Legislative Budget and Audit Anchorage, Alaska October 2, 1998 1:30 p.m. Tapes:LBA-980210 Tape 1, Sides 1 and 2 LBA-980210 Tape 2, Sides 1 and 2 LBA-980210 Tape 3, Side 1 CALL TO ORDER Chairman Phillips convened the meeting of the Legislative Budget and Audit Committee on October 2, 1998, at approximately 1:50 p.m. in the Anchorage Legislative Information Office - Room 220, Anchorage, Alaska. PRESENT The following members were present: Senators Representatives Chairman Phillips Representative Martin Senator Donley Representative Bunde Senator Halford Representative Croft Senator Pearce Representative James Representative Therriault ALSO PRESENT David Teal, Legislative Fiscal Analyst; Pat Davidson, Legislative Auditor; Helen Eckman, DVR; Business Enterprise Program; George Buhite, Youth Corrections Administrator; Janet Clarke, DHSS; Greg Swank, DNR, SPCO; Brent McGee, OPA; Mike Black, DCRA; Mary Elizabeth Rider, B. J. Sorensen, Bill Herman, Alaska Mental Health Trust; Betsy Rolson, DOC; Bob Fisher, Court System; Paul Smith, DOE; Patty Ware, DHSS; Kay Burrows, Senior Services; George Smith, Library/Archives; Nico Bus, DNR; Kim Judge, DCR; David Liebersbach, Diane Alcantra, DMVA, DES; Tom Williams, Senate Finance Committee Staff providing support for the Legislative Budget and Audit Committee; Marveen Coggins, Senator Green's office APPROVAL OF PRIOR MEETING MINUTES Representative Martin MOVED to approve the minutes of August 14, 1998. Chairman Phillips - Hearing no objection, the motion was APPROVED. (Senator Pearce was present at the meeting) PRELIMINARY REPORTS Representative Martin MOVED to go into Executive Session for the purposes of discussing preliminary audits. Chairman Phillips - Hearing no objection, the motion was APPROVED. EXECUTIVE SESSION Chairman Phillips reconvened the meeting to the public at 2:40 p.m. Representative Martin MOVED to release the 1997 Statewide Single Audit report immediately to the public. Chairman Phillips - Hearing no objection, the motion was APPROVED. (Senator Donley and Senator Halford were present at the meeting) Representative Martin MOVED to release the following seven preliminary audits to the various agencies or departments for 21-day response then automatically released within 30-days depending on the findings: 1. Elective Child Protection Report 2. Management Practice Report 3. Alaska Railroad Corporation Contract Issue 4. Board of Pharmacy Report 5. Surety Fund Report 6. Division of Tourism Contract Issue 7. Division of Agriculture, Matanuska Maid Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to accept the audit request of Senator Pearce related to the September 1, 1997, Legislative Audit report on the Department of Health and Social Services, Division of Medical Assistance and Mental Health and Developmental Disabilities, Community Mental Health center program, and the audit request of Senator Donley as to the implementation of AS 18.56.470 by the Alaska Housing Finance Corporation. Chairman Phillips - Hearing no objection, the motion was APPROVED. Pat Davidson - Within the past year, we have done an audit on the special education program statewide, not specifically at the Ketchikan School District. We ask the Committee if they would hold approving this request until the next meeting until I have a chance to talk with Senator Taylor and go through with him what we have already done and our limited ability to actually conduct an audit in the Ketchikan School District. Representative Bunde MOVED to hold the audit request from Senator Taylor until the next meeting. Chairman Phillips - Hearing no objection, the motion was APPROVED. REVISED PROGRAM REQUESTS Representative Martin APPROVED the RPL#41-9-0030, Alaska Court System, Using Trail Court Performance Methodology to Address Cultural Diversity in the Courts, $9,854 Federal Receipts. Chairman Phillips - Would you clarify your statement "recommend amending appropriation authority from line 19"? David Teal - It is a Federal reference in response to your request for more thorough review of the RPL requests. In all of these, we have changed the appropriation authority or Statutory authority when as we were looking at them we found a few lines off or an appropriation off. So in our analysis of them we made those changes to reflect the proper line for their appropriation authority or the Statutory authority. The departments received our analysis and DHSS did approve changes. We have not heard from other departments. I don't think it is a critical issue but we were trying to make things as technically correct as possible. That point will come up later on the capital RPL. Line 19 is a general appropriation so you could leave it there; line 22 is the admin. support component. Some of the others don't have to be changed; some are actually in the wrong component and should be changed. We did not hear from the Alaska Court System as to whether they agreed with this change. (Representative James took leave from the meeting) Bob Fisher, Alaska Court System - In answer to our knowledge of this, we were not aware; possibly the number (tape inaudible). We support the change. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#02-9-0057, RPL#02-9-0058, RPL#02-9-0059, Mental Health Trust Authority Account Receipts. David Teal - They were combined into a single RPL and the Department asked they be separated. Representative Bunde objected and requested they be voted on separately. Representative Martin WITHDREW his motion. Representative Martin MOVED to approve the RPL#02-9-0057, Administration, Volunteer Long Term Care Ombudsman, $30,000, MHTAA Receipts. Representative Therriault - In the first place, this is going to obligate us to continue to follow through, although it would be all from Mental Health Trust funds initially. The $30,000 which is available is only half of the annual funding. When it shows up in the next budget you've obligated the next person coming in with the general fund request. That was a large part of the discussion at the last meeting. Representative Croft - The auditor does say that the approval of this request isn't expected to impact future general funds. It does on a policy level but not a budget level. Chairman Phillips hearing objection called for a roll call vote. Yea: Senator Halford, Senator Pearce, Representative Croft, Senator Phillips Nay: Senator Donley, Representative Martin, Representative Bunde, Representative Therriault Chairman Phillips - The motion FAILED by a 4-4 vote. Representative Martin MOVED to approve the RPL#02-9-0058, Administration, Adult Protective Services/General Relief Data Management, $18,052, MHTAA Receipts. Chairman Phillips - Mr. Teal, you state that there is no mention of the information technology plan in the FY99 Governor's Amended Budget request and I'm asking why? Kay Burrows - Director, Division of Senior Services - The purpose of the information technology plan was actually only one project. It wasn't a full plan. That's why it wasn't included in the Governor's Amended Budget. This is a project to take one data base that the Adult Protective Services group has been using in one software package and simply migrating it to another software package. We didn't complete the project in FY98 and so we have funds left over to finish it in FY99. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#02-9-0059, Administration, Alaska Choices for Independence (Personal Assistance Services), $97,000 MHTAA Receipts. Representative Therriault - (tape inaudible, paper shuffling) I guess considering the one we turned down I'm wondering why ...(tape inaudible) David Teal - Any time a program is funded by Mental Health funds, there is no certainly that the Mental Health Trust will continue to fund it with Trust funds so right now they're saying you can stop this program if we stop the Mental Health funding of it, but I think the Department should probably respond. Kay Burrows - This is actually not ongoing funding service request. There is no additional next year funding that is part of this. This is one time amount of money to look at the personal care attendant program and develop some manuals to help those beneficiaries who use independent personal care attendants who are independent Medicaid providers. It is similar to physicians or other people who are providers. The beneficiary actually does the hiring and firing of that independent personal care provider and they have a consultant available to them. It does not have to do with ongoing service which would be paid for by the state other than the services which are currently part of Medicaid. Representative Martin - The Mental Health Authority is going further and further in all kinds of grants involving things that are not the responsibility of mental health. Now because you have excess money and you're going to expend it into new areas I'm concerned at what time your earnings may drop and you suddenly find out you don't have that money for your clients and the assistance they need. This is another case are you going to spend everything you have each year and not save anything. (Representative Bunde left the meeting) Nelson Page - Chair, Mental Health Trust Authority - I think we need to remember our beneficiaries include people with Alzheimer's disease, dementia. That is one of the categories that people are most likely to get benefit from this program. It also includes developmental disabilities which is another area where people need to have care assistance. We thought this was pretty close to our real purpose. Representative Martin - Are you still spending all the money you get? I think Mental Health needs to save some money rather than spending all their receipts. Nelson Page - It was actually a pretty rough Fall for us watching the stock market like everyone else. The answer is "no" we are not spending all our receipts. We have a reserve account that is intended to provide a buffer. Every year we spend a fixed percentage of the asset value of the Trust and that percentage is set based on our experts understanding of what we can spend without running into the problem you described. So we don't have a situation where we've overspent. Representative Croft - So in effect, you inflation proof yourself? Nelson Page - I'm not sure it's what we'd call inflation proof. The idea is the purchasing power of the Trust will remain constant. Representative Croft - By taking a fixed percentage, do you think you can keep enough in it? Nelson Page - Yes, we've spent 3-1/4%; we started out at 3% but we felt we could increase the payout. We think we may be able to increase it higher in the future depending on how the Trust performs. Representative Martin - There is also the responsibility that you will not continually make more demands on the Legislature for general fund appropriations; that was part of the oath that this endowment would build up and less reliant on the general funds. Nelson Page - We do expect we will be able to at least maintain purchasing power parity ten years from now. There is built in to this a little room for growth because we also get the income from our assets. