Legislature(2017 - 2018)SENATE FINANCE 532
01/26/2017 09:00 AM Senate FINANCE
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| Audio | Topic |
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| Start | |
| Presentation: Overview Fy 18 Budget - Alaska Mental Health Trust | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
January 26, 2017
9:02 a.m.
9:02:35 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Mike Dunleavy
Senator Peter Micciche
Senator Donny Olson
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Russ Webb, Chair, Alaska Mental Health Trust; Greg Jones,
Interim CEO, Alaska Mental Health Trust; Senator Gary
Stevens; Jeff Jesse, Legislative Liaison, Alaska Mental
Health Trust; John Morrison, Executive Director, Alaska
Mental Health Land Office.
SUMMARY
^PRESENTATION: OVERVIEW FY 18 BUDGET - ALASKA MENTAL HEALTH
TRUST
9:03:09 AM
RUSS WEBB, CHAIR, ALASKA MENTAL HEALTH TRUST, felt honored
to represent the Alaska Mental Health Trust Authority
(AMHTA) before the committee. He discussed the presentation
"Legislative Presentation - Senate Finance Committee,"
(copy on file).
Mr. Webb turned to slide 2, "Mission: Improve the lives of
beneficiaries":
Trust Duties
Enhance and protect the trust
Provide leadership in advocacy, planning,
implementing, and funding of a Comprehensive
Integrated Mental Health Program
Propose a budget for the Comprehensive Integrated
Mental Health Program
Coordinate with state agencies on programs and
services that affect beneficiaries
Report to the Legislature, the governor and the
public about the Trust's activities
9:05:38 AM
Mr. Webb displayed slide 3, "Trustees":
Russ Webb, chair
Mary Jane Michael, vice chair
Larry Norene, secretary
Laraine Derr
Paula Easley
Jerome Selby
Carlton Smith
Mr. Webb introduced trustees and employees of AMHTA. He
noted that Larry Norene was not present due to illness. He
listed names of the executive directors of AMHTA's
statutory advisory boards.
Mr. Webb indicated that he had a realization that the
meeting was likely the last time he would address the
committee in a public service capacity, as his term as
chair of the board would end within the year. His term as a
trustee would end in a year. He reflected that he had
worked nearly half a century in public service. He remarked
on the extraordinary changes he had observed in the lives
of AMHTA's beneficiaries. He mentioned the development of
systems of care. He commented that change was constant and
that the trust would work in perpetuity for the
beneficiaries and for the state.
9:09:16 AM
Co-Chair MacKinnon expressed thanks on behalf of the
committee and the legislature.
Mr. Webb added expressed appreciation for Larry Norene, who
had served as AMHTA's Resource Management Committee chair
for 8 years. Due to his background and expertise in
resources, he had a vision for the development of the
trust's land office. He thought Mr. Norene had done an
extraordinary job.
Co-Chair MacKinnon informed that Mr. Norene was her
constituent and expressed her thanks for his service. She
hoped the decision to leave the trust was a personal
choice, rather than just the expiration of his term.
9:12:47 AM
GREG JONES, INTERIM CEO, ALASKA MENTAL HEALTH TRUST,
discussed slide 4, "Recent Updates":
? Leadership Change
Greg Jones, Interim CEO
? Legislative Audit
Mr. Jones relayed that there was a leadership change at
AMHTA, and that he was working as Interim CEO. He discussed
a scheduled legislative audit, and recounted that for the
past several years the land office had worked towards
diversifying and strengthening the trust's source of
income. He qualified that the trust's income could be spent
directly on programs to the benefit of the beneficiaries.
He mentioned a strategy of shoring up income with
investments in high-quality real estate in select markets.
He reported great success with the strategy, but pointed
out that questions had been raised in the current year that
had resulted in an audit. He expressed that the trust took
the inquiry very seriously. He informed that AMHTA had
paused its real estate program and was not making any new
investments.
Mr. Jones continued, and informed that the trust had
engaged with the attorney general's office to define what
legal issues might exist. He hoped the audit would include
an open and transparent discussion of the issues with the
goal of clarity and a way to continue to generate income
safely.
9:15:28 AM
Co-Chair MacKinnon commented that the legislature had asked
almost all state agencies and units that received
undesignated general funds (UGF) to develop a plan to use
less UGF. She continued that the trust was doing exactly as
the legislature had asked. She expressed her support for
AMHTA to move forward with changing state statute to allow
for the flexibility to create additional revenue for the
beneficiaries of the trust. She referred to individuals
with disabilities, who experienced adversity on a regular
basis. She appreciated the resources that had been deployed
on behalf of the beneficiaries. She offered her assistance
towards providing clarity for the trust in its endeavor to
generate income.
Mr. Jones thanked Co-Chair MacKinnon, and stated that AMHTA
would continue to stay in touch.
Co-Chair MacKinnon commented that change was difficult, and
emphasized that there were multiple viewpoints on the use
of funds. She expressed appreciation for the foresight of
members that had pointed the trust in the right direction
in managing its assets.
Mr. Jones read slide 5, "FY18 BUDGET," and stated that he
would discuss revenue sources available to the trust.
