SENATE BILL NO. 150 "An Act repealing the limits on grants awarded from the Alaska children's trust fund." This was the first hearing for this bill in the Senate Finance Committee. JASON HOOLEY, Staff to Senator Fred Dyson, Chair of the Senate Health, Education and Social Services (HESS) Committee, stated that the HESS Committee sponsors this bill by request of the Alaska Children's Trust Board of Trustees. The Trust was established in the late 1980s as a means through which to fund programs designed to "combat child abuse". The Board of Trustees is "seeking additional flexibility" in the administration of the program in regards to the awarding of Trust grants. To that point, Section 1 of this bill would require grant applicants to include a self- sustainability plan in their proposal. Section 2 of the bill would eliminate the current annual $50,000 grant limitation; would re- define the current grant funding formula; and would specify that the grant award be limited to four-years in an effort to guarantee that the grant would be recognized as seed money for the program. Section 3 would reinforce the conditions specified in Sections 1 and 2 by allowing the Board to reduce or eliminate an awarded grant based on the performance of the grantee. Co-Chair Green, noting that this grant process was revised within the last four or five years, asked the reason for the need to re- address the process. Mr. Hooley deferred to Margo McCabe of the Alaska Children's Trust. MARGO MCCABE, Chair, Board of Trustees, Alaska Children's Trust, testified via teleconference from Anchorage and commented that, while the assets of the Trust Fund currently exceed ten million dollars, the Trust could only expend its annual net income of the Trust Fund to fund the entirety of child abuse programs statewide. In the last few years, the amount of available funds was a limiting factor as the income was only sufficient enough to fund recurring grants. Therefore, "the intent of this legislation is to limit" funding for those grants so that money would be available to fund "new innovative" programs. Co-Chair Green asked which current formula language must be changed in order to accomplish this goal; specifically why the proposed formula is to establish a sliding scale award of 75-percent of the program's first year's expenses the initial year, 50-percent of the program's first-year expenses the second year, and 25-percent of the program's first-year expenses the third and fourth years. Ms. McCabe stated that the proposed formula changes would establish parameters that would allow the grantees to become self-sufficient at the termination of the four-year period. This would also allow Trust funds to become available to fund other programs. Co-Chair Green asked how many $50,000 grants have been awarded. Ms. McCabe responded that, due to budget constraints, the most recent Request for Proposals (RFP) grant awards were limited to $30,000. Approximately half of the applicants applying requested the maximum $30,000 amount, and four such grants were awarded. The Trust would be issuing its next RFP shortly. Co-Chair Green noted that current State Statutes limit the award to $50,000. She was curious to the number of grants that have been awarded at that level. Ms. McCabe did not have that data available as the $50,000 grant level was last awarded prior to her being on the Board. Recent annual award levels have been limited to $30,000. Co-Chair Green asked the Commissioner of the Department of Health and Social Services to explain, for the record, the specific formula change included in the Senate HES version of the bill. JOEL GILBERTSON, Commissioner, Department of Health and Social Services, pointed out that the most substantial formula change in that version of the bill is the four-year grant award limitation specified in Section 2. Current State Statute does not specify any limitation on the length of a grant award. While current language does include a sliding scale award level, once the lowest award percentage is reached, it could be awarded indefinitely. One program recipient is receiving its eighth year of funding. "No grants are transitioning off", therefore no new grants are being awarded, as there is a finite amount of money available. No new programs have received grants in the last two years. The net income for the program is projected to continue at the current level and, unless programs are cycled out, funds to support new programs would be unavailable. Therefore, the four-year provision would provide the Trust the ability to transition from "continuation funding" to being able to fund new programs. 9:30:19 AM Co-Chair Green stated that she had participated in the development of the previously adopted language. While the sliding scale language in the bill was intended to halt continual funding, the changes being proposed in this legislation would "correct and clarify" that a program would receive a sliding scale percentage of funding that would terminate at the end of the fourth year. This would provide the opportunity for new programs to be funded. The intent of the Trust funds is to provide "a boost but not a lifeline support system". Commissioner Gilbertson affirmed that that the intent of the original Trust language was "to have the grants move toward sustainability plans and to transition off after a four year cycle". However, the four-year cycle language was omitted from State Statute. 9:31:09 AM Co-Chair Green asked whether this legislation would affect the maximum award amount. Commissioner Gilbertson stated that this legislation would eliminate the maximum limitation amount on the grants awarded by the Trust. The annual net income available would serve as "a natural cap". Co-Chair Green concurred, but stated that the Trust should not award the entirety of its funds to a single program. Commissioner Gilbertson stated that other factors would prevent one entity from receiving the entire amount of available funds. One deterrent to that would be the fact that existing grants must be honored until they transition out of their four-year cycle. Co-Chair Green asked whether the number of program applicants might diminish once the current recipients conclude their four-year cycle. Commissioner Gilbertson responded that one of the circumstances constantly encountered in grant programs is "that areas most in the need of the programs and programs that are most in need of coming into their communities are often those that are the least prepared to submit a good grant application". Typically the areas that submit good applications "are areas that are resourced enough". The challenge, therefore, is how to make those communities that do not have grant writers or the resources with which to compete with larger organizations more competitive. The proposed structure would require the formation of a sustainability plan, performance measures, and would include the Trust's involvement in the process. This, combined with the phased four-year maximum grant award limitation, would allow a natural transition process that would provide the opportunity for programs that are on "the peripheral now" to get into the system and receive some start-up funding. The existing programs are good; however, as was the original intent of the Trust grant program, they need to become self-sustaining and allow other programs to benefit from the grant program. Co-Chair Green asked whether the language authorizing the Board to reduce or discontinue an awarded grant, as included in Section 3, is a revision of current language. Commissioner Gilbertson clarified that Section 3 is new language. 9:33:54 AM Commissioner Gilbertson stated that Section 3 would allow the Trust to discontinue or reduce funds were a program to not meet performance standards. When he initially participated in the Trust, the quality of the data being collected on the grants disappointed him. The Board is addressing performance standards in a serious manner as reflected in the forthcoming RFP specifications. "Outcome data" would become more of the focus in the future. Co-Chair Green supported this direction, as it would provide the Board the oversight authority required to ensure that the programs being conducted support the mission of the Alaska Children's Trust. Commissioner Gilbertson affirmed that the Board and the Trust are "in agreement" that "a better tool and a better reason for why we approve a grant or why we discontinue it" is required. The outcome data, similar to the State's Missions and Measures policy, would allow the program's performance to be measured to insure that Trust funds are used in the most efficient and effective manner. The bill's language would also allow for program expansion for, as recipients cycle out, funding would become available to fund new grants. Ms. McCabe voiced appreciation for the discussion. It covered the important aspects of what the bill would do. Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal note. There being no objection, CS SB 150(HES) was REPORTED from Committee with previous zero Fiscal Note #1, dated April 5, 2005 from the Department of Health and Social Services. AT EASE 9:36:24 AM / 9:37 AM