SB 296-CRIME VICTIM COMPENSATION FUND  VICE-CHAIR STEVENS announced the consideration of SB 296. 9:43:16 AM TREVOR FULTON, Staff to Senator McGuire, Alaska State Legislature, said SB 296 creates a non general fund program for the Violent Crimes Compensation Board (VCCB), which generates funds for the board with no additional outlay of state funds. The arguments for and against putting dedicated funds into statute are familiar territory. It would be the 83rd such fund on the books. It is difficult to argue that the state is better off forgoing the additional $0.60 in federal grants that would be generated for every dollar put into the compensation fund. The mission of the VCCB is to mitigate the financial hardships innocent victims can suffer as a direct result of violent crime. The board may pay for medical expenses, counseling, lost income, funeral expenses, and other costs for Alaska victims of violent crimes. SB 296 will generate additional funds for this program without additional appropriations. 9:45:04 AM SENATOR GREEN read a part of the bill and asked where the connection is with the source of the money that is coming in. She asked what funds the bill is talking about. SENATOR FRENCH said the sponsor statement says that the VCCB awards $1.3 million every year. In paragraph three, it says if the VCCB can get these funds that it's taking to pay into the budget, it would have gotten an extra $.60 on every dollar in federal grants. The last sentence says without any effort the VCCB would have gained almost $1 million in ten years. "You must not be talking about all of the money received, because if you're giving out $1 million a year and you're [getting] $0.60 on every dollar, if you just get that money into a special fund, then you should be talking about $600,000 a year." There is a disconnect between the money coming from the federal government and the money the VCCB is taking in. 9:47:15 AM VICE-CHAIR STEVENS said the bill is not moving today because Chair McGuire has left. GERAD GODFREY, Chair, Violent Crimes Compensation Board, Juneau, said he doesn't understand the question. When anyone comes to the board with a claim, they sign a subrogation agreement. The maximum for any victim is $40,000. That is entirely compensatory. It has to be tangible losses, like medical, counseling, lost wages, and relocation expenses. For example, someone comes who was a victim of a DWI. "We know they're going to win a lawsuit insurance settlement," but that will take time. But this person is out of work and bills are piling up. The board gives money, and it is a de facto loan. When the person tries to pay it back, the board has no means to accept it - it has no receipt authority. That money that operated as a loan while awaiting a suit could compensate other victims, but instead it goes into the general fund. The $0.60 on the dollar is available regardless of what the state puts up. The board is funded through garnished PFDs of felons. 9:50:36 AM MR. GODFREY said during the Murkowski administration, "we were looking at a $400,000 decrement because the PFD average had gone down so much. However that money gets put up, it is eligible for $0.60 to the dollar in federal matching funds." There is no cap on the federal money. He spoke of a graph illustrating the money that originated from the board's initial funding, which came from the garnished PFD money. "When it comes back to us, we don't get it; it goes to the general fund." If that money were put back into the VCCB fund, it would be eligible, yet again, for the $0.60 federal match. Ultimately, if the board was given the money that it recuperates, in the next era of decrements the board believes it could sustain itself. 9:52:58 AM SENATOR GREEN suggested a review of the language in Section 1, because she finds it confusing. She asked, "Is it improper to use the word such as subjugation, or court-ordered restitution?" SENATOR FRENCH said the clearer the better. SENATOR FRENCH said he is fuzzy on the details. It is not clear why some dollars count for the federal match and why some don't. MR. GODFREY said all the money the state puts up, whatever the source, is eligible for the sixty cents on the dollar. The money that is eligible that the VCCB puts up this year that didn't get expended because of recuperation comes back and is eligible again, rather than a different allocation of money. "If $30,000 was put up this year and therefore it's eligible for sixty cents to the dollar federal money, and it was utilized in the form of that illustration I gave you, like the DWI victim, that $30,000, and it comes back to us again, next year that same $30,000 is yet again eligible for sixty cents to the dollar. Rather than using new money, we're using the same money to get that sixty cents on the dollar again." 