Mr. Jones moved to slide 6, "Permanent Fund Payout
History," which showed a bar graph. He informed that the
trust had approximately $460 million invested with the
Permanent Fund, in an undivided portion of the fund through
which the trust achieved the same earnings as the fund on a
pro-rata basis. Because the earnings fluctuated to a
certain degree, the trust had developed a system whereby it
used a percentage of market value (POMV) of its portion of
the fund to average a four-year trailing average. The trust
then took 4.25 percent of the market value.
Mr. Jones continued discussing slide 6, and pointed out the
green line on the chart, which indicated what the payout
percentage was in 2018. He relayed that the fund had grown
through a combination of organized growth, combined with
contributions made by the trust. He pointed out years in
which there was a significant decrease in permanent fund
earnings (such as 2010), and noted that averaging had
allowed the trust to take out funds to continue its
programs. He shared that the trust had been able to take
approximately $20 million from its Permanent Fund endowment
for the three previous years.
9:19:24 AM
Co-Chair MacKinnon noted that Senator Gary Stevens was
present.
Senator Micciche asked about slide 6, and referred to
recent discussions regarding a POMV philosophy. He inquired
about the running average of endowment fund draws by the
trust.
JEFF JESSE, LEGISLATIVE LIAISON, ALASKA MENTAL HEALTH
TRUST, explained that at the inception of the trust, the
trustees realized that if the endowment earnings were spent
each year it would result in volatile income due to the
earnings fluctuation. He discussed the challenge of being a
perpetual trust and therefore not being able to use the
principal. As a remedy, the trust had realized it needed a
budget reserve/endowment model. The trust had commissioned
Callan and Associates (which also advised the Permanent
Fund Corporation), and it was advised that the reserve
should equate to four times the annual payout.
Mr. Jesse continued, explaining that the trust had started
with a relatively small payout, with the idea that income
above the payout would begin to fund the income reserve. He
recounted that the trust had been fortunate within the
first few years, when the permanent fund had very high
returns and the 400 percent reserve became fully funded. He
continued that the original $200 million corpus was
inflation-proofed once the reserve was fully funded, after
which the payout percentage was incrementally increased. He
explicated that for every quarter percent the payout was
increased, the reserve would have to be increased by 1
percent. He noted that during the period in which the
payout was 3.5 percent, income had gone down. He explained
that the downturn in the market between 2001 and 2005 was
to blame, and the trust had used the income reserve to
continue to make the payout during the lean years.
9:23:41 AM
Mr. Jesse continued, summarizing that the trust had "stair-
stepped" up the payout while fully funding the reserve and
fully inflation proofing. He stated that the model was an
extremely resilient funding mechanism. He considered that
the ultimate sustainable payout was a question that had
never been answered. He informed that the Internal Revenue
Service required that private foundations take 5 percent of
net asset value.
Senator Olson observed the graph on slide 6, and referred
to the economic downturn in 2008. He wondered if the trust
was optimistic as to whether the payout amount would
continue to swing up under different national leadership.
Mr. Jesse thought the trustees would pursue policies that
it had in the past; and would make sure the reserve was
fully funded, as well as fully inflation-proofing the fund.
He suggested the trustees would have to consider the
prospects for future returns and growth. He thought it was
possible that the trustees would choose to revise the
payout as they felt appropriate.
Senator Olson referred to the graph and asked if the
trust's draw on the General Fund (GF) would be minimized.
Mr. Jesse reminded that the trust authority itself did not
draw any GF. He stated that the trust was concerned about
the fiscal status of the state, and the availability of GF
for the mental health program. He echoed the earlier
comments of Mr. Jones that indicated the trust was looking
at how to generate more revenue in order to have more
resources available to support the state in funding mental
health programs when GF prospects were challenging.
Vice-Chair Bishop thought that the trust board had been
very realistic with the payout model it had used.
Mr. Jesse concurred.
9:27:09 AM
JOHN MORRISON, EXECUTIVE DIRECTOR, ALASKA MENTAL HEALTH
LAND OFFICE, discussed slide 7, "Trust Land Office Annual
Revenue," which showed a graph depicting a snapshot of the
million-acre land base that was managed by the office. He
commented that the land office was a "mini DNR" in that it
was involved in all the same industries as the state, and
the office was also exposed to volatility in commodities as
was the state. He informed that in managing the land base,
there were five principles that were found in regulation:
maximize revenue, protect the corpus/land base, enhance the
long-term productivity of the land base, diversify revenue,
and to do so prudently and with accountability to the
trust.
Mr. Morrison continued that the purpose of the slide was to
illustrate the need for the diversity and the foresight of
the trustees to anticipate coming troubles in the commodity
market. He pointed out the green and purple lines,
depicting dominant sources of income in lands and timber,
respectively. He noted that the purple line had all but
disappeared in the most recent year on the graph, because
no timber had been cut in FY 16. The blue line represented
principal income the trust had taken and reinvested in real
estate; which then produced income to spend on
beneficiaries. He referred to significant initiatives that
the trust was working on in aid of increasing timber
revenues.
