Legislature(1995 - 1996)
04/13/1996 02:55 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 13, 1996 2:55 p.m. TAPES SFC-96, #78, Side 1 and 2 SFC-96, #79, Side 1 (000-575) SFC-96, #79, Side 2 (575-326) CALL TO ORDER Senator Rick Halford, Co-chairman, convened the meeting at approximately 2:55 p.m. PRESENT All committee members (Co-chairmen Halford and Frank and Senators Donley, Phillips, Rieger, Sharp, and Zharoff) were present. ALSO ATTENDING: Senator Green; Senator Taylor; Commissioner Karen Perdue, Dept. of Health and Social Services; Laurie Otto, Deputy Attorney General, Criminal Division, Dept. of Law; Kristen Bomengen, Assistant Attorney General, Human Services Section; Dept. of Law; Art Snowden, Administrative Director, Alaska Court System; James W. Elliott, Acting Director, School Finance, Dept. of Education; Eddy Jeans, School Foundation, School Finance, Dept. of Education; Curt Lomas, Welfare Reform Program, Division of Public Assistance, Dept. of Health and Social Services; Shirley Dean, Juneau Office, Child Support Enforcement Division, Dept. of Revenue; and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 70 - PUBLIC SCHOOL FOUNDATION PROGRAM Discussion was had with Senator Taylor, Dr. Elliott, and Eddy Jeans. A draft CSSB 70, version "W" was adopted. An amendment by Senator Rieger to delete Sec. 16 from the draft was adopted. Amendment by Senator Donley relating to pupil transportation was adopted. A further amendment by Senator Donley relating to unhoused students was adopted as amended. CSSB 70 (Fin) was then REPORTED OUT of committee with a $29,266.5 fiscal note from the Dept. of Education (K-12 Foundation) and a $1,992.0 from the Dept. of Education (Pupil Transportation). SB 98 - PERSONAL RESPONSIBILITY ACT Continued review of a draft CSSB 98, version "N," (pages 13 through 51) was had with Senator Green, Commissioner Perdue, Curt Lomas, Shirley Dean, and Kristen Bomengen. A packet of amendments was distributed by Senator Green and the transitional assistance amendment was discussed. Areas of concern relating to responsibilities of grandparents, Alaska Native Organizations' Family Programs, transitional assistance, and adverse action against the driver's license of delinquent obligors were flagged for further discussion at a work session at 12:00 noon, April 14, 1996. The bill was held in committee for consideration at a meeting scheduled for 3:00 p.m., April 14, 1996. SB 320 - NEW SUPERIOR COURT JUDGE FOR DILLINGHAM Discussion was had with Art Snowden and Laurie Otto. The bill was then REPORTED OUT of committee with a $226.8 fiscal note from the Court System. SENATE BILL NO. 70 An Act relating to the public school foundation program; and providing for an effective date. Co-chairman Halford directed that SB 70 be brought on for discussion. Senator Randy Phillips MOVED for adoption of a work draft CSSB 70 (9-LS0652\W, Ford, 4/12/96). SENATOR ROBIN TAYLOR came forward to speak to the bill. He explained that an earlier draft contained a mandatory mill equivalency paid by each community for its school system before the district received state funding for additional education needs. The rate was set at 5 mills. That has been adjusted to 4.5 mills. In doing that, a major percentage of communities statewide are "dropped off because they're all paying more than that." The Senator directed attention to a spread sheet (copy on file in the original Senate Finance Committee file for SB 70) and cited Anchorage, Fairbanks, Juneau, and MatSu as examples of areas that would receive increased funding while a $9 million reduction in state general funds is effected. This occurs due to a shifting of funds from communities that can readily afford to pay the full cost of eduction from the existing tax base. Funds that, in the past, have flowed to these communities would no longer be needed and would be available for distribution to communities that have taxed themselves over and above the mill rate, to provide basic education. The theory behind the legislation is "share the pain equally across the state." Senator Taylor next referenced the existing cap on the formula and noted that many tax-based communities are at cap and may exceed it this year. The work draft formula is driven by need to provide for a final solution to the problem of equitable distribution. The draft formula changes existing statutes and brings the state into compliance with federal law. A further provision deducts 100 percent of the eligible federal impact aid from basic need in determining the amount of state aid. Senator Taylor referenced indications from districts that 100 percent provides no incentive to complete paperwork for PL 874 moneys. He suggested the committee might wish to "give them a fudge factor of a couple percent just for filling out the paperwork." Directing attention to Section 3 of the draft, Senator Taylor explained that before the state would be required to contribute educational costs to a community, the locality is mandated to contribute the 4.5 mill