                               
services.   He  referred to  an Agnew::Beck  study funded  by the                                                               
Alaska Mental  Health Trust Authority (AMHTA)  [Staffing Plan and                                                               
Cost  Impact Analysis  for the  Alaska  Pioneer Homes,  11/29/18]                                                               
that  explores the  best way  to  serve community  needs and  the                                                               
level of care needs in  the community and determines the staffing                                                               
structure.   The study determined  that there is a  subsection of                                                               
the population - those with  dementia and complex behaviors - who                                                               
are  currently  not  being  served in  assisted  living  or  many                                                               
nursing home settings and who  inappropriately are being place in                                                               
emergency departments or the  Alaska Psychiatric Institute (API).                                                               
He relayed  that DAPH  is currently  building a  complex behavior                                                               
neighborhood in  the Anchorage Pioneer  Home with  capital budget                                                               
funding received  in 2018.   He maintained  that the  $15,000 per                                                               
month represents the  rate for this subsection  of the population                                                               
needing the highest level of care.                                                                                              
MR. LASLEY  stated that DHSS  put forward a regulatory  package -                                                               
currently being  reviewed by the  Department of Law (DOL)  - that                                                               
would  establish  rates reflecting  the  true  cost of  services.                                                               
Within the package is a proposal  to tie future rate increases to                                                               
Social  Security Administration  (SSA) rate  increases, which  is                                                               
currently   being   used   for  individuals   receiving   payment                                                               
assistance.  He  summarized by saying that  currently everyone in                                                               
APH  is being  subsidized  by  the state  -  regardless of  payer                                                               
source - because of the artificially low rates.                                                                                 
REPRESENTATIVE WOOL  asked for confirmation that  everyone in APH                                                               
receiving Level  I services is  paying less than the  actual cost                                                               
of $3,623 regardless of ability to pay.                                                                                         
MR. LASLEY  responded, "You're  correct."  He  added that  for an                                                               
individual in  APH who  is receiving Lovel  I services,  it costs                                                               
the state  $3,623 to provide  those services, but  the individual                                                               
only pays $2,588 - the advertised rate.                                                                                         
3:42:41 PM                                                                                                                    
REPRESENTATIVE WOOL referred to  Mr. Lasley's statement that DAPH                                                               
would not evict a resident who  was unable to pay the actual cost                                                               
of $13,333.   He asked  about an  applicant who doesn't  have the                                                               
ability  to pay  the $13,333;  the state  wouldn't subsidize  the                                                               
care of that individual; and  SSA, Medicaid, and Medicare doesn't                                                               
cover the cost.  He asked, "Are those people just left out?"                                                                    
MR. LASLEY replied  that statute is clear that  someone living in                                                               
the state who  is 65 years of  age or older can move  into APH if                                                               
he/she is a resident  of the state for at least  one year and has                                                               
a medical need to  be in APH.  The DAPH does  not ask about one's                                                               
ability  to  pay  when  put  on the  waitlist  initially.    When                                                               
individuals become  ready to move  into APH, they  put themselves                                                               
on  the activate  waitlist; the  state  does not  ask them  about                                                               
their ability to  pay.  As rooms become  available, DAPH contacts                                                               
individuals on the  waitlist, asks them to move into  a home, but                                                               
does  not  ask  about ability  to  pay.    It  is only  after  an                                                               
individual  accepts  a  room  at  APH  that  DAPH  discusses  the                                                               
person's  finances,   what  he/she   can  pay,  need   for  state                                                               
assistance,   and  qualification   for  Medicaid   waiver.     He                                                               
maintained  that DAPH's  challenge is  that rates  have not  been                                                               
reflective  of  the  true  cost  of  care:  therefore,  DHSS  has                                                               
proposed  to  show  in  regulation the  true  cost  of  providing                                                               
services -  knowing that the  payment assistance  program exists.                                                               
Additional  funds were  added to  the payment  assistance program                                                               
budget to  ensure that every  individual who wanted or  needed to                                                               
live  at  APH  and  could  not pay  for  the  services  would  be                                                               
subsidized by the state.                                                                                                        
REPRESENTATIVE  WOOL  offered  his understanding  that  currently                                                               
people are  accepted into APH  regardless of the ability  to pay;                                                               
DHSS proposes charging  the true rate; the change under  HB 96 is                                                               
that  someone  who  has  the ability  to  pay  through  depleting                                                               
his/her  assets will  pay the  full rate  until they  are out  of                                                               
money, at which time they  would be eligible for state subsidies.                                                               
He  maintained that  under the  proposed  legislation, the  state                                                               
would get the full rate for a longer period than currently.                                                                     
MR.  LASLEY responded,  "This  is correct."    He explained  that                                                               
currently every resident is being  subsidized regardless of need.                                                               
Under  the DHSS  proposed  plan, by  regulation,  rates would  be                                                               
raised,  and the  resident  would use  his/her  resources to  pay                                                               
whatever he/she  could, based on the  payment assistance program.                                                               
He gave an example:   A resident moves into the  home and can pay                                                               
the  $13,333  rate for  six  months.    Once he/she  needs  state                                                               
payment  assistance, DHSS  would process  the individual  through                                                               
the payment  assistance program.   The rules  are set  in statute                                                               
defining  an individual's  income,  limited allowable  resources,                                                               
and  allowable  deductions  such   as  for  taxes  and  insurance                                                               
premiums.    The  remainder  is  subsidized by  the  state.    He                                                               
acknowledged that Representative Wool's  analysis was correct:  a                                                               
resident would pay what he/she can  of the true cost of providing                                                               
