CS FOR SENATE BILL NO. 104(FIN) "An Act relating to appropriations from the dividend fund; creating the criminal fund; relating to appropriations from the criminal fund for payments for crime victims, operating costs of the Violent Crimes Compensation Board, grants for the operation of sexual assault response teams and domestic violence intervention projects, and incarceration costs; and providing for an effective date." SENATOR FRED DYSON explained that in 1988 the legislature adopted restorative justice measures and enacted a criminal justice fund with the intention to restore victims to their pre-offense condition. He reported that the prior year's court ordered restitution totaled $600 thousand for victims but only $85 thousand was available to the Violent Crimes Compensation Board (VCCB) for distribution. He discovered that most of criminal's statutorily withheld Permanent Fund Dividend (PFD) was being diverted to cover prisoner's medical cost instead of funding victim's compensation. He expounded that SB 104 was a clean-up measure to clearly prioritize the distribution and use of the PFD criminal fund to ensure adequate funding for victims compensation. He noted that his first attempt to structure the funds ensured that the victims received their money before court or other costs. Senator Dyson clarified that the bill also allowed other victims support organizations to receive funding. He offered that the VCCB had advantages over other groups. The board appropriated funds to victims before the cases were adjudicated, which could take years. The victims were suffering and carried all of the costs. He added that the Department of Corrections (DOC) did not oppose the bill because of the increased payout of the dividends and that under the Affordable Care Act incarcerated criminals would be covered by Medicare and Medicaid. He added that the Department of Law (DOL) maintained a recovery section for court ordered funds that recently improved their recovery rates. Child support enforcement and collection by the Department of Revenue (DOR) would not be affected by SB 104. Senator Dyson added that the bill received "rigorous" examination in the Senate and improved during the committee process. Senator Dyson stated that the legislation would make an extraordinary difference for some of the victims. He added that the criminal fund did not relinquish the responsibility of the amount owed by the perpetrator. The criminal will reimburse the fund. Representative Wilson asked whether the fund would pay all of the child support expenses owed by a criminal and wondered how the state would recover the costs. JOSHUA BANKS, STAFF, SENATOR DYSON, answered that the Senate Finance version of the bill removed the child support arrears provision. He pointed out that on page 4, line 6 of the Senate Finance version the second priority distributed funds to the Council on Domestic Violence And Sexual Assault (CDVSA). Senator Dyson interjected that he struggled with the child support issue. He worked with the administration and Child Support Services Division and a solution proved difficult. He delineated that child support arrears were exorbitant and would make a huge impact on the fund. Issues such as how far back to assess arrears were problematic. The Senate Finance committee was unable to determine an equitable way to address child support issues. He acknowledged the need and thought a solution could be found in the future. Representative Wilson asked how the order of priorities was established. Senator Dyson replied that the concept of restorative justice clearly intended that the first priority for the perpetrators restitution would be used to restore the victim to the pre-offense condition. He then examined the other entities that were entitled for court ordered reparations and pondered who the most worthy was. He concluded that organizations that provided services to victims were another high priority. 4:43:26 PM Representative Holmes noted that the second priority appropriated funds to the CDVSA. She read page 4, lines 8 through 10: … for grants for the operation of sexual assault response teams and domestic violence intervention projects that input data into the Alaska Public Safety Information Network… Representative Holmes reported that the language in previous versions was broader. She wondered whether the change was substantive and if it would change the way funds were currently distributed to the program. Mr. Banks replied that the language was established to focus on programs that were successful. The programs accomplished a large reduction in the rate of recidivism for domestic violence perpetrators and immediately responded to the victim's needs. Representative Holmes restated that the provisions limited the flexibility of the funds use to two particular programs of CDVSA's broader mission. Mr. Banks concurred. Senator Dyson stated that setting priorities established a new source of funds to help victims and he advised that the legislature only distribute funds to organizations that have a track record of providing services in an effective way. Co-Chair Austerman asked what was meant by new funds. Senator Dyson replied that the prior year's total criminal fund administered to DOC was $13 million. He stated he misspoke. The funds were available for a new purpose. Co-Chair Austerman asked what the cost of SB 104 was out of the $13 million. Mr. Banks referred to the chart regarding potential scenarios of the fund: "Historic PFD Criminal Fund Appropriations" (copy on file). He stated that the impact to the department for the next fiscal year was $.5 million. Co-Chair Austerman wanted clarification regarding the cost of the bill to the department and the $8.4 million figure on the fiscal note FN7 (COR). 