HB 260-DAY CARE ASSISTANCE & CHILD CARE GRANTS  3:58:39 PM CHAIR SEATON announced that the next order of business would be HOUSE BILL NO. 260, "An Act relating to the recovery of overpayments of day care assistance and child care grants; and providing for an effective date." 3:59:23 PM SEAN O'BRIEN, Director, Director's Office, Division of Public Assistance, Department of Health and Social Services (DHSS), explained that the division provided child care funding to qualified individuals with low to moderate incomes who needed assistance in order to return to work. He reported that the proposed bill would allow for the collection of overpayments and misspent funds through the garnishment of permanent fund dividends (PFDs) when it could not be collected through voluntary repayment, as was the current strategy. Reflecting on FY15, he reported that the division had about 30 open claims, with about half actively repaying. He stated that most of the department's claims occurred when there was either a lack of accurate information or neglect for the reporting of a change to circumstances. The proposed bill included four important aspects, which the department considered justification for its passage. The bill supported federal compliance with the child care development program to recover improper or fraudulent payments, and addressed a gap in the division's current authority to recoup those payments. He shared that the inability to recoup these payments through voluntary means, resulted in the cost being covered through state general funds. The proposed bill would provide a consistency of collection practices with other Division of Public Assistance programs, thereby streamlining the process. He clarified that the effective date would be July 1, 2016, in order to allow leverage of the 2016 PFD. He shared that the division had a policy allowing for a one year look back period, which was consistent with practices for recouping payment in other public assistance programs. He clarified that child care assistance was paid to providers on a parent's behalf, so that the collections would come from the parents. He noted that, for child care grants paid to licensed providers for specific purposes, the division would go directly to the provider to recoup the funds. 4:03:33 PM CHAIR SEATON asked if the proposed bill enabled collection of overpayment of grants for daycare and child care assistance similar to collection from adult public assistance and medical assistance. MR. O'BRIEN expressed agreement, stating that the proposed bill would make consistent and align the recovery collection systems. CHAIR SEATON asked if the proposed bill would necessitate a new set of regulations for implementation. MR. O'BRIEN explained that the Child Care Program Office currently had a notice of proposed rulemaking, and within that language two major features were indicated: identify fraud or other program violations and investigate the recovery of fraudulent payments with accompanying sanctions on clients and providers. He offered his belief that the ability to collect the payments was in place, but the methodology for enforcement and collection was in volunteer status. CHAIR SEATON asked for clarification whether regulations would need to be written. He opined that regulations would need to be written for Section 2 of the proposed bill. 4:06:39 PM STACIE KRALY, Chief Assistant Attorney General, Statewide Section Supervisor, Human Services Section, Civil Division (Juneau), Department of Law, offered her belief that it was not necessary to draft regulations to implement the proposed bill, as the ability for recovery already existed, and the proposed bill offered an additional tool with the statutory provision for the garnishment of PFDs. In response to Chair Seaton, she explained that Section 2, the retroactive provision, contemplated the ability to garnish the 2016 PFD for debts or overpayments that had accrued prior to the effective date of the proposed bill. She pointed out that the department policy was to look back one year for collection of debts. 4:09:10 PM REPRESENTATIVE VAZQUEZ expressed her support for the closure of this loophole, and she asked about inclusion in the proposed bill for collection of overpayments to the heating assistance program. MR. O'BRIEN replied that he did not know the background for whether this program had been considered for inclusion to the proposed bill. MS. KRALY acknowledged that this program should be considered by the committee for addition to the proposed bill. CHAIR SEATON asked for more information so this could be considered in an amendment. REPRESENTATIVE VAZQUEZ expressed the desire for the Department of Health and Social Services to have any necessary tools to recover any overpayments, "especially in the light of our fiscal gaps." 4:11:08 PM REPRESENTATIVE TARR, referencing the fiscal note, asked for clarification of the breakdown between the grants and the individual recipients for day care assistance. She noted that she had been pondering ways for program improvement, and shared that one challenge posed by many providers was that the assistance was done in time blocks, which made it difficult for "drop-in" services and often resulted in payment for time that was not necessary. She asked if flexibility for shorter time blocks could be considered. 4:13:17 PM JANICE BRADEN, Child Care Program Office, Division of Public Assistance, Department of Health and Social Services, in response to Representative Tarr, said that she did not have that information readily available. She relayed that, as the recent re-authorization of the federal child care development and block grants had made many changes, states also needed to make changes within the regulations. She reported that her office was in the process of reviewing the necessary changes to meet these new requirements for the child care assistance program. CHAIR SEATON asked that any federal changes be brought forward to be included in the proposed bill. REPRESENTATIVE TARR asked if the aforementioned breakdown could be sent to the committee. MS. BRADEN acknowledged that she would send them. 4:16:58 PM REPRESENTATIVE WOOL asked if the funding went directly to the child care provider or to the parent, and how often was this audited to reconcile any overpayments. MS. BRADEN explained that with the Child Care Assistance program the family would apply and provide documentation for household, income, and activity, such as work or school, in support of eligibility. She explained that recipients were asked to report any changes and eligibility was then reviewed and re-determined at six months. She shared that the most common unreported change was for a second parent back in the home, which affects the family size and income to determine benefit levels. In the childcare assistance program, the benefits were paid directly to the child care provider on the family's behalf, so any recoup of overpayment came from the parent. CHAIR SEATON asked for clarification that, if there was a single parent upon determination of eligibility, but then the parents reunited prior to the six month review resulting in a second income to the household, this was an example of "things not getting reported." MS. BRADEN expressed her agreement that this was one of the most common examples. REPRESENTATIVE WOOL asked for clarification that, when the payments went to the child care provider, if there were a change in situation, then the parent was responsible for any overpayment. He asked if they would have to approach the child care provider for reimbursement. He opined that the discrepancy was not for the amount of child care provided, but for the amount of [financial] assistance that was provided. REPRESENTATIVE TARR asked for clarification that although the overpayment went directly to the provider, the individual parent was responsible for repayment. She asked if the provider was entitled to keep the funding, as they had provided the service. MS. BRADEN explained that the provider would not be penalized by recouping money as they had provided the services, and they had a cost for those services. What the state had paid on behalf of the family was too much, as the family should have paid more of the portion to the provider. REPRESENTATIVE WOOL asked if the child's PFD could be garnished. MS. KRALY explained that, as the agreement was with the parent, not with the child, it would be garnishment of the parent's PFD. CHAIR SEATON said that HB 260 would be held over.