HB 162-ABSENCES UNDER LONGEVITY BONUS PROGRAM    CHAIRMAN THERRIAULT announced it was his intent to discuss the bill, but not to move the bill from committee that day. REPRESENTATIVE GRETCHEN GUESS introduced HB 162 on behalf of Representative Fred Dyson. She had been working on the legislation with him. The bill does two things to the Longevity Bonus Program. 1. It extends the paid leave absences from 30 to 60 days. The reason for that change is there are people who receive the bonus and cannot visit their families out of state because economics require that they drive and there isn't enough time to leave, visit and return in just 30 days. 2. It would change the unpaid leave time from 90 days to five years. Individuals who leave the state would not receive the bonus while they were gone, but they would be eligible to receive it again if they returned within five years. The Department of Administration suggested the five year time period to help them clear their books. House members discussed changing the unpaid five-year sabbatical but they didn't act. They understand Senator Halford is interested in reducing the five years and they are receptive to a change. A change should not impact the fiscal note. The fiscal note is negative because people are currently flying back to Alaska to remain eligible for a month and then flying back out. Extending the unpaid leave saves the state money and provides seniors additional flexibility. CHAIRMAN THERRIAULT asked her to explain the current bill language on page 2, lines 18 through 23. REPRESENTATIVE GUESS explained it defines an unqualified person as someone who would be eligible for the longevity bonus but they were not qualified because they were incarcerated. CHAIRMAN THERRIAULT restated that those individuals would meet all the criteria but, because they are incarcerated, they do not get the bonus. He asked whether they would receive the bonus once they are paroled. REPRESENTATIVE GUESS deferred the question to the Department of Administration. ALYSON ELGEE, Deputy Commissioner with the Department of Administration, stated they made several assumptions in the preparation of the fiscal note. They have data that enabled them to develop a cost estimate for extending the paid leave from 30 to 60 days. They looked at a year's records and figured the cost to pay those people who had been absent for over 30 days an additional one-month check. When they looked at the provisions for allowing extended absences they had to make some guesses about what people's behavior might be. To estimate the cost savings, and they believe one will occur, they assumed that an average of 10 percent of the longevity bonus recipients would be absent one month longer than they currently are today thereby forgoing one month's check. This would result in an estimated savings to the state of $435,000 a year and the estimate may well be conservative. The program was closed in 1997 and all recipients are 70 years or older. Loosening some of the provisions would allow those seniors much appreciated flexibility so they can spend more time visiting with family and friends outside the state. There are numerous anecdotal stories about seniors who gave up their bonus when they moved from the state only to find that they didn't like living out of Alaska. However, by the time they returned to the state they were no longer eligible for the longevity bonus even though they may have spent a majority of their life in Alaska. This would help such cases. As Representative Guess stated, they selected the five-year limitation so they could purge their rolls and have an idea of their potential clientele for the program. SENATOR PHILLIPS asked how many individuals currently receive the longevity bonus. MS. ELGEE replied that, on average, they issue between 18,000 and 19,000 longevity bonus checks per month. There are always more people who are eligible, but they are absent for some reason. SENATOR PHILLIPS then asked about the breakdown for the different payment amounts. MS. ELGEE replied the information is available, but she would have to provide it later. SENATOR PHILLIPS asked her to provide the average state residency for the bonus recipients. MS. ELGEE said that information is not readily available. SENATOR PHILLIPS said his reason for asking the questions is that he remembers that 10 to 20 percent of the recipients had lived in the state two years or less. MS. ELGEE said she would check on information that relates to length of residency. CHAIRMAN THERRIAULT announced he was interested in that information as well. It is frustrating to him that there are some who got into the program with minimum residency while some who lived here for 50 years, but weren't quite old enough to qualify before the program was closed get nothing. If this legislation passed, those that qualified with minimum residency would be able to leave the state for up to five years then return and start receiving the bonus again. In a lot of people's opinion, they