HOUSE BILL NO. 337 An Act relating to claims against permanent fund dividends to pay certain amounts owed to state agencies and to fees for processing claims against and assignments of permanent fund dividends; and providing for an effective date. DWIGHT PERKINS, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, commented that some State agencies are currently allowed to seek from individuals overdue payments of money due the State through a simple administrative collection of permanent fund dividends. But most State agencies still need to use a time consuming and costly court action to attach an individual's permanent fund dividend. It makes sense for all State agencies to have access to the "fast track" method of collecting from a person who receives a dividend while in arrears with payments lawfully due to the State. The proposed bill accomplishes that change in law. He continued, a State agency would not be required to use the new procedures for collection. Any agency that elects to use the new procedures would be required to notify the individual of the claim with a fair opportunity for a hearing at which the individual could contest the agency's claim to the dividend. If a hearing is not requested or the claim is resolved in favor of the State agency, the agency may collect the money from the individual's dividend without filing a court action. Mr. Perkins emphasized that passage of the measure gives State agencies an additional tool to recover money that is lawfully owed to the State under existing law. He outlined the differences between the three versions of the bill contained in member's packets. Co-Chair Therriault questioned the Department of Labor and Workforce Development's fiscal note. Mr. Perkins explained the change between the various totals for the five years. He noted it calculated interest penalties from the received money. RON HULL, DEPUTY DIRECTOR, EMPLOYMENT SECURITY DIVISION, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, added the first page of the fiscal note represents the current fiscal year. Mr. Perkins pointed out that this was originally the Department of Labor and Workforce Development's legislation. In the process, other State agencies believed that more was needed. The Administration does not have a problem with the State Affairs version which includes other departments. Representative J. Davies requested an example of a "hypothetical situation" resulting in a person owing money through the recommended legislation. Mr. Hull replied that there are a number of methods in which benefits are over paid. The largest problem is in collection of over paid unemployment. Cross match information often shows that a recipient is working when they do not claim that they are. That would be a fraud case. Employers send quarterly documents indicating how much an employee was paid per week. The appeal process is undertaken and it could then be transferred to a criminal court. Hearing officers initially address the case. Mr. Hull stated that if there is an appeal and it is upheld, the claimant could go to Superior Court. He noted that the due process issue is well covered. Representative J. Davies pointed out that the claimant has 30 days to appeal. He asked if the claimant did not respond in that period, would they then be garnished. Mr. Hull explained that the Department is not "heavy handed". Before the Department approaches this, the claimant must first be 120 days in arrears. Taking the dividend is the Department's last resort. Co-Chair Therriault attempted to clarify the process undertaken to make a garnishment. Mr. Hull explained that to garnish the dividend, would depend on why there was no response. Mr. Perkins explained that the address used by the Department is the one used to mail the dividend to. Co- Chair Therriault asked if only the garnished persons would be the ones who had established a payment plan. Mr. Hull explained that not everyone has set up a payment plan and that all recipients could be garnished. Mr. Hull added that the Division's collection rate on the overpayment area is in the 90% percentile. Problems exist with the fraudulent payments. Representative Bunde voiced concern that notification did not take place through a registered letter. Mr. Hull replied that if the person could show that they had not received the mail or had not opened it, then their repeal rights are reopened. Vice Chair Bunde asked about the continuity of the procedure. Mr. Hull replied that all procedures used by the Division are in writing. Representative J. Davies inquired the number of cases this amount of revenue represents. Mr. Hull replied that right now, the Division is working on cases that are six years old. Yearly, there are about two thousand people, half of which could be fraudulent. Fraud for 1997 was $1.8 million dollars; for 1998 it was $1.5 million dollars. Co-Chair Therriault inquired how the garnishment process was handled. NANCI JONES, DIRECTOR, ALASKA PERMANENT FUND DIVIDEND PROGRAM, DEPARTMENT OF REVENUE, explained that when a State agency files a garnishment, that case is given a number to track it. Any person can track that with the assigned number and it can be tracked through the department claiming the dispute. Only if there is a release from the agency, will the action can be stopped. The Permanent Fund Dividend Division would work directly with the Department of Labor and Workforce Development. Representative Foster MOVED to HB 337 out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CS HB 337 (JUD) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Labor and Workforce Development dated 2/4/00 and a zero note by the Department of Revenue dated 2/23/00.