services; at  the time he/she  needs assistance, he/she  would be                                                               
qualified for the  program.  In this way  [the payment assistance                                                               
program] truly would be a need-based system.                                                                                    
3:47:29 PM                                                                                                                    
CO-CHAIR KREISS-TOMKINS  referred to the waitlist  and activation                                                               
on  the waitlist  and asked,  "How many  people are  presently on                                                               
that waitlist, and  of all the people presently  on the waitlist,                                                               
how  many of  them have  activated themselves  saying, 'I  want a                                                               
room as soon as it becomes available.'?"                                                                                        
MR. LASLEY  replied that there  are about 5,500  people currently                                                               
on  the  inactive  waitlist.    These are  people  who  have  put                                                               
themselves on  the list  to move  into a home  at a  future date.                                                               
Just over  200 individuals are ready  to move into a  home within                                                               
30 days, therefore, have activated themselves.                                                                                  
REPRESENTATIVE  SHAW asked  how the  rate increases  would affect                                                               
long-term care insurance.                                                                                                       
MR.  LASLEY  responded  that  currently  there  are  a  group  of                                                               
individuals with long-term care insurance  that pays to APH.  The                                                               
department has  discovered that  because it  is not  charging the                                                               
full amount  for care, insurance  is not  paying the most  it can                                                               
pay under  the plan.   He stated that  a rate increase  would not                                                               
affect the long-term care insurance.                                                                                            
REPRESENTATIVE SHAW asked whether  long-term care insurance has a                                                               
MR. LASLEY  answered that each  insurance program has a  limit as                                                               
far as maximum payout.                                                                                                          
REPRESENTATIVE LEDOUX asked whether there  must be a medical need                                                               
[for  acceptance  into  APH]  beside an  age  requirement.    She                                                               
suggested  that a  surviving spouse  might  not feel  comfortable                                                               
living  on her  own and  asked  whether that  would constitute  a                                                               
medical need.                                                                                                                   
MR. LASLEY relayed  that under statute an individual  must be [at                                                               
least] 65  years of age.   The APH looks for  individuals who are                                                               
not safe living at home or  who cannot take care of themselves on                                                               
their own.   He suggested that  a person who forgets  to turn off                                                               
the stove could fall into that category.                                                                                        
3:50:46 PM                                                                                                                    
REPRESENTATIVE WOOL asked how the  state subsidy is allocated and                                                               
the mechanism  for funding the  state subsidy.  He  asked whether                                                               
that fund was secure.                                                                                                           
MR.  LASLEY answered  that  historically  the payment  assistance                                                               
program has  been funded through GF  and GF / Mental  Health.  He                                                               
added  that the  statute  that states  that  APH neither  accepts                                                               
individuals based on their ability  to pay nor evicts individuals                                                               
due  to  their inability  to  pay  is  what secures  the  payment                                                               
assistance program.                                                                                                             
REPRESENTATIVE WOOL  asked whether  the funding is  separate from                                                               
the  funding  for  APH  itself.     He  asked  about  the  fund's                                                               
availability to  continue to pay  the costs  of care and  make up                                                               
the  difference between  what Medicaid  pays and  the costs.   He                                                               
mentioned that HB  96 was introduced due to a  concern that rates                                                               
are exceeding people's ability to pay.                                                                                          
MR.  LASLEY responded  that the  current  payment assistance  has                                                               
been paid out of  the APH component of GF.   He stated that under                                                               
the  governor's  proposal,  there  would  be  a  separate  unique                                                               
component  developed  - the  payment  assistance  component.   He                                                               
maintained that  the purpose of  developing this component  is to                                                               
truly  identify the  amount that  needs to  be subsidized  by the                                                               
state.   Initially when the  $15 million  was put into  the fund,                                                               
OMB and DHSS did not know  what would be needed for state subsidy                                                               
because it was  paid from GF.  Individuals have  never been asked                                                               
about  their   ability  to   pay.     Under  the   proposed  DHSS                                                               
regulations,  DHSS  would  identify  exactly what  the  needs  of                                                               
individuals  are  for state  subsidy  and  draw down  that  state                                                               
subsidy component by the amount needed.   He gave an example:  If                                                               
someone  could pay  $10,000 and  needed $3,333  in subsidy,  DHSS                                                               
would  draw  that  amount  down  from  the  [payment  assistance]                                                               
component and  truly be  able to  identify what  individuals need                                                               
for  subsidy and  not subsidize  individuals  merely because  the                                                               
rates are low.                                                                                                                  
REPRESENTATIVE  WOOL expressed  his understanding  that currently                                                               
every  resident is  subsidized because  APH is  not charging  the                                                               
actual rate; under the proposal,  the true rate would be charged,                                                               
and if  a person cannot pay,  it would be subsidized  through the                                                               
new subsidy program.   He asked whether there was  ever more of a                                                               
residency requirement  [for APH]  beyond the  current requirement                                                               
of one year.                                                                                                                    
MR.  LASLEY answered  that  there was  a  requirement for  longer                                                               
residency, but he does not know  when it was changed to one year.                                                               
He  clarified that  under the  proposal,  the payment  assistance                                                               
program would be  intact as previously, and  the difference would                                                               
be that  DHSS would account for  it in a separate  component.  He                                                               
