HOUSE BILL NO. 161 "An Act relating to reduction in payments to individuals under certain benefit programs; and providing for an effective date." Co-Chair Mulder observed that Tamara Cook, Legal Counsel, Legislative Affairs Agency, indicated that the legislation would not affect Medicaid because that is a payment to a provider, not an individual. He noted that it was not his intent that the legislation affect Medicaid. MARGIE VANDOR, DEPARTMENT OF LAW noted concerns by the Department of Law. She pointed out that the legislation raises the question of unconstitutional delegation of legislative authority. She observed that the legislation is broad and pointed out that similar broad legislation was struck down by the court. The legislation does not identify benefit programs. She stated that the legislation provides that "not withstanding other provisions of law" insufficient funding would be handled on a pro rata basis. This conflicts with existing programs that provide that insufficient funding be handled through a reduction in service. She stated that programs need to be identified and guidelines provided regarding the determination of when a pro rata basis should be done. She asserted that there is too much left up to the agencies. She noted that it is a legislative function to set the guidelines of appropriations. In response to a question by Vice-Chair Bunde, Ms. Vandor stated that each benefit program would have to be addressed separately. ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION provided information on the legislation in regards to the longevity bonus program. She spoke against an across the board pro rata reduction to the program. She pointed out that the Administration has introduced HB 55 to allow an income cap on the program as a fair way to address a reduction. She added that it is difficult to determine the actual amount of need in order to estimate when pro ration should occur. She observed that the program might have been unnecessarily reduced in the current year had they responded to earlier estimates. KAREN PERDUE, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES testified in opposition to HB 161. She stated that the legislation conflicts with longstanding statutes. Recipients will not be able to anticipate the amount of their payments. She noted that most programs have accompanying statutes that describe the program's criteria. There are federal protections that would prevent the legislation from applying to some programs. She acknowledged that the legislature does have the ability to pro rate programs. She observed that there are a number of cash payment programs that would be affected. The Alaska Temporary Assistance Program (ATAP), payments to foster parents, subsidized adoption and guardianship, and Adult Public Assistance (APA) would be affected. She maintained that changes should be made to programs through legislation. Co-Chair Mulder referred to Commissioner Perdue's letter dated March 31, 1999 (copy on file). He read from the letter: "Our TANF Block Grant requires that we maintain state expenditures at 80 percent of our 1994 level (MOE). The Governor's FY2000 budget for ATAP includes only the amount of General Funds necessary to meet the MOE." He asked if the MOE (maintenance of effort) level is stationary. Commissioner Perdue clarified that the amount does not change. It is 80 percent of the amount paid by the state in 1994. Co-Chair Mulder observed that this assumes that the amount spent in 1994 was the right amount at that point in time. Commissioner Perdue noted that this amount was agreed on in Congress. Co-Chair Mulder noted that Commissioner Perdue stated that: "Any reduction to the General Fund amount in this program would result in significant penalties." He asked what the penalties would be. Commissioner Perdue did not know the exact amount but observed that the state would have to make a cash payment to the federal government. Vice-Chair Bunde asked if it would be more disturbing for payments to end prematurely or to be pro rated. Commissioner Perdue stressed that individuals are dependent on their payments and that either scenario would be difficult. Commissioner Perdue pointed out that community programs that help persons with mental illness or developmental disability are dependent on the payments. She added that the state pays the Medicaid premiums for 8,000 elderly Alaskans. JEANNETTE GRASTO, PRESIDENT, NATIONAL ALLIANCE FOR THE MENTALLY ILL, FAIRBANKS spoke against HB 161. She maintained that the programs are essential. GENE GRASTO, NATIONAL ALLIANCE FOR THE MENTALLY ILL, FAIRBANKS testified against HB 161. He maintained that the legislation is "disability cleansing." He asserted that the state has sufficient funding to take care of the needs of the mentally ill. MARGO WARING, STAFF, ALASKA MENTAL HEALTH BOARD reviewed the Board's concerns with HB 161. She emphasized that reduction in funding levels for persons with mental illness would jeopardize