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#02-9-0062, Administration, CASA Grant, $39,577 Federal Receipts. Senator Halford - I haven't been able to figure out what it does. Brent McGee - Office of Public Advocacy - CASA is an acronym for Court appointed special advocate. It is a volunteer guardian ad litem who is recruited, screened, trained, and supervised by OPA. There are two places where this is happening; one function is to create a CASA program in Bethel and Juneau; the other is to train individuals in areas where they can both be volunteer guardian ad litems in Federal and in State Courts. The notion is there should be one child advocate in each of those places. The best option is to have a person who is one unpaid and two able to function in both Courtrooms. Senator Halford - Does this advocate function in a Tribal Court? Brent McGee - No. One is to create a CASA program in Juneau and Bethel that is exactly what we've had in Anchorage for the last 11 years. That has been very successful. The other piece is to train people primarily tribal members to act as guardian ad litem in State Court and also in those areas where there are Tribal Courts. When they have concurrent jurisdictions we think it is a good idea to provide that service with a person who costs us no money and provide the same person for both of those Courts in order to get better representation. There is no reason to provide a paid person for the State Court and an unpaid untrained volunteer in the Tribal Court. Senator Halford - You said concurrent jurisdiction has been granted by the Superior Court? I thought the Supreme Court said there is not concurrent jurisdiction? Brent McGee - Common state agencies deal directly with Tribal authorities. Senator Halford - State agencies do; I'm saying the Courts. Brent McGee - That is an entity of the state of Alaska. They will refer cases for an opinion to Tribal Courts or sometime to Village Elders. Judges are generally interested in getting as much information as possible so they can make life determining decisions about a child. They don't grant decision making authority to the Tribal Court or Village Elders. They want to hear from them. According to the Village Elders, the guardian ad litem is a perfect vehicle for them to know what is going on in the State Courts. We want to use local people who can function in both arenas because we think we can get a better outcome. Senator Halford - I agree with all that; I was trying to figure out the jurisdictional question. Brent McGee - The jurisdictional question, I don't have any idea how that is going to be figured out. In order to do this, we don't have to answer those questions. Senator Halford - You're not appropriating into any side of that question? Brent McGee - No, we're not. This doesn't have anything to do with jurisdiction. The fact is there are true entities out there; we want to be able to participate on behalf of the children in both of those instances. The best way to do that is through a trained volunteer supervised by a professional. Senator Halford - The fact is there are two entities out there. Brent McGee - There aren't two legal entities out there at the same level of jurisdiction. They exist in fact even if they don't exist in law. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representation Martin MOVED to approve the RPL#05-9-0569, Education, Gold Rush Curriculum, $97,901 Federal Receipts. George Smith - Deputy Director, Division of Libraries/ Archives and Museums - Representative Therriault - On the Legislative Finance backup, it says there is no Federal authorization available in this component but down further it states Federal approval to expend the funds (tape inaudible) so I don't understand. Is this an appropriation already made in the Federal budget? (tape inaudible) I'm wondering about the source of the funds. Are they in the Federal budget? Are they ready to be received? George Smith - This was a grant awarded by the National Archives Record Service which we did not receive until August of this year. They were unanticipated funds on our part so we were not prepared to ask for authorization when we prepared the budget for FY98. Senator Pearce - (tape inaudible, too faint, paper shuffling) Representative Therriault - If the Federal money is there then that takes care of that problem. I'd like to have further discussion between myself and Mr. Teal about the way these are presented. Chairman Phillips - In your statement, you say there is no mission statement or performance measures were developed for this component but the request (tape inaudible) with state contact (tape inaudible) standards. I was wondering why we don't have that? David Teal - I guess Education didn't develop this specific mission or performance measures. They do have state content measures for the curriculum and this falls within those and then on the issue of Federal authorization the Federal funds are in hand now and it is an issue of Federal receipts that have become available after the Legislature was done. Representative Therriault - In the statement no Federal authorization, are you meaning we do not anticipate and build this into our budget component? David Teal - Yes. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#05-9-0584, Education, Federal Carry Forward, $49,059 Federal Receipts. Are these receipts we need to carry over or just receipts that one spent? George Smith - When we were presenting our budget for FY97 before the Legislature, the Legislature recommended we adjust our authorization for Federal money to more clearly reflect what we were actually receiving and spending each year. Therefore, last year when we presented our FY98 budget we significantly reduced our authorization for Federal money. Unfortunately, at the very time one old Federal grant program that we administer was being phased out and a new one phased in. We didn't properly anticipate what our total receipts would be for the Federal Government so what we have is need for additional authorization for this one year and it will be resolved in the budget we present to you next January. This will take care of a need for us to receive authorization and receive the money during this fiscal year. Representative Martin - It's already committed; you just need authorization? George Smith - Yes Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#05-9-0585, Education, PELL Grants, $100,000 Federal Receipts. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#05-9-0587, Education, Business Enterprise Program, $1,000,000 Statutory Designated Program Receipts. Representative Therriault - To expand this program so dramatically, have we had comments back from private sector vendors? Chairman Phillips - I want to dovetail on what Representative Therriault has questioned. I have a note, does it effect (tape inaudible)? Helen Eckman - Division of Vocational Rehabilitation, Project Coordinator for the Business Enterprise Program - Under the Randolph Shepherd Act, there is priority given to the business enterprise program for this specific type of contract and Elmendorf has adjusted their announcement to reflect the Act will be recognized if our bid on this falls anywhere in the target range. We will be competitively bidding. They did have the option of negotiating with us directly without putting the contract out to anyone else, but they are putting out an open solicitation recognizing the Act if we come within the competitive range. Representative Martin - If you bid competitively, why do you need $1 million? What is done with that money? Helen Eckman - The money basically comes to the Division of Vocational Rehabilitation as state licenses (tape inaudible) for the Randolph Shepherd Act. When our blind vendors are placed in a facility that he or she are operating, they provide services to the Department of Defense who in turn writes a check to us because we are the contractor. We receive this money and turn around immediately and write a check for all (tape inaudible) portion of it. About 1% will be saved for administrative expenses and the rest will go right back the facility itself. It isn't a money maker for us personally. It is just that because we are the contractor for the Department of Defense that we have a subcontract with our blind vendor operating this facility. The money has to be given to us under the contract and we have to return it so that the vendor can receive reimbursement. Representative Croft - So this isn't a $1 million cost; it is authority to go out and bid on a $1 million contract? You need that room because that's the way the money flows? It says under the anticipated timeline, it would be difficult to wait for the full Legislature. That is because this bid is essentially coming up now? Helen Eckman - Yes. We have to have permission to receive it. Monetarily they did put it off another seven days when we called this week but they are anticipating any day. Representative Therriault - The whole thing is tied to the operation of a vending machine? Helen Eckman - No. This is a contract that will provide primarily cleaning duties, ? services and some food preparation to the military dining hall facilities at Elmendorf Air Force Base. There are five different cafeterias or kitchens involved. Chairman Phillips - You are going to be competing with others on this proposal? Helen Eckman - We will be competing and if we don't get the solicitation, then the full amount of money will never come our way at all. If we do, we will be in a position to do that. Representative Croft - Do you have blind and disabled people ready to take advantage of this contract? Helen Eckman - Yes, we have already have applications turned in from three qualified participants in our program who as soon as we get this solicitation and begin our response we will chose among those vendors. They are each giving us a proposal on how they will employ others with disabilities. David Teal - There is a fund source change here. It cannot be Statutory Designated Program Receipts. We looked at it and thought it was okay because they are both. On further checking of the Statutes of the Executive Budget Act, Statutory Designated Receipts by definition cannot include State or Federal Receipts. Representative Martin MOVED to amend his motion to approve the RPL#05-9-0587, Education, Business Enterprise Program, $1,000,000 Federal Receipts. