SENATE BILL NO. 111 "An Act designating certain Pioneers' Home receipts as program receipts, appropriations of which are not made from the unrestricted general fund; and providing for an effective date." Senator Gary Wilken, sponsor of the bill, testified. He told the committee he had come to learn that designated receipts roped off monies that were put into the general fund and showed intent that the Legislature would spend those monies in certain areas. From a cost-accountant standpoint, he liked the theory that the cost-causer was the cost payer. This legislation, as similar legislation in the past, would add set up designated receipts for Pioneer Homes receipts. If there was one type of receipts that should be designated for state services was the Pioneer Home receipts, he stressed. The people who used the pioneer homes essentially divorced themselves from all other state services other than the pioneer home itself. When a resident paid for those services, he or she had the right to expect that those monies be spent on their care. He gave a history of the pioneer homes. They were in the fourth of a seven-year rapid-ramp program to pay for their own costs. He pointed out to committee members, a schedule showing that the homes would be self-supported for those patients who could afford it. He stressed that this was a steep ramp. He gave an example of his two parents living in the Fairbanks Pioneer Home. The services were not cheap; his parents wrote a check for $6125 per month. Starting in July 1999, the fee will rise to $7480. That will be a 22 percent increase. By the time the program is fully implemented, his family will have to pay $11,515 per month. He stressed that the care his parent's receive was excellent and he did not oppose the high costs. He did have concerns that any part of his parent's payment could be used for other state services such as road repairs. He wanted those funds to only pay for the care of residents in the pioneer homes. He noted the requirements for care in the pioneer homes was changing. The need for an increased number of caregivers was increasing and therefore the pioneer home dollars were precious. He concluded by saying, this was the time to rope off that money and show the Legislature's intent that the cost payers were the cost providers and that those in the pioneers homes deserved 100 percent benefit of their payments. Senator Lyda Green asked for explanation of the Legislature's role with this money as it was done currently and if the bill were adopted into law. Senator Gary Wilken compared this to Item #2 of the bill, listing University of Alaska receipts. Those receipts were from tuition receipts and were designated as University of Alaska monies unless the Legislature intervened. Co-Chair John Torgerson clarified that the money could only be spent in the category in which it was designated to be spent. It was still subject to the power of appropriation by the Legislature, but could not be appropriated for another category. This bill would designate that the pioneer home receipts could only be spent for pioneer home programs. The funds would still have to be appropriated. If the Legislature appropriated a lesser amount than was collected, the balance would remain as a designated receipt for the pioneer homes. Senator Lyda Green went back to an earlier conversation on the FY99 supplemental budget request relating to the additional Certified Nursing Assistants positions that would be funded with the increased fees. It was said that would be awkward because previous funding had been from a different source for other employees. She wanted to know if this was an attempt to solve that problem, or would this leave the Legislature out of the loop on decisions to add new positions. Co-Chair John Torgerson responded that the Legislature would still be in the loop. The total budget for the pioneer homes was $33 million so this amount was just a portion. Senator Sean Parnell explained the dispute on the supplemental budget matter and how this situation was different. The existing CAN positions were funded with general funds and the proposed positions would have been funded with program receipts. This legislation would treat the program receipts as one category. He stated that this was a good policy call because $12 million would be moved from what was considered general fund spending. There were many revenue or enterprise type activities throughout state government such as the University of Alaska that were already treated that way. At this point, he was not ready to support the bill but felt there should be discussion as to how these funds should be treated. Senator Lyda Green was uncomfortable with this bill. Senator Dave Donley suggested the Division of Insurance should be included in the designated receipts category because if was difficult to do their budget. He had that budget in the past. He detailed the problem where the companies actually paid for the services provided, but the receipts were shown as general fund. It didn't make sense to take cuts to that program because that would just reduce the service to the companies who had paid for it. He spoke of the pressure to cut general funds but felt this process was not successful. Senator Randy Phillips stated it in more simplistic terms saying that the constitution prohibited the Legislature from dedicating funds unless otherwise authorized by the constitution. Most of the programs listed in the bill were nothing but a "white picket fence." Senator Lyda Green asked if Senator Dave Donley's distinction for the Division of Insurance was for the program receipts to fully pay for the entire division. She warned that other departments such as Department of Natural Resources and the Division of Motor Vehicles would then be claiming they were entitled to collect all of their revenues and the state would be unable to fund other functions. Co-Chair John Torgerson agreed and stated that was the purpose of this discussion Senator Gary Wilken pointed out that three out of four patients in the pioneer homes paid for their care themselves. From the time they moved into the home, they did not go outside the home to use any other state services. He felt it was easy to distinguish between their needs and their draw on state services. He also stressed to Senator Randy Phillips that the