4:48:58 PM AT EASE 4:50:47 PM RECONVENED Mr. Banks pointed to the first priority established on page 4 of the bill and noted that 20 percent of the criminal fund would be distributed to the VCCB. He clarified that based on the current years criminal fund of approximately $10 million the total distributed to the board would be $2 million. Currently DOC received $1.5 million for victim's compensation. He noted that the projection for next year's PFD was $1,300 to $1,800. The criminal fund would significantly increase. He did not anticipate losses for the department if the later scenario occurred. COMMISSIONER SCHMIDT, DEPARTMENT OF CORRECTIONS, explained that SB 104 re-prioritized the department's needs to meet the prisoners' medical needs. He exemplified the situation where a prisoner needed a lung transplant that cost $800,000. The prisoner was medically paroled and treated at the Alaska Native Medical Center. If the prisoner had been denied treatment at the medical center, the law required that the department would have had to pay for the medical costs of the transplant. He relayed that the PFD funds distributed to the department fluctuated each year. The department requested general fund money to backfill the anticipated need based on projections. If funds were lacking due to the legislation the department would request general fund money or make a supplemental request. He qualified that the department worked hard to control rising medical costs and made careful projections in order to avoid requesting supplemental funds. Co-Chair Austerman asked what the prisoners' total medical budget was. LESLIE HOUSTON, DEPUTY COMMISSIONER, DEPARTMENT OF CORRECTIONS, replied that the current year's total was $41 .268 million. Commissioner Schmidt reiterated that DOC worked hard to achieve medical cost containment. He stated his neutrality about the bill but stressed that if the money fluctuated, the department would have no other choice except to request additional funding. Co-Chair Stoltze addressed the $8.4 million appropriation in DOC's fiscal note. He asked whether that was a worst case scenario projection in anticipation of decreased funding due to passage of the legislation. Ms. Houston affirmed his assumptions. Representative Holmes recalled much discussion about the spiraling cost of prisoner's medical care in DOC subcommittee. She remembered that prisoners were not eligible for any type of government assistance for medical care. She wondered how the Affordable Care Act would impact the department when prisoners qualified for medical care. Commissioner Schmidt replied that coverage was limited. He continued that inmates' eligibility was complicated and that the department worked diligently with the Department of Health and Social Services (DHSS) to understand the process. Ms. Houston reported that inmates that were 65 years of age and older, pregnant women, and unsentenced inmates would be covered under the Affordable Care Act. The unsentenced inmates were only covered outside of the correctional facility for a period of 24 hours in the hospital. She expounded that Medicaid coverage was split 50 percent between the state and Federal government but that currently the split was 60 percent federal and 40 percent state when paying for hospital costs. The department did not yet know how much the department could leverage or recover under the Affordable Care Act coverage. Representative Holmes asked whether someone who was covered under Medicaid or Medicare before they were incarcerated was still eligible when in prison under the Affordable Care Act. Ms. Houston answered that once the person was adjudicated and sentenced they would not be eligible. Representative Gara asked whether the felony classification disqualified the prisoner or just the fact that the person was incarcerated. Ms. Houston read the four factors that disqualified the inmate: 1) convicted of a felony during the qualifying year; 2) incarcerated for a felony during the qualifying year; 3) convicted of or incarcerated for a felony during the qualifying year with two prior misdemeanor convictions that occurred after December 13, 1996; 4) convicted of or incarcerated for a misdemeanor during the qualifying year with a prior felony conviction. Representative Munoz asked about the possibility of enrolling higher costs prisoners in the program and paying the premiums. Ms. Houston stated that inmates were not eligible for the general Affordable Health Care coverage. Representative Costello mentioned the $42 million cost of inmates' health care and asked what the amount spent on prescription drugs was. Ms. Houston answered that she would supply the data after the meeting. Representative Wilson asked whether the four disqualifiers for Affordable Care Act coverage were prohibited by state or federal law. She wondered whether inmates that were covered by private insurance were prohibited coverage by state or federal law. Ms. Houston answered that the prohibitions were from the code of federal regulations. Co-Chair Stoltze requested clarification on how the role of the PFD Division interacted with the criminal fund and how the legislation affected the division. 5:04:25 PM DAN DEBARTOLO, DIRECTOR, PFD DIVISION, DEPARTMENT OF REVENUE, replied that the bill did not change the calculation of the criminal fund and was the reason the division submitted a zero fiscal note. He pointed to page 2, line 12 of CS SB 104 FIN which delineated the three categories of individuals who were counted in the criminal calculation. He read: (A) during the qualifying year, the individual was convicted of a felony;(B) during all or part of the qualifying year, the individual was incarcerated as a result of the conviction of a(i) felony; or(ii) misdemeanor if the individual has been convicted of a prior felony or two or more prior misdemeanors. Mr. Debartolo furthered that each year DOC and the Department of Public Safety (DPS) sent the division the list of the individuals who met the criteria. The division matched them against individuals who applied for the dividend. The amount of applicants who applied for the dividend was smaller since many categorized individuals realized they were ineligible for a PFD. The division then ascertained who would be otherwise eligible if they did not fall into the three categories which typically amounted to 95 percent. The applicants and non-applicant offenders were added together to yield a count which was multiplied by the dividend amount. The total amount was the criminal fund and sent to the Office of Management and Budget (OMB) for distribution. He added that the amount fluctuated greatly since 2008 and for the current fiscal year was $9.6 million. He informed the committee that the division did not decide how the fund was distributed but merely calculated the amount. Co-Chair Austerman asked how much of the $9.6 million was distributed to DOC. Mr. Houston reported that the department received $10,000,474 in FY14 in criminal receipts. Mr. DeBartolo replied that he attributed the $9.6 million calculation was to FY 15. Ms. Houston replied that the department anticipated $8,445,900 in criminal receipts as requested in the fiscal note. CSSB 104(FIN) was HEARD and HELD in committee for further consideration.