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#06-9-0017a, Health & Social Services, Juvenile Accountability Incentive Block Grant, $1,605,800 Federal Receipts. (Note: This whole section was difficult to transcribe due to paper shuffling and speakers not speaking loud and clear into their microphones. It was transcribed as well as possible under the circumstances. Tapes are available in Legislative Library.) Senator Donley - If you will remember we had discussion on this part of the Federal program and set out several guidelines for the state to develop. Guideline no. 1 is the state should work towards accountability for juvenile felons over the age of 15. This proposal doesn't do anything towards that initial Federal guideline. This Administration has consistently opposed any modifications to do with the Federal guidelines required. The proposal here is to do other things than the first guideline of the Federal law but not to do anything on that until a future time. I think it is backwards. I object. Senator Halford - I want to hear an explanation of what they are going to do with the money. I tend to agree with Senator Donley. The Administration opposed our efforts when we are able to get the automatic waiver down to 16. The Administration was strongly opposed (tape inaudible, multiple voices) exactly what the first guideline was. With the Administration support, the first guideline in the next legislative session . . . George Buhite - Youth Corrections Administrator - The approval for the first year only requires active consideration (tape inaudible, paper shuffling). For three years we have looked at the Governor's conference did in fact consider this issue and the members of the conference hotly debated this issue and so I think for the first go around we do in fact meet what the Federal ? . I in my position cannot (tape inaudible, too faint) relative to (tape inaudible, too faint). I would like to go on and say that of the other three issues, I think we are already ahead of the Feds or fully in compliance or mostly in compliance with two of the graduated sanction conditions and the (tape inaudible, too faint). We have requested funding to the Federal Government through Senator Stevens about this for about $1-1/2 million dollars as well as a $300,000 grant to develop a data base in Corrections where we would be much more able to respond appropriately to the information requested by the Feds . . . (End, Tape: LB&A-980210, Tape 1 Side 1 #242) Representative Croft - . . .when they want to tell us we have to do something they can say that; they've said that before or usually you have to do this or you don't get Federal money. This just says because I think the policy they are talking about is so controversial that they just want the state's to actively consider it and we are doing that. We don't have to have unanimity on a controversial matter to receive this money and continue to work toward these goals and to the extent that we are in agreement on three of the four and are actively debating the fourth why wouldn't we want this authority particularly if some members of the Committee are of the opinion that the first is a good idea. To simply say there are other people in the state who disagree so we won't accept this money for three of the four things people want - If we do need it that was the question last time, what is active consideration and it is that the liberation under debate of policies that would affect state compliance with the requirements we are doing that. I don't understand why we would want to turn down this money which does largely what all of us want and some of what some of us want. Senator Donley - It is carefully calculated that this would comply for right now because this is (tape inaudible, paper shuffling) and there is no effort to move toward that requirement for later on. Additionally I have concerns about the accountability aspects and the increased sanctions, the actual existence of those within the system because most of the data I've been able to obtain over the years doesn't show an effective increased sanction system. It is all very void how it's done within the Department as far as making sure that crimes aren't continually being committed and there is a line drawn at some point. It takes a lot to get to that line. I think they need to have something more to deal with (tape inaudible, paper shuffling) so they don't get caught two years out with no compliance at all. They have the intention to do that under this proposal. Senator Halford - Exactly how do you plan to spend the money? George Buhite - The requirements of the grant are that we have to have a committee to apply to this on how to spend that money. That committee apparently consists of Deputy Commissioner of Public Safety, Commissioner of Corrections, representatives of Department of Law and Court System and two members of the public (tape inaudible, paper shuffling, too faint, multiple conversations). We propose that of the $1,605,800 (tape inaudible), $160,000 to be used to hire two grant administrators, one primarily to prepare grants and advertise that process dealing with the training and technical assistance to deal with the compliance of the grants when they receive the grants. We are looking at approximately $300,000 to apply for those (tape inaudible, too faint) to address specifically the activity between agencies like Corrections and Public Safety. So once we (tape inaudible, too faint, paper shuffling) Approximately $550,000 goes to the areas to ? to which the statewide RP's for services that are accountability based and that ranges from ? , restitution programs (tape inaudible, too faint, paper shuffling) particularly in the areas where we are ?. Approximately (tape inaudible, too faint, paper shuffling) to be divided up between our Division, Department of Law, Public Safety, the Court System to provide services (tape inaudible, too faint). We are looking specifically at how to coordinate those services to the degree and we've ? and we've identified ? high level of services ? . That's about as close as we've gotten. The actual budgets are still (tape inaudible, too faint, paper shuffling). Representative Martin AMENDED his motion to delay this RPL until the next meeting to give the Department more opportunity to work on the concerns expressed by Senator Donley and Senator Halford. Representative Croft objected to the motion. Janet Clarke - DHSS - We did delay this RP from the August meeting and we provide information to Senator Donley and the Committee. If we delay it again, we will work with the folks who have concerns or invite them to some of the meetings that are held. On this particular issue, I'm not sure it can be resolved before the next meeting. It seems to be a policy question. Right now the Law is at 16. Senator Donley - It is a policy question and they should be studying changes to 15. There is nothing in this proposal to do that. They could modify this proposal to do something regarding that issue such as survey the public, find out how the public feels about it rather than approve everything exactly. It would make this more consistent with the Federal intent and would be the intent of some of us in the Legislature. Representative Martin - A lot of times we depend on each other to specialize various aspects, i.e., University, juveniles, Courts, and I don't often now all the details but I rely on my colleagues who do specialize in those issues and that is why when Senator Donley concerns haven't been answered yet I think it is legitimate. The Feds are paying us to do it and for some reason the state policy questions it. Rather than lose it, I'd rather wait until the next meeting. Chairman Phillips hearing objection, called for a roll call vote. Yea: Senator Halford, Representative Martin, Senator Donley, Senator Phillips Nay: Senator Pearce, Representative Croft, Representative Therriault Chairman Phillips - The amended motion FAILED by a vote of 4-3. Up for approval is the original motion to approve the RPL. Representative Croft - There is legitimate disagreement about the first policy choice. The Feds recognize that in my view by asking us to consider it and not mandating that we do it. This is an area where there will be some disagreement. This proposal takes the vast majority of the issues they ask us to consider and accepts them and takes this controversial one and continues to consider it. That is in my view exactly what Congress wanted us to do with this and let's be very clear if we reject this it is us rejecting this money to do what most of us think is at least partially correct to do and continue to study the thing that is controversial. It would be folly in my opinion to reject it. Senator Donley - There is nothing in this proposal that continues to study item no. 1. In fact, item no. 1 is going to be a mandate on this Legislature and there is nothing here to move us toward complying with this mandate. If there was something here to move us towards compliance or even study towards moving us towards compliance I think that would be persuasive. They haven't