Legislature(2021 - 2022)DAVIS 106
01/27/2022 11:30 AM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Fiscal Policy Impacts | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
January 27, 2022
11:34 a.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Adam Wool, Vice Chair
Representative Andy Josephson
Representative Calvin Schrage
Representative Andi Story
Representative Mike Prax
Representative David Eastman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): FISCAL POLICY IMPACTS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JARED KOSIN, President/CEO
AK State Hospital and Nursing Home Association
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation, titled
"Medicaid Spending & the Impact on Health Care."
MICHELE GIRAULT, Chief Director
Hope Community Resources;
Board President
Key Coalition of Alaska
Anchorage, Alaska
POSITION STATEMENT: Provided invited testimony about fiscal
impacts to the healthcare industry.
LISA PARADY, PhD, Executive Director
Alaska Council of School Administrators
Juneau, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation, titled
"The Proposed Fiscal Plan and Public Education Funding."
BRIDGETT WEISS, PhD, Superintendent
Juneau School District;
President Elect
Alaska Council of School Administrators
Juneau, Alaska
POSITION STATEMENT: Provided invited testimony on fiscal
impacts on Alaska's Schools.
LON GARRISON, Executive Director
Association of Alaska School Boards
Juneau, Alaska
POSITION STATEMENT: Provided invited testimony about the fiscal
impacts of education funding.
ACTION NARRATIVE
11:34:38 AM
CHAIR IVY SPOHNHOLZ called the House Special Committee on Ways
and Means meeting to order at 11:35 a.m. Representatives Wool,
Josephson, Schrage, Story, and Spohnholz were present at the
call to order. Representatives Eastman and Prax arrived as the
meeting was in progress.
^PRESENTATION(S): Fiscal Policy Impacts
PRESENTATION(S): Fiscal Policy Impacts
11:35:05 AM
CHAIR SPOHNHOLZ announced that the only order of business would
be a presentation on Fiscal Policy Impacts.
11:36:32 AM
JARED KOSIN, President/CEO, Alaska State Hospital and Nursing
Home Association, provided a PowerPoint presentation, titled
"Medicaid Spending & the Impact on Health Care" [hard copy
included in the committee packet]. Alaska State Hospital and
Nursing Home Association's (ASHNHA's) mission is advancing the
shared interests of Alaska's hospitals, nursing homes, and
healthcare partners, to build an innovative, sustainable system
of care for all Alaskans. For over 60 years, ASHNHA members
have worked together to improve health care in Alaska. The
fiscal year 2023 (FY 23) 10-year plan will flat fund Medicaid
and will project annual growth at 1 percent after year two. The
Medicaid Enrollment and Spending in Alaska forecast (MESA
Report) covers 20-year cycles, was updated in 2021, and is
projected to increase by 3.8 percent per recipient per year for
Medicaid. The 2022 report downgraded that rate to 2 percent.
Historical performance of average annual growth between 2016-
2019 saw general fund appropriation at a 2.1 percent rate. The
average annual growth rate for 2020-2023 was 0.7 percent. The
pandemic caused Medicaid utilization and healthcare service
utilization to drop significantly.
11:43:07 AM
MR. KOSIN demonstrated that the payer mix shows volumes by payer
type and is relevant because it shows that Medicaid is a
significant wedge at almost 30 percent of the total volume.
Payer mix varies by service type, for example 90 percent of
services of a nursing home come from Medicaid and any change in
fiscal policy regarding Medicaid would significantly impact
nursing home operations. More than 50 percent of the payer mix
is made up of government programs that often pay less than cost
and start operations in a deficit which results in increased
costs of care.
11:46:27 AM
MR. KOSIN described the healthcare system continuum and that the
most expensive part of the continuum is the hospital inpatient
environment and the least expensive is at the community care or
primary care level. Capacity deficiencies drive and trap
patient care at the highest cost point. For example, if you
don't have access to primary care and need to go to the hospital
for services, it will cost way more than it should to get care.