Mr. Jones commented on the substantial volatility of the
assets represented on slide 7. He explained that the land
base produced commodities, which were by nature volatile.
He directed attention to the blue line depicting real
estate on the graph, which was more predictable and had
served as a floor for the other revenue that was generated.
Senator Dunleavy asked if Mr. Morrison could briefly
describe the challenges involved in monetizing the land
through sales lease, timber, or mineral commodities. He
wondered if the trust had dealt with lawsuits from groups
that wanted to stop the trust from monetizing the land.
Mr. Morrison relayed that the trust faced the same issues
as any other land owner within the state, and was subject
to the National Environmental Policy Act (NEPA) and other
environmental requirements. He reported that one issue of
developing a raw land base was the infusion of capital.
Over time the trust had been subject to the whims of the
commodity markets and the desire of outside parties to
invest in the land to delineate and extract resources. He
noted that the trust had made the decision over time to use
the money from the resources to reinvest back into the land
base to delineate and proceed with extraction of other
resources for future income.
Senator Dunleavy asked if the trust had had any
monetization concepts halted by lawsuits.
Mr. Morrison answered in the negative.
9:32:11 AM
AT EASE
9:32:57 AM
RECONVENED
Mr. Jones clarified that the trust had been challenged many
times, just like any other land owner, but had not been to
court recently. He remarked on the expertise of the staff
in the land office.
Mr. Jones displayed slide 8, "Funding History," which
displayed a graph depicting the conversion of trust revenue
into income. He stated that the bulk of revenue shown on
the previous slide was principal revenue that had to be
reinvested at the Permanent Fund or in other investments in
the trust's land. He clarified that the green bar on the
graph represented the income from the trust land office,
which had steadily grown over the last 5 to 6 years.
Mr. Jones showed slide 9, "FY18 Anticipated Available
Funding":
Distributable Funds
Payout $21,067,000
Prior Years Average Lapse $3,042,000
Land Office Average Spendable Income $4,534,000
Interest Average $283,000
Total $28,926,000
Mr. Jones noted that the first three figures on the slide
were four-year trailing averages, which the trust used for
its anticipated funding.
Mr. Jones moved to slide 10, "FY18 Budget," which showed a
pie chart that indicated where funds were spent. He
referred to earlier remarks by Senator Olson and noted that
the trust was fully self-funded. He stated that almost
three quarterss of the funds went to Mental Health Trust
Authority Authorized Receipts (MHTAAR) grants which went
through state departments; or to AMHTA grants, which were
given to program providers. He relayed that approximately
17 percent of the funds went toward managing the trust land
office and the trust authority administration.
9:36:01 AM
Mr. Jones discussed slide 11, "Trust Beneficiaries":
Approximate Number of Trust Beneficiaries
Mental Illness 34,000
Developmental Disabilities 13,000
Chronic Alcoholism/Substance-Related Disorders 20,000
Alzheimer's Disease and Related Dementias 6,000
Traumatic Brain Injury 12,000
Mr. Jones noted that the beneficiaries the trust served
represented five categories, and the numbers totaled
approximately 85,000. He clarified that the figures on the
slide were not from an actual census, but rather were based
on national prevalence data. He furthered that the trust
beneficiaries dealt with a broad range of conditions, and
the population did not seem to be diminishing.
Mr. Jones turned to slide 12, "Mental Health Budget Bill":
1. General Fund/Mental Health
2. Capital Budget
3. Mental Health Trust Authority Authorized Receipts
(MHTAAR)
Mr. Jones remarked that the GF portion of the mental health
budget bill was the amount established by identifying
health services, most of which was through Department of
Health and Social Services.
Mr. Jones showed slide 13, "General Fund/Mental Health
Base":
? Amount is established by identifying the mental
health services funded within the state's GF budget
? These funds are designated as GF/MH
Final budget from the previous fiscal year
establishes the base
9:37:20 AM
AT EASE
9:37:51 AM
RECONVENED
Co-Chair Hoffman asked to return to slide 11, and wondered
what percentage of trust beneficiaries listed on the slide
under the category of 'Chronic Alcoholism/Substance-Related
Disorders' were inmates in the correctional system.
Mr. Jones did not have an exact figure, but believed that
approximately 40 to 60 percent of incarcerated individuals
in the state were beneficiaries or potential beneficiaries
of the trust.
Co-Chair Hoffman recounted that the previous year the
committee had worked on SB 91 [legislation pertaining to
criminal justice reform that passed in 2016] in order to
address problems with alcohol and substance abuse in the
correctional system. He wondered if the trustees had looked
at the issue and were spending any resources to aid the
state in reversing the trend in the correctional system.
Mr. Jones answered in the affirmative, and stated that the
"revolving door" issue was a significant driver of the
efforts of the trust. He continued that the trust had a
number of programs that were designed to provide services
to individuals entering or exiting the correctional system.
Co-Chair Hoffman asked if the board had concentrated on the
particular problem and spent additional resources since the
passage of SB 91.
