TAPE 96-20, SIDE B Number 001 CO-CHAIR BUNDE announced the next bill on the agenda was HB 451. HB 451 - PROHIBIT DUPLICATE PUBLIC ASSISTANCE DENNIS DeWITT, Legislative Assistant to Representative Eldon Mulder, presented the following sponsor statement: "House Bill 451 requires the use of fingerprints for identification of welfare recipients, just as the federal government requires fingerprinting of its employees. Today, we require teachers, substitute teachers, bank employees and many other workers to be fingerprinted. Fingerprinting has long been established as a valid method of identification. Electronic fingerprinting avoids the mess of ink used in the traditional fingerprinting. It is also much easier and quicker to perform. House Bill 451 also adds two new sections to our laws that makes it a violation to seek or receive duplicate benefits under the General Relief program and the Aid to Families with Dependent Children program. "House Bill 451 would establish a pilot program to use electronic fingerprinting to identify applicants for General Relief Assistance and Aid to Families with Dependent Children. This will allow the state to be certain that no one is able to enroll under multiple names, using fingerprints for absolute identification. As state and federal programs limit duration of benefits, this will enable Alaska to keep accurate track of recipients and to work with other states to determine if applicants have received federal funded benefits outside Alaska. "Electronic fingerprinting is a simple procedure, both for the applicant and the individual taking the fingerprint. The process requires a person put their index finger and thumb on a glass screen. A computer takes a picture creating an accurate and permanent record. There is no messy ink usually associated with fingerprinting. The fingerprint can be saved in a data bank and used to compare with current and future applicants. "Electronic fingerprinting of welfare recipients is not a new idea. The states of California, New York and Pennsylvania are currently using this system. Connecticut, Massachusetts, Arizona and Washington are all in the process of moving toward this system. "While New York and California are certainly larger than our state, the notion of how much they've been able to save is an important issue to consider, and relatively, we think we can save similar kinds of dollars. "New York saved $500,000 in a two county pilot program and has expanded the program statewide. New York City alone will save $35 million with this program. "California began its pilot program in Los Angeles County in 1991 with its general assistance program. It was so successful that in 1994 they expanded it to the AFDC program. The independent consulting firm of Ernst & Young evaluated this program in Los Angeles and recommended it for implementation statewide. "House Bill 451 gives Alaska the opportunity to take the lead in preventing welfare fraud by developing a system that can identify our applicants and compare them to those who have received benefits in other states." MR. DeWITT mentioned that Washington State has legislation currently to investigate a pilot program that uses the driver license as the key for identification. It requires a thumb print on the driver license and then requires the driver license as proof of identification for any state benefit. Number 105 CO-CHAIR BUNDE said he assumed there was a fair amount of fraud, so this type of system would save the state money in avoiding duplicate benefits. He noted however, the fiscal note does not reflect any savings. MR. DeWITT noted he had reviewed the fiscal notes and felt the costs were a little excessive, but he thought it was something that could be addressed in the Finance Committee. In terms of the amount of fraud, he thought the department should be and has been commended by the federal government for its handling of fraud. The process has been changed from a paper process into a computer generated age where changing documents and forging driver licenses for example, which have pictures on them is fairly easy. He cited a personal experience with his 13-year-old daughter who had her identification stolen and approximately a month ago, she got a letter a collection company stating she needed to pay up on the check she had cashed using her driver license as identification and verified by a bank teller, and the check had bounced. He said first off, his 13-year-old daughter doesn't have a driver license and second, he believed that most bank tellers were fairly well trained to look at a picture on a driver license, when accepting it as identification. He concluded that the ability to forge the documents used today for identification is improving substantially, which is one of the reasons Washington is moving toward one identification card using fingerprints for all benefit applications. The idea behind this legislation is to get on the front edge of fraud being seen in a lot of other places, and to begin to build a data base so as the limitation of benefits is being considered at both the state and federal level, Alaska has a data base against which future applications can be compared. CO-CHAIR BUNDE commented he had been at a restaurant one time having lunch, paid with a credit card and got the wrong credit card back. He used that credit card for three weeks with no problem and didn't realize the mistake until he received a billing statement. He encouraged Mr. DeWitt to follow up on the fiscal impact and the savings through increased efficiency. Number 285 REPRESENTATIVE BRICE asked Mr. DeWitt how many people the Department of Health & Social Services thought were double-dipping in this manner. MR. DeWITT replied there was no absolute way of identifying it. He explained the legislation sets up a small pilot project to find out if administratively it could be carried out. One of the problems in terms of specific identification is, for example in Anchorage there is only one enrollment office. They had considered having a project in both Anchorage and Fairbanks to compare the two and gain a lot more information, but the cost reflected on the fiscal note made it difficult to push for both locations. REPRESENTATIVE BRICE asked what the current fraud rate was in the Aid to Families with Dependent Children program. CO-CHAIR BUNDE indicated the Director of Public Assistance was in the audience and would be testifying. REPRESENTATIVE BRICE asked if Mr. DeWitt had looked into other types of identification such as