their wellbeing by threatening already low-income levels. She observed that Alaska has been reducing the capacity of the Alaska Psychiatric Institute for several years, in favor of community based care. Community care requires that persons have basic income support to live in communities rather than in institutions. Of the 8,000 low income, disabled Alaskans on APA, many are chronically mentally ill. She maintained that formula programs assure that increases and decreases do not jeopardize those already enrolled. The Alaska Mental Health Board supports the continuation of benefit programs that are predictable, consistent, and provide sufficient support for individuals with disabilities. ERNIE DUMMANN, MEMBER, COUNCIL OF DISABILITIES AND SPECIAL EDUCATION, ANCHORAGE testified via teleconference in opposition to HB 161. He noted that he is the father of a severely disabled child. He expressed concern that support for his son would be reduced by the legislation. He stressed that community based programs are extremely stretched. JOHN WOODWARD, CHAIR, STATE INDEPENDENT LIVING COUNCIL, ANCHORAGE testified via teleconference in opposition to HB 161. He recommended that the legislation be held until questions regarding the affect of the legislation are answered. SCOT WHEAT, NATIONAL ALLIANCE FOR THE MENTALLY ILL, HOMER testified via teleconference in opposition to HB 161. He maintained that reductions to benefits would cause disruptions and increase the number of persons in institutions. He stressed that people need support in transportation, childcare and housing in order to move from welfare to work. KELLY BEHEN, CONSUMER MEMBER, MENTAL HEALTH BOARD, HOMER testified via teleconference in opposition to HB 161. She expressed concern that the legislation could shift costs to overburdened communities without resources. ROBYN HENRY, EXECUTIVE DIRECTOR, NATIONAL ALLIANCE FOR THE MENTALLY ILL, ANCHORAGE testified via teleconference in opposition to HB 161. She stressed that the legislation would have grave effects upon those with mental health problems. She stressed that the legislation could jeopardize the ability of people to live independently and make it necessary for people to return to institutions. She noted that citizens receive over $1 thousand dollars in permanent fund dividend checks. (Tape Change 99- 58, Side 1). KARLEEN JACKSON, EXECUTIVE DIRECTOR, ANCHORAGE testified via teleconference against the proposed legislation. She urged Committee members to reconsider. She stated that the legislation undermines the work that has occurred over the last two years, to get people to work. She stressed that it would be extremely hard for homeless shelters and other support groups to provide for individuals if their benefits were reduced to 8 months. She maintained that there would be an increased cost to the state if individuals were taken out of the work place and made homeless. Vice-Chair Bunde pointed out that the 8 or 12 month scenario was a hypothetical condition. He had asked which would be the least damaging to those receiving payments. Ms. Jackson replied that if it causes them to become homeless, a one- year time limit would be short sighted. She asserted that if benefits are cut, the benefit will be lost. JEAN STEELE, HOMER testified via teleconference in opposition to HB 161. She noted that she is disabled. She stated that she was grateful for the services that she currently receives. She stated that the proposed bill is disturbing in its generalities. She maintained that without specific language, it leaves people floating in the air. Those who are disabled and cannot work depend on these services and cannot afford to have the state budget balanced on their backs. She asserted that funds are being spent on travel and highways and other things that cannot be rationalized by those that are disabled. She stated that further cuts could exacerbate a spiraling. JOHANNA TORNES, HOMER testified via teleconference in opposition to HB 161. She echoed the previous comments. She observed that bill is vague. JEFF JESSE, E.D., ALASKA MENTAL HEALTH TRUST AUTHORITY testified in opposition to HB 161. He emphasized that many beneficiaries are close to the edge. He noted that recipients have built their independence around these funds. He stressed that individuals on the margin would not be able to maintain their independence with reductions. He asserted that the reduction of any programs would push individuals to the edge. He stressed that the mental health population is trying to put together the benefits that they receive. He pointed out that if projections were significantly off or a recession was to hit the state, there could be a dramatic impact to beneficiaries. He maintained that the legislature has to take the risk and shoulder the responsibility for making hard choices. He stressed that the way to make the choice is not through short funding programs in the budget process. HB 161 was HELD in Committee for further discussion.