Mr. Jesse answered in the affirmative, and continued that
not only had disability justice been a focus area of the
trust for the last few years, but one its two major
priority areas was criminal justice reform. He specified
that the trust was investing about $4 million in FY 18 to
assist the state in the criminal justice reform effort.
Co-Chair Hoffman asked what percentage of the funds were
viewed as an increase due to the passage of SB 91.
Mr. Jesse estimated that approximately half of the funds
were directly related to SB 91 or associated reform
efforts.
9:41:29 AM
Senator Micciche surmised that 12 percent of people in
Alaska were beneficiaries of the trust's programs. He asked
if there was overlap in the categories listed on slide 11.
Mr. Jones stated that there was overlap between the
categories.
Senator von Imhof referred to Co-Chair Hoffman's comments
and noted that Title IV was an area that the trust had been
working on. She hoped there had been efforts to analyze the
landscape of substance abuse programs across the state,
such as how the programs worked together, and the
measurement of program effectiveness. She wondered if the
trust was examining tweaking the programs to improve
outcomes.
Mr. Jesse answered in the affirmative, and noted there was
a subsequent slide that would address the matter. He
furthered that one of the two increments that the trust was
proposing involved the topic of identifying the
effectiveness of programs and how to improve programs over
time.
9:43:28 AM
Co-Chair MacKinnon referred to the voter initiative that
had resulted in legalization of marijuana, and wondered if
there had been observable adverse effects on beneficiaries
of the trust.
Mr. Jesse thought it was too early to be able to observe
impacts of marijuana legalization. He commented that many
dispensaries had not been able to open due to lack of
supply. He discussed the ratio of licensed grow operations
as compared to those which were awaiting licensing. He
thought the impacts would be felt in coming years, and
noted that the trust had been looking at the experience of
other states such as Colorado and Oregon. He thought the
other states had been seeing some impacts from
legalization.
Co-Chair MacKinnon asked about potential future
implications in Alaska, based on what was observed in other
states.
Mr. Jesse considered that states that had pursued
legalization had found poly-substance use. He thought the
increased use caused a problem in the public safety arena,
as there was no method for testing for consumption of
marijuana. He referred to recent research showing heavy
marijuana use in young adulthood as a trigger factor for
schizophrenia. He noted that there had been a dearth of
research on the effects of marijuana. He thought it was
safe to assume that legalization would not reduce the
impacts of substance abuse in the state budget.
9:46:46 AM
Mr. Jones moved to slide 14, "Capital Budget":
? Separate MH appropriation bill includes portion of
the state's capital budget that funds mental health
projects
? Includes funds for both operating and construction
to provide housing for Trust beneficiaries
Mr. Jones discussed slide 15, "Mental Health Trust
Authority Authorized Receipts - MHTAAR":
? Trustees authorize state agencies to spend Trust
funds for specific operating and capital projects
? State agencies must have legislative approval to
receive and expend Trust funds
Co-Chair MacKinnon asked if there were state matching
funds, or was AMHTA asking for only trust funds. She
thought that there was an opportunity to provide the
committee with an understanding of what the trust was
requesting. She discussed the financial challenges of the
state.
Mr. Jones indicated that an ensuing slide would address the
matter in detail.
Mr. Jones turned to slide 16, "Established Focus Areas":
1. Disability Justice
2. Substance Abuse Prevention & Treatment
3. Beneficiary Employment & Engagement
4. Housing and Long-term Services & Supports
Mr. Jones shared that the focus areas listed on the slide
dictated how AMHTA staff would spend their time, how the
trustees prioritized funding, and how it evaluated
partnership requests submitted throughout the year. Through
the model, the trust actively managed multiple long-
standing investment strategies. He specified that further
slides would address the land trade in Southeast Alaska, as
well as budget details.
9:49:12 AM
Mr. Jesse returned to slide 16, noting that the focus areas
listed were recurring themes that would appear throughout
discussion of other program issues. He emphasized that
items 2 through 5 on the slide were essential in aiding
beneficiaries to be fully functioning in the community and
need less services and supports. He discussed the need for
treatment of addictions or mental health issues, productive
employment and engagement, and housing.
Mr. Jesse showed slide 17, "Current Priorities," which
depicted a flow chart listing Medicaid re-design and
justice reinvestment as top priorities. He stated that the
goal of the slide was to demonstrate how integrated the two
efforts were. He posited that for justice reinvestment to
work, the state needed to develop a sustainable Medicaid
program. He referenced Medicaid reform legislation from the
previous year. He referenced justice reinvestment research
that indicated that individuals needed support for
recovery, employment, and safe housing to be diverted from
the cycle of criminal justice involvement.
Mr. Jesse continued speaking to slide 17, relating that one
thing behind the Medicaid re-design was to provide more
flexibility as to how the state could use Medicaid funds.
He used the example of providing support to individuals
within their housing.