Bed availability in nursing homes is extremely low, if a patient
goes to the hospital and there isn't space in a nursing home,
the patient incurs uncompensated care because the patient
doesn't meet the criteria for staying in the hospital, but also
can't be safely discharged. The State of Alaska General Relief
Assisted Living Home Program helps Alaskans who lack resources
to meet an emergent need and are not eligible for assistance
from other programs such as Medicaid. The waitlist system
prioritizes those discharged from hospital or long-term care
facility. The current General Relief Assisted Living home rate
is $70 per day and has been at that rate since July 1, 2002.
Medicaid pays $170.27 per day and the rate was last updated on
July 1, 2021. Because of long wait times for placement in
assisted living facilities, some patients are in the hospital
for over 100 days and can't be discharged because they are
waiting to qualify for Medicaid and no assisted living facility
will take them due to the low general relief rate. This problem
is widespread. People with behavioral issues get stuck in the
hospital because facilities can't accept them due to the low
rate. It takes anywhere from 45 days to 4 months to qualify for
Medicaid, and in the meantime, patients are incurring high costs
by staying in the hospital, the most expensive environment of
care.
11:53:10 AM
MR. KOSIN said that simply put, a unit of service multiplied by
a rate of payment equals the Medicaid expenditure. Aggressive
targets can be hit, some critical steps must be taken including
planning, projecting, and time. Mr. Kosin, in response to
Representative Wool, said that the General Relief rate has been
an ongoing issue for years because it is in the general fund.
Money saved by avoiding uncompensated care will more than cover
the cost of increasing the General Relief rate. The amount of
time it takes to qualify and process general relief has also
been a contributing factor. Matching Medicaid at $170 would
make an enormous difference. The General Relief Assisted Living
Home rate is a line item in the Health and Social Services
budget.
12:02:34 PM
MICHELE GIRAULT, Chief Director/Board President, Hope Community
Resources/Key Coalition of Alaska, referenced the Joint
Legislative Education Funding Task Force Report to the Governor
and Legislature [included in the committee packet]. Hope
Community Resources has been a provider of community support in
Alaska for 53 years. Key Coalition of Alaska is comprised of
stakeholders representing people experiencing disabilities,
families, advocates, and a range of providers who provide
services from infant learning programs, child and adolescent
programs, and adult services. Fiscal constraints are pushing
community provider systems to the brink of collapse. Rates for
home and community-based services including personal care
services are governed by regulation 7AAC145520 which says that
rates should have been established every four years using
provider cost data collected for rebasing purposes. Although
providers have submitted cost surveys during this time, no rate
rebasing has occurred in 2014 and 2018. A fee for service
system dependent on Medicaid for reimbursement created litany of
federal mandates, regulatory expectations, and changes adding
unfunded administrative burden on providers.
MS. GERAULT said requirements under the Affordable Care Act,
expectations to move to an electronic health record required
under the American Recovery and Reinvestment Act, self-audits
required under Medicaid reform SB 74, Center for Medicare and
Medicaid Services requirements, electronic visit verification,
accreditation requirements, increased training requirements,
requirements for note review, et cetera have required providers
to allocate additional funds and human resources for compliance
without any rate adjustment. She said 33-66 percent of services
to some of the most vulnerable people in Alaska are not offered
due to lack of staffing because of the "great resignation." A
lack of rate adjustment has demanded providers create their own
cost containment measures including reducing sick leave, cutting
positions, closing assisted living homes, and refinancing
properties, yet there were still multiple-year operating losses.
We share a vision of a flexible system where each person directs
their own support based on their strengths and abilities towards
a meaningful life in their home, job, and community. The vision
includes supported families, professional staff, and services
available throughout the state now and into the future. The
health system is in crisis due to staff retention.
12:17:23 PM
MS. GIRAULT, in response to Representative Josephson, referred
to a document, entitled "Medicaid Waiver Home and Community
Based Services Rate Study Background and Recommendations
Effective Health Design" [included in committee packet] that
outlines the rate adjustment expectations. She confirmed for
Representative Prax that the Key Coalition has a wide range of
partnerships. She noted for Representative Story that the
aforementioned report did an analysis on other states that may
help to guide the committee to address the fiscal reality along
with the needs of the community-based system.