shouldn't have gotten the benefit in the first place. MS. ELGEE pointed out that when seniors are out of state for more than 30 days, for any reason, they are not paid. CHAIRMAN THERRIAULT said Senator Halford has some concerns over the necessity of section 2, which is the five-year cutoff. He asked for an explanation of how that section helps clear the roll. MS. ELGEE replied they wanted some time frame within which they could clean up the longevity bonus rolls. When people leave the state they are suspended from the program, but they may stay suspended forever. If they never hear from people again, they have no way of knowing whether they are deceased or if they are gone from the state forever. Currently they project that the last bonus check will be paid in approximately 2030. At that time, they don't want to have 10,000 people on the roll even if they are only paying two of them. They were hoping to be able to purge the rolls along the way, but five years was subjective. CHAIRMAN THERRIAULT asked what the shortest workable period would be. MS. ELGEE said one to two years is reasonable. One of the current problems is that medical absences are allowed, but there is no provision for an accompanying spouse. CHAIRMAN THERRIAULT asked if there wasn't a provision allowing a one-year absence from the program after which the individual could re-qualify. MS. ELGEE replied that was an amendment that Senator Tim Kelly sponsored several years ago. It provides for a one year unpaid sabbatical once every five years. CHAIRMAN THERRIAULT asked whether she had other examples of how the 30 day limitation is unduly burdensome. MS. ELGEE replied that the House HESS Committee developed that provision. ROSALEE WALKER, President of the local AARP and board member of the Older Persons Action Group (OPAG), testified in support of HB 162. She asked that members pay attention to the negative fiscal note. The bill requires a simple modification, but it would mean a lot to the recipients. The program was started as a reward for a specific group, but there was a lawsuit and that's when people started moving to Alaska to receive the bonus. Because of this, legislators decided to phase the program out over time. Nonetheless, the bonus is a very important part of many seniors' income. CHAIRMAN THERRIAULT said the court case did explode the participating pool for the bonus program so the Legislature had to take action. At the time that they were considering change, some of his constituency that were long time Alaskans expressed an interest in doing away with the program altogether rather than grandfathering in people who had been in Alaska for just two or three years. The proposed changes would give those newcomers increased flexibility for travel and that won't sit well with some long term Alaskan seniors. That needs to be factored into the decision to make changes. SENATOR DAVIS asked Ms. Walker about her thoughts on the five- year term. MS. WALKER said she hadn't really considered that point because if she leaves for two years she won't come back. Alaska has been her home for 35 years, but if she were gone for two years it would be for an extreme reason. Five years is certainly more than fair and she could personally accept less. CHAIRMAN THERRIAULT said it's important to keep in mind that there is currently a one-year non-paid sabbatical allowed every five years. The proposed section 2 would allow a continuous absence above and beyond what is allowed by the sabbatical. He asked Representative Guess to comment on when they decided to extend paid absences from 30 to 60 days and whether it was part of the original idea. REPRESENTATIVE GUESS replied the 30 to 60 day change came first and was the result of a constituent request. Her research indicated that the 30 day limit was a subjective decision. The difficulty is the free rider problem, the people that qualified with just two or three years of residency. Everyone wants to provide flexibility to the seniors that lived in Alaska in the 1940s, 1950s and 1960s, but along with those come the newcomers. Because of the court decision, it's unclear what can be done about that. The bill began with the 30 to 60 day change and the department asked for the change from the 90 day allowed absence to a five year unpaid sabbatical. This would provide more flexibility to seniors who were flying into and then back out of Alaska to maintain their eligibility. This is the part of the bill that provides the overall negative fiscal note. It's a way to save the state money and provide seniors more flexibility at the same time. CHAIRMAN THERRIAULT asked whether the original bill had just the 30 to 60 day change so there was a cost of implementation. REPRESENTATIVE GUESS replied that in working with the department on the 30 to 60 day change they suggested the 90 day to five year change. When they put those together, the result was a negative fiscal note. CHAIRMAN THERRIAULT closed testimony on HB 162 and held the bill in committee.