9:53:01 AM
Mr. Jesse moved to slide 18, "Legislative Priorities":
? Criminal Justice Reform + Reinvestment
? Medicaid Reform Efforts
? Alcohol Excise Tax
? Title 4 Revisions
? Forest Service Land Exchange Trust Land Office
Mr. Jesse noted that the trust would be bringing the
legislature additional information regarding alcohol taxes
based on questions it had received from members. He
referred to a current economic study by the McDowell Group
considering the impact of potential tax increases. The
trust would be looking at the level of taxation and how
Alaska compared to other states. Additionally, the trust
would be bringing data and research on health and public
safety impacts of increased taxes. In some categories such
as underage drinkers, increased taxes we shown to reduce
consumption and the subsequent draw on GF-funded public
services. He revealed that increased taxes had a reductive
effect on underage drinking, as the group was price-
sensitive.
Mr. Jesse continued discussing slide 18, and referred to
Senator Micciche's comprehensive Title 4 revision bill from
the previous session. He referred to issues with the bill
around minor consuming and the composition of the Alcohol
Beverage Control Board, and work with the bill sponsor. He
believed the trust would be coming forward with a Title 4
bill in the current session, and believed it would have the
support of a large portion of the industry as well as the
Division of Public Health and the Department of Public
Safety. He complimented Senator Micciche for working with
stakeholders to build consensus on the issue.
9:56:57 AM
Senator Micciche asked Mr. Jesse to discuss substance abuse
problems in the state, and to give the committee an idea of
the ratio of substance abuse associated with alcohol versus
other drugs.
Mr. Jesse emphasized that the state had an opioid addiction
problem, but without a doubt alcohol continued to be the
most impactful drug use and abuse problem for the state.
9:58:21 AM
Mr. Morrison showed slide 23, "Forest Service Land
Exchange":
? Equal value land exchange that better positions
Trust's timber assets in locations that support a
viable Southeast timber industry
? Exchanges approximately 18,000 acres of Trust land
for 20,000 acres of USFS land
? Prevents timber asset devaluation and provides
increased future revenues
? Federal legislation (S.131 & H.R.513)
? State legislation to be introduced this year
Mr. Morrison discussed the original land acquisition of the
trust. He explained that the trust land being exchanged was
in a variety of locations, including Douglas island, Sitka,
Wrangell, Petersburg, Ketchikan, and Meyers Chuck. The
trust was seeking to acquire more contiguous lands in areas
economically viable and suitable for logging in Shelter
Cove, Hollis, and Naukati. He continued that there had been
new legislation introduced at the federal level (SB 131 and
HB 513) to facilitate the land trade, and that
corresponding state legislation would be necessary. He
stated that the land exchange was a top priority of the
trust, and reiterated that timber revenues had declined
after not having viable timber to cut. He stated that the
land exchange would generate $50 million to $60 million in
revenue for the trust through timber over the next 10 to 15
years. Additionally, the trade would provide important
material for the timber industry in Southeast Alaska while
the United States Forest Service (USFS) moved to a young-
growth timber model.
10:01:04 AM
Co-Chair MacKinnon asked if the legislation was somewhat in
response to Senator Dunleavy's question regarding community
acceptance of harvesting.
Mr. Morrison stated that the trust had a sensitivity to the
desires of the community. He furthered that even though the
land exchange was value-for-value, there was a difference
between timber value and land value. The trust felt
strongly that the lands and timber it would receive were
worth more to the trust than the lands it would be
divesting.
Co-Chair MacKinnon asked if such land was typically made
available for multiple uses, or if the land was more often
locked up for a specific use.
Mr. Morrison understood that the legislation that had been
introduced and the intent of the USFS was to take the land
into the Tongass National Forest, and manage it according
to the Tongass plan. He thought the plan did not
necessarily encourage use of the land.
Vice-Chair Bishop asked Mr. Morrison about his
conversations with USFS, and wondered if he had discussed
the young timber plan under review. He asked if the USFS
was going down a path of encouraging logging of second-
growth timber in the future.
Mr. Morrison relayed that the USFS plan as stated was to
preserve old-growth stands of trees and facilitate a change
in the industry to a young-growth or second-growth model.
He relayed that the USFS believed it had young-growth trees
to offer, although it had publicly stated there were none
that could be offered in the next five years.
Co-Chair MacKinnon spoke in support of the land exchange.
She thought there was an opportunity for beneficiaries of
the trust to benefit from the land exchange. She asserted
that the trust was attempting to honor the requests of
communities that were close to its properties, including
those that might prefer to see the land exist as a forest
rather than being monetized for timber sales. She asked the
committee to direct any questions to the land trust
expeditiously.
Mr. Morrison added that the land trade was an example of an
important project for preservation of the land base, as
well as future income.
10:05:38 AM
Mr. Jesse discussed slide 19, "Criminal Justice Reform and
Reinvestment":
? Continue efforts to ensure the successful diversion
and re-entry of beneficiaries
? Committed nearly $4 million in FY18 for community
prevention, diversion and reentry programs
? Support Criminal Justice Commission recommendations
Mr. Jesse referred to SB 91, and thought that resultant
issues could be put in two categories: those that clearly
needed to be addressed to fine-tune the legislation, and
misinterpretations of the effects of the bill on the
criminal justice system. He affirmed that the trust was
working with the sponsor on changes necessary to fulfill
the goals of the legislation. He thought that when there
were multiple changes to a system at one time, it was hard
to discern which change had caused a particular impact. He
discussed an impact pertaining to jail time that had drawn
concerns, which was attributable to bail schedule changes
rather than the bill. He knew presiding judges in the court
system had heard the concerns and were considering the
matter. He relayed that the trust would be looking further
into the topic of Class C felonies and theft offenses.