retinal scanning. MR. DeWITT replied they had not, but added that Representative Mulder met with state house members from Pennsylvania who shared with him the success they have had with this concept. Representative Mulder had contacted other states, but this process seemed to be a simple, nonintrusive methodology of developing an accurate data base. A factor in selecting the electronic fingerprinting process was that a number of other large states were moving in this direction. CO-CHAIR TOOHEY surmised the expense of retinal identification would far exceed other identification systems. REPRESENTATIVE BRICE said not necessarily; it does the same thing as a fingerprint. Number 433 REPRESENTATIVE ROBINSON asked who would be doing the fingerprinting and if the idea was for the divisions to have the equipment? MR. DeWITT said the equipment is very simple to operate. It's basically a matter of punching bottoms on a computer screen. REPRESENTATIVE ROBINSON asked if the main thrust for setting this up was to deal with fraud. She asked if the fraud rate of the other states had been compared to Alaska's. MR. DeWITT responded the fraud rates had not been compared, but they did look at the savings other jurisdictions gained, which were substantial compared to the money spent. CO-CHAIR BUNDE asked if he was correct in assuming there were two areas of savings - the prevention of fraud and the prevention of paperwork, since this would be done electronically. MR. DeWITT said it was his belief that would be the case over time. Initially, in the pilot program no savings is expected. However, one of the questions that remains open regarding a limitation of benefits is what the federal penalties will be for not being able to identify an individual who has exceeded the benefit period. This system gives an absolute way to identify the person. He noted there were several bills contemplating a limitation of benefit time in this legislature. The real issue is how to keep track of an individual between this benefit period and a new benefit period three or four years downstream and how to aggregate those. This system has the ability to do that. CO-CHAIR BUNDE questioned the error rate. MR. DeWITT responded that of the individuals he has talked with, none of them have raised that as an issue. He noted that electronic fingerprinting is used in Alaska. The correctional system, state troopers and court system all find it to be very effective; none of them have indicated a problem with error rate. As a matter of fact, the error rate on electronic fingerprinting is substantially less than with the ink fingerprints because it is much more difficult to distort the print by moving the finger on a computer-driven system as opposed to ink and paper. Number 601 LIZ DODD, Board Member, American Civil Liberties Union of Alaska; and National Board Member, American Civil Liberties Union, testified that she had learned about HB 451 just a few days ago and hadn't had a lot of time to involve the national experts who were well versed in this issue. She said that most places where fingerprinting is used have survived court challenges in order to make sure that the legal threshold for the violation of privacy has been met before fingerprinting is allowed. That's why it is not really proliferated throughout society, but in very specific places. Generally, before a person's privacy is violated, there has to be a real concrete need for gathering the information. This bill represents a speculative need. It speculates there might be legislation that limits welfare benefits to a certain period time, whether that be in the state of Alaska or in certain states, so there would be a need to determine when a person got off benefits, when the benefits expired and in what state that happened. At this point, however, that is speculative. To be fingerprinting people, violating their rights to privacy, on the chance that this information will be needed in this state to work with other states to make sure this type of fraud doesn't happen, is a speculative harm weighed against a concrete constitutional right of privacy. Number 726 MS. DODD further explained that if the federal government passes welfare reform that limits the benefit time, she was certain there would be enforcement provisions. Various measures will be discussed by individuals who have a high level of expertise and a good understanding of what electronic fingerprinting means in terms of constitutional rights. Also, no one has been able to say there is a huge problem in Alaska. The potential for fraud is much greater in the states that border each other, thus the need is greater in those states. If someone in the state of Alaska wants to duplicate benefits, they have to fly to Washington State, for example, and they certainly won't reap much of a profit. She felt there was not a lot of fraud within in the state and that's the reason why no one has been able to quantify it. She stated she would like to have additional time to research the issue, to talk with the national experts and get back to the committee with some comprehensive information as to the threshold as to where fingerprinting becomes permissible. Number 840 REPRESENTATIVE VEZEY said he failed to understand why Ms. Dodd thought there was a constitutional issue in that no individual is forced to sign up for a benefit program; it's a voluntary request for service. MS. DODD responded that because people are compelled to request public assistance by virtue of their neediness, there are going to be people trying to get these benefits. If a constitutional right is being waived for just people who interface with the system in one area, then that is discriminatory. In other words, as long as a person is not in need of public assistance, then that person's privacy rights are protected; nobody is going to fingerprint that person. To the question of whether or not public assistance is voluntary, she thought that was the difference in perspective between her organization and Representative Vezey. CO-CHAIR TOOHEY noted that she had recently been fingerprinted while applying for a concealed weapon permit and asked if Ms. Dodd was indicating that Co-Chair Toohey had given up her rights by being fingerprinted? MS. DODD responded that society has determined there is a concrete risk that a violent crime will be committed with a firearm, which is just one risk. Number 953 JIM NORDLUND, Director, Division of Public Assistance, Department of Health & Social Services, testified the