HOUSE BILL 78 "An Act relating to the maximum amount of assistance that may be granted under the adult public assistance program and the program of aid to families with dependent children; proposing a special demonstration project within the program of aid to families with dependent children and directing the Department of Health and Social Services to seek waivers from the federal government to implement the project." Co-Chair Hanley provided an overview of HB 78. He pointed out that the intent of welfare reform is to get people off welfare. According to a recent survey by the State Department of Health and Social Services, 88% of Aid to Families with Dependent Children (AFDC) clients in Alaska have indicated that they would rather work than be on welfare. Co-Chair Hanley stated that HB 78 would provide for the Department of Health and Social Services to apply for a series of waivers from the usual provisions governing AFDC programs. A "workfare" project would be established and would require able-bodied recipients who were not working at least 15 hours a week to perform community service or have their benefits reduced. Co-Chair Hanley concluded that the legislation would provide positive incentives to work in the form of higher income allowance and higher vehicle allowance. The costs of child care and transportation necessary for participation in the 7 program would be covered by the Department. He added that HB 78 would be an initial step towards breaking the cycle of dependence on welfare by rewarding hard work. Co-Chair Hanley provided a sectional analysis of the legislation. HB 78 amends existing statutes for the AFDC program. The legislation would authorize the Department to seek federal approval to operate four experimental AFDC demonstration projects under the authority of Section 1115(a) of the Social Security Act, which would authorize imposition of certain modified AFDC eligibility criteria and requirements for participation in a mandatory work program for project participants. The project would establish a ratable reduction in benefit payments for the AFDC program statewide. Co-Chair Hanley added, under the waiver, a person would be allowed to receive up to $200 hundred dollars for the first amount of money made and that, they would be able to keep 1/3 of the remainder made. This would provide an incentive for people while also allowing them to improve their status by working and at the same time would help the State by reducing the amount of money spent. (Tape Change, HFC 95-89, Side 1). Co-Chair Hanley continued explaining each section of the bill. He reiterated that the Department would be responsible for paying the child care costs as well as transportation costs. One of the fiscal notes included would cover those expenses. JIM NORDLUND, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, stated that Section #7 would establish an AFDC unemployed parent demonstration project, to assist two-parent families establish self-sufficiency within three years. He added that Section #8 would establish a self-employment demonstration project to assist AFDC recipients in reducing their need for benefits by allowing them to establish and operate a microenterprise. Co-Chair Hanley commented that the current system prohibits participants from saving money as it would place them over the asset limit. Representative Grussendorf spoke in favor of the proposed programs, although expressed hesitation on the proposed program funding. He communicated that the money to fund the program would be taken from those already poor and making them more poor for making the experiment work. Mr. Nordlund added, a rateable reduction of 1.7% amounting to 8 $13 dollars per month per one adult and child unit would be added. He stressed that the current system would operate the same, although there would be demonstration projects for certain selected persons receiving AFDC. The auto exemption would not apply for all AFDC participants in the State. Co-Chair Hanley commented on Section #9, the "diversion" demonstration project, which would offer short term financial assistance to job-ready AFDC applicants in order to avoid long-term financial support. Representative Martin asked the intent of the language on Page 8, Line 18, "(2) disregard up to $500 each month in nonbusiness income set aside for the development or operation of the microenterprise;". CURTIS LOMAS, WELFARE REFORM PROGRAM, DIVISION OF PUBLIC ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that language provided a provision to allow an individual to set aside income from some source other than a business as a way to capitalize. The provision would allow the AFDC individual to accrue up to $500 dollars per month and place into a business capital account with a maximum limit of $10 thousand dollars. That amount would not be considered as income. Representative Martin questioned how the Permanent Fund Dividend checks and share holding reimbursements would affect a persons qualifications to receiving welfare subsidies. Mr. Nordlund stated that the bill would have no effect on any AFDC recipients dividend check resulting from the "hold harmless" provision in current law. Mr. Lomas added, in terms of the PFD checks, the "hold harmless" would allow a four month investment limit. Currently, a person could set aside the check into a savings account and continue to have their eligibility protected for up to four months. If that person chose to place that saved amount into a microenterprise account, a limit would no longer exist. Mr. Nordlund added that there would be administrative costs associated with the new demonstration projects. In order to move forward with welfare reform, to move people from welfare to work, new ideas must be tried. He applauded all demonstration projects found in the bill stating that they are good ideas and worthy of testing. Representative Martin criticized encouraging any further exemptions to the welfare program. Mr. Lomas clarified information regarding dividend payments received from Native corporations. He stated that as a part of the 1988 Native Claim Settlement Act, a $2 thousand dollar limit was 9 established in federal law; this was not a state policy. He added that this was not an exclusive Alaskan policy as referenced by Representative Martin. KIRSTEN MARTIN, SELF, PRISONERS OF WELFARE WORKING ON WINNING, ANCHORAGE, provided the Committee with a handout of the monthly expenditures for the average AFDC recipient. [Attachment #2]. She asked for further consideration of the portion of the legislation requiring the under eighteen welfare recipient to live with the parent which would require that parent's income to be the determinant in deciding the medical expenses of the AFDC recipient. She directed her concern to "breaking" the grandparent's "pocket book". Ms. Martin requested