proposed anything like that. They are saying that we've already done it so we don't have to do it. Chairman Phillips hearing objection on the original motion, called for a roll call vote. Yea: Senator Pearce, Representative Croft, Representative Therriault, Nay: Representative Martin, Senator Donley, Senator Halford, Senator Phillips Chairman Phillips - The motion FAILED by a vote of 3-4 Senator Halford gave notice of reconsideration for the next meeting. Chairman Phillips - I would suggest that the Department contact those members with objections prior to the next meeting. Representative Martin MOVED to approve the RPL#06-9-0126, Health and Social Services, Pass 1 Child Care, $2,2000,000 Federal Receipts. Senator Halford - I object for purpose of discussion. One of the justifications for the $2.2 million is the Governor is going to request it - no operating impact but it also goes on the say it will be requested in the year 2000 budget. Senator Pearce - They will request additional Federal funds next year. Janet Clarke - In handing out a chart which I think many of the members have seen before, it is a chart that shows you our Alaska temporary assistance program and history of welfare reform. In the summer months from July to August, we continue to have (paper shuffling) welfare reform programs. When we have more and more people working they require child care. What happened this summer was that the numbers of child care increased beyond what the Department had projected. We had more people going to work than what we predicted. So this request although large will serve 588 children and obviously it is an important element of welfare reform. I do think that there are program managers on line from Juneau if they can answer more specific questions. Representative Martin - This bragging that we do about our case load dropping and expanding so this is really a flexible thing. I was worried about three weeks ago when the Department bragged that our case load had dropped about 15%. So we're saying this was for the last quarter or the year? I really ? numbers from other indications always going up and I marvel that we keep on saying the case load is going down. Are we shifting them into other programs? Janet Clarke - We have shifted money to child care and work service as welfare reform has concluded programs. We have seen success in actual benefit payment system which has dropped by 15%. We have had a significant supplement from general funds over the last couple of years and we are also not spending our Federal ? which are available to be carried forward and that's what these Federal funds are, Federal block grants. They can only be spent in a few areas, i.e., child care, work service, and there is a special provision that the Legislature took advantage of last year. We transferred some of the funds into the child protection service, although Congress is reducing our responsibility to do that in the future. We have reinvested funds; we had a lot of general fund savings but these are Federal funds which are available and cannot really be used in any other places. Senator Halford - Is there a general fund component that is funding part of this still? What happened to it last year? Janet Clarke - The general fund component of our welfare reform program is at the floor that the Federal Government has given the state. They've set a maintenance effort requirement that we have to continue to maintain. We reached it with the current FY99 budget. That was a decrease over the prior year. There were $5 million general fund savings in the overall program. In child care, it increased rapidly. Senator Halford - We're saying it is Federal funds, but there is a general fund component funding this same function, is there not? And that general funds went up substantially last year? Is it the same as last year? Janet Clarke - Yes, there is a general fund component but it did not go up substantially last year. As I recall, in the Department of Community and Regional Affairs, the Senate budget took advantage of the ability to transfer Federal funds about $4 million to be used for day care assistance programs in that particular child care activity so general funds have decreased in child care as well as in other components. Senator Halford - So you are already taking this grant and offsetting general funds as much as you can? Janet Clarke - Yes. Representative Croft - It doesn't seem the way Representative Martin characterized this is true. We are moving people off welfare into work and this is the cost side of it. A different category, overall savings and this case we're taking savings in both Federal ? in our welfare and having some increased cost in child care that primarily the Feds are picking up. It seems a win financially and a win for people who are now working. If we can serve 588 children with Federal money, I think we should approve it. Senator Halford - It sounds like we are making the maximum offset. Janet Clarke - We have not made the maximum offset that the Federal Government allows but certainly the Legislature can look at it in the future. There are some questions about sustainability of the Federal funds over the long term. Right now we are benefiting from the provision in welfare reform that we are considered a high population state and so we have this special Federal bonus that we get for four to five years then we lose it after FY01 and that is like a $7 million drop. We have to carefully balance the long-term sustainability of using Federal funds that we transfer state funds what the Federal Government is going to do with some of those provisions. Senator Halford - You say we don't dare take advantage of the maximum Federal funds because politically it will be difficult to replace them. If we cut the general funds out now, we are making a political decision that is economic waste. Why shouldn't we use it to the maximum capacity to replace general funds? When it's not available you're going to have to replace it with general funds to face those questions. If we are managing ourselves so we don't use maximum Federal funds because we're afraid it will be too hard to increase the general fund budget to pick it up if they stop then it is a political determination that it is economically unsound. Janet Clarke - We get more money right now that we're not going to get after FY01. I think you are saying that in the short time, we do use as much general fund as we can instead of Federal dollars and then three years from now pay the bill. Is that what you are saying? Senator Halford - Do the Federal funds carry forward? Do they expire? How are Federal funds treated? There are people who argue against maximizing Federal funds because they believe it will be too hard to replace them with general funds when they do run out. Is that your argument? Janet Clarke - The current provision we're under for welfare reform we have a block grant that comes to us through FY02 then Congress can re-authorize or change or do what they want with that provision. The benefit we are receiving under the current Federal block grant is based on a 1994 expenditure so that's why states are receiving these large Federal funds. At the time, we discussed this issue with the Finance Committees it was in the first year of welfare reform. Our tendency as an agency was to be conservative as to how many people might be benefited or where the funds should go and what we currently have is the agreement that seemed reasonable with the Finance Committees. For example, if this line was turned away and we needed due to economic distress in Alaska and there weren't jobs available we might see a different picture. Representative Martin - One of the problems I have is the mystery as to where the children are coming from. In looking at the other statistics from the Department of Labor, our birthrate has decreased 1600 this year from 1990. That is consistent over the last four years. The age group 5 and under has decreased 4.9%; one of the largest decreases in the nation. So where are they coming from? Is it because we increased the level of poverty from 150% to 250%. We're increasing the poverty level and allowing more people to come in. It's not due to a true birth rate or increase in children in that age of 5 and under. Are we grabbing money to grab it and then finding children or people to qualify for it. Janet Clarke - People are working that's where children are coming form for this program. Senator Halford - I'm going to vote "no" because of what I think about this maximization of the offset. I disagree with what we then apparently did in Finance last year. I would support it if it came back in a way that was presented to utilize the offset. Representative Croft - With two "no" votes, then discussion may be warranted. I'm not trying to jeopardize the others. People here may disagree with what happened in Finance, but this is at least a partial step to maximizing the most. It's asking to use more Federal money for it. We can have that discussion sometime about whether that was a proper policy choice but this increment is at least moving in the direction you want. It's using more money. Senator Halford - It's not offered to supplant general funds; it's offered as an increase. Representative Croft - Nothing in this precludes that discussion over what we should be doing about maximization. It simply allows us to use a pot of Federal money. To the extent part of your point was we were not using enough Federal money this allows us to use more for people who have a need. This has nothing to do with the birthrate. These are the same children who were formerly on welfare and are now children of people who are working. Janet Clarke - While I certainly appreciate Senator Halford's view, I don't know that this Committee could do anything about (coughing) offset from general funds. If you need to go to the full Legislature, it is likely there wouldn't be a determination until late in the session. Again we might lose the opportunity to continue getting more people off welfare. Senator Pearce - (tape inaudible, too faint, coughing) In the first real year of the program, the Legislative Finance encouraged us to take it slowly the first year