Mr. Jesse continued discussing slide 19. He emphasized that
SB 91 would not achieve its anticipated savings and goals
if there was not investment in necessary services once
individuals in the criminal justice system were identified.
He thought one problem with such reform was that potential
savings happened downstream rather than being available for
immediate investment. The previous year, the trust had
received initial investment by using prospective marijuana
tax funds. He spoke to research on recidivism that
suggested treatment, employment, and housing were
mitigating; as opposed to incarceration, which could lead
to further criminal activity.
Mr. Jesse asserted that without an upfront investment in
necessary services, many of the strategies being employed
would not be effective. He could not see a way to achieve
the desired outcomes of the criminal justice reform
legislation other than prospective revenues from marijuana
tax, increased alcohol taxes, or a policy decision.
10:11:14 AM
Senator Micciche thanked Mr. Jesse for the description of
how the trust was approaching SB 91. He commented that
crime rates were not at an all-time high but were
increasing. He recognized issues such as the changed bail
schedule. He noted that a priority of the Senate was to
identify what needed to be amended, revised, and improved
to make changes to give law enforcement the tools it needed
to deal with crime. He agreed that incarceration had not
been effective, and had in many cases turned lower-level
criminals into serious offenders. He emphasized that it was
important to put public safety first.
Vice-Chair Bishop asked if it was true that when an
individual desired treatment, it was important to start
treatment immediately to optimize success. He wondered how
much more capacity the state needed to meet the demand for
treatment and recovery.
Mr. Jesse was not able to provide an exact number, but
thought that pre-trial assessments would provide more
information. He discussed data collection by the Office of
Children's Services as another source of information. He
emphasized that Vice-Chair Bishop was correct in the
assumption that it was important to begin treatment when
individuals were open to making life changes. If treatment
was delayed, individuals returning to the same environment
were more likely to relapse, as well as re-offend if there
was a criminal justice issue.
10:15:22 AM
Senator Dunleavy thought that many of the issues the trust
dealt with leant themselves to management and mitigation,
rather than eradication. He used the example of smallpox to
illustrate the concept of eradication. He referred to a
report from the United States Department of Education that
indicated $7 billion spent on education under the
administration of President Barack Obama had yielded no
results. He asked how AHMTA programs were measured for
effectiveness. He wondered if the trust could show progress
made on issues that were being addressed.
Mr. Jesse commented on the encompassing nature of the
question, and first addressed eradication. He commented
that prohibition had not been effective as a means of
stopping alcohol use. He discussed opioid abuse, and
thought there was action that could be taken to mitigate
the problem. He discussed individuals with intellectual
disabilities, who may need a certain level of lifetime
support and services. He emphasized the importance of
finding the most economic and effective of assisting people
over time. He used individuals experiencing dementia as an
example of those who needed a growing level of support. He
discussed maximizing the ability of family and communities
to help individuals so reliance on government support was
minimized.
10:19:51 AM
Mr. Jesse continued addressing Senator Dunleavy's question.
He shared that he was a recovering alcoholic. He thought it
was not accurate to say that there could be eradication of
alcoholism. He thought the trust could provide some
information to elucidate the matter. He shared that a
future slide would provide information on the Justice
Information Center, which could answer some of Senator
Dunleavy's questions.
Senator Dunleavy wanted to see a detailed accounting of
where funds would be spent, and the value of the funds
towards the goals of the program. He questioned the goals
of the programs, and thought it was important to examine
the efficacy of a program and its goals. He thought his
constituents would better understand state spending if the
goals of programs were more clearly communicated regarding
mitigation, sustainment, or eradication of issues.
Mr. Jesse said he would work with Senator Dunleavy to
provide more of the requested information.
10:22:07 AM
Senator von Imhof supported the request of Senator Dunleavy
and imagined that the trust was already measuring program
efficacy and outcomes. She discussed methods of evaluation,
and expressed a desire to see evidence that the trust was
measuring and adapting to achieve the best outcomes.
Mr. Jesse relayed that every authority grant or MHTAAR
project that went through state government had a set of
performance measures that were established with those
providing the service. He used the example of the Bring the
Kids Home program, which had been extremely data-driven and
had a large work group of providers, state representatives,
advocates, and family members; that had continuously
crunched outcome data on strategies. He recalled that all
the strategies had been adjusted over time through using
data as a feedback loop to seek better outcomes. He
emphasized that the trust would be focused on outcomes and
data collection.
10:24:49 AM
Co-Chair MacKinnon commented on how to discuss bills that
had passed in previous sessions.
