CS FOR SENATE BILL NO. 116(FIN) "An Act making a special appropriation for energy assistance for Alaska residents; and providing for an effective date." 8:47:24 AM JAY LIVEY, STAFF, SENATOR LYMAN HOFFMAN, stated that SB 116 required a one-time appropriation of $9 million to assist Alaskans in paying for energy costs. Although the amount of fuel was abundant, the cost of fuel has forced families to make difficult budgetary choices, and has been compounded by lower than average yearly incomes. In 1990, fuel costs in Bethel were 45 percent higher than fuel costs in Anchorage, by 2007, the differential was 92 percent. The one-time appropriation would be divided between the Low Income Home Energy Assistance Program (LIHEAP), and the Alaska Heating Assistance Program (AKHAP). Both programs provide state-wide assistance. Approximately 162 communities are served. Communities with recipients include; Anchorage, Palmer, Wasilla, North Pole and Homer. He added that some areas of rural Alaska are served by tribal programs as well. Mr. Livey detailed the criteria set out for residents to establish enough points to qualify for assistance under the two programs. The applicant must be a state resident and must live in the home in which the heating costs occur. Set income guidelines must also be met. Each applicant would be assigned a number of points based on the climate in the area in which they live, which would be assessed by degree days in the area. The number of disabled and elderly in the household would also be considered. The requirements determine that the assistance would be rewarded to those with the highest need. In addition, the assistance money, determined by the application points, would be distributed directly to the vendor and not the individual applicant. 8:52:27 AM Mr. Livey noted that The Department of Health and Social Services (DHSS) would initiate a final check run in April of 2009. This would allow enough time for the appropriated funds to become available to those with established vendor accounts, or who become eligible before April 2009. This would assist families with fuel debts from the winter of 2009 in paying existing debts and continue to afford heat through the spring. Mr. Livey furthered that based on the amount of federal and state funds DHSS had to spend on heating assistance, he could calculate that $220 was spent per applicant point. The average number of points is 15, which equals $3300 for heating assistance in 2009. If the resident pays $6.50 per gallon for 84 gallons per month, or 507 gallons total during the winter months, and uses 150 gallons per month, the existing program will only pay 56 percent of the heating need. He thought that the additional assistance was not extravagance for the state. 8:55:37 AM Representative Fairclough wondered if one household could receive assistance from both LIHEAP and AKHAP simultaneously. Mr. Livey replied that it would depend on the family's income. The qualification would be based on the federal poverty level. He added that AKHAP was funded through general state funds and LIHEAP was funded federally. Representative Fairclough requested further clarification. Mr. Livey explained that the funding for LIHEAP cannot be used to fund AKHAP, but the funds for AKHAP can be used for LIHEAP. If a family of four earns under $40,000 per year, funding may be combined from both programs, but would be distributed under LIHEAP. If the family's income exceeds $40,000, general funds must be used under AKHAP. Representative Fairclough asked how many families under each program receive combined funds. Mr. Livey guessed that 13,000 families in the state are served by both programs; 90 percent of the families are under the poverty line. 8:58:22 AM Representative Joule queried what percentage of a family's available income, throughout the state, is spent on energy costs. Mr. Livey replied that he did not have the exact percentages. He believed that the percentages were significantly higher in rural Alaska. Representative Joule thought that the elderly and disabled should be the first to qualify for assistance. He told story of two elderly people who needed assistance but did not qualify for AKHAP. He worried that the funds were not going to those who needed the assistance most. He wondered if the point system could be negatively manipulated. 9:01:36 AM Mr. Livey responded that the program used to assign points has a component that provides extra points to the elderly and disabled. He added that income does factor into the determination of points. Representative Joule asked about CITGO, which provides fuel assistance to Alaska Native families. He wondered how long the program had been in effect, what was the cost, and who was eligible. Mr. Livey understood that CITGO had provided some fuel to a few communities in 2008, and was expected to again in May 2009. Through regional corporations, some communities had accepted the fuel, some did not. Representative Joule asked if the cost of the program was known. Mr. Livey replied no. Representative Crawford questioned the ratio of federal to state dollars for the individuals under the federal poverty level. Mr. Livey explained that the money is melded and a dollar value is assigned per point. A family under $40,000 would receive one dollar, which would be combination of both federal and state money, per point. A family above $40,000 per year would receive only state money. 