stated that it  is not a new program; the  governor's proposal is                                                               
for  the  rates  to  reflect  what  it  truly  costs  to  provide                                                               
services, and to truly account for it.                                                                                          
3:55:49 PM                                                                                                                    
REPRESENTATIVE VANCE expressed her  understanding as follows:  If                                                               
the  state raises  the rates  to reflect  actual costs,  it could                                                               
maximize its draw  from insurance and federal  funds, account for                                                               
the amount truly  needed in the state budget and  help the people                                                               
who  truly need  [the care].   She  added that  there is  a clear                                                               
increase  in the  aging population  in Alaska,  and Alaska  needs                                                               
many more private care facilities  for seniors; however, with APH                                                               
subsidizing senior care, there is  little incentive for people to                                                               
move into private  facilities.  She maintained that  if the costs                                                               
of  each were  competitive  and both  were able  to  draw on  the                                                               
insurance and federal  funds, then APH truly  could be need-based                                                               
- for  people who cannot  pay.   She asked for  confirmation that                                                               
she has  accurately stated the  motivation behind  the governor's                                                               
MR.  LASLEY responded  that when  he introduced  the proposal  to                                                               
raise rates  to reflect  the cost of  providing services,  it was                                                               
not an  easy decision - knowing  that it would cause  angst among                                                               
people living in the homes or planning  to live in the homes.  He                                                               
stated  that the  payment assistance  program provides  security.                                                               
He said  that the  APH system  was developed to  be a  true need-                                                               
based system  and serve  individuals who  need assistance  and do                                                               
not have the ability  to pay for care in the  private sector.  He                                                               
voiced  that currently  DAPH, by  keeping its  rates artificially                                                               
low, is competing  with the private sector,  and state government                                                               
should never compete with the  private sector.  He considered how                                                               
to raise  rates - incrementally or  one time.  He  mentioned that                                                               
the  8.5 percent  rate increase  in 2016  caused many  issues for                                                               
residents.  He said that his  proposal was to raise rates to what                                                               
it  costs to  provide services  rather than  raise them  multiple                                                               
times and to avoid competing with the private sector.                                                                           
REPRESENTATIVE   VANCE  asked   whether   under  the   governor's                                                               
proposal, the  rates for residents  currently in the  homes would                                                               
be "grandfathered" in  and new residents would be  subject to the                                                               
new rates.                                                                                                                      
MR. LASLEY  answered, no.   The current  proposal is  to increase                                                               
rates for  every individual;  he is unsure  if DAPH  could charge                                                               
varying rates for the same service.   He reiterated that the rate                                                               
increase  was for  every individual;  however,  if assistance  is                                                               
needed,  the payment  assistance component  could be  used or  an                                                               
individual  needing the  highest level  of care  could draw  down                                                               
his/her assets and qualify for  a Medicaid waiver.  He maintained                                                               
that the proposal represents a  multitiered approach:  higher APH                                                               
rates, Medicaid  waiver reimbursement  rates, and  accounting for                                                               
individuals who need assistance.                                                                                                
4:00:28 PM                                                                                                                    
REPRESENTATIVE  STORY related  that  the intent  of  APH was  for                                                               
Alaska to  take care of  its seniors at  the point they  need the                                                               
care,  and  the  state  would   help  provide  that  care.    She                                                               
maintained this has been the state's  policy for a long time; the                                                               
governor's  proposal  represents a  major  shift  in policy;  the                                                               
change  is a  drastic and  sudden change;  and seniors  and their                                                               
families  have planned  with  the  current rates  in  mind.   She                                                               
relayed the  percent increases listed  in the table on  slide 14,                                                               
entitled "Current  vs. Proposed  Monthly Rates," for  the various                                                               
level of care  categories:  40 percent, 40  percent, 138 percent,                                                               
65 percent,  and 96 percent.   She opined that the  increases are                                                               
large.   She expressed her  desire to see more  gradual increases                                                               
to  allow  people  to  plan   and  anticipate  the  costs.    She                                                               
understands  DAPH's   viewpoint;  however,  it  is   a  difficult                                                               
situation.   Alaska does not  have many  places for seniors.   It                                                               
would be  unfortunate if they  had to leave  and not be  by their                                                               
families.   She  asked whether  DAPH has  considered proposing  a                                                               
more moderate increase.                                                                                                         
MR.  LASLEY  answered  yes,  and that  DAPH  looked  at  multiple                                                               
different approaches.   The beauty  of the regulatory  process is                                                               
that it  is posted for  60 days for  public comment and  the rate                                                               
would be determined  by the DHSS.  He acknowledged  that the true                                                               
cost of  providing services does  present "sticker  shock"; there                                                               
is not easy way to rightsize  DAPH.  He mentioned that increasing                                                               
rates over a three-year period  would require a regulation change                                                               
every  year, public  testimony every  year, and  a decision  made                                                               
every year.  He stated that  DHSS advanced the proposal to have a                                                               
one-time rate increase, rightsize DAPH,  and put a methodology in                                                               
place to  propose future  rate increases  based on  SSA benefits,                                                               
thereby  avoiding multiple  hard conversations  but knowing  that                                                               
the payment assistance program exists  to protect all Alaskans 65                                                               
and older.   He said that the governor and  the administration is                                                               
committed to following the statute  prohibiting any resident from                                                               