12:23:40 PM
LISA PARADY, PhD, Executive Director, Alaska Council of School
Administrators (ACSA), provided a PowerPoint presentation,
titled "The Proposed Fiscal Plan and Public Education Funding."
She noted that ACSA's unifying purpose is to support educational
leaders by providing a collective voice that champions
possibilities for all students' purposeful advocacy for public
education. While student achievement is the number one
priority, adequate funding remains the most critical need. The
base student allocation (BSA) in 2020 dollars hasn't changed
since FY 19. There has been a downward trend in the BSA all
while fixed costs like electricity, insurance, et cetera, are
increasing. The value of the BSA has decreased despite any
increases in recent years. Flat funding for education is a cut
to the budget of every public school in Alaska because it does
not account for inflation. The blue line in the graph on slide
5 which was created by the legislative finance office, shows the
significant erosion of the inflation adjusted value of the BSA.
The BSA has been cut by 16 percent from FY 07 to FY 22.
Nationally, inflation has increased by 7 percent in the last
year. Alaska consumer price index increased by 7.2 percent last
year.
DR. PARADY said that school districts must fund the increasing
cost of health care, utilities, shipping costs, and supplies.
The budget has not met the need for nurses, substitute teachers,
counselors, and special education teachers. The urgency of
increasing the BSA is prudent due to the impacts of the pandemic
which has exacerbated already existing issues in the operating
budget. Early notification and stable funding are crucial for
sound financial management as well as recruitment and retention
of quality educators. Unpredictable funding leads to district
uncertainty, which leads to district instability and further,
will negatively impacts instruction. Implementation of a long-
term, multi-revenue fiscal plan remains imperative to maximize
the ability of districts to meet student needs. Diversified
revenue streams are critical in the current fiscal climate to
address any deficit and ensure the ability to fund service
increases associated with economic development, inflation,
deferred maintenance, and capital construction requirements.
Reliable and predictable funding will lead to district certainty
and district stability and will increase student achievement.
12:34:30 PM
DR. PARADY said timely reliable predictable revenue for schools
is a critical need. The ACSA is also focused on student
achievement, the social emotional needs of students, access to
early childhood education, and retaining and attracting
qualified educators. Currently, Alaska's benefits, retirement,
and salary are not competitive with the Lower 48 which has made
it difficult to recruit and retain teachers. The ability of
Alaska schools to attract teachers is eroded by flat funding
BSA.
12:39:18 PM
BRIDGETT WEISS, PhD, Superintendent, Juneau School District;
President Elect, Alaska Council of School Administrators,
pointed out the compounding impacts that occur alongside
inflation includes contract negotiation. Property liability,
auto insurance, and workers compensation insurance has doubled
from $500,000 to $1 million in the last year for the Juneau
School District. Those increased fixed costs were absorbed into
required expenses in the budget. Next year, property insurance
alone will increase another $452,000. The deductible for
property insurance and increased from $100,000 to $500,000 in
the past five years. Utilities are increasing. There are
shortages in the highest need positions, especially counselors.
There is not enough funding to fill essential positions for
programs that need the most help to close the achievement gap
for Alaska Native, low-income, and English learning students.
Grant services are limited in scope and are not sustainable.
Dr. WEISS relayed that with the deferment of maintenance
efforts, facilities across the state will experience rising
costs in future maintenance as problems are exacerbated due to
the lack of funding to solve issues as they are needed. For
example, at Riverbend Elementary in Juneau there was a
significant flood, a water table issue which increased moisture
levels in the building causing damage to carpets, and
significant leaks in the roof led to unusable classrooms. In
response to Representative Wool, she answered that the Juneau
School District is recouping students who had been utilizing
remote learning resources during the pandemic. Because the BSA
formula doesn't fully count remote students, districts receive
less funds to serve them. She gave an example that a reem of
paper cost $2.97 in 2011 and now costs $13.69.
