SENATE BILL NO. 4 "An Act extending the cash assistance benefit program for seniors under the senior care program and increasing the benefit amount; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. Co-Chair Stedman communicated that the intent today would be to move this bill from Committee. A new fiscal note, dated April 3, 2007, relative to the Version 25-LS0056\C committee substitute adopted during the bill's first hearing, had been distributed. 9:41:17 AM Senator Olson, the bill's sponsor, informed the Committee he had worked with both the House of Representatives and the Department of Health and Social Services to perfect the language in this bill. SB 4 would extend the Senior Care cash assistance program to 2011. In addition, it would eliminate the under-utilized prescription drug benefit component of the current program. Senator Olson explained that the bill would provide monthly cash assistance payments to eligible individuals as follows: $175 to those whose household income did not exceed 100 percent of the federal poverty guidelines for Alaska; $150 to those whose household income did not exceed 135 percent but was above 100 percent of the federal poverty guidelines for Alaska; or $100 if the household income did not exceed 150 percent of the federal poverty guidelines for Alaska. Senator Olson specified that the bill would not require individuals meeting the household income test to provide information on their asset holdings. Senator Olson noted that provisions in the bill would prohibit an individual from being eligible for both this program and the Longevity Bonus Program were it re-authorized. Senator Olson communicated that the new fiscal note estimated FY 2008 expenses to be $17.4 million. That amount was based on the Department's estimation that 7,800 seniors would qualify for the program. 9:43:11 AM GINNY AUSTERMAN, Staff to Senator Olson, affirmed that the new fiscal note had been distributed. 9:43:36 AM Co-Chair Stedman observed that the fiscal note accompanying this legislation would be the largest one advanced by the Committee to date this session. While assistance to the State's seniors and the needy is important, this legislation in essence "is going counter" to the Legislature's effort to control the growth of the operating budget this year. JANET CLARKE, Assistant Commissioner, Finance and Management Services, Department of Health and Social Services, explained that the $17.4 million fiscal note "is a comprehensive fiscal note for the cost of Senior Care program" in that it includes administrative costs in addition to the benefits paid to recipients. The annual costs associated with the existing Senior Care Program, which has existed for approximately three years, has been approximately 12 million dollars. Ms. Clarke reviewed the Analysis information on page 3 of the fiscal note. It depicted the monetary benefits estimated to be paid at each of the three different income levels. These payments which are estimated to amount to $16.6 million, would account for the "bulk" of the program expenses. The balance would address the cost of administering the program. Additional staff would be required to administer this program since it is more complex than the previous Senior Care program. The previous Senior Care program allotted single cash payments of $120 per month to program recipients as opposed to the three tiered payment approach proposed in this bill. 9:47:28 AM Co-Chair Stedman asked whether, instead of increasing staffing levels, computer programs could be enhanced to address this effort. 9:47:46 AM Ms. Clarke explained that staffing was based on caseload levels. The number of people who would be eligible for this assistance is anticipated to increase. Co-Chair Stedman asked the Department to testify to the accuracy of its calculations. 9:48:29 AM ELLIE FITZJARRALD, Director, Division of Public Assistance, Department of Health and Social Services, stated that approximately 7,000 seniors are currently enrolled in the Senior Care program. "This bill would increase that number to 8,800". Two additional staffers would be required to manage the additional caseloads as each application must be reviewed to determine eligibility and the information on each eligible individual must be entered into the Department's computer system. In addition, the Department's computer system must be upgraded to ensure that payments are made in a timely matter. Ms. Clarke pointed out that one time costs, such as the computer upgrades, have been identified and could be eliminated from the program expenses, once completed. Co-Chair Stedman advised that it is much easier to control expenses when things such as one-time expenses are identified early on in the budget process. Otherwise the tendency is to expand the program to absorb that funding. Co-Chair Stedman also thought that the FY 2012 expenses depicted in the fiscal note were an underestimation in light of the fact that the number of program recipients might increase as the State's population ages. To that point, he asked whether the Department had studied the State's "aging trends" and the affect of that beyond the timeframe specified in this bill. Ms. Clarke affirmed that aging trends were analyzed. The determination was that the State's senior population growth rate would be "fairly flat" for the next eight to ten years and then would experience a significant level of growth. That information was utilized in developing the new fiscal note. Ms. Clarke explained that the new fiscal note depicts a zero expense for FY 2012 as the program is proposed to terminate in 2011. 9:51:18 AM In response to a question from Senator Thomas, Ms. Fitzgarrald expressed that the Department had conducted a survey of program recipients to determine why the prescription drug component had been under-utilized. The determination was that the program "was not what they needed" as other prescription drug programs were available to them through other insurance programs, pension benefits, or the new Medicare Part "D" program. Senator Thomas asked what consideration had been given to those who had utilized the program. Ms. Fitzgarrald specified that approximately 140 seniors were currently utilizing the drug benefit. Senator Olson had addressed this issue in this bill by revising the income test levels and increasing the benefit levels. 9:53:24 AM Senator Elton agreed with Co-Chair Stedman's remarks that once a program is established, it is often difficult to curtail or disband. To that point, he asked the Department to provide an estimate of the program expenses were it continued to the year 2020, particularly as the senior population "bubble" was yet to come. In addition, he asked whether the fiscal note was developed in consideration of future changes in the federal poverty level. Ms. Fitzgarrald affirmed that the fiscal note did reflect the fact that federal poverty guideline levels would increase each year. 9:54:55 AM Co-Chair Stedman asked for further clarification about the staffing levels required to support the program. Ms. Clarke specified that four staffers currently manage the Senior Care program. Two additional staff would be required to support the program proposed in this bill. Co-Chair Stedman understood therefore that the program would be supported by a total of six staffers. Senator Olson moved to report Version "C" from Committee with individual recommendations and new Department of Health and Social Services fiscal note. There being no objection, CSSB 4(FIN) was REPORTED from Committee with the new $17,398,900 fiscal note, dated April 3, 2007 from the Department of Health and Social Services.