Co-Chair MacKinnon followed up to say the responsibility of
the committee was to examine the numbers. She stated that
the committee had seen cost savings in many ways when
working on criminal justice reform and reinvestment. She
thought that the media had focused on the cost-saving
angle, when the real intention of the bill sponsor was to
save lives. She discussed incarceration, lack of
rehabilitation, and the resultant costs to the state. She
commented on the level of interest in the bill and the
prevalence of misconceptions by the public. She emphasized
that although the committee was tasked with examining the
financial implications of the bill; the intent of SB 91 had
been to save lives, and to provide the right services to
allow for people to have a second chance.
10:28:39 AM
Mr. Jesse displayed slide 20, "Medicaid Reform efforts":
? Approved nearly $10 million on reform efforts over
three years
? Advocating for maintaining same optional services
that the state currently provides which allows
beneficiaries to remain in their community and often
at a lower cost of care
? Build flexibility into programs to accommodate
potential federal funding changes
Mr. Jesse remarked that he had never seen a department work
harder on such a complex issue as the Department of Health
and Social Services (DHSS) had on the issue of Medicaid
reform. He specified that there were 16 distinct strategy
threads in the reform effort, 14 of which involved
behavioral health. He informed that the trustees had
invested nearly $10 million over three years to help
provide the department the resources it needed to be
successful in the reform effort. He described that some
things were on track and on budget, but there were also
unforeseen issues to consider. He emphasized that the trust
was committed to the major reform effort to keep it
sustainable and provide the level of healthcare that
Alaskans needed.
Co-Chair Hoffman referred to slide 19, and asked for more
details about the $4 million that was committed for FY 18.
He referred to slide 20, which listed $10 million of
towards reform over three years. He asked if the three
years were FY 18 through FY 20, or were the three years
prior to the current budget. He thought it was not clear
where and when the $10 million was placed in the budget.
Mr. Jesse relayed that the funds were placed in the budget
FY 17 through FY 19.
Co-Chair Hoffman referenced slide 26, and asked if Mr.
Jesse could explain where the funds were in FY 18.
Mr. Jesse expressed that he might need assistance from
other staff to provide any details beyond an overview.
10:31:40 AM
Co-Chair MacKinnon asked Mr. Jesse if he had observed
substantive change happening at DHSS, or if the change was
only on the surface.
Mr. Jesse shared that his and his staff's experience had
perceived that DHSS leadership was clearly committed to
major system change and reform. He thought that like any
large bureaucracy, making sizable changes was challenging.
He considered that it would be unrealistic to assume that
there were not individuals in the agency that were
resistant to change. He believed that the department was
committed to structural change, and recounted that it had
regularly addressed issues that arisen.
Mr. Jesse continued, and discussed the department's funding
of national-level consultants in substance abuse (who had
worked with many other states on reform). He was sure that
there would be some in the legislature that had hoped for
more progress and more immediate savings from the reform
efforts, but thought that the department was working hard
to accomplish its goals. He mentioned personal sacrifices
by department leadership as a demonstration of the level of
commitment.
10:35:40 AM
Co-Chair MacKinnon asked Mr. Jesse to inform the committee
if AMHTA experienced any turf wars. She discussed change
and hoped that the department would be able to adapt and
sustain.
Senator Micciche remarked on the new administration in the
federal government, and the impending loss of the
Affordable Care Act. He wondered if the trust had a
position on point to react to what could come from the new
administration, and how the state might deal with it.
Mr. Jesse relayed that the trust was closely watching
developments at the federal level. He relayed that AMHTA
was part of AK Reform, which was a group comprised of a
variety of stakeholders in the health industry. The group
was also monitoring developments at the federal level. He
expected there would be less funding, but also less federal
control over how states chose to address problems. He
thought the latter presented opportunities in the Medicaid
reform arena.
10:39:11 AM
Mr. Jesse displayed slide 24, "FY18 Operating Increments":
Alaska Justice Information Center
Trustees Proposed 225.0 MHTAAR 150.0 GF/MH
Governor Proposed 225.0 MHTAAR 150.0 GF/MH
IT Application/Telehealth Service System Improvements
Trustees Proposed 100.0 MHTAAR 100.0 GF/MH
Governor Proposed 100.0 MHTAAR 100.0 GF/MH
Mr. Jesse asserted that the trust understood the state's
fiscal situation, and had brought only two increments it
felt were essential. He discussed the request for funding
the Alaska Justice Information Center (AJIC). He recalled
that the trust had partnered with the project before. The
first project of the center was to analyze the trust's
current programs to address criminal justice issues and
identify how many matched evidence-based standards. The
endeavor was part of the results-first effort that the
trust had committed to.
Mr. Jesse continued discussing AJIC, and noted that there
were 52 different projects that addressed criminal justice
issues around re-entry and recidivism, 65 percent of which
were state funded. He continued that 57 percent of the
programs matched an evidenced-based practice that had
research in the field. The state contributed $23 million to
the programs. He thought the committee would be pleased to
know that 89 percent of the programs that the state money
went to matched evidence-based programs.
Mr. Jesse shared that the information center was currently
working on determining the total cost of a journey through
the criminal justice system. Additionally, evidenced-based
programs were being analyzed for fidelity; and a cost-
benefit analysis was being developed. He referenced similar
work completed in the State of Washington. He discussed the
idea of cost-benefit analysis and the number of individuals
programs could reach.