minimum. If 4.5 generates more moneys than the community is spending on education, the excess flows to the state fund for distribution to communities taxing themselves at a higher rate. Communities are allowed to contribute up to 2.5 mills of additional local support above the mandatory 4.5. Contribution beyond the mandatory level qualifies a community to receive supplemental or excess moneys. Many communities are now taxing over 6 mills. Section 4 establishes the pool for excess funds generated by the 4.5 mills. Section 5 changes the number of students required to establish a funding community from 8 to 10. Section 6 reduces the "trigger" on the hold harmless provision from the current 10 percent decrease in instructional unit to a 5 percent decrease. That only comes into effect in situations of declining enrollments. Section 7 cleans up the formula for determining unit count. It reflects the 8 to 10 student change made in Section 5. Section 8 contains a single-site fix to cure the ongoing problem. Section 10 removes gifted and talented children from the special education funding formula. Senator Taylor cited abuses of the formula whereby certain districts have distorted numbers to gain additional funds. The new formula contains a limit of 4.5 percent of a school district's enrollment. Section 11 relates to bilingual education. Senator Taylor cited abuses in this area as well. Reductions are included in the formula established for provision of the instructional unit count per bilingual student. Reduction is 50 percent. Section 14 changes the date at which student counts occur. The historic deadline has been October 15. That date has been moved to November 20. Section 15 provides flexibility in allowing districts to determine when they wish to conduct the count (sometime between October 15 and November 20). Section 16 contains a "mini-hold harmless" provision which gives the commissioner discretion to allow a school district caught between Sections 14 and 15 to show good cause why the district should not be adversely impacted by the manner in which the count was conducted. Section 17 allows for promulgation of regulations. Sections 18 and 19 provide effective dates. Senator Taylor acknowledged that the proposed bill reflects a legislative mandate forcing localities to prioritize and dedicate a portion of the tax base to education. It requires every community to dedicate 4.5 mills. The state will then "match the rest." He further remarked: If 4.5 mills happens to generate $40 some million dollars out of the North Slope, and they only need $15 or $20 for education, then those poorer districts, in this state, that aren't that wealthy ought to have the benefit of those funds so that their kids will also receive a decent education. The purpose of the legislation is to avoid the equity problem being forced upon Alaska by the federal government's formula. Discussion followed between Senator Rieger and Senator Taylor concerning how numbers set forth on the spread sheet were calculated and what they include. Senator Rieger requested further explanation of Section 16. Senator Taylor said it was included "only for purposes of providing a transition for the change in time period in which you count students." Senator Rieger noted that his reading of the language indicates that in any given year (1999 was used as an example) a district could opt to report membership numbers from the earlier year (1998). Senator Taylor concurred in that understanding, saying that the district could "fall back to the previous year, but only if you have good cause for doing so." Senator Rieger advised that it amounts to a "100 percent hold harmless for a year on top of the 5 percent hold harmless . . . . elsewhere in the bill." Senator Taylor deferred further comment to staff from the Dept. of Education. In response to a request for a summary of changes between the current draft and earlier versions of the bill, Senator Taylor noted: 1. A drop from a mandated 5 mill equivalency to 4.5. 2. The 50 percent reduction in bilingual 3. Establishment of 4.5 percent of total district ADM as the amount eligible for gifted programs. Senator Zharoff asked how the legislation would work in areas with no tax base. Senator Taylor noted that those areas are presently receiving PL 874 moneys. Those moneys are contributed by the federal government in lieu of taxes. Under the proposed bill, those districts would contribute "that full amount of their PL 874" moneys as their local contribution and "still share in exactly the same dollar revenues that they were getting before." If a community has a tax base but elects not to tax it, the proposed bill "may very well require them to impose a 4.5 percent tax." EDDY JEANS, Project Assistant, School Foundation, School Finance, Dept. of Education, came before committee. He explained that the proposed formula computes a statewide average assessed value per student. For REAAs, the statewide average has been adjusted by 2.5 mills. That 2.5 mills is then multiplied