that language be changed to exempt that responsibility. Mr. Lomas instructed that federal law computes the income of a parent when the child is living with them. He added that the bill could change that policy, however, the way the legislation is structured, there is a federal option to require teens to live at home. To change that language would depend on the State of Alaska adopting that option. He added, that section of the bill was not a demonstration project, but was a portion of the bill which was an exercise as an option of federal law. To change that "treatment" would require a waiver of that portion of the bill. Representative Martin interjected that supporting that waiver would encourage more teenage parents to leave home. Representative Martin cited the responsibility of the biological father. Ms. Martin discussed the lengthy time it takes for the Child Support Enforcement Agency to enforce child support. She personally has waited for five years without any child support compensation. Co-Chair Hanley advised that there is not much flexibility within current laws. Representative Brown asked what a cut to the benefits would mean to someone receiving AFDC. Ms. Martin affirmed that she was fortunate in that she currently received rental assistance. Without rental assistance, she stated that she would most likely lose her housing. Ms. Martin stressed that a ($15) fifteen dollar cut would be dramatic for someone on such a "tight" budget. Ms. Martin emphasized that all shelters and most churches are full; food banks have reached their limit. She stated that many people will loose their homes and the end product will be that many more children will be taken by Division of Family and Youth Services (DFYS) because the parents will no longer be adequately able to support the child's needs. She added, 10 currently there are not enough foster parents for the children needing home placements. Ms. Martin remarked that she was involved in creating a self sufficiency group with other AFDC recipients through local networking. Some of the items targeted through the networking are child care and transportation needs. She agreed that there are failures in the present system, although there are many AFDC recipients who are trying to find ways to better themselves. SHERRIE GOLL, ALASKA WOMEN'S LOBBY/KIDPAC, JUNEAU, stated that HB 78 was clearly the most rational approach considered by the Legislature, pointing out that it was full of things which removed disincentives for families to become employed and stay employed. Ms. Goll focused on specific areas of concern with the proposed legislation. The first concern of the Women's Lobby is the teen parent project. Ms. Goll pointed out that Alaska has a high teen birth rate. In 1993, 1189 teenagers had babies. The total case load of teen parents on AFDC is 141. She noted that the vast majority of teenagers who are having children, are living at home with their parents and being supported. Ms. Goll applauded the exemptions for those with no parental support, or if the home of the teenager was an abusive situation and the teen could not live there. She pointed out that 70 recipients would be affected by the project. In determining each case, investigation would be required. Ms. Goll emphasized that her main concern would be with the health care needs of a pregnant teenager. Pregnant teenagers have poor health outcomes which often mean poor health outcomes for their children. Premature births are much more common in teens, and most of the low birth weight babies born prematurely will have health problems throughout their life. Ms. Goll emphasized that prenatal care is important as is good nutrition as well as the delivery of the child. In considering the parents income, the minor will be required to live at home as a condition of eligibility. Unless the parent of the minor is also on welfare, the teen would not be eligible for any assistance. The concept of holding the parents income harmless in some way so that the teen could be eligible for assistance necessary for her to have a healthy baby needs to be reconsidered if that section remains in the bill. Ms. Goll continued addressing other issues regarding the personal responsibility of the "other" parent of the new 11 baby. In 60% of the cases where a teenage girl is pregnant, the father of that child is an adult. Ms. Goll recommended that the State provide active child support collection. The other 40% of the fathers are teen age boys. The family of the teenage girl is required to take personal and financial responsibility for the teenager and new baby, although the same responsibility is not required of the teen dad's family. Ms. Goll emphasized that consideration of that section of the bill be given deeper scrutiny or that section of the bill be dropped. Ms. Goll requested that one other exemption be considered. (Tape Change, HFC 95-89, Side 2). Ms. Goll stated that if a student is enrolled in a four year education program, they should not be required to work 20 hours a week as well. Ms. Goll spoke to the "unemployed" parent project. Until a few years ago, AFDC was only available to single parents who had dependent children. In 1988, there was a change in federal law, which indicated that law broke-up families. The federal law mandated on states that two parent families should be included in welfare eligibility when one of the parents was unemployed. She pointed out that at that time case loads grew significantly. She noted that by October, that mandate could be terminated. Much of the JOBS training money currently is distributed for the two parent families. Those are the persons who will be greatly affected by the hundred hour rule. That group could most benefit from the limit and could live within that restraint. Ms. Goll opposed the rateable reductions. Without subsidized housing, of which only 20% percent of the AFDC recipients qualify, an AFDC recipient could not make it with a $15 dollar monthly reduction. She emphasized that the costs of welfare changes should be offset with increased child support collections. Ms. Goll noted that major changes on the federal level would be occurring by October. She added that these changes will probably block grant the funds and will most likely come with less restrictions, rather than new and different restrictions. However, the welfare system will be redesigned. She requested that the Committee consider putting off changes to the welfare system until the federal changes have been made. Ms. Goll suggested changing the effective dates for applying for the "waivers" until January, 1996. 12 Ms. Goll urged the Committee to consider off-setting the cost of the programs other than on the "backs of the poor". She pointed out that action would hurt 14,000 children in Alaska. HB 78 was HELD in Committee for further consideration.