being evicted and ensuring that funds would be available.                                                                       
REPRESENTATIVE  WOOL   mentioned  the  sticker   shock,  resident                                                               
expectations,  and  the  possibility   of  a  person  needing  to                                                               
liquidate all his/her assets.   He referred to the possibility of                                                               
different rates  for new  residents versus  someone grandfathered                                                               
in.   He acknowledged that  even though  no one will  be evicted,                                                               
the proposal causes residents stress.                                                                                           
MR. LASLEY  agreed that it is  a tough conversation to  have.  He                                                               
stated that  for individuals  moving into APH,  it is  their last                                                               
home, and they have been moving  in at higher ages.  He mentioned                                                               
that some come in at the lowest  level of care and within a month                                                               
they have  advanced to the  higher level of care  costing $6,700.                                                               
He  said that  it  is a  hard transition  as  individuals age  in                                                               
place; the average age in the home  is 87; over 50 percent are at                                                               
the  highest  level  of  care;   most  individuals  expend  their                                                               
resources at  a rapid rate.   If individuals at the  higher level                                                               
of care meet  resource and medical need  requirements, they would                                                               
qualify for the Medicaid waiver.   He mentioned the Miller Trust,                                                               
a  qualifying income  trust,  into which  an  individual can  put                                                               
resources,  and those  funds  would  pay the  state  what it  had                                                               
subsidized through the Medicaid Waiver program.                                                                                 
CO-CHAIR KREISS-TOMKINS stated HB 96 would be held over.                                                                        
4:08:52 PM                                                                                                                    
The committee took an at-ease from 4:09 p.m. to 4:14 p.m.                                                                       
[During the at-ease, Co-Chair Kreiss-Tomkins  passed the gavel to                                                               
Co-Chair Fields.]                                                                                                               
        HB 71-STATE PERSONNEL ACT: VETERANS' EXPERIENCE                                                                     
4:14:20 PM                                                                                                                    
CO-CHAIR FIELDS announced  that the next order  of business would                                                               
be HOUSE  BILL NO. 71, "An  Act relating to hiring  for positions                                                               
in  state   service  based  on  substitution   of  military  work                                                               
experience or  training for required civilian  work experience or                                                               
4:14:43 PM                                                                                                                    
REPRESENTATIVE STORY,  prime sponsor of  HB 71, relayed  that the                                                               
proposed legislation  would allow  work experience gained  in the                                                               
military to  be used  when applying  for jobs  with the  State of                                                               
Alaska.  She paraphrased from  the sponsor statement, included in                                                               
the committee packet, which read:                                                                                               
     Members of  the military  bravely serve our  nation and                                                                    
     protect  our  nation's  values around  the  world.  The                                                                    
     rigors  of  the battlefield  can  be  immense, yet  the                                                                    
     transition  back to  civilian life  often proves  to be                                                                    
     another  battle.  In  a   2012  survey,  two-thirds  of                                                                    
     veterans named finding a job  as the greatest challenge                                                                    
     in transition from military to civilian life.                                                                              
     House  Bill  71 attempts  to  ease  this transition  by                                                                    
     allowing veterans,  former prisoners of war  or members                                                                    
     of   the  national   guard  to   substitute  documented                                                                    
     military     experience    for     published    minimum                                                                    
     qualifications   for    state   classified   positions.                                                                    
     Numerous  states,  including Alaska,  provide  veterans                                                                    
     hiring benefits and  employment preferences; House Bill                                                                    
     71 would provide additional support  to our veterans by                                                                    
     allowing  their previous  military  work experience  to                                                                    
     carry over into the civilian world.                                                                                        
     Allowing the  use of military experience  for state job                                                                    
     qualifications   is  currently   allowed  in   Alaska's                                                                    
     personnel  policy. House  Bill 71  would enshrine  this                                                                    
     current  practice into  law,  ensuring  those who  have                                                                    
     sacrificed for  our nation will  have better  access to                                                                    
     employment irrespective of changes in administrations.                                                                     
REPRESENTATIVE STORY added  that in the 15 years  that she served                                                               
on the  [Juneau] School District  Board of Education,  there were                                                               
five leadership changes.  Even  though the board had policies and                                                               
practices,  leadership changes  often  disrupted following  them;                                                               
the proposed  legislation would put  the practices  into statute.                                                               
She  continued by  saying  that an  additional  benefit would  be                                                               
raising awareness  among veterans that their  military experience                                                               
can  be  used  when  applying  for  state  jobs.    State  hiring                                                               
personnel  would  know to  count  military  work experience  when                                                               
evaluating veterans and  other members of the  military for state                                                               
REPRESENTATIVE STORY mentioned that  the proposed legislation was                                                               
introduced during  the Thirtieth Alaska State  Legislature, 2017-                                                               
2018,  by  former Representative  Justin  Parish  and passed  the                                                               
House  unanimously.   She  expressed  her belief  that  HB 71  is                                                               
worthwhile  legislation, has  value, and  should be  enacted into                                                               
4:17:51 PM                                                                                                                    
REPRESENTATIVE  VANCE asked  for an  example of  how HB  71 would                                                               
benefit the workforce beyond the practices currently in place.                                                                  
4:18:10 PM                                                                                                                    
GREG  SMITH,  Staff,  Representative  Andi  Story,  Alaska  State                                                               