by the ADM to determine the state share to REAAs. For a city/borough district, there is an additional computation whereby the district's individual assessed value per student is compared to the statewide average. That produces a proportion that is applied to the statewide average per student and multiplied by the district's ADM to determine the local share. The state share is computed based on the statewide average times the ADM. Operation of the above formulas (per distributed spread sheets) was discussed using both communities with and without tax bases as examples. Further review of existing district funding compared to the new formula followed. Senator Taylor noted legislative need to address area cost differentials in the future. Co-chairman Frank expressed concern regarding potential for additional state expenditures driven by increased local contributions. Mr. Jeans said that would not happen since the state share is based on the average of the statewide value per student. Mr. Jeans directed attention to a spread sheet dealing with local effort requirements and supplemental equalization funding. He voiced his reading of the bill to be that the additional 2.5 mills above the 4.5 is required. The 2.5 mills is based on the statewide average. Further discussion followed using Anchorage as an example. In response to a further question from Co-chairman Frank, Mr. Jeans explained that the proposed bill would result in two formulae working together within the umbrella of the foundation formula. One reflects basic foundation aid computed on instructional units, times area cost differential, times the unit value of 61. From that the state would subtract 4.5 mills of required local contribution and 100 percent of impact aid funds to arrive at the basic state allocation. The supplemental equalization formula would then be applied to determine additional state aid. Co-chairman Frank voiced his understanding that greater contribution by a local government would not "cost the state more on a per share basis." Senator Taylor concurred in that understanding, saying: "A local government cannot drive more money out of the state by spending more." Mr. Jeans noted that the existing formula cap of 23 percent of basic need remains in effect. Further review of spread sheets followed using numbers for the Juneau-Douglas School District as an example. Senator Taylor noted that the bill would result in "a significant tax reduction for almost every major community in the state." The Governor's legislation "gives more money to the people who weren't taxing themselves." The Senator stressed that the proposed formula change would "take care of the inequality problem for a lot of years to come . . . ." Co-chairman Frank noted general discussion of the impact to the state treasury resulting from application of the proposed bill to the North Slope. He referenced existing tax caps under state law and asked how they impact the North Slope Borough and oil and gas property taxes. Senator Taylor said discussions indicated impact of "about $29 million over and above local effort right now." Co-chairman Halford voiced his understanding that the North Slope is at the cap and would have to cut its budget in half. Further discussion followed regarding the statutory cap as well as bonded indebtedness. Senator Taylor remarked: Whatever percentage of their 30 mills that they are currently dedicating to paying off that huge bond debt they've got up there . . . shouldn't qualify as a portion of the total 30 mill cap so as to prevent them from having the revenues to pay for their own education. Additional discussion of North Slope taxes and state oil and gas taxes followed. END: SFC-96, #78, Side 1 BEGIN: SFC-96, #78, Side 2 Co-chairman Halford quoted from a May, 1995, Dept. of Revenue analysis of the 5 mill version of the bill: The state revenue loss based on 43.56 (the offset) for the North Slope Borough would have been $34,321,249. However, the Borough is already at the 30 mill limitation provided for in Title 29. Since no additional property tax revenue is available, the Borough operating budget must be reduced over 50% to cover the additional educational funding. [The foregoing analysis was set forth on a May 3, 1995, fiscal note for SB 70 from the Dept. of Revenue.] Discussion of the differential between mills applied to bonded indebtedness and general operations followed. Senator Taylor again questioned whether the North Slope was utilizing a majority of its tax revenues to repay bonded indebtedness. Co-chairman Halford stressed that the cap is complicated, and there may be other considerations. He suggested that the "cap may only be the cap in the deductibility against the statewide ad valorem tax." Senator Taylor remarked that if impact on the North Slope would be as dramatic as indicated, perhaps phase-in provisions would be necessary. Additional discussion of tax applications within the North Slope Borough followed. A comparison of funding under current law versus the proposed