SB 19-CIVIL LEGAL SERVICES FUND  10:02:47 AM MR. JOE MISCHEL, aide to Senator Seekins, sponsor of SB 19, explained that this legislation adds to AS 37.05.146, which pertains to the definition of program receipts and non-general fund program receipts. SB 19 is designed to provide a financial mechanism whereby the legislature can appropriate funds to organizations that provide civil legal services to low-income Alaskans. It creates a civil legal services account funded by AS 09.17.020(j). It requires that 50% of all punitive damage awards be deposited into the general fund. SENATOR GUESS asked for the origin of the definition of "low income" and whether that definition will constrain organizations that use 125% of the poverty level. CHAIR SEEKINS said the civil legal services people suggested that definition. He noted that Mr. Harrington was on line. SENATOR FRENCH asked if a windfall is expected. CHAIR SEEKINS said it could range from zero to a large number. He noted that last year the amount would have been $100,000. 10:06:47 AM SENATOR THERRIAULT asked the source of any windfall. 10:07:07 AM MR. ART PETERSON, Alaska Legal Services Corporation, told members he is serving his final term on the legal services board after serving for 31 years. He explained that SB 19 fits a funding source into a legislative funding pattern established in the mid-80s. The source of funds would come from punitive damages; that amount fluctuates wildly. Last year the amount was $100,000. The Legal Services Corporation has existed for 40 years. He applauded the staff that work for minimum salaries and carry a huge workload and reminded members that legal services attorneys don't just litigate, they also advise. When an indigent person comes into a legal services office, an attorney will often write a letter to solve the problem, thereby avoiding litigation. When litigation occurs, having legal representation streamlines the judicial process - having an attorney who knows the procedures can help people through the legal system more quickly. SB 19 will provide that assistance to low income Alaskans. The definition of "low income" in SB 19 is the same one used by Alaska Legal Services and other low-income programs; the Alaska level is set at 125 percent of the poverty level. He referred to a graph that showed the amount of funding provided to the Alaska Legal Services Corporation over the years. That amount is now at zero. He maintained that is a blow to one of the most efficient programs in the state. 10:12:50 AM SENATOR THERRIAULT asked if money from that source now accrues to the general fund. MR. PETERSON said it does. CHAIR SEEKINS asked Mr. Harrington to testify. 10:13:15 AM MR. ANDY HARRINGTON, Executive Director of the Alaska Legal Services Corporation, described the corporation as a 501(C)(3) firm that provides legal assistance to low-income individuals at no charge. It differs from the public defender agency in that it only provides services in cases where the law does not recognize a right to an appointed attorney but where the consequences at stake in the case are significant to the family, i.e. laws of shelter or domestic violence. It recruits volunteers through its pro bono attorney support program, which handles between 100 and 200 cases at any one time. It also offers legal information to the general public through clinics and the Alaska Law Health website. Its mission is to provide meaningful access to justice. It has 8 offices around the state. MR. HARRINGTON said the idea behind SB 19 stems from an Alaska Supreme Court task force report, which determined that people who are unrepresented take more of a judge's time. SB 19 designates a legal fund reserve flowing from Alaska's civil cases - that is 50 percent of punitive damage awards that go to the state rather than the plaintiff under current law. He talked about an eviction case in which the defendant found that Alaska law gave her more protection than she realized. She had entered into a "too good to be true" financing arrangement with an outside firm and lost the house in a foreclosure. The attorneys from the other side made a settlement offer, the eviction was set aside and she regained ownership of her house. 10:17:10 AM MR. HARRINGTON said that SB 19 presents a creative approach. He then suggested two technical changes: the Legal Services Corporation sets the eligibility guidelines. Those are set at 125% of the federal poverty guidelines used in the contiguous 48 states. He said one of two changes would be preferable: either on line 13, after the word "or less than," insert "125% of", or on lines 13-14 use "or less than the maximum income level for Alaska set by the federal legal services corporation." He apologized for not raising that issue earlier. His second suggestion was to include an effective date. He noted that legislative support of the legal services staff would be greatly appreciated. 10:20:04 AM SENATOR THERRIAULT referred to the packet of information about funding and asked if the legal services corporation oversees the state bar pro bono program. MR. HARRINGTON said it doesn't oversee it but cooperates with it. The Alaska Bar Association doesn't place cases but makes attorneys available. 10:21:28 AM SENATOR THERRIAULT referred to the funding graph and noted the amount in the current fiscal year went down to zero with the governor's veto action but in a separate document the 2003 state dollars amounted to $327,000, which doesn't match the $175,000 FY 03 amount on the graph. The note on the bottom talks about grants, donated services, gain of dispositional property, etc. He asked about the disparity between the graph and state dollars. 10:22:39 AM MR. HARRINGTON explained that the figures on the chart are taken from direct legislative appropriations, which came to Alaska Legal Services through the Departments of Community and Economic Development (DCED) and the Department of Health and Social Services (DHSS). The figures on the table came from the Alaska Legal Services audited financial statements. Those figures include grants from organizations such as the AkMHTA through the Alaska Children's Trust, through the Municipality of Anchorage and through the Fairbanks North Star Borough. The auditors classified all of that money as state funds despite the fact that part of it came from boroughs and from competing with other organizations. The chart reflects direct legislative appropriations through DCED and formerly through DHSS. He said the figures in the table include money from other sources. 10:24:30 AM SENATOR THERRIAULT asked if, with the passage of SB 19, he is proposing that all of that money be funneled through the new sub-account in the general fund. He questioned whether the punitive damage awards would be tagged as a funding source for operations. MR. HARRINGTON said that is correct. SENATOR THERRIAULT asked if there would be a one-year lag so that this year the legislature would appropriate the funds that come in from punitive damages and make those funds specific available next year or whether the legislature would estimate the amount. MR. HARRINGTON thought that an estimate would be necessary for the first year. His vision of how it would work in the long run is that the money would accumulate and the legislature would appropriate based on the preceding fiscal year. 10:25:57 AM SENATOR THERRIAULT said he asked because if the committee takes action, it would need to convey to the finance committee that this year's budget would need verbiage saying that all funds that fit this description need to be appropriated into this sub- account, and that next year the legislature would have a certain amount from which it could appropriate. 10:27:02 AM MR. BILL OBERLE, President of the Alaska Academy Trial Lawyers, said he appreciates the work done by the Alaska Legal Services Corporation. He believes that SB 19 provides an excellent opportunity to fund an organization that is doing valuable work in Alaska. The Academy supports SB 19. 10:28:33 AM CHAIR SEEKINS asked members if they preferred using a percentage for the definition of "low income" or to use the guidelines set by the federal legal services corporation. SENATOR GUESS asked for Mr. Harrington's input. She said she likes the second approach so that any changes do not need to be made by statute. MR. HARRINGTON agreed and said a generic reference to the maximum income level for Alaska is set by the federal legal services corporation and will avoid the need for future changes. SENATOR FRENCH asked if the national body looks to each states cost of living and sets a number for that state. MR. HARRINGTON said that is correct although the figure is currently set at 125% of the federal poverty level. The only two states it looks at that have a different number set for them are Alaska and Hawaii. 10:30:30 AM CHAIR SEEKINS said he would have staff work with Mr. Peterson and Mr. Harrington to clarify the definition of low income and the appropriation language and bring it before the committee for further consideration. He hoped to complete the work on SB 56 and continue work on SB 19 at the next meeting.