Legislature, on  behalf of Representative   Story,  prime sponsor                                                               
of HB  71, stated that  the first  step for applicants  for state                                                               
employment    is   demonstrating    that   they    meet   minimum                                                               
qualifications, such as holding  a [General Education Development                                                               
(GED) - High School Equivalency  Certificate], a college diploma,                                                               
a commercial  driver's license (CDL),  or a nursing degree.   The                                                               
proposed  legislation  would  allow   experience  gained  in  the                                                               
military to  be used  to meet those  minimum qualifications.   He                                                               
gave  an  example:   for  a  procurement specialist  the  minimum                                                               
qualifications include a year  of procurement experience, writing                                                               
or approving solicitations,  explaining contracting requirements,                                                               
and developing or proving product  specifications.  He reiterated                                                               
that  the proposed  legislation  would enshrine  in statute  that                                                               
such experience  in the military  would count toward  the minimum                                                               
qualifications for a state position.                                                                                            
REPRESENTATIVE VANCE asked  for the reason the  practice needs to                                                               
be  enshrined in  statute when  it is  in the  standard operating                                                               
procedure (SOP).                                                                                                                
MR. SMITH stated that statute  is more fixed than policy; changes                                                               
in administration cause  policies to change.   He reiterated that                                                               
there is an  awareness component; veterans and  those involved in                                                               
the  hiring process  would  know for  certain  that the  military                                                               
experience counts when applying for state positions.                                                                            
REPRESENTATIVE  SHAW gave  examples in  which veterans  could use                                                               
their work experience to transition  into a position:  "Troops to                                                               
Teachers" is  a program allowing  an individual with 20  years of                                                               
military service, who  is at the conclusion of  a degree program,                                                               
to enter  a classroom, initiate student  teaching, finish his/her                                                               
degree,  and  become  a  teacher.   In  the  military  there  are                                                               
individuals  in the  Supply  Corps or  under  the Judge  Advocate                                                               
program who are lawyers or  legal assistants.  He maintained that                                                               
there are  many positions  in the military  with vast  amounts of                                                               
experience that  could transition  easily into a  state position.                                                               
He  asserted that  the value  that  veterans bring  to the  state                                                               
workforce  is  huge; this  practice  being  enshrined in  statute                                                               
rather than  policy, would make  a difference and would  allow it                                                               
to exist in perpetuity.                                                                                                         
REPRESENTATIVE FIELDS  offered that  as a practical  reality, the                                                               
Department  of  Defense  (DoD)   has  substantially  invested  in                                                               
personnel to assist with  transitioning military service members;                                                               
with  the practice  put into  statute,  DoD staff  who work  with                                                               
those  finishing  their  service  in  Alaska  would  be  able  to                                                               
reference statute as  a clear indicator of  the great opportunity                                                               
to enter  state service.  He  stated that there are  also private                                                               
sector  transition programs;  some unions  promote the  Helmet to                                                               
Hardhats program.   He said  that the advantage of  the statutory                                                               
language under the proposed legislation  is that it would make it                                                               
easier  for the  state to  benefit from  a veteran's  service and                                                               
previous experience by welcoming him/her to its workforce.                                                                      
4:23:08 PM                                                                                                                    
REPRESENTATIVE WOOL mentioned that  regulations are enshrined and                                                               
followed; they are not tenuous.                                                                                                 
REPRESENTATIVE  STORY responded  that  there  have been  reported                                                               
incidences in  which policy was  not followed and  using military                                                               
experience  for employment  became difficult.   She  offered that                                                               
the  bill was  introduced to  put  the practice  into statute  to                                                               
ensure the policy would be followed.                                                                                            
CO-CHAIR FIELDS stated that HB 71 would be held over.                                                                           
4:24:40 PM                                                                                                                    
The committee took an at-ease from 4:25 p.m. to 4:26 p.m.                                                                       
          HB 31-APPROP: EARNINGS RESERVE TO PERM FUND                                                                       
4:26:06 PM                                                                                                                    
CO-CHAIR FIELDS announced that the  final order of business would                                                               
be HOUSE BILL  NO. 31, "An Act making a  special appropriation to                                                               
the Alaska permanent fund; and providing for an effective date."                                                                
4:26:08 PM                                                                                                                    
CO-CHAIR KREISS-TOMKINS, as prime sponsor,  relayed that HB 31 is                                                               
identical  to an  amendment to  the operating  budget [introduced                                                               
during the  Thirtieth Alaska  State Legislature,  2017-2018] with                                                               
ten co-sponsors  from both caucuses  and both  political parties;                                                               
however, it  was never  put to  a vote  on the  House floor.   He                                                               
maintained  that  the  impetus   for  the  amendment  is  greater                                                               
currently than last year.                                                                                                       
CO-CHAIR KREISS-TOMKINS  relayed that he joined  the Alaska State                                                               
Legislature in  2013; that year was  the first in some  time that                                                               
Alaska had  a budget deficit.   In  the ensuing years,  the state                                                               
had  a multibillion-dollar  deficit, cut  spending slightly,  did                                                               
not raise  revenues, and spent down  $14 billion in savings.   He                                                               
referred  to  a  PowerPoint  presentation  on  HB  31,  slide  1,                                                               
entitled  "If  the deficits  continue,  the  CBR is  most  likely                                                               
gone."   The chart  on the  slide demonstrates  by bar  graph the                                                               
decline in  the funds  over the years,  2014-2019.   He expressed                                                               