bill followed using Pelican as an example. Senator Zharoff next inquired concerning changes in funding for bilingual programs. Mr. Jeans said the department had not yet had an opportunity to run numbers. He then instructed members regarding how computations would be made. Mr. Jeans noted that it appears rural districts would lose, and urban districts would gain, under the proposed change. He acknowledged that he would not be sure of that until calculations are made. Senator Zharoff asked if the intent was to "get away from bilingual as you get further up the grades." Mr. Jeans voiced his understanding of intent to not reward districts for classifying "children in a higher weight category." A uniform funding level should be provided for all bilingual students. Co-chairman Halford again referenced the tax situation in the North Slope Borough. He advised of a formula based on a limitation on assessment. There is no limitation on tax as it applies to debt service. The borough budget (including debt service) for 9,000 to 12,000 people totals approximately $225 million. Of that, $165.6 million is slated for debt service. Senator Zharoff asked how the proposed bill compares to state board of education efforts to restructure the foundation formula. JAMES ELLIOTT, Acting Director, School Finance, Dept. of Education, noted that the board has considered quotas on "some of the categorical weights" as well as a "block plan." The proposed bill is radically different. Senator Zharoff asked if the area differential would remain applicable under the proposed draft. Senator Taylor responded that the bill does not deal with the differential. It is a separate matter. Co-chairman Frank asked if the bill solves the disparity problem. Mr. Jeans remarked that the draft enhances district ability to contribute local revenue by the increase from 4 to 4.5. If districts now at cap continue to increase, that may cause a problem is disparity. However, the supplemental equalization provides additional revenue outside the instructional units. That will increase the unit value and may offset disparity. Senator Rieger MOVED for deletion of Section 16 (the transitional section involving the prior-year count) from the draft. He referenced discussion indicating that the section essentially provides a second hold harmless on top of the 5 percent hold harmless within Section 6. Senator Zharoff OBJECTED, advising that he was unsure what the impact of removal might be. Co-chairman Halford called for a show of hands. The MOTION CARRIED on a vote of 5 to 1, and Section 16 was DELETED. Senator Phillips MOVED that CSSB 70 (Fin) pass from committee. Senator Zharoff OBJECTED. Senator Donley advised that he wished to offer several amendments. He explained that the first relates to pupil transportation while the second relates to unhoused students. He then formally MOVED for adoption of the AMENDMENT dealing with transportation. Co-chairman Halford called for a show of hands. The AMENDMENT was ADOPTED on a vote of 4 to 3. (Co- chairman Frank and Senators Sharp and Zharoff were opposed.) Senator Donley then MOVED for adoption of an AMENDMENT relating to assessment of unhoused students in portable units. The intent is that the department not count these students as housed when it makes it assessment of where construction needs to occur. Co-chairman Halford inquired regarding floor discussion of the 10,000 limit. He voiced need to count unhoused students in all locations, regardless of the size of the district, and noted a preference for removal of the 10,000 floor. Senator Phillips suggested that "and the district has a population greater than 10,000" be removed from the amendment. Co-chairman Halford raised concern that the word "temporary" may become a major term within regulatory definition and suggested that "temporary relocatable facilities" might be more direct. Senator Donley formally MOVED to insert "relocatable" and delete language relating to district populations greater than 10,000 so that underlined language within the amendment would read: for purposes of this subparagraph, students are considered unhoused if the students attend school in temporary relocatable facilities; Co-chairman Halford called for objections to the AMENDMENT to the AMENDMENT. No objection having been raised, the AMENDMENT to the AMENDMENT was ADOPTED. Co-chairman Halford next called for a show of hands on adoption of the AMENDMENT. The AMENDMENT was ADOPTED on a unanimous vote of 7 to 0. Senator Randy Phillips renewed his MOTION for passage of CSSB 70 (Fin). Senator Zharoff again raised OBJECTION. Co- chairman Halford called for a show of hands, and CSSB 70 (FIN) was REPORTED OUT of committee with two fiscal notes from the Dept. of Education (a $29,266.5 note for K-12 foundation and a $1,992.0 note for pupil transportation). Co-chairman Halford and Senators Donley, Phillips, and Sharp signed the committee report with a "do pass" recommendation. Co-chairman Frank and Senator Rieger signed "no recommendation." Senator