HB 292-GRANTS TO DISASTER VICTIMS  1:54:31 PM CHAIR GATTO announced that the next order of business would be HOUSE BILL NO. 292, "An Act relating to grants to victims of a disaster in this state; and providing for an effective date." 1:54:48 PM McHUGH PIERRE, Deputy Commissioner, Department of Military & Veterans' Affairs (DMVA), reminded the committee the state suffered monumental disasters last year, two of which were Presidential Disaster Declarations. The largest disaster, the spring flood that spread from Eagle down to the Kuskokwim and Yukon Rivers, focused attention on the state's Individual and Family Grant (IFG) program, portions of which have not been changed since 1977. For example, the Federal Emergency Management Program (FEMA) was granting relief in the amount of approximately $30,000 per family, but families eligible under the state disaster declaration were receiving $5,000. He said, "It was very troubling to witness people who were trying to rebuild ... to see the disparity when someone lost their house in one location of our state and another person ... [was] eligible for different amounts of service." Mr. Pierre expressed his hope that the proposed bill will change this situation. 1:56:25 PM MICHAEL O'HARE, Deputy Director, Division of Homeland Security/Emergency Management (DHS&EM),Department of Military & Veterans Affairs (DMVA), explained that the governor is limited by statute to grant a maximum of $5,000 in individual assistance to those affected in a state-declared disaster emergency. Recent experience shows this amount is just not enough; in fact, in current dollars $5,000 in 1977 values about $18,500. A multi-agency task force, including DMVA, DHS&EM, the Department of Health and Social Services (DHSS), the Department of Public Safety (DPS), AHFC, and the U.S. Department of Agriculture Rural Development, recommended the provisions in the proposed bill such that in a state-declared disaster or emergency, the governor may allow individual assistance grant funding up to one-half of the federal amount. Mr. O'Hare further explained that the federal amount fluctuates based on the consumer price index (CPI). Therefore, the bill amends the $5,000 limit to a more reasonable and current amount based on today's economy. 1:58:48 PM CHAIR GATTO posed a scenario in which an insured homeowner suffers a loss in a declared disaster zone. MR. O'HARE responded that homeowners with insurance, or the means by which to recover from the loss, are not eligible; in fact, DHS&EM has staff to assess damages and the economic status of victims. In further response to Chair Gatto, he said cases can also be reviewed as to the insured's deductable. 2:00:18 PM REPRESENTATIVE TAMMIE WILSON asked why the amount of $14,950 was chosen for the eligibility amount. MR. O'HARE indicated that an increase from $5,000 to half of the FEMA Individual Assistance (IA) allotment "seemed appropriate." He estimated that only 30 percent of those affected by a disaster will qualify for 100 percent of the eligible expenses. MR. PIERRE added that this recommendation came from the task force because a state disaster is less in magnitude than a federal disaster. MR. O'HARE further noted that the amount fluctuates with the CPI. In response to Chair Gatto, he clarified that the maximum an individual or household can qualify for is the federal amount, not both the state and the federal amount. Mr. O'Hare further described the qualification process. 2:03:00 PM CHAIR GATTO asked whether the grant was a reimbursable amount or "a check upfront to help you get started." MR. O'HARE provided the options for payments, verification of expenses, and the methods for checking for non-compliance. 2:03:45 PM REPRESENTATIVE BUCH assumed there is a pool of money. MR. O'HARE said yes, the Disaster Relief Fund is funded through the general fund. In further response to Representative Buch, he relayed the fund consists of approximately $100,000, which is all that is left after the spring disaster cost $10 million. MR. PIERRE added that his department is bound by statute and cannot spend more than $1 million without legislative authorization. However, the legislature has forward-funded the disaster fund in the amount of $5 million per year. If necessary during the interim or session, the department can request the legislative leadership to approve additional or future funds. MR. O'HARE, in response to Chair Gatto, explained that in the interim the leadership of both bodies of the legislature issues the authorization; during session, the department requests a supplemental authorization. 2:05:49 PM REPRESENTATIVE KAWASAKI referred to the fiscal note and pointed out that the fiscal note only includes monies that would be designated to grantees; therefore, there is zero overhead for the agency. MR. O'HARE agreed. Although the fiscal note is speculative, the sponsors have based its numbers on an average over the past five years. In further response to Representative Kawasaki, he said the bill identifies "U.S. code 42, which is that federal element which fluctuates on the CPI." MR. PIERRE further added that the sponsors based the fiscal note on the amount "that we would pay out this year, so we've tried to make it very appropriate to today's response...." 2:07:27 PM REPRESENTATIVE BUCH expressed his concern that at the time this obligation would be instituted, the state will enter into an extended period of potential shortfalls in the budget. In fact, two or three disasters could encumber the state with massive obligations. He warned that to triple the state's obligation seems to be a very expensive adjustment. MR. PIERRE stated that the department shares Representative Buch's concerns; however, the intent of the original language of the fund would be equal to an $18,000 expenditure today. He concluded that the proposed bill does not surpass the original intent of the legislature and encouraged the committee to make recommendations after considering the needs of Alaskans, particularly those in rural areas. 