and then move toward the offsets that are available for next year including to continue to work toward maximizing our offset and we should try and take the entire amount the first year. There were a lot of discussions. Senator Parnell and I and Chair of the HESS Committee decided it was the best approach. Not accepting the money and having mostly single mothers out there who are trying to move off welfare and can't do so because they don't have child care because this Committee is sitting on whether to take $2 million from Federal funds is stupid. Representative Therriault - In the budget, there was language that said if Federal program receipts exceeded estimated appropriations in fact, the appropriation from state funds from the effected program may be reduced by the excess if the deductions are consistent with the Federal Statutes. I think what this Committee should do is to ask the Administration for a full accounting of those areas where the Federal funds where we find ourselves in this situation and make a determination then are we going to adjust the budget down. The language in the budget allows us to do that, but I agree with Senator Pearce. Senator Pearce - We're talking about people who are trying to get off welfare; now let's make it work. We should (tape inaudible, too faint). Representative Therriault - There are a number of areas where we need to look for general funds that offset and remove it. I don't think this is the time to do that. Chairman Phillips hearing objection, called for a roll call vote. Yea: Representative Croft, Representative Therriault, Senator Pearce, Senator Phillips, Representative Martin Nay: Senator Halford Chairman Phillips - The motion FAILED by a vote of 5-1. Representative Martin MOVED to approve the RPL#06-9-0127, Health & Social Services, Arrestee Drug Abuse Monitoring Program, $101,200 Statutory Designated Grants. David Teal - The only issue here is the Statutory reference; it isn't Federal receipts. In the RPL they refer to Statutory authority, I don't think it effects the validity of the RPL in any way. It is just the request was flawed in a minor way and as we reviewed the language we pointed that out. Representative Martin - For the Committee's evaluation, we've done an evaluation and we had $1.2 billion in other funds in the front section where all these designated grants are and are not considered part of the budget. It really is going to hurt the Legislature and Governor's office by not proving where they come from. These are designated general funds rather than undesignated general funds and I think in a short time the Legislature is going to find itself in a bad situation with more and more designated general funds which we now call statutory designated program receipts versus nondedicated and the problem is getting subject $1.2 billion off budget. It is 50% of what is called the budget. Janet Clarke - It is a strange route they take to come to the state and depending on where we actually get them determines the actual categorization of the funds. The Federal Government has actually contracted with a private vendor to manage this program and we will have a contract with a private vendor. So that situation this $101,200 does need the definition Statutory Designated Program Receipts which is why we requested them that way. Representative Martin - It also meets the category of Federal Receipts and that is the proper designation for this. Janet Clarke - The check the state will receive comes from a private contractor not from the Federal Government. Representative Martin AMENDED the motion to approve the RPL#06-9-0127, Health & Social Services, Arrestee Drug Abuse Monitoring Program, $101,200 Statutory Designated Program Receipts. Chairman Phillips - Hearing no objection, the amendment to the motion was APPROVED. On the amended motion, hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#06-9-0128, Health & Social Services, Epidemiology Drug Rebates (Ryan White CARE Act), $50,000 Statutory Designated Grants. This is the first time I remember putting "Statutory Designated Grants" into our RPL's. Representative Therriault - This is some kind of a rebate that used to come back completely off the budget. Janet Clarke - This is actually a new part of the Ryan White CARE Act (tape inaudible, too faint, multiple conversations) ... requires the pharmaceutical companies to give rebates back to states (tape inaudible, too faint, multiple conversations) ... give some portion of that back to the state for additional program use. This was a fairly new provision. Representative Therriault - The money rebated to us - are we under some contractual - does it meet statutory definition? Janet Clarke - As I understand it, the Federal Government requires the drug companies to rebate to the state for ? high drugs. It requires the state to use the money for programs so that is very similar to what the Legislature does with the WIC program where we get formula rebates back. Yes, I think it does meet the statutory definition. Representative Martin - With that in mind, everything we have off budget in a fund always had a specific Statute reference. The Committee ought to show what Statute in the future. Your using that phrase so the Statute should be referenced, especially since it is a new program. What Statute are we referring to? David Teal - It doesn't necessarily (tape inaudible, paper shuffling) Statute is just a definition of what's, it's something that OMB wanted to do and worked on for a while and got through. It allows you to take what used to be called program receipts now in some cases the Statutory Designated Program Receipts. It applies only in this case there is a the contract involved. In some cases, it is specific services that are applied, but generally speaking, if there is a signed contract for these services then you classify it this way. Statutory 37.05.146 - what that Statute says is simply that it is a definition of program receipts, a nongeneral fund program receipts. Under there it says "designated program receipts means money received by the state from a source other than the state or Federal Government that is restricted to a specific use by the terms of a gift, grant, bequest or contract". (Senator Halford left the meeting) Chairman Phillips - We're going to take a break from RPL's due to the lack of a quorum. OTHER BUSINESS -Y2K Bob Poe - I'm the Y2K project office. I appreciate being able to speak to the Committee today. Each of you received a status report and my plan is to continue to provide you with timely status report. You should receive another one next week. I'd like an opportunity on an ongoing basis to get before the Committee to update you. First, I'd like to point out that Y2K is not just a computer problem. It is truly a risk management problem and I offer three numbers for you to consider. The Gardner Group which is a leading think tank on information technology has estimated the cost of Y2K clean up to be $250 billion. I would suggest that the cost of national litigation to follow would is $1 trillion is something we should pay attention to. Three hundred national law firms have opened up Y2K practices to get ready to sue companies that don't deal with the Y2K issue. This is also a leadership issue. I would suggest that no one really caused this problem. It is nobodies fault. It is a very real problem. It is on our watch and we have to deal with it. There is a lot less time than you think. The calendar right now says there is 455 days are left but actually Y2K is already happened. With you have a credit card that has an expiration date of 00 it failed at the beginning of this year. June 30, 1999, is when it will hit the state because we will change fiscal years at that time. September 1999 is an old computer programmers trick shooting into data files should cause us a problem. 9/30/99 is the Federal fiscal year and all of those dates happen before the New Year's Eve date and the change of the millennium. What is the state doing about it. Governor Knowles issued Administrative Order No. 177 which set up the Y2K Project office and established what that office would do and what each agency is responsible for doing and also elevated the office to Cabinet level position so it could get the job done. We have a formal plan and it is the same plan everyone else is using around the world. It is a five step plan and that's what we are following. We are starting a triage process to identify 199 business functions that the state performs and we identified 87 that are critical because they reflect on life, health, safety or the economic well-being of the state of Alaska. Our inventory systems are complete. Assessment of those systems is probably in the neighborhood of 60%. The reason I qualified that is we are in the process of implementing a comparable status reporting system so we know how each agency is doing on the same basis and we should have that system debugged and fully running by late November. We have a website which is being used to transfer a lot of information to various users and in fact it is referenced by states like New York which has spent over $400 million because we have a more thorough vendor analysis for the imbedded chip problem than most other states do. There are several systems which are already compliant that are compliant on the current operating system that is the state accounting system access the payroll system, DNR lands management system, Student Loan system, permanent fund accounting systems, child support system and Medicaid. Alaska's primary exposure are small and medium size businesses; that diversified fabric of our economy is wide we've probably done so well in the face of low oil prices and mineral prices and bad timber situation. Those are the business which are paying attention to Y2K and can be enormously affected. Electric transmission we're probably not as vulnerable because we are not on a big complicated grid like the rest of American. Telecommunications on the other hand we are much more vulnerable. The supply-chain issue we're much more vulnerable. Anchorage is at the end of the supply chain from America's standpoint. Healthcare is a big issue because there are