Zharoff signed "do not pass." SENATE BILL NO. 320 An Act increasing the number of superior court judges designated for the Third Judicial District to provide an additional superior court judge at Dillingham. Co-chairman Halford directed that SB 320 be brought on for discussion. ART SNOWDEN, Administrative Director, Alaska Court System, came before committee. He explained that the new judge would fill a hole in the Dillingham/Naknek area. Citizens in the area have raised concern that many cases are "pled out" because of lack of prosecutorial and defense assets. Necessity for judges to travel from Anchorage to preside at Dillingham depletes ability to cover the Anchorage caseload. LAURIE OTTO, Deputy Attorney General, Criminal Division, Dept. of Law, next came before committee. She voiced support for the legislation and directed attention to correspondence citing the basis for support. She noted that much of the problem associated with prosecutions in the region is inability to "get adequate court time to process the cases within the time limit set in state speedy trial rules." In response to a question from Senator Sharp, Ms. Otto said that the position would be new to the region. Facilities (a court building in Dillingham staffed by clerks) are in place. There is a public defender in the area, but district attorneys serve the region out of the Anchorage office. One district attorney dedicates full time to Dillingham. If the judge is placed in Dillingham, the Anchorage position would move to the region as well. Senator Rieger MOVED for passage of SB 320 with individual recommendations and the accompanying fiscal note. No objection having been raised, SB 320 was REPORTED OUT of committee with a $226.8 fiscal note from the Court System. All members signed the committee report with a "do pass" recommendation with the exception of Senator Phillips who signed "no recommendation." SENATE BILL NO. 98 An Act making changes related to the aid to families with dependent children program, the Medicaid program, the general relief assistance program, and the adult public assistance program; directing the Department of Health and Social Services to apply to the federal government for waivers to implement the changes where necessary; relating to eligibility for permanent fund dividends of certain individuals who receive state assistance, to notice requirements applicable to the dividend program; and providing for an effective date. Co-chairman Halford directed that CSSB 98, Version "N," dated 4/10/96, be again brought before committee for continued sectional review. SENATOR LYDA GREEN directed attention to Page 13 of the draft and commenced review of "Disqualifying Conditions." [Tape malfunction. There is no recording for this portion of the meeting. Minutes reflect transcription of shorthand notes.] Co-chairman Halford referenced language at Page 15, line 19, relating to "a crime that is classified as a felony" and asked what would happen if serious class-A misdemeanors were added. CURT LOMAS, Welfare Reform Program, Division of Public Assistance, Dept. of Health and Social Services, explained that the wording was precisely taken from federal welfare reform language. He said he did not know whether the state could be more restrictive. Senator Green next noted subparagraphs (1), (2), and (3) at Page 16, lines 17 through 19, and advised that they relate to fraud. She further pointed to application process requirements set forth on Pages 16 and 17. Directing attention to Page 18, subsection (3)(c), Senator Green advised that provisions relate to seasonal workers. Co-chairman Halford referenced the list of utilities within subsection (B), suggested that a telephone does not appear to be as basic as other services listed within the section, and suggested that it be flagged. [Tape malfunction was corrected at this point. Remaining minutes reflect transcription of the tape recording of the meeting.] Referencing Page 19, Senator Green explained that the diversion program is the same as HB 78 and the Governor's bill. In the proposed draft, however, it has been restricted to adults. Minors had previously been included. The program allows individuals to receive a lump-sum payment to ensure that they will not be "going on to the full benefit program." Language relating to assistance to minors at Page 20, line 20, was taken from HB 78. The family self-sufficiency plan set forth on Page 21, commencing with line 11, will be part of the intake and evaluation of those coming into the program. It will involve a plan with benchmarks, time limits, conditions that must be in place, and how compliance will be achieved. Page 22 language relating to participation in work activities was taken directly from federal law. The emphasis here is on work. Provisions at Page 23 reflect existing law. Directing attention to Page 24 language concerning agency collaboration, Senator Green advised of instances when the legislature had need of more information than is currently provided. She further