2:10:33 PM CHAIR GATTO suggested the legislation may need "sideboards" to prevent abuse of the benefits. MR. O'HARE encouraged Chair Gatto to meet his staff who perform damage assessments and audits in affected communities. He assured the committee his staff is diligent in assessing and verifying losses of items for which there may not be documented evidence, through interviews with elders and other individuals. 2:13:04 PM MR. PIERRE reminded the committee the maximum grant is $14,950. 2:13:40 PM MR. O'HARE said that he shared the concern about the opportunity for fraud, but encouraged the committee to focus on the intent of the bill that is to help those who have been affected by disaster in a manner that is appropriate in the current economy. The state is not an insurance company, and this funding "will only get them up on one knee, or maybe two feet." 2:14:49 PM REPRESENTATIVE RAMRAS observed that fraud is a crime, and although people will abuse the system, most people are honest and most times the reimbursement or insurance payment does not leave a person whole. He expressed his belief that the overwhelming majority of people who would be eligible for this assistance are honest. Representative Ramras said, "We should not allow the bad behavior of ... the few to affect good legislation for the many." 2:16:17 PM MR. O'HARE assured the committee that his staff has prosecuted fraudulent claims. 2:16:46 PM REPRESENTATIVE BUCH said, "Doubling the numbers of disasters and tripling the response to that, we would go from 10 to 60 million dollars of obligation. That's my concern." 2:17:47 PM REPRESENTATIVE TAMMIE WILSON pointed out that the legislation states, "may appropriate up to $15,000." Therefore, this amount could be changed by the governor; in addition, the legislature must re-appropriate money into the fund. She asked whether her understanding of the legislation was correct. MR. O'HARE replied yes. 2:18:33 PM REPRESENTATIVE KAWASAKI has heard that is difficult to apply for the $5,000 due to the lack of receipts. He surmised that raising the cap on eligibility might cause more people to apply. MR. PIERRE opined that more people will not apply. The department already conducts an aggressive advertising campaign in affected disaster areas during which staff are sent in to help with the application process. Moreover, the fiscal note purposefully reflects "a very liberal number there, because I wanted to show ... the maximum impact, in case there were questions." 2:20:14 PM REPRESENTATIVE KAWASAKI asked for confirmation that the funding would be just for the grant, and not for more man hours. MR. PIERRE indicated that DMVA is a very small department that makes up 0.3 percent of the overall budget. There are 70 employees in Mr. O'Hare's staff at DHS&EM, and there are 300 state employees at DMVA, with 4,000 National Guard members. He stressed that DMVA employees are dedicated to helping folks during times of disaster. MR. O'HARE explained that his staff sets up disaster assistance centers in affected communities to interview local individuals and verify damages. MR. PIERRE, in response to Representative Kawasaki's earlier question about the budget, further explained that although employees are sometimes pulled from other areas to maintain consistency in handling cases, the amount of money and number of staff remains the same. Furthermore, his department is looking for more efficiency and has reduced its budget by 0.5 percent this year. 2:23:16 PM CHAIR GATTO questioned whether renters who purchased flood insurance at different times would benefit. MR. O'HARE answered that because both renters would benefit from flood insurance, they would not qualify for this program, except perhaps for the amount of the deductible. CHAIR GATTO referred to the last page of document entitled "State Individual and Family Grant Program (IFG)" and read: If the grantee is a renter, flood insurance required under this section must be maintained on the contents of the rental unit for as long as the grantee resides at the flood-damaged property address. MR. O'HARE clarified that owners or renters need to have had insurance coverage prior to the disaster. 2:25:38 PM REPRESENTATIVE RAMRAS asked what happens to a typical off-duty enlisted soldier who volunteers for duty during an emergency. MR. PIERRE informed the committee that in an emergency, the local community government sends a disaster declaration to the state. If the governor agrees to declare a state disaster, the state emergency coordination center at DHS&EM will task from the local community "response-to-needs." The community's request is sent to the joint force commander who asks for volunteers. These volunteers are paid a state active duty rate, according to their rank, from the Disaster Relief Fund; in fact, their pay from the state is in lieu of their regular week-end drill or annual training time paid by the federal government. 2:29:21 PM REPRESENTATIVE KAWASAKI asked whether the disaster relief funds can go to purposes other than directly to individuals. MR. O'HARE said yes. The funds also encompass response costs such as safety of life and protection of property. However, the portion of the bill being discussed addresses the recovery aspect of a disaster; state monies to assist affected individuals recover from a disaster. MR. PIERRE added that disaster relief funds are also used in a 25 percent matching fund program with FEMA. In response to Chair Gatto, he clarified that an arrangement with the Department of Defense National Guard Bureau allows for expenses on the federal side in response to a disaster. These expenses are paid through federal training funds; in fact, to pay for expenses incurred during a disaster, the department uses federal funding through the U.S. Property and Fiscal Office, which is a federal [contractor] working for the National Guard Bureau in Washington, D.C. The federal training monies can be applied to gasoline, trucks, repairs, and other expenses. 2:31:46 PM CHAIR GATTO set aside HB 292. [Although not formally announced, HB 292 was held.]