constitution spoke to dedicated funds and the bill was for designated funds as mentioned. Senator Randy Phillips commented that this was a public policy technique. Senator Dave Donley said the Division of Insurance used to participate in the designated receipts but was removed because the programs generated more money then they spent. He felt it was unfair that the programs that made money were penalized while the programs that under-generated were given the designated receipts. He didn't have a solution but wanted to see one that treated the groups that over- generated fairer and give them the same degree of protection as those that under-generated. Co-Chair John Torgerson said the matter had been debated at one time as seen in the changes to the statutes. He noted that group insurance programs were included but that other insurance programs were not. He didn't know of any of the programs designated that were 100 percent funded with program receipts. Senator Al Adams moved for adoption of Amendment #1. Co- Chair John Torgerson objected for discussion. Senator Al Adams spoke to his motion saying it was not a new idea. This amendment would designate housing receipts as well. It would consolidate all housing programs including the pioneer homes care and support. He provided a table that showed the other housing receipts. He noted other programs participating in the designated receipts method as Department of Fish and Game, Department of Transportation and Public Utilities and Department of Public Safety and the amounts that would change funding categories. The state could use the funding for maintenance and upkeep and other operations of all those facilities. Senator Randy Phillips asked if there would be a general discussion on the white picket fences first. If so, he had an amendment to offer. He did not have one prepared, but would draft one. Co-Chair John Torgerson said the bill would not be reported from committee this meeting. If there were other amendments, they could be submitted later. Senator Al Adams did not mind if the amendment was voted down. He did feel the legislation was important and should not be jeopardized. Co-Chair John Torgerson thanked Senator Al Adams. He felt the matter was a policy call and needed to be addressed. He would also have some amendments to offer. Senator Al Adams withdrew his motion to adopt Amendment #1. There was no objection and it was so ordered. Senator Dave Donley thought the amendment had merit. He wanted to broaden the discussion to add other programs. He also wanted to hear how the sponsor felt about broadening the scope of the bill. Senator Gary Wilken had considered other options when drafting the bill, but felt the pioneers home issue was most important. He had concerns with adding other items that could potentially cloud the issue. It was his desire to keep the bill clean. Alison Elgee, Deputy Commissioner, Department of Administration, testified in support of the bill. She added to the history of the pioneer home funding program. When the Pioneer Home Advisory Board made the decision to approach a seven-year ramp up to full cost of care in 1995, they were looking at three primary motivations. At that time there was consideration of legislation that would have privatized the homes. The board also felt that there was considerable inequity in the long-term care market. The people who were not fortunate enough to get into a pioneer home were being asked to bear the full cost of care in whatever facility that they did find while those who did get into a pioneer home were getting a tremendous deal. The third reason, and probably the most important to the board, was the fact that with the changing mission, they recognized that they was going to be a need to increase the dollars available to the pioneer home program to provide additional staffing. At the time the first rate increase went into effect in July 1, the pioneer homes were generating approximately $5 million in program receipts. In the current year, they generated almost $10 million in program receipts. That $5 million increase was used to offset former general fund appropriations. In point of fact, it reflected a $5 million general fund cost that was previously part of the pioneer home budget that was now being supported by the users of the pioneer home system. The fiscal note did not show the proposal before the Legislature to increase the program by $2.367 million. The department estimated that additional money to be the amount generated by the increased fees between FY 99 and FY00. The money would still have to be appropriated by the Legislature. It would be the Legislature's decision whether it came in as an increased allotment for spending or continued to supplant general funds that support the program. The change to pioneer home revenues to designated program receipts would allow the Legislature to recognize those revenues as new revenues that were not taking away from other general fund program opportunities. It would also demonstrate the increased support by the residents of the pioneer homes programs. She added that it was tough emotionally for the board to implement their plan of continuing to raise the rates. Both the Administration and the board believed it was necessary that the pioneer homes move to a full cost of care. However, to address the residents who were concerned about their own financial ability to pay the higher rates and not be able to demonstrate improvements in the pioneer home services as a result of those increases had been difficult. She concluded saying the department supported the bill because they believed it accurately reflected the efforts in the program to increase the revenues available other than basic general fund resources. Lester Westling testified via teleconference from Fairbanks. He wanted to bring to the attention of the committee that the pioneers homes were also assisted living facilities. He was unfamiliar with the bill. He heard the same concerns stressed that there was a need to compensate those who provided assisted living to seniors. Senator Randy Phillips explained the bill to the witness as a potential Christmas Tree. He had another agency he wished to add to the list of designated program receipts. He wanted the witness to understand that. Co-Chair John Torgerson ordered the bill held in committee.