that  these  actions  have been  immensely  frustrating  to  him,                                                               
especially considering the earning  potential of the $14 billion.                                                               
He maintained  that regardless of  one's views on  permanent fund                                                               
dividends  (PFD) payments  and  level of  state services,  Alaska                                                               
would be in a better position if it had invested that amount.                                                                   
CO-CHAIR  KREISS-TOMKINS  stated that  there  is  still a  budget                                                               
deficit.  There  are many competing visions  for Alaska regarding                                                               
PFD payments  and public services.   The impetus  of HB 31  is to                                                               
ensure that  Alaska's intergenerational financial assets  and the                                                               
permanent  fund  itself  are  protected  from  the  "tugging  and                                                               
pulling" of the political priorities  for spending.  He expressed                                                               
his  grave concern  that  the legislature,  which  has spent  $14                                                               
billion in  the past  4-5 years, is  equally capable  of spending                                                               
down some  fraction of  the $17 billion  in the  Earnings Reserve                                                               
Account (ERA)  over the  coming years,  if the  political climate                                                               
was conducive to  doing so.  He maintained that  he is cautiously                                                               
optimistic  that  this  would  not   happen  during  the  current                                                               
legislative session; however, he  is concerned about it happening                                                               
in future  years.  He offered  that spending the account  down in                                                               
an  unsustainable  manner,  that  is, spending  faster  than  the                                                               
permanent fund is  generating earnings, is the  most perilous and                                                               
concerning  outcome  as far  as  bankrupting  the future  of  the                                                               
4:30:53 PM                                                                                                                    
KEVIN  MCGOWAN,  Staff, Representative  Jonathan  Kreiss-Tomkins,                                                               
Alaska  State Legislature,  on behalf  of Representative  Kreiss-                                                               
Tomkins,  prime sponsor  of HB  31, referred  to slide  2 of  the                                                               
PowerPoint   presentation,  entitled   "Permanent  Fund   Account                                                               
Structure," which  illustrates the two accounts  of the permanent                                                               
fund  -  the  Principal  and  the   ERA.    The  Principal  is  a                                                               
constitutionally  established and  permanently protected  savings                                                               
account  that can  never  be spent.   The  ERA  is available  for                                                               
appropriation by a simple majority of the legislature.                                                                          
MR. MCGOWAN moved on to slide  3, to discuss the calculation used                                                               
last year [2018]  in determining the amount needed in  the ERA to                                                               
maintain the  percent of  market value (POMV)  annual draws.   He                                                               
said  that under  Senate  Bill 26  [passed  during the  Thirtieth                                                               
Alaska State  Legislature, 2017-2018]  the formula  used required                                                               
the ERA to  be four times the  POMV draw to maintain the  ERA.  A                                                               
POMV draw  of $2.5 billion would  require an ERA of  $10 billion.                                                               
This amount would need to remain  in the account in order to make                                                               
PFD payments or state service appropriations.                                                                                   
REPRESENTATIVE KREISS-TOMKINS  explained that when  the operating                                                               
budget was discussed  in 2018, the minimum  sufficient balance of                                                               
the ERA was viewed as a  "shock absorber," because the ERA is the                                                               
account  from which  all PFD  payments are  made and  - with  the                                                               
passage of  Senate Bill 26 -  from which payments for  some state                                                               
services  are   made.     The  ERA  is   where  market   risk  is                                                               
consolidated, and unrealized earnings  are represented.  If there                                                               
is  a  severe  market  downturn or  a  [calamitous]  geopolitical                                                               
event, the ERA could contract  rapidly.  Even though $2.5 billion                                                               
may  be all  that  is  needed annually,  having  four times  more                                                               
provides the buffer to absorb financial shocks.                                                                                 
REPRESENTATIVE LEDOUX  asked what the  benefit of HB 31  would be                                                               
as  opposed  to  the  constitutional   amendment  that  has  been                                                               
proposed creating a spending cap.                                                                                               
REPRESENTATIVE KREISS-TOMKINS  replied that although the  two are                                                               
interrelated, the  proposal under HB  31 - moving funds  from the                                                               
ERA into the Principal - does  not mention how much or how little                                                               
spending is appropriate.                                                                                                        
REPRESENTATIVE LEDOUX  maintained that, in effect,  it does limit                                                               
the amount which can be expended.                                                                                               
REPRESENTATIVE KREISS-TOMKINS agreed.  He  said that if there was                                                               
a  constitutional spending  cap in  place -  like what  [Governor                                                               
Michael J. Dunleavy] has proposed  or the Senate of the Thirtieth                                                               
Alaska  State  Legislature  proposed,   there  would  be  certain                                                               
enhanced levels created for the permanent  fund.  He said that if                                                               
the  spending cap  were in  excess of  state revenues,  "it would                                                               
help  but it  wouldn't entirely  solve it  depending on  what the                                                               
spending cap  ultimately was."   He added  that there  is another                                                               
political consideration:   the spending  cap may not pass  in the                                                               
legislature;  passing  a  spending cap  constitutional  amendment                                                               
requires  a  high  threshold  -  two-thirds of  each  body.    He                                                               
believes that there  are more permanent fixes  for protecting the                                                               
state's assets, but currently, there is  a great deal of money in                                                               
the  ERA that  could be  liquidated  [by the  legislature].   The                                                               
proposed  legislation offers  a  short-term ability  to put  some                                                               
money into savings.                                                                                                             
4:36:47 PM                                                                                                                    
REPRESENTATIVE  STORY  opined  that  HB  31  appears  to  provide                                                               
inflation proofing.  She asked  what the state is currently doing                                                               
to inflation  proof the fund and  what the state's history  is on                                                               