a lot of imbedded chips in those biomedical equipment. (End, Tape 1: LB&A-980210 Tape 1 Side 2 #242) Bob Poe - We're going to have to rely on contingency planning. That's okay. If the system fails, what do we do? Get listings of those critical files. Resurrect that manual form that you use to do. Also we are using the risk management fund at this point to deal with it. We feel that is a justifiable use of the fund largely because those 300 law firms getting ready to litigate on us. There are eighty cases in Court right now on Y2K; the Alaska Bar has opened a Y2K section. The attorneys are ready. We are trying to keep the Legislature informed. We'll be asking for a FY99 supplemental and give you accurate numbers on that. Those requests will be coming through the Y2K office and we'll be asking for CIP request for the year 2000. The reason for that is the Y2K problem will extend quite a ways beyond 9/31/99. We also have to recognize that there are leap year problems and we rely on contingency planning that is just a stop gap measure. In closing, I'd like to say three things. One, I can guarantee is that things will go wrong as a result of Y2K. This isn't something that people are thinking about; it will happen. Second, the real test of all our success is how we get through that difficult period. Finally, I challenge this Committee and the rest of the Legislature and Administration that this really is a leadership issue; it is nobodies fault. It is going to happen. And it is our responsibility to deal with it. (Representative James was back on line) Senator Pearce - I was just at a State Chamber Convention monitoring a panel on what the state is doing but I know the banking industry led by NBA is working very closely to follow their customers and suppliers (tape inaudible, too faint). Is anybody looking the connection between the state and local communities and what is our lives in terms of systems (too faint) Bob Poe - We really do have a three prong approach that is taking care of our own needs, reaching out to smaller unified businesses and local communities. I met with the counsel mayors; I'll be speaking to AFN; I met with the North Star Borough. They are doing a resolution on Y2K. So the first thing we're trying to make people aware of the problem. They're going to need some help. We're trying to bring resources to bear (paper shuffling) but we don't have much financial resources at this time. So when we get a communication from a local government we get on the phone with them and talk with whoever is in charge of their Y2K effort. Senator Pearce - You mentioned that the bonding industry is seriously looking at Y2K compliance and its vulnerability. Do we have any feel for whether or not any financial (too faint) or do we know if any local communities could have problems with their bonding because of it. Bob Poe - The short answer is all of them could have. At this point, the bond industry needs to look and see if you have a plan, are you dealing with it and are you funded. Funding is a big issue. So as the bond question comes up depending on how close you get to the date the risk return trade ? issue that a bond counsel or traders are thinking about is going ?. The risk is higher if you don't have a plan. Or if we looked at you nine months ago and you had a plan and it looked good but we haven't seen much progress it may reflect on your bond. The same thing with insurance. Both the general insurance for the state of Alaska and the aviation insurance both of those underwriter groups tried to include a rider eliminating any kind of protection with regard to Y2K. Because we had a plan we were able to take care of the general liability insurance; we still haven't worked out the aviation insurance. Representative James - One of the things I have read or heard about Y2K is the cost; how much work there has to be; what kind of plan you have to have, can you tell me in simple terms why this is so complicated? Bob Poe - It is not very complicated. The computer problem itself is simple; it's a two digit date problem. The problem is it is so pervasive. We've become so dependent on so many automated systems and they are so intertwined today that's what makes it complicated. Representative James - To go one step further, what's so complicated about changing from a two digit to a four digit? Bob Poe - It's not in the simple sense. The problem is there are so many different systems; so many different solutions to solving that date problem. If you have an old system there is one set of solutions to reprogram all the formats, but if you have something in a more modern language the solution is different. The other thing that is challenging is if problem with the imbedded chips about 2-4% are going to have date problems; the key is knowing which one. Most of its going to be like my VCR it's going to blink just as well after 2000 as before, but the imbedded chip in a fire engine says that I haven't been maintained for 99 years I don't think I'll run we have to deal with that. That maybe as simple as contacting the manufacturer and find out what the reset routine is or have your maintenance people put those machines on the ? when the date turns and tell them they are all maintained. We need to figure that out and each one of those particularly the imbedded chips have unique solutions. We have to figure out the solution for each one. Representative Martin - I think we should get involved. I do take objection to the perceived threat that if we don't do something we're going to be sued. Bob Poe - I'm not offering a threat. I'm just simply saying if we don't develop a case that we've made a good faith effort to solve the standard practices to solve it we are much more vulnerable than we would be if we'd taken action. Chairman Phillips introduced Red Boucher. Red Boucher - My name is H.A. "Red" Boucher; I am former Lt. Governor, Mayor of Fairbanks and State Representative. I'm currently a computer consultant. About two years ago, I became a part of a national and international organization sponsored by Purdue University, the Center for International Strategic Studies. In 1960, one megabyte of ram cost $3.2 million; today one floppy disc costs $1 and contains 1.3 megabytes so it wasn't a computer decision; it was a management decision. They just punched in two numbers instead of four. The real problem and somebody said why wasn't it corrected it was kind of periferated. Nobodies going to be using these programs; nobody even thought of it. It was only about five to six years ago when people began to ask questions. I have brought two videos which I'd like to pass out to each member of the Committee. It is a three hour tape put on by Senator Robert Bennett's committee of which Senator Stevens is an ex-officio member. It is a bipartisan committee and at the end of listening to this, then make your own decisions. You deal with the cost section of the problem. The people down in the engine room made the mistake. They are trying to correct it now, but it is the executive and Legislature who is going to have to make the decisions. We are now part of a net worth world that we interface. If every single computer in the building and in the state was fixed how about the imbedded chip in the power grid. We are fortunate we are not connected to the power grid outside. Based on two and half years of research, this is real and as Senator Bennett said it scares the hell out of him. It scares me not because we can't solve it but the level of public awareness is nil and people who have to make the decisions should rely on the resources available.Last year I didn't see any legislation about Y2K. I predict that you will be bombarded by insurance companies, legal aspects and others in the coming session. Representative James - No one seems to come up with a solution? Red Boucher - There is no silver bullet. It never happened before and the greatest thing you can do is become informed, hold public hearings and interface with the international and national experts who provide life line facilities. Bob Poe - One of the things that happened last year was numbers and solutions were identified. By beginning of session we will have to you a supplemental request which will be very specific about which things we do to do and what the cost will be. Representative James - I appreciate that because I do understand the problem but I haven't seen anyone come up with a request for what it's going to take to change it so I'm happy to hear one is forthcoming. Bob Poe - The other thing I'd offer is as we go through the work plan and learn more we'll get smarter as we go. This project has never been done before so anybody who claims to be an expert isn't because there aren't experts. People haven't done it before. So there is a certain amount of getting smarter but we'll give you firmer numbers at the beginning of session. REVISED PROGRAM REQUESTS Chairman Phillips moved back up the calendar to Representative Martin's motion to approve RPL#06-9-0128 to exclude the words "Statutory Designated Grant" and replace it with "Statutory Designated Program Receipts". Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#06-9-0129, Health & Social Services, Consumer Affairs Position, $45,000 MHTAA Receipts. Senator Halford - Explanation? Janet Clarke - This is the first time this request has come before the Committee. This position would do is provide a Mental Health Consumer Affairs position to consult with consumer boards in the development of policies for mentally ill individuals. There are many states that are developing this kind of position. A mentally ill consumer which actually be in the position. Chairman Phillips - Mr. Teal, your statement the FY00 funding request for this position is from Mental Health funds, future funding could impact the general fund. How? David Teal - All we are referring to there is they ? with another RPL. Once you create a position it doesn't necessarily go away. Senator Pearce - Why is this coming outside the regular budget process? (tape inaudible, too faint). Janet Clarke - My understanding is that consumer advocates have been asking for this kind of position of a long time. I know there was some confusion about this position could be established in state service, what other states have done and research was done in the interim when this idea came up a year ago. So the position was not included in the budget because people didn't really understand what the advocates were talking about and how it would fit in the state system. In the interim the Mental Health Board met with consumers, Mental Health Trust Authority and the Department, did some research on what other states have done, how we would establish this position, what the job duties would be, etc., and the Mental Health Trust Authority agreed to the concept in May but the details hadn't been worked out and then they authorized this at their August meeting. Senator Pearce - authorized at their August meeting, departments are I assume in the process of building budgets for the coming legislature so what is the extraordinary circumstance to look at it now rather than during the full legislative process and look at it as part of the larger picture (tape inaudible, too faint). Janet Clarke - The Mental Health Trust Authority authorized the position as one of their recommendations for FY00 budget. At the same time at their August meeting they authorized the Department to go forward with this position now because the advocates have been pushing for some time that this position was necessary and really it was the Mental Health Board, the Administration and the Trust Authority that hadn't quite figured out how to do it so they believed it was worthwhile to go forward. I believe they heard from a lot of beneficiaries about the benefit of this position and they were convinced they needed to go forward. Representative Martin - Reading the previous report, Mental Health had requested this position before for more than one year. Evidently we didn't approve it. This is still asking for it. Nelson Page - Mental Health Trust Authority - The reason for the timing on this is that we have been exploring the possibility of this position for some time. There wasn't really a consensus on what the position should be and that was what we were trying to facilitate and that was what we were trying to facilitate, the consensus. That didn't come to us until this summer. When it did come to us actually we were surprised with the group of beneficiaries that we have we usually don't get this strong a consensus on what to do. As soon as we had that consensus that's what we approved. We have approved Mental Health Trust Authority funds for the position for FY00 and will be included in our budget recommendation. Chairman Phillips - Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve the RPL#06-9-0130, Health & Social Services, Children's Health Outreach, $211,500 Statutory Designated Program Receipts. Chairman Phillips - Mr. Teal, you said there is a minor technical problem. David Teal - The minor technical problem was that the grant was for $1 million and the fiscal year amount didn't add up. The Department has clarified it; the FY02 number should be $157,000 and it does add up. Senator Pearce objected. Senator Pearce - I'm not sure (tape inaudible, too faint, paper shuffling) Representative Martin - It goes right in to what I was saying before even though they have temporary receipts right now that will allow the position they are also saying that they will have to have money next year through general funds and all these grants that use to be designated this will be general fund and technically it is still general fund moneys even though we call it a grant. The full legislature is suppose to be responsible for these things no matter what we call it and I hope this group will go to the Finance Committee where we evaluate it. It seems to be a open door position now that anything that comes as a grant or gift will be put under this designated grant and dedicates general funds. Janet Clarke - The money from the Robert Wood Johnson Foundation and the Crockett Fund will help supplement even the state's effort for the Children Health Expansion Program that the legislature authorized last year. The funds will be used for outreach as required under the Federal expansion. The Robert Wood Johnson Foundation expanded their role in helping the state implement the Children Health Expansion Program so it is consistent with the direction the legislature authorized. As part of the Program there is a requirement that the state do outreach and go out and identify children that may be Medicaid eligible and if not benefited by the Medicaid program how they may benefit by the new expansion program that the legislature authorized. We will use the funds to actually provide a couple of grants. I do have more details that I can share with you. One of the pilot sites is in the Mat-Su area; we believe there are a number of children. We are going to specifically work in rural Alaska with a consortium of the grant to go out and look for children who are Medicaid eligible. They are covered 100% if they are Native children with Federal funds. There will be some technical support as well. Senator Pearce - Has our CHIP program been approved by the Trust? Janet Clarke - I know we have pushed the implementation date to March 1, 1999, based on the amount of money that was approved by the legislature. I do not believe our state plan has been submitted to some of them. Senator Pearce - How many programs that we did pass why would we take this money to go out and find more children. We've got a program; let's get started and see how's it's working and then talk about (tape inaudible, too faint). It is my understanding that we don't have (tape inaudible). Deborah Smith - CHIP Coordinator for Department of Health & Social Services - Is the question whether or not Alaska has actually submitted or approved its CHIP plan? The plan was submitted on August 31 and we anticipate response for ? within the next two to three weeks. We have not received any questions from them since we submitted it. Senator Pearce - The implementation isn't until next March? Deborah Smith - That is correct. Representative Croft - I read here that the Robert Wood Johnson Foundation is meeting today to discuss that grant. Do we now if they've given us the award? Deborah Smith - They would not be making the final decision only recommending to the full Board. This is just the meeting of the national advisory committee. Representative Croft - And the grant has a start date of January 1, 1999? Deborah Smith - Yes Representative Croft - I think it makes sense to start identifying but it may make sense to delay this until the next meeting when we see what the Foundation decides? Janet Clarke - I know that with the Children's Health Expansion money the Federal Government has put some limits on spending any of that until the implementation date actually occurs so some of the administration work and initial outreach we can't do until March 1 under those rules so the intention was that this grant would help us get started before we bring children on. Deborah, is there any harm to the program since we have an implementation date of January 1, 1999, in delaying? Deborah Smith - This RPL has two pieces to it. One is the Crockett Foundation money which is available right now; the second piece is the Robert Wood Johnson Foundation money. As long as this RPL for the RWJ money would be able to come before this committee prior to the start date of January 1 I would see no problem in delaying but obviously the more time we have to plan on how we are going to implement with resources the better off we will be. Representative Martin - Is part of this money coming from the Mental Health Trust Authority? Janet Clarke - No Representative Martin - I'm wondering how come after all these years that we haven't found all the children available? Chairman Phillips hearing objection, called for a roll call vote. Yea: Representative Croft Nay: Representative James, Representative Therriault, Senator Halford, Senator Pearce, Representative Martin, Senator Phillips Chairman Phillips - The motion FAILED by a vote of 1-6. Representative Martin MOVED to approve RPL#06-9-031, Health & Social Services, Work Initiatives Project, $224,200 Federal Receipts. Chairman Phillips hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#06-9-0139, Health & Social Services, Energy Conservation Initiative, $1,328,700 Federal Receipts. Senator Halford objected. Janet Clarke - This comes from a low income energy assistance program. This is a competitive grant that the Department reviewed as part of a low income housing energy assistance program which provides funding to help low income families achieve assistance in energy. We will look at weatherization projects, energy efficient products incentives and financial planning. In our Department we have a Federal program that actually provides for fuel purchasing. This would go to those folks who are beneficiaries of that program and the reason the Federal Government offered this program was to reduce the energy needs of those low income individuals. Senator Halford - This is a $1.3 million; we have MEA ? budget weatherization efficiency stuff I'm just wondering if this would supplant other state funds in any way? Mary Riggen-ver - Program Coordinator, Energy Assistance Program, Division of Public Assistance - These funds would not be supplanting any weatherization funds. Basically what this is geared towards is helping individual households learn how to use energy more efficiently and reduce their demand whereas Alaska Housing Finance Corporation Weatherization is geared more to coming in and making retrofit to the home. This is designed to help households learn to reduce their consumption. Senator Halford - Does this go to the individuals or is this money totally used in the program to tell individuals to turn out their lights. Mary Riggen-ver - The grant would go to RURALCAP that the grant has been written for and it uses the MERICORP members to help with projects in the public schools and also has pieces of some rebate purchasing so the best way to reduce energy is to learn how to use air ceiling. The MERICORP members will help that household do that and they may want to have rebates on buying high energy or high