HB 366-DISCLOSURE : APPROPRIATIONS FROM PFD FUND 9:25:15 AM CHAIR LYNN announced that the last order of business was HOUSE BILL NO. 366, "An Act relating to an exemption from public disclosure of certain appropriations from the dividend fund; and providing for an effective date." 9:25:35 AM REPRESENTATIVE HARRY CRAWFORD, Alaska State Legislature, presented HB 366 as prime sponsor. He said a law that was passed which took the permanent fund dividend away from those who are incarcerated had the unintended consequence of taking child support away from the children of those incarcerated. The proposed legislation, he explained, would allow those children to receive that money. 9:27:46 AM REPRESENTATIVE JOHNSON asked if there is any provision in the bill that would allow the Department of Revenue to fill out the application on behalf of the child if the child's incarcerated, non-custodial parent refused or chose not to fill it out. REPRESENTATIVE CRAWFORD responded that those incarcerated are not able to apply, which is why the bill sets up the ability for the department to provide a grant to the children. REPRESENTATIVE JOHNSON stated his understanding that the Department of Corrections would actually have to fill out a form to get the money, essentially applying on behalf of the inmate. He said he supports the concept but wants to ensure the mechanism is there to ensure there is communication through the department. REPRESENTATIVE CRAWFORD reiterated that the bill does not deal with people who are eligible, but rather those who are ineligible due to felony or multiple misdemeanors. REPRESENTATIVE JOHNSON clarified that he is concerned about the steps the Department of Revenue would take in providing the grant. 9:30:57 AM DEBBIE RICHTER, Director, Central Office, Permanent Fund Dividend Division, Department of Revenue, in response to Representative Johnson's concern, explained the process. She said if an incarcerated individual applies for a PFD, he/she is denied. She said the Department of Revenue pays the Department of Corrections based on a calculation, which she specified is not based upon an actual head count. REPRESENTATIVE JOHNSON stated his assumption that if HB 366 passed, the department would apply a similar calculation to get the money to the appropriate people, and there would not be any real interaction. MS. RICHTER answered that is correct. REPRESENTATIVE JOHNSON asked how the process would actually work. MS. RICHTER said she is not sure, but was assured by Jerry Burnett of the Department of Revenue that the process would be dealt with between [the Child Support Services Division] and the Department of Corrections. REPRESENTATIVE JOHNSON said that works for him. 9:33:08 AM REPRESENTATIVE ROSES stated his support for the concept of bill, although he indicated that the bill "does nothing for those children whose parents are incarcerated that aren't receiving child support." He surmised that those children need the money just as badly as those under the child support provision. He questioned whether - should the bill pass - it would be the responsibility of the Alaska Permanent Fund Board to determine who the money gets funneled to, or if the money would go as a lump sum to be distributed by another entity. 9:34:31 AM MS. RICHTER, in response to a question from Representative Johansen, stated that anyone can apply for a PFD, but incarcerated individuals will be denied. In response to a follow-up question, she explained that an application enters the PFD database and the denial is based on information provided by the Department of Corrections. 9:35:56 AM REPRESENTATIVE DOLL asked why an incarcerated person would apply if he/she knows the application will be denied. MS. RICHTER replied that she wishes she knew the answer to that. In response to a question from Representative Doll, she explained that the formula used to figure out how much DOC gets "is not based on the actual eligible people who are incarcerated; it is based on the number of people incarcerated." 9:36:56 AM JERRY BURNETT, Legislative Liaison, Director, Administrative Services Division, Department of Revenue, confirmed Ms. Richter is correct: the calculation is based on the number of people incarcerated in the prior year, not whether or not they are eligible. The distribution between DOC and the Council on Sexual Assault is done in the budget process and has nothing to do with the number of people incarcerated, he added. MR. BURNETT, in response to Representative Doll, stated: I would guess that we'll have a few more people incarcerated this year .... The formula said 10,188 people ... for the '07 dividend. It will probably be more than that - I'm guessing more people are incarcerated. The dividend this year will be some amount which, based on current projections, will be more than the '07 [dividend]. So, I'm thinking we're dealing with an amount of money here that's totaling somewhere near $20 million. ... If these people were eligible and we were garnishing them for child support, we could be potentially garnishing up to $10 million from those individuals, had they been eligible for dividends and were able to apply. ... There's ... just over 10,000 people who are ... not eligible, but we don't know if they would have been eligible if they weren't incarcerated. MR. BURNETT noted that "this" will be effective next year, "since all the money is appropriated in the FY 