inflation proofing.                                                                                                             
REPRESENTATIVE  KREISS-TOMKINS  said   that  currently  inflation                                                               
proofing under  the statutory  formula is about  $1 billion.   He                                                               
stated that the amount of money  that HB 31 would transfer - $5.5                                                               
billion -  is like  an inflation proofing  amount.   He mentioned                                                               
that under  present market conditions,  the transfer could  be as                                                               
large as  $7 billion;  the ERA  amount this  year is  larger than                                                               
last  year when  a transfer  was considered  under the  operating                                                               
budget.  He maintained that  the amount that would be transferred                                                               
under HB 31  is very similar in principle  to inflation proofing;                                                               
however, because  the legislature  has failed to  inflation proof                                                               
in a couple  previous years, because there is a  bull market, and                                                               
because the ERA  has rapidly grown, even  inflation proofing like                                                               
has been  done in the past  would not move the  excess money from                                                               
the ERA.                                                                                                                        
4:38:37 PM                                                                                                                    
REPRESENTATIVE   VANCE   relayed  that   Representative   Kreiss-                                                               
Tomkins's  presentation sounds  like he  supports protecting  the                                                               
states  funds from  excessive spending  by balancing  the budget.                                                               
She  mentioned  that  the  legislature   has  rapidly  spent  $14                                                               
billion; however, there continues to  be spending, and one way to                                                               
avoid  that is  to reduce  spending.   She expressed  her concern                                                               
that the  intent of HB  31 - moving  funds from  the ERA -  is to                                                               
remove  it  from the  conversation  regarding  restoring the  PFD                                                               
payments of  the past few  years.   She maintained that  the 2018                                                               
elections  demonstrate that  Alaskans  want to  be  part of  that                                                               
conversation.  She stated that  her constituents support having a                                                               
conversation  about  restoring the  PFD  payments  that were  not                                                               
fully  paid,  and  not  moving  the excess  ERA  money  into  the                                                               
[Principal].  She  maintained that her constituents  have not had                                                               
the opportunity to have this conversation.                                                                                      
REPRESENTATIVE  KREISS-TOMKINS  responded  that  he  has  a  deep                                                               
cynicism about  legislature's ability  to restrain  its spending.                                                               
He  suggested that  he and  Representative  Vance have  different                                                               
perspectives about  the solution.   He  mentioned that  his first                                                               
two years  in office were  under a Republican  administration and                                                               
Republican majorities  in both chambers  of the  legislature, and                                                               
the savings were  liquidated.  He stated that  his solution would                                                               
have been to cut spending a  little and raise revenues; there was                                                               
a small  cut in spending  and no new  revenues.  He  continued by                                                               
saying  that  in  subsequent  years  there  was  mixed  political                                                               
control.   He opined that  to some extent political  control does                                                               
not matter;  the state has  not been able to  sustainably balance                                                               
its budget.  He maintained that  the state is closer to balancing                                                               
its  budget  than  ever  before; however,  until  the  state  can                                                               
balance its budget, there is a  lot of risk with large amounts of                                                               
money available for appropriation,  especially when only a simple                                                               
majority vote of 21-11 is required.                                                                                             
CO-CHAIR  KREISS-TOMKINS offered  that regarding  the backpay  of                                                               
PFDs, it never occurred to  him before Representative Vance asked                                                               
the question that HB 31 would  be considered a way to preempt the                                                               
ability to do  that.   He maintained that  the proposal [under HB
31]  was  first introduced  last  year  before there  was  public                                                               
dialogue  on backpay  of  the PFDs.   He  added  that there  were                                                               
concerns  voiced  during  the previous  administration  that  the                                                               
funds would  be spent down to  pay for the natural  gas pipeline;                                                               
another time it  could be another project  that people supported.                                                               
He  said  that  such  proposals   are  concerning;  for  example,                                                               
building a giant  bridge from Baranof Island  to Admiralty Island                                                               
would be  a multi-billion-dollar project  and a  tremendous waste                                                               
of state  money.    He asserted  that Alaska should  spend within                                                               
its means  and have  a balanced  budget; having  a great  deal of                                                               
available funds presents risks.                                                                                                 
4:43:19 PM                                                                                                                    
REPRESENTATIVE  WOOL  relayed  that  the argument  last  year  is                                                               
different from the  argument this year.  In past  years the state                                                               
drafted a budget, didn't have the  revenue to pay for the budget,                                                               
and took the money out  of the Constitutional Budget Reserve Fund                                                               
(CBRF).  The  CBRF represented a liquid savings  account that was                                                               
easy  to  access.    He  said that  currently  the  state  has  a                                                               
structured  draw  out of  the  entirety  of the  permanent  fund;                                                               
therefore, the  revenue - from  the draw and the  other revenues,                                                               
such as oil taxes - could pay  for the budget.  He suggested that                                                               
the intent  of HB 31  is to protect against  the draw on  the ERA                                                               
outside of the structure.                                                                                                       
REPRESENTATIVE KREISS-TOMKINS  answered, "Effectively, yes."   He                                                               
said that if the legislature  had forever abided by the framework                                                               
of Senate Bill 26 and never  drew from the Permanent Fund greater                                                               
than 5 percent of the  permanent fund's market value, there would                                                               
effectively be  no risk of  unsustainably spending down  the real                                                               
fund  of  the  Permanent  Fund.    It  is  possible  that  should                                                               