Mr. Jesse continued discussing slide 24, and thought that
some of the information being discussed would serve to
inform Senator Dunleavy's inquiries about program efficacy.
He continued that the increment for the information center
would provide an integrated data platform for the criminal
justice system and criminal justice reform. The system
improvements would create a central location and allow
combination of information and provide iterative data
feedback to the entire criminal justice reform system. He
emphasized that the trust considered the project to be
mission critical to getting criminal justice reform
completed.
Mr. Jesse noted that AJIC was working in complement with
the Judicial Council, which was staffing the Alaska
Criminal Justice Commission. He added that AJIC was located
at the University of Alaska Anchorage, and was a great
opportunity for the state to harness the resources of the
university.
10:44:34 AM
Mr. Jesse discussed the second operating increment listed
on slide 24, for 'IT Application/Telehealth Service System
Improvements,' which was for the Division of Senior and
Disability Services. He spoke to the effectiveness and
efficiency of maximizing the use of telehealth systems. He
shared that the trust had learned that the systems had to
be tested and used. He used the example of a recent meeting
in which the technology had been problematic and caused
delay. He referred to a backlog of assessments in the
division. He questioned how telehealth could be used to
reduce the backlog and continue to complete assessments in
a more cost-effective way.
Mr. Jesse discussed expanded use of telehealth beyond
assessments. He thought it was possible to use telemedicine
further and avoid costly transportation. The trust felt the
increment was well worth the investment. He thought it was
important to support agencies that were maximizing
resources; with recognition that funding was limited, and
the trust was willing to share a portion.
Senator Dunleavy asked Mr. Jesse to inform the public
exactly how much the request was for.
Mr. Jesse specified that the request was for $200,000; with
$100,000 of AMHTA receipts, and with a matching $100,000 of
GF/MH.
10:47:47 AM
Mr. Jesse turned to slide 25, "FY18 Capital." He commented
that the areas of 'Homeless Assistance' and 'Special Needs
Housing' were in the capital budget primarily because the
major partner was the Alaska Housing Finance Corporation
(AHFC). He specified that many of the dollars were
operating dollars that went towards grants to provide
service assistance to people in the facilities that had
been funded in the past. He pointed out the 'Home
modifications and Upgrades to Retain Housing' item, noting
that it was a program for which the governor had changed
fund codes, but had supported.
Mr. Jesse continued discussing slide 25, noting that there
were reductions in the 'Homeless Assistance Project' and
'Special Needs Housing Grants,' and most of the funding
would go to support existing services. He noted that
'Coordinated Transportation' did not get support in the
governor's budget, nor did 'Medical Appliances Assistive
Technology' or 'Deferred Maintenance.'
Senator Dunleavy asked Mr. Jesse to specify the amount of
the funding request.
Mr. Jesse read the FY 18 Capital request figures from slide
25.
10:51:10 AM
Co-Chair MacKinnon suggested that if the programs were
important to the trust, Mr. Jesse might want to contact her
office to see if the trust was willing to use some of its
reserve accounts for funding. She was not sure the Senate
would agree with what the governor had proposed for the use
of GF or dividends from AHFC. She discussed spending
authority for the trust to put toward priority programs.
Mr. Jesse thanked Co-Chair MacKinnon.
Mr. Jesse mentioned a question by Co-Chair Hoffman and
asked if he could provide the details at a later time.
Co-Chair Hoffman answered in the affirmative.
Mr. Jesse discussed slide 26, "FY18 Mental Health Budget
Bill Increments," which showed a table listing increments
under the headings, 'Operating Totals,' 'Capital Project
Totals,' and 'Administrative Costs.' He read the figures
from the slide, and noted that the governors proposed
budget had reduced two items. He explained that the
governor had made a slight reduction to the trust's
administrative costs category. He noted that the trust had
made the argument that it was self-funded, and denying its
annual increments would not affect the state GF, but would
impair the trust's ability to fund the administrative
expenses of the trust. He relayed that the land and
authority offices were under pressure from trustees to make
the increments extremely small. He asserted that the trust
would be approaching the finance subcommittees and asking
that the funds be restored.
Co-Chair MacKinnon asked if the trust was in the Public
Employees' Retirement System (PERS) or maintained its own
health and retirement system.
Mr. Jesse relayed that trust employees were all exempt
employees and in PERS.
Co-Chair MacKinnon made note of the effect on the
retirement system as employee salaries went up. She
understood that the trust was paying into the PERS system.
10:54:38 AM
Mr. Jones thanked the committee, and expressed willingness
to answer any questions about the trust.
Co-Chair MacKinnon thanked the testifiers. She acknowledged
the AMHTA board members who worked on behalf of the people
of Alaska, specifically on behalf of the beneficiaries of
the trust.
Co-Chair MacKinnon discussed the schedule for the following
week.
ADJOURNMENT
10:56:31 AM
The meeting was adjourned at 10:56 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012617 AMHTA 2017 Leg PowerPoint SFIN.pdf |
SFIN 1/26/2017 9:00:00 AM |
Meantl Health FY18 |