09 budget already." REPRESENTATIVE DOLL offered her understanding that there are 5,500 people in the prison systems, so when she hears Mr. Burnett say there are 10,000 people, she wonders "where these people are." MR. BURNETT said he could not say exactly where the people are. He noted that he used to serve the administrative director of the Department of Corrections, and therefore can say that there are a number of people who are incarcerated for short periods of time during any year or were incarcerated in previous years. The average sentence length is not multiple years; therefore, numbers can be easily run up to as many as 40,000 people who may be in and out of prisons in a year. He concluded, "So, ... a count at any time is not representative of the number of people who are in and out of the prison system." 9:40:44 AM REPRESENTATIVE COGHILL asked if the grants to minor children of incarcerated individuals would equal the amount of the PFD in any given year. MR. BURNETT said the proposed legislation does not make that clear. REPRESENTATIVE COGHILL stated the need to clarify that issue. He asked how a minor child of an incarcerated individual is found. MR. BURNETT said the Department of Revenue's Child Support Services Division has a case on almost every child who has been subject to child support in Alaska, and the division has identified approximately "5,000 of the 10,000 here." REPRESENTATIVE COGHILL asked if the expectation is that the grant would be automatic or that there would be an application process involved. MR. BURNETT replied that the department has not really spent much time related to how this would really work, but since a case is set up for each child, the amount of money going to the children is known, as is the amount of debt from the parents. He made a point of noting, "This does not off-set the debt of the incarcerated parent in any way." He said he thinks the process would be a fairly simple one. REPRESENTATIVE COGHILL asked the bill sponsor if his intent is that the grant would be equivalent to a dividend or if it would be in place of a designated child support amount. 9:42:55 AM REPRESENTATIVE CRAWFORD answered it would replace the amount of the dividend. CHAIR LYNN commented that a lot of children should be getting child support but do not. MR. BURNETT responded that if an application was made, those children would be eligible for child support, and a case could be established. He clarified, "Anyone who's incarcerated, there's an automatic minimum child support due from them on a monthly basis of $50 for a child." REPRESENTATIVE COGHILL, in response to a question from Chair Lynn, explained that he is satisfied to have on the record that the intent of the sponsor is to make the grant be the amount of the dividend for that year. 9:44:33 AM MR. BURNETT told Representative Coghill: What we would do if this bill were to pass is we would develop a program - regulations with that amount - and then, during the budget process, for the FY 10 budget, we would go to OMB and propose that the money be split, so that that much money goes to the child support grant program [and] that the rest goes to Corrections and [the] Council on Domestic Violence and Sexual Assault. 9:45:11 AM REPRESENTATIVE ROSES asked if a child could apply on behalf of an adult. MR. BURNETT answered no, since the parent incarcerated would not be eligible for a dividend. REPRESENTATIVE ROSES explained that he asked the question because although it easy to define who is receiving child support, it is not easy to find those that are not receiving child support. Representative Roses asked if a person can apply on behalf of a disabled parent who cannot apply for him/herself. MR. BURNETT responded yes. He emphasized the difference in this case is that [incarcerated parents] are not eligible for dividends. REPRESENTATIVE ROSES asked, "But this would ... allow the child to be eligible for what would have been theirs had they been eligible, correct?" MR. BURNETT replied: This method ... goes around the statute in a sense, and allows that child to ... receive that money, which, if their parent were not incarcerated and were eligible, we would be garnishing. We garnish 100 percent of dividends for people who have child support arrearages. There is no limitation on our garnishments. 9:47:20 AM REPRESENTATIVE COGHILL stated his understanding that for an incarcerated parent, "this could be in lieu of child support," but a custodial parent could still apply on behalf of a child for the child's dividend, in which case he/she would get the dividend. MR. BURNETT responded that the child would still get his/her dividend, but in the event that a child does not get a dividend by the time he/she turns 18, because no one has applied on his/her behalf, the child has two years after the 18th birthday to apply for all past dividends. REPRESENTATIVE COGHILL said, "I just want it to be very clear that this is not replacing a dividend, but [is] in lieu of child support - equivalent to a dividend." MR. BURNETT replied that that is essentially correct. He added: Although, it does not relieve the non-custodial parent who is incarcerated of any of their responsibilities. CHAIR LYNN closed public testimony. 9:49:08 AM REPRESENTATIVE COGHILL moved to report HB 366 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 366 was reported out of the House State Affairs Standing Committee.