political or economic conditions shift,  there may be a situation                                                               
in  which the  legislature  would  want to  draw  greater than  a                                                               
sustainable  amount  from the  Permanent  Fund  as set  forth  in                                                               
Senate  Bill 26,  regardless  of  how the  money  is  spent.   He                                                               
maintained that HB 31 would control for that risk.                                                                              
REPRESENTATIVE LEDOUX  asked if  HB 31 would  have the  effect of                                                               
avoiding a three-quarter vote [of  the legislature] to draw money                                                               
from  the CBR.    She suggested  that  if the  ERA  were below  a                                                               
certain amount, a three-quarter vote  would not be needed to draw                                                               
from the CBR.                                                                                                                   
4:47:21 PM                                                                                                                    
ANGELA  RODELL, Chief  Executive Officer,  Alaska Permanent  Fund                                                               
Corporation (APFC),  answered that  traditionally there  has been                                                               
language  associated with  the CBR  that  if the  level of  total                                                               
savings of  the state reaches  a certain threshold then  the need                                                               
to repay  the CBR is  negated.  She added  that she did  not know                                                               
what  the  threshold  was  but currently  there  is  a  repayment                                                               
obligation for the CBR for the current balance.                                                                                 
REPRESENTATIVE LEDOUX  stated that her  concern was not  with the                                                               
necessity of  repaying the CBR;  her recollection is that  if the                                                               
amount of  money in ERA is  less than a certain  amount, than the                                                               
requirement for  a three-quarter  vote to take  money out  of the                                                               
CBR would be negated.                                                                                                           
4:49:14 PM                                                                                                                    
ALEXI  PAINTER,  Fiscal  Analyst, Legislative  Finance  Division,                                                               
stated that under the constitution, the  CBR can be accessed by a                                                               
simple majority  vote, if the amount  available for appropriation                                                               
is  less than  the  previous year's  budget.   He  said that  the                                                               
courts have  interpreted that  to include the  ERA as  the amount                                                               
available  for  appropriation;  it  also  includes  that  current                                                               
year's  revenue.   For  fiscal  year 2020  (FY  20), the  current                                                               
year's revenue is  about $2.5 billion in  traditional revenue and                                                               
$2.7 billion  from the permanent  fund.   In order to  access the                                                               
CBR with  a simple majority  vote, the  balance in the  ERA would                                                               
have to be under $1  billion, requiring a $17.5 billion transfer;                                                               
currently the amount is far too small for that to occur.                                                                        
MS.  RODELL, in  answer to  Representative Story,  said that  the                                                               
original legislation 40 years ago  included inflation proofing as                                                               
a second  draw after the draw  for PFD payments.   The [inflation                                                               
proofing]  calculation is  based on  consumer price  index (CPI).                                                               
Each year there has been  an appropriation for inflation proofing                                                               
up  until 2010;  that  year the  appropriation  was zero  because                                                               
inflation was zero.  The calculation  is based on the most recent                                                               
calendar  year's CPI  and is  calculated off  the balance  in the                                                               
Principal of the [permanent fund]  account only; therefore, it is                                                               
not calculated on  the total of the Principal plus  the ERA.  She                                                               
said that in FY  16, FY 17, and FY  18, the  decision was made to                                                               
not appropriate for  inflation in any of those  three years; that                                                               
amount would  have totaled $1.4 billion  had those appropriations                                                               
occurred.   An appropriation  was included in  the FY  19 budget;                                                               
that money  will be moved  at the  conclusion of the  fiscal year                                                               
once Alaska  has received  all the  royalties into  the Principal                                                               
and APFC  is able  to do  the calculation.   She added  that this                                                               
usually occurs in July of every  year; the amount is estimated to                                                               
be about  $942 million.  She  continued by saying that  in the FY                                                               
20  budget proposal,  there is  an  estimated inflation  proofing                                                               
calculation of about $982 million.                                                                                              
CO-CHAIR  FIELDS  asked for  the  amount  each $1  billion  earns                                                               
Alaska on average per year;  that is, what earning opportunity is                                                               
lost for each $1 billion that Alaska spends down.                                                                               
MS.  RODELL  replied  that  since inception  40  years  ago,  the                                                               
earning rate has  been 8.9 percent; rounded up to  9 percent, the                                                               
amount lost would be about $90 million.                                                                                         
CO-CHAIR FIELDS stated that HB 31 would be held over.                                                                           
4:53:43 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
State Affairs  Standing Committee  meeting was adjourned  at 4:55                                                               

Document Name Date/Time Subjects
HB096 Bill Version A 3.25.19.PDF HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Sponsor Statement 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SFIN 3/9/2020 9:00:00 AM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Sectional Analysis 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Fiscal Note DHSS-APHPA 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Fiscal Note DHSS-PH 3.26.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Supporting Document Alaska Pioneer Homes Advisory Board Report 2018 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Supporting Document Consumer Price Index in AK Statutes 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Supporting Document-PPT Presentation 3.5.19 HSS Finance Subcommittee, 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Supporting Document DHSS Budget Subcommittee Amendment No. 1 PASSED 3.26.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Letters of Support 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB096 Supporting Document AK Dept of Labor Consumer Price Index 2018 3.25.19.pdf HHSS 4/9/2019 3:00:00 PM
HHSS 4/23/2019 3:00:00 PM
HSTA 3/26/2019 3:00:00 PM
SHSS 2/12/2020 1:30:00 PM
HB 96
HB071 ver A 3.19.19.PDF HSTA 3/26/2019 3:00:00 PM
HB 71
HB071 Sponsor Statement 3.19.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 71
HB071 Minimum Qualifications SOP04 3.19.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 71
HB071 DOA Fiscal Note 3.19.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 71
HB031 ver U 3.25.18.PDF HSTA 3/26/2019 3:00:00 PM
HB 31
HB031 Sponsor Statement 3.25.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 31
HB031 Sectional Analysis ver U 3.25.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 31
HB031 Presentation 3.26.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 31
HB071 Supporting Document - Letter of Support 3.28.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 71
HB031 Opposing Document - Letter in Opposition 4.24.19.pdf HSTA 3/26/2019 3:00:00 PM
HB 31