9:55:52 AM SENATOR BUNDE said it just recycles the money. It is almost an arbitrage thing. It seems barely legal. VICE-CHAIR STEVENS said, "But do you object to that?" SENATOR BUNDE said no. SENATOR GREEN said the problem is that the money that comes back in from subrogation goes to the general fund and never gets back into your account; therefore, you cannot get the sixty cents. MR. GODFREY said it is fuzzy, but whatever the state puts up next year - from the general fund, garnished PFDs, or the money that the fund retains -- it will still be eligible for the match. "We are double dipping that same money." The federal money is available regardless of how the state puts it up. The money can be used again after it operates as a de facto loan and get the sixty cents on the dollar that it already received. SENATOR BUNDE said the bill just cuts out a step - the $30,000 comes back and goes to the general fund, and the legislature appropriates it, but it may decide not to. But if this is money that VCCB generated, maybe it should go back to them. MR. GODFREY said exactly. 9:58:30 AM MR. GODFREY said the amount that comes back to the VCCB was not expended - it was recuperated. It should still be available to serve its purpose. The board imposed policy limitations on how much it would award certain categories. It had to restrict awards dramatically. It could either help the first 30 percent of claimants with 100 percent of their needs or help all of them at 55 percent of what they were entitled too. He hopes SB 296 will change that. SENATOR BUNDE said if someone is convicted, they lose their PFD to the victim. When the victim repays, the money goes to the general fund. But this program generates money for the general fund, and if SB 296 passes, that money goes back to the VCCB. "It is money they generated anyway." VICE-CHAIR STEVENS said the state provides a dollar and it is matched with sixty cents. It gets loaned to a victim, and then when the victim pays it back, it can get a federal match again if it goes into the VCCB fund. MR. GODFREY said Senator Stevens definitely has the concept. 10:00:57 AM SENATOR FRENCH said he supports the board, and maybe there should be a revised fiscal note. It sounds like the state would be spending less general funds. SENATOR GREEN asked if the board is ever not repaid. MR. GODFREY said there are limited resources and only three staff. "We do not have a whole lot of motivation - the board itself is all volunteers -- to pursue those people that - everyone had to sign a subrogation agreement - those people that ultimately are going to win a lawsuit and if the perpetrator is solvent - perhaps the perpetrator worked on the Slope and has some cash in the bank or what-have-you. We do not expend the resources to go after that because we can't recuperate it, so it just doesn't serve our purpose to spend our limited resources to pursue somebody who we know can give us back that $25,000 when we're not going to recuperate it." He said it is not time well spent by the board to pursue money owed to the VCCB. Typically they will retain an attorney, especially if it is not an insurance settlement, and then they are obliged to disclose that. He estimated that 90 percent of the time their attorney will petition the board to ask forgiveness on the subrogation. They will give their best compelling argument as to why. One example may be a resultant injury that requires more therapy. The board wants an attorney to give a good pitch, "and we pretty much take it at the first blush … because to spend the resources to vet out the veracity of what the attorney is saying … he's going to make the best argument and sometimes we buy it, sometimes we don't." If the board knew it could recuperate it, it would spend more time and ask for more documentation and some follow-up from the attorney. "Yes, there's times when we do not recuperate money that was due us." 10:04:35 AM SENATOR GREEN suggested that it would be difficult to approximate what the board could get back from people, and she asked if his attitude would change if SB 296 passes. MR. GODFREY said it would change because the board could become self sufficient by recuperating that money -- and lean on the general fund less and less to the point of not needing it at all. There would then be more motivation to go after it. He would probably develop a series of steps for an attorney to go through. "We would like to go after the money whether it's going to the general fund or not; we just don't have the resources." SENATOR GREEN asked if he would object to language in the bill asking the board to pursue the payments. MR. GODFREY said he would have no problem with that. VICE-CHAIR STEVENS suggested working on the sponsor statement. SENATOR FRENCH said he would like to hear from the people who prepared the fiscal note and who oversee the funds. VICE-CHAIR STEVENS said also to pursue Senator Green's idea. MR. GODFREY said the board has been working on this for years and he appreciates the opportunity to provide clarity. VICE-CHAIR STEVENS set SB 296 aside and adjourned the meeting at 10:08:03 AM.