12:53:03 PM
LON GARRISON, Executive Director, Association of Alaska School
Boards, read from the following prepared remarks [original
punctuation provided]:
Good afternoon, Madam Chair and members of the House
Ways & Means Special Committee. My name is Lon
Garrison, and I serve as the Executive Director of the
Association of Alaska School Boards. Thank you for the
opportunity to testify today. My testimony today is
supported by 2 resolutions of the AASB membership.
These resolutions address the need for long-term,
sustainable and predictable education funding. These
resolutions are titled: Resolution 2.1 - SUSTAINED,
RELIABLE AND ADEQUATE STATE FISCAL PLAN AND
EDUCATIONAL FUNDING FOR ALASKA'S STUDENTS THROUGH A
NON-VOLATILE FUNDING SOURCE and Resolution 2.2 -
URGING EARLY, ADEQUATE, EQUITABLE, AND PREDICTABLE
FUNDING OF PUBLIC EDUCATION. I will speak to you today
regarding Governor Dunleavy's recently proposed 10-
year funding plan for education and its impact on
school governance. The Governor's plan maintains K-12
education funding annually at $1.215 billion through
FY24 and then 1.5% growth for FY25 and beyond. This
would mean that the BSA must remain at the current
$5,930 per student for the next two years with very
little change thereafter. Locally elected school
boards have been delegated the authority to implement
a system of public education required by the Alaska
Constitution Article 7, Section 1. School board
members are tasked with governing their districts and
allocating funds to execute an educational plan for
all students attending their public schools. It is a
highly complex task. In Alaska, school boards have no
taxing authority. They, therefore, must rely solely on
revenue from the state, the federal government, and in
organized areas at least a minimum local contribution
to fund education. The highly uncertain nature of
annual appropriation for education funding as part of
the state's general fund budget, and potential
executive vetoes, continually creates uncertainty that
makes it difficult to sustain a maintenance of effort
in an effective and efficient manner. Time and again,
boards and superintendents must make hard choices that
may result in the reduction of staff or the
elimination of programs and services, which can
negatively impact student achievement. The recently
presented 10-year plan for education funding put
forward by the Governor is an unimaginative and
minimalist approach. It substantially ignores
increasing costs, which are inevitable. While it
appears stable and potentially sustainable, it
continues the inadequacy we face today in meeting the
needs of our public-school students. Let me highlight
a few areas within a school district budget that are
the biggest drivers: 2 Salaries and benefits make up
on average 80 to 85 percent of the district budget.
Most districts operate through collective bargaining
agreements that set the terms for salary advancement
and benefits. In most instances, most agreements
include a "step and lane" schedule that helps to
ensure annual salaries see minimal growth that helps
offset yearly inflation. In my experience, most of
these schedules end up with a 1 to 1.5% yearly
increase. Thus, using the Governor's proposed funding
plan, there would not be the resources to exceed these
current agreements without negatively impacting other
elements of the budget. If we hope to improve teacher
and administrator retention and recruitment, Alaska
must become competitive with the nation's salaries and
benefits. Providing an excellent education for every
student every day means we must continually invest in
developing and retaining the best and the brightest,
especially those from Alaska. As a result of our
inability to adequately fund education, I put forward
this example. One of the many services AASB provides
to districts is the facilitation of superintendent
searches. Over the last five years, as I have worked
with school boards to find their next superintendent,
I have seen the number of applicants diminish
significantly. The experience and quality of the
candidates applying have also dramatically changed and
are now dominated by applicants with no experience as
a superintendent. More and more, we see candidates
with minimal administrative expertise. Some of this is
a result of the fact that administrator and
superintendent turnover is so high there is very
little time available for candidates to gain valuable
experience as building-level administrators. Our
ability to recruit and retain quality classroom
teachers that ultimately become the principals and
superintendents of the future is adversely impacted by
public education funding that is unstable and
inadequate. Maintenance and operations account for the
next 10 to 15% of a district budget. This is an
incredible challenge for school boards as they weigh
the needs of maintaining school system infrastructure
against the need for certified and classified
staffing. For our education system to work, students
and staff need structures that create conducive
learning environments, whether physical or virtual.