noted that temporary positions involved in the effort are exempt. Interagency efforts are also to be devoted to job training and development. Senator Green next referenced Page 25 and noted that a proposed Amendment would remove Federal-State Cooperation language commencing at line 6. It is considered to be "too loose." It gives the department too much authority. Referencing the Alaska Native Organizations' Family Assistance Program provisions commencing at Page 25, line 31, Senator Green advised that the commissioner of the Dept. of Health and Social Services would speak to the issue. Senator Green indicated that the provisions may ultimately not be needed. The Senator referenced provisions for establishment of an emergency account per language at Page 26 and advised that inclusion should be a finance committee decision. Language relates to provisions under the new reform act whereby the department may receive additional funds from the federal government, and those funds may not all be spent within a particular fiscal year. The department will speak to this issue. Page 27 language, relating to Appeals and Dispute Resolution, raises questions regarding department adoption of regulations establishing the informal dispute resolution process. Senator Green advised that she did not know whether a procedure is presently in place for hearings or if it is necessary to adopt a new process. This area requires clarification. Senator Green advised of a proposed amendment which will relate to Sanctions and Recovery of Costs at Page 27. Provisions deal both with recipients who refuse to cooperate as well as those who receive benefits to which they are not entitled. Civil action is available via subsection (d). Definitions set forth at Page 28 include terms not previously defined. Senator Green referenced subsection (7) and noted drafter inclusion of the word "unemancipated." A proposed amendment would remove the word. Senator Green next advised of numerous technical changes involved in changing the name of the Aid to Families with Dependent Children to the Alaska Family Independence Program. Senator Green referenced Section 13, Page 30, and explained that the language was provided by the Child Support Enforcement Division. END: SFC-96, #78, Side 2 BEGIN: SFC-96, #79, Side 1 The interest rate presently charged in computation of arrearages is 12 percent. The division has asked that it be reduced to 6 percent. Senator Randy Phillips noted need for closer review of the request. Senator Green read from backup material indicating that, for many years, the 12 percent rate was reasonable given the prevailing rate at that time. However, a rate of 6 percent per year better reflects existing rates. Directing attention to Page 31, Section 15, Senator Green noted language from HB 78 relating to participation by both sets of grandparents in support of a child born to minor parents. The responsibility remains in effect until one of the parents reaches the age of 18. The parents of the minor mother are more often involved in support of the infant. This language would provide some balance to that support. Section 24, at Page 33, was also requested by CSED. It relates to correction of clerical and administrative errors by the agency. Correction of miscalculations of arrearages is presently very cumbersome. Section 25 language relating to adverse action against a delinquent obligor's occupational license was in both HB 78 and the Governor's bill. It provides for issue of a temporary license in instances of arrearages. A process is established by which the obligor may work with the agency to develop a plan for repayment. Provisions cover occupational and driver licenses. This effort would require a network between CSED and licensing agencies. The bill specifies a 150-day window in which the obligor must either pay the arrearage, establish a payment plan, or request an administrative hearing. Senator Phillips questioned CSED ability to take on this additional task when the agency has yet to accomplish its primary purpose. Senator Rieger asked if the provision is required by federal reform. Senator Green responded, "This and more is in federal law--in the federal reform act." Section 26 incorporates contractors that administer grants within bill provisions. Section 30, Page 46, relates to day-care benefits. The only substantive change is removal of the word "net" (line 6) to bring language into conformity with federal law. Senator Green next directed attention to Page 47, line 23, and noted addition of the following: or a federal program designated as the successor to the aide to families with dependent children program. Referencing Page 49, line 13, Senator Green noted need to add "and legislature" following the word "governor." Co-chairman Halford asked if provisions within Sec. 35, at Page 47, reflect federal law. Senator Green responded affirmatively. Curt Lomas again came before committee. He explained that current federal law contains a requirement for the language. All versions