department was opposed to the legislation for three reasons: 1) It addresses a problem that doesn't exist; 2) it has a cost to the state without any anticipated savings; and 3) it sets up an information tracking system that is virtually useless. He advised that he would address each of these issues in detail. MR. NORDLUND referenced Ms. Dodd's testimony regarding the differences between California, New York and the state of Alaska. In Alaska, there are small communities and even in Anchorage, the largest community in the state, there is one public assistance office. He commented it would be virtually impossible to apply for benefits one day under one name and the following day apply for benefits under another name. It would be impossible to apply for assistance under two different names. He said for the most part, he didn't see that any duplicate benefits were issued in the state of Alaska. However, that's not to say there isn't welfare fraud in the state - there is welfare fraud and there is a fraud unit that tracks down fraud. This is not the type of fraud the state is faced with, however. MR. NORDLUND said secondly, if the state doesn't pay duplicate benefits in Alaska, there really is no savings to be achieved through this measure. It would simply be a cost as reflected in the fiscal note, to implement something that doesn't do any good. He said Curt Lomas was available to answer any questions regarding the fiscal note. MR. NORDLUND said his last point was that HB 451 sets up a tracking system that is virtually useless. Even if there was a problem with duplicate benefits in the state and the fingerprints were taken, there is no place to send those fingerprints. There is no other state that has a systematic information identification system like this. He noted there are a few states that have projects like this as Mr. DeWitt mentioned, and there is some sporadic application of this program, but for the most part any systematic tracking system is nonexistent. He felt the state would be premature to set up a fingerprinting system in the state when there is no place to send those fingerprints. MR. NORDLUND said because of welfare reform and it appears there is going to be a lifetime limit on benefits, there is a need to track. He pointed out there is a problem in the federal welfare legislation in that there is no system set up for tracking benefits across state lines. From what he has seen, there is nothing anticipated in terms of a federal set up in creating this tracking system that is going to use fingerprints as a method of identification. That's not to say there couldn't be in the future; it's possible, but at this point he said we'd be way out in front with a fingerprinting system that doesn't do the state any good. Even with a pilot program, if there was a problem with duplicate benefits, he asked what good is it just to take fingerprints in Anchorage when those prints can't be compared with someone who might be trying to apply for duplicate benefits in any other city in the state. He commented this is one instance where a pilot program really doesn't make any sense. MR. NORDLUND pointed out the provision in the legislation which says to apply for duplicate benefits is fraudulent is unnecessary because the current statutes already consider applying for duplicate benefits as welfare fraud. He informed the committee of an individual in Anchorage who attempted to do that under an alias, and she is currently serving time in jail. Number 1173 CO-CHAIR BUNDE said he remembered reading about a case in Anchorage where an individual had accumulated quite a bit of money and asked if having the fingerprints would have assisted in tracking the person down when the department became suspicious. He felt there were two kinds of fraud: 1) when the same person applies for duplicate benefits; and 2) a person applies for benefits they are not entitled to. MR. NORDLUND explained the two most common kinds of fraud encountered by the department. The first is when an individual's living circumstance has changed. The income of the entire household is looked at when determining if an individual is eligible, and if the person moved in with someone who is providing for them and it is not reported, that is fraud. The other kind of fraud is failure to report earned income or failure to report an increase in assets, which would make a person ineligible. Number 1257 REPRESENTATIVE ROBINSON clarified that the type of fraud in Alaska is different from the kind of fraud that can be detected with fingerprinting. In other words, all fraud cases won't fit under the fingerprinting process. MR. NORDLUND said that was correct. He added there are two motives behind this legislation; one is the possibility of someone falsifying their identification and secondly, the need to track people to ensure the five year limit, if imposed, had not been exceeded. The second need is a real need. He explained that Alaska needs to have a system in place which will be able to track benefits beyond the 60-month limit that is anticipated will be imposed on recipients. Alaska does not have the mechanism to compare that information with other states, but whatever mechanism is determined, has to be in place in all states and has to be applied uniformly. At this point, there is no indication that fingerprinting is going to be that mechanism. It is known that each state's eligibility information system will be able to track people from one state to the next under their true identity. Mr. Nordlund said the department is working on a proposal to accomplish that. In fact, part of the information systems request was included in the supplemental budget approved by the House of Representatives last week. Number 1355 REPRESENTATIVE VEZEY referred to Mr. Nordlund's intuitive opinion that there is very little fraud of duplicate benefits and asked if there was any audit information available to actually quantify the presence or absence of this kind of fraud. MR. NORDLUND responded yes. He explained that a big part of their program is quality control, which is required under federal regulation. A random sampling of the caseload is taken periodically and reviewed for variations or problems in the eligibility determination process. It is partly through this quality control process that other kinds of fraud are discovered, but duplicate benefits have not been a problem. CO-CHAIR BUNDE announced this was the first hearing on HB 451 and it would be held in the HESS Committee for further discussion.