One result of the ongoing pandemic is that we have
seen how important in person learning is. The human-
to-human interactions between students, teachers, and
their fellow students cannot be understated. The
maintenance of effort to keep our aging schools useful
to good learning cannot be underscored enough. Most of
Alaska's schools date back to the 80s and 90s, meaning
most of them are nearing the end of their useful
design life. School programs, administration, and
other expenses make up the rest of the 5 to 10% of
district budgets. It is often within these school
programs, such as extracurricular activities, extra
educational programming, field trips, and student and
family engagement, that we find those most intrinsic
things that may connect a student in a positive way to
their school. These are often the most vulnerable
elements of the school budget that boards must
evaluate. While grant funding may provide for the
support of some of these activities, it does not cover
such things as basketball, volleyball, wrestling,
drama and debate and so on. For most students, these
may be the essential connections that keep them
engaged in the rest of the educational program. For
Alaska, the cost of many of these programs is
extremely high often due to the cost of
transportation. 3 In closing, when I review the
proposed 10-year plan for education funding from the
Governor, a proposal that is essentially flat-funding,
I don't see the opportunity and hope to improve our
system, to attract or train the best and the brightest
to be in our classrooms and to maintain our aging
buildings and systems. I see the continued struggle
for school boards to meet only the minimum affordable
effort with little room to focus on innovations and
systems to improve student outcomes. I see a tradeoff
for short-term, individual financial gain versus the
long-term investment in Alaska's future, our students.
Alternatives to the Governor's proposal, such as CS
HB4003 (W&M), provides a substantive opportunity for
the legislature to move forward with a statute that
acknowledges the importance and necessity of providing
predictable, sustainable, and more adequate funding
for education. The proposed language in CS HB
4003(W&M) has provisions that address those times when
the formula draw does not meet the BSA and also when
the formula draw goes beyond the BSA need. This seems
to be a responsible solution. As I stated previously,
locally elected school boards have been delegated the
authority to implement a system of public education on
behalf of the state of Alaska. In order to do that,
they rely upon state, local and federal governments
for revenue. Locally elected boards implement the
local control model that has served Alaska well but
depend on your support. Thank you for the opportunity
to testify today. I would welcome any questions you
might have.
1:03:46 PM
MR. GARRISON, in response to Representative Prax, expressed his
concern that funding that considers broader possibilities is
greatly diminished because schools have been operating in crisis
management mode. In response to Representative Story, he
mentioned that pupil transportation and food service needs are
not met. The cost of food and fuel due to inflation has
negatively impacted school district budgets.
CHAIR SPOHNHOLZ thanked testifiers, and in response to
Representative Prax cited the Constitution of the State of
Alaska Article 7, Section 1, which says "regarding public
education, the legislature shall, by general law, establish and
maintain and system of public schools open to all children of
the state and may provide for other educational institutions."
She noted that there is a minimal obligation to maintain public
education. Alaska is reaching a crisis state regarding public
education and public health.
1:08:47 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
1:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| ACSA Presentation, 1.27.22.pdf |
HW&M 1/27/2022 11:30:00 AM |
|
| Joint Legislature Education Funding Tasf Force Report, 9.1.07.pdf |
HW&M 1/27/2022 11:30:00 AM |
|
| Medicaid Spending and the Impact on Health Care - ASHNHA Presentation 1.27.22.pdf |
HW&M 1/27/2022 11:30:00 AM |
|
| Medicaid Waiver Home and Community Based Services Rate Study, 1.25.22.pdf |
HW&M 1/27/2022 11:30:00 AM |
|
| ACSA Joint Position Statements 2022.pdf |
HW&M 1/27/2022 11:30:00 AM |
|
| AASB Testimony, 1.27.22.pdf |
HW&M 1/27/2022 11:30:00 AM |