of the personal responsibility act, including those being considered by Congress, have a requirement that the state establish rules which restrict the use of public assistance case information to purposes specifically related to program administration. Co-chairman Halford asked if availability of the information to Legislative Budget and Audit and individual legislators would violate federal law. Mr. Lomas said Legislative Budget and Audit currently conducts program audits. He said he was unfamiliar with what level of access the division has at the present time. Referencing statutory citations slated for repeal per Page 48, Co-chairman Halford requested a list of repealers. Senator Green remarked that the existing AFDC program and the Jobs program (AS 47.25) constitute the majority of the citations. She said she would subsequently confirm that repeals are limited to those programs. In concluding her review, Senator Green referenced effective dates listed on Page 51. She noted language within Section 54 allowing for enaction following federal law changes, if new federal law is forthcoming. Co-chairman Halford took exception to portions of the bill relating to Alaska Native Organizations' Family Assistance areas, suggesting that, "That's a governmental function that will create Indian country." Senator Green responded, "There's no opposition to removing that section . . . ." Co-chairman Halford added that there are benefits in some of the federal provisions. He said there was nothing wrong with using the Indian Self-Determination Act to get local entities--the closest entities to the people--to make decisions. The question is, If any of the entities . . . on the list . . . are now recognized as tribes, and we authorize them to provide a governmental function . . . defined by a service area, we're walking into a trap on the next issue down that road. As long as the twelve entities listed at Page 26 are incorporated under the laws of the state of Alaska and do not have a tribal identity, they are probably the best entities to do the work. Co-chairman Halford voiced his understanding that federal law provides benefits to the state at a higher rate of reimbursement for having these entities perform the functions. Senator Green subsequently advised that the entities listed at Page 26 are all incorporated under the laws of the state. Language within the bill was also reworded to delete the reference to tribes. The Senator further noted provisions within subsection (c) which require the listed Alaska Native organizations to waive any claim to sovereign immunity. Co-chairman Halford voiced his understanding that listed entities would be providing services to all residents of their areas, both Native and non-Native. A reading of the bill indicates that service would only be provided to a "racially defined constituency." KAREN PERDUE, Commissioner, Dept. of Health and Social Services, explained that under present language, the organization would write a plan and apply for the federal portion of the AFDC program. Subsection (b) would allow the state to participate in that planning. Funds received from the federal government would cover only racially defined members. That would not prohibit the state from contracting with the organization to provide other services. Further discussion of operation of the program followed between Commissioner Perdue and Co-chairman Halford. The Co-chairman questioned legislative ability to appropriate to a racially defined function. He suggested that the separation of the program and service of two classes of recipients would cause problems. Commissioner Perdue concurred in concern. She said that when the Governor expressed his views on the issue, he said it was important that program benefits be comparable. That does not mean they have to be exactly the same. The intent is to get local entities to design programs that work in their communities. Co-chairman Halford reiterated concern that the proposed arrangement would create a situation where the program at Bethel would provide a different benefit to a Bethel Native than it does to a Bethel non-Native. That appears to raise equal protection arguments the court system will not tolerate. Commissioner Perdue pointed to ongoing WIC program administration by the Tanana Chiefs Conference on a non-discriminatory basis. Senator Sharp referenced language within subsection (b), Page 26, and voiced his belief that, as written, it allows for a racially defined program. He suggested that removal of "Alaska Native" within the subsection might cure the problem. Commissioner Perdue voiced her desire to create programs that work locally and do not pit one person against another. The commissioner stressed need for the department to work with listed organizations. She expressed concern over potential for a tribe to write its own plan, apply for the federal share, and receive the funding. Co-chairman Halford voiced his understanding that the state share provides the incentive to work cooperatively