9:05:02 AM Representative Crawford asked for further clarification on the ratio of melded state and federal funds. Mr. Livey thought that the ratio was 2/3 federal dollars and 1/3 state dollars. Vice-Chair Thomas asked if two families, living together in one household, could qualify for assistance. Mr. Livey understood that one application was allowed per house. Vice-Chair Thomas said that when AGIA was moved out of committee in 2007, intent language had been written into the bill that would have allocated $60,000 per year into LIHEAP. The Senate Finance Committee removed the intent language. He felt that that action may be connected to the funding problems the programs currently face. RON KREHER, CHIEF OF FIELD SERVICES, DIVISION OF PUBLIC ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that families below 150 percent of poverty receive 100 percent federal funds, and families above receive 100 percent state funds. The appropriation of $10 million for FY 2008, stipulated that the funds be used for heating assistance programs. At the end of the program year the department examines the number of households served by the programs. Surplus funds are used as supplemental payments. The $10 million would be spread out between LIHEAP recipients and AKHAP recipients. The amount of state versus federal funds distributed would depend on where families fell on the poverty line. Representative Joule proposed that the department manipulate the point system to ensure assistance to the elderly and the disabled. 9:10:14 AM Mr. Kreher felt that manipulation of the point system would require regulatory changes. With the creation of AKHAP, and the pushing up of income limits to 225 percent of poverty, any household that is income ineligible for the program has an income in excess of the limited amount. The income qualifications do not currently take into consideration how the income budgeted. He thought that the number of households at the higher end of the income bracket may be dropping of in assistance use because their gross income exceeds the limits set forth by the program. The program also requires seasonal incomes to be annualized, which can put a family above the income limit. Representative Joule stated his support for the provision, but reiterated concerns regarding people in need who are denied assistance. Mr. Kreher replied that the department would work with the legislature to remedy the concerns regarding elderly and disabled persons with need. Representative Joule expressed excitement for the collaborative effort. 9:14:37 AM Representative Gara asked if federal portion of the LIHEAP program was funded at $10 million. Mr. Kreher replied that the program received $22 million in federal funds, including emergency contingency funds, and an increased black grant amount. Representative Gara asked if the federal portion would be closer to $10 million, in a year without a federal stimulus package. Mr. Kreher replied yes. Representative Gara asked how many LIHEAP applications were filed each year. Mr. Kreher shared that 2008 had been unusual, with 37 percent more applications filed than in previous years. This was because of the poor economy, but also marketing efforts by the department. Of the 9,000 applications that have been processed, the majority are well below poverty level. Representative Gara asked how many applications the department expected to receive by the end of 2009. Mr. Kreher thought it could be 16,000. Representative Gara asked how much assistance each applicant would receive. Mr. Kreher answered that in rural Alaska the average household received $4,000. A very low income household in an urban setting received $900. 9:17:53 AM Representative Salmon commented on the 15 point system. He wondered if 15 points was the maximum amount of points that could be received. Mr. Kreher answered that the maximum number of points that could be received was 32, the minimum was 2. Representative Salmon what were the qualifications that would earn the applicant 15 points. Mr. Kreher said that the points were based on community heating points, calculated based on location and heating degree days. For example, heating points for Willow is 7; there are additional points for children, elderly, and disabled. The factor is also based on housing type, such as size. Where a family falls in the poverty income brackets also determines the percentage of points. Representative Salmon asked if there were points given based on distance from urban centers. Mr. Kreher said that the points were based on heating degree days and where the community is located, including being on the road system. Representative Kelly wondered how the effective date ending FY 2009 related to FY 2008. Mr. Livey understood that the bill would provide a one-time appropriation to fund the department's last check run of FY 2009. The money would be obligated by June 30, 2009. Representative Kelly asked how much state funding had been given to the program in 2008. Mr. Livey replied $10 million. 9:22:21 AM BOB CHARLES, ASSOCIATION OF VILLAGE COUNCIL PRESIDENTS testified via teleconference, spoke in support of the legislation. Representative Kelly expressed frustration with the bill. He opined that there had been significant discussion about the one-time nature of past appropriations. He considered it an entitlement that would be expected in perpetuity. He understood the need, but was upset about provisions that purport to be one-time. He thought federal funding should only be used to help the truly needy. He cited statistics around the state regarding use of state and federal funds. 9:28:28 AM Representative Salmon pointed out to the committee that state funds have been made available to urban areas for energy assistance in the past. He felt that the rural areas of the state had been treated unfairly. He felt that a long-term solution had been established in urban areas and he wanted the same solutions for rural areas. Representative Gara recognized that the Healy coal plant had been heavily subsidized over the years. He surmised that the reason there was no road money in rural areas was because there are no roads. He emphasized that the assistance funds that were distributed in rural Alaska were necessary, not extravagant, and should not be limited to a one-time commitment. He stated that he did not vote for a one-time commitment. 9:32:37 AM Representative Kelly countered that Fairbanks does not have a hydro plant. He maintained his position on the legislation. Co-Chair Stoltze MOVED to report CS SB 116(FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS SB 116(FIN) was REPORTED out of Committee with a "do pass" recommendation. 9:33:39 AM RECESSED 9:47:15 AM RECONVENED