with the department. The commissioner concurred. Further discussion followed between Co-chairman Frank and the commissioner regarding operations of the federal block grant. Co-chairman Halford voiced additional concern regarding broad language and authorities as well as the tethering of occupational licenses to support payments, because of CSED's past performance. Co-chairman Halford announced his intention to continue review of the bill at 3:00 p.m. the following afternoon. He then asked that the sponsor and department representatives speak to the packet of proposed amendments. Senator Green directed attention to the first amendment and noted that it relates to transitional assistance. Commissioner Perdue explained that the department presently authorizes 12 months of child care after an individual leaves AFDC. Testimony at statewide hearings indicated that people would leave welfare much faster if they had medical and child care. The amendment would extend periods of transitional assistance to 24 months for day care. It would also extend Medicaid medical care for children for an additional year. The cost of the Medicaid extension for the first partial year would be $150.0 in general funds to be matched by federal dollars. Co-chairman Halford voiced his understanding that Medicaid would cover the parent for 12 months and the child for 24. The commissioner concurred and added that the child care portion would cost $700.0 for the first full year. END: SFC-96, #79, Side 1 BEGIN: SFC-96, #79, Side 2 Further discussion ensued regarding changes to the program intended to discourage individuals from going on welfare for a period of time in order to obtain extended medical benefits. Additional discussion followed concerning the voucher system for child care and calculation of costs per child. Mr. Lomas advised of a typical cost of $450 a month. In response to a question from Co-chairman Halford regarding numbers associated with 185 percent of the poverty level for Alaska, Mr. Lomas advised of $2,501 a month gross income for a family of three. Senator Rieger expressed a desire to delete language relating to 150-day temporary license provisions. He said he would be more comfortable with establishment via regulation, if such a provision is mandated by federal law. Co-chairman Halford voiced a desire to delete the entire license section. He acknowledged that the federal government might impose the requirement. Senator Randy Phillips referenced language relating to grandparent liability (Page 31) and quoted the following concern raised by a constituent who practices family law: Teenagers who do not want to follow household rules can easily squeeze into one of the exceptions and begin collecting child support based on all four of their respective parents' income . . . . SHIRLEY DEAN, Juneau Office, Child Support Enforcement Division, Dept. of Revenue, came before committee. She advised that if the teenage mother voluntarily leaves her home, her parents would not be obligated, but the parents of the infant's teenage father would be. Responsibility for non-custodial parenthood would be transferred to the father's parents. Senator Green noted that grandparent responsibilities were included within HB 78 via a floor amendment in the House. Co-chairman Frank asked if paternal grandparents would have to provide support if the teenage mother resides with her parents. Ms. Dean responded affirmatively and advised that the reverse would be true if the teenage mother was living with the teenage father's parents. The attempt is to equalize responsibility between both sets of parents. Lengthy discussion of grandparent provisions followed using a number of different scenarios. Additional discussion ensued regarding the two-year bridge provision and the five-year limitation on the program. Co- chairman Halford suggested that the committee might wish to include sunset provisions for the two-year bridge. Senator Green cautioned that a two-year sunset might not allow sufficient time. Mr. Lomas reiterated that current law provides a 12-month transitional period. Provisions within the proposed bill would extend the program for an additional 12 months. The program is not new but rather an extension of an existing program. Co-chairman Halford voiced his understanding that the fiscal note only covers the extension. Mr. Lomas concurred. Co-chairman Halford announced a work session on the bill commencing at noon the following day. He advised of intent to have a proposed committee substitute available for review by 3:00 p.m. Senator Phillips voiced intent to prepare an amendment to remove provisions relating to grandparent responsibility. He also concurred in Senator Rieger's proposed change to licensing provisions. Co-chairman Halford expressed a preference to remove both provisions. Senator Green advised of a proposed amendment providing for CSED license review to become effective with implementation of federal welfare. ADJOURNMENT The meeting was adjourned at approximately 6:00 p.m.