efficiency on stoves. They are still paying for much of the cost but there will be some incentive to make those changes. Senator Pearce - How much of the money actually goes to the low income recipient and how much is consumed by the poverty pentagon? Mary Riggen-ver - Almost the entire grant goes to RURALCAP and a lot of what the grant is focused on is training and education. We have a breakout in the grant application to the Federal Government but primarily we are paying for education and rebate to the family if they chose to take advantage of the different rebate options that are available to them. Chairman Phillips - Do these people pay their light bills? If so, it seems to me if they have a high light bill they will do something about your own way of living. Mary Riggen-ver - Part of the education is to learn what draws the most electrical usage. Senator Pearce - Are there missions and measures developed and is there accountability that we can see to measure the grant to RURALCAP? Does someone go back and see how they spent over $1 million and decide whether it was efficient or effective? Mary Riggen-ver - A key piece of this grant is an evaluation which has to be shared with all the state. It is a demonstration grant. Part way through and at the end there is an evaluation. Senator Pearce - That is different from what I asked. I asked if there were measures built in not at the end. Mary Riggen-ver - I guess I'm not clear on your question. Senator Halford - With regard to the Federal application, how much of the money will be used in rebates for other different benefits passed on to low income people and how much will be used in the administration, training, operation of everything else? Mary Riggen-ver - As far as the majority of the grant, I don't have a total for you as far as the grant is written in terms of the improvement cost of the household. A lot of things depend on what needs to be done and the service is geared toward that. It is hard to say what the actual cost would be. As far as the majority of the cost, it is education and doing assessments and providing the energy fairs and materials for the public schools. Representative Martin - It seems we've be doing this for a number of years. How many years have we been running this through the Federal moneys and how does this conflict with the Power Equalization Program which in my opinion encourages the rural community to use as much energy as they can and we reimburse them so we really have a conflict there of two forces running against each other. (End, Tape 2: LB&A-980210 Tape 2 Side 1) Mary Riggen-ver - and often when you have a large electric bill you may not know what is causing that bill to be so high. It may be one of the particular items or appliances you are using and this is something that you've identified that could be replaced and you are helped decide what is the best type of product to buy to save you the most money in the long run. Those are the things that you're helped with. Representative Martin - Alaska Housing Finance Corporation has been doing this for years as well as the Homebuilders Association. We've paid them very well but I take this as another load of money to go out into RURALCAP areas to keep people employed. Chairman Phillips hearing objection called for a roll call vote. Yea: Senator Pearce, Representative Croft Nay: Representative James, Representative Therriault, Senator Halford, Representative Martin, Senator Phillips Chairman Phillips - The motion FAILED by a vote of 2-5. Chairman Phillips moved RPL#06-9-0140 to the bottom of the calendar to correspond with the discussion on the Western Alaska Disaster Relief Status Report. Representative Martin MOVED to approve RPL#09-9-0058, Military & Veterans Affairs, Participation in State Fair and Municipal League Conference, $32,182 Federal Receipts-FEMA. Chairman Phillips hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#09-9-0059, Military & Veterans Affairs, Participation in FEMA sponsored Project Impact, $50,000 Federal Receipts. Chairman Phillips hearing no objection, the motion was APPROVED. Chairman Phillips moved RPL#10-9-4021 CIP, Natural Resources, Purchase an estimated 41,000 acres of land on Northern Afognak Island to the bottom of the calendar. Representative Martin MOVED to approve RPL#10-9-4016a, Natural Resources, North Slope Borough Natural Gas, $136,220 Statutory Designated Program Receipts. Greg Swank - It has been formalized. Chairman Phillips hearing no objection, the motion was APPROVED. (Representative James left the meeting) Representative Martin MOVED to approve RPL#20-9-0003, Corrections, Female Offender Residential Substance Abuse Treatment Program, $51,104 MHTAA Receipts. Chairman Phillips hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#20-9-0006, Corrections, Existing Community Residential Center, $325,000 Federal Receipts. Chairman Phillips clarified Mr. Teal's statement that he was not sure how this subsection was going to be implemented. It was clarified with Legal Services. Chairman Phillips hearing no objection, the motion was APPROVED. Representative Therriault raised a question on a prior approved motion. - FEMA provided $32,000 receipt of these funds will replace general funds previously earmarked to use for Federal programs. This is one of those areas where we freed up general funds, should we take the reduction in Federal funds or allow them to be shifted. I'd like to get more information on what is going on. David Liebersbach - Acting Director of Emergency Services - The extra FEMA funds made available at the end of `98, that is Federal 98 money made available to us we would like to apply to a couple of projects so we could free up state money that we can match with other Federal receipts that we have available. Now primarily we will use other Federal receipts, those other funds Federal and State to augment some training. We have the training already to be presented and this would be used to bring local responders into the training. Representative Therriault - We authorized a general fund match for a special program; we don't need it all now so we are shifting it to something else. I'm not sure what we are shifting it to; were we short on matching on some other Federal pot and if so, why? David Liebersbach - I can't say we are short in matching some other Federal pot because we are just now getting our Federal year 99; we haven't actually got it. We would anticipate there will be additional add on moneys like there was on this particular one throughout the year, the Federal year. Representative Therriault - Are we being asked to give blanket approval from this day forward to take that pot of freed up general funds and just match these additional Federal funds that might become available? David Liebersbach No I think that if we get more Federal funds we will have that, Federal authorization for those funds. We will have to come back here. Representative Therriault - If we don't capture additional Federal funds will there be a general fund balance which will carry forth potentially to the end of the fiscal year and would lapse but by passing this we would give you authorization to spend? David Liebersbach - The state general matching funds will be used as we planned to use them which would be for the AML and state fair but if we get the Federal funds that are eligible to be applied to those we would free up those state funds and apply them to the training. If we don't take the Federal funds then we will have to use them where we are authorized to use them. Representative Martin MOVED to approve RPL#21-9-0007, Community & Regional Affairs, Rural Utility Business Advisor Program, $100,000 Federal Receipts. Chairman Phillips hearing no objection, the motion was APPROVED. epresentative Martin MOVED to approve RPL#21-9-0068, Community & Regional Affairs, Southeast Alaska Community Economic Revitalization Team, $10,000 Federal Receipts. Chairman Phillips hearing no objection, the motion was APPROVED. In regard to RPL#09-9-0002 CIP, Military & Veterans Affairs, AK National Guard, Federal Scout Armories, $1,350,000 Federal Receipts and RPL#10-9-1014 CIP, Natural Resources, Parks & Recreation Mgmt, Parks Mgmt, Symns Rec Trail, $300,000 Federal Receipts, Mr. Teal stated that at the last August meeting, the Committee approved both capital requests and we looked and the language is missing from the capital budget that allows us consideration of excess Federal and other receipts. I faxed a memo with a Legal Services opinion. Without detailing the problem, I think the solution is what you care about it; your actions were appropriate or legal; we just need to clarify to OMB that the basis for the approval was not necessarily what you thought it was but it's okay. It will help to clarify it through a letter. I would recommend not telling them how to do it, just tell them there is a problem and they can figure out how to rectify it. Chairman Phillips requested Mr. Teal draft the letter. Representative Croft MOVED to approve RPL#10-9-4021CIP, Natural Resources, Purchase an estimated 41,000 acres of land on Northern Afognak Island, $74,397,953 EVOSS. Senator Halford - I think there is a legitimate question as to whether it is in order for this Committee to take action that is prohibited by the State Constitution. David Teal - I asked Legal Services about it. They said there would be no difference in your failing to consider it or rejecting it. It wouldn't prejudice the issue either way. It is probably better to reject it than not consider it. The letter to OMB on the other CIP RPL's could include that you rejected it for these reasons. Representative Croft - I thought it would give the Committee an opportunity to put those objections on the record. Senator Pearce - Well, this question has been floating around so I'd like to see how the legal authority for this Executive Branch responds. Molly McCammon - Executive Director, Exxon Valdez Oil spill Trustee Council - We just got a copy of the legal opinion yesterday and haven't had a chance to look at it. We believe this proposal is properly before you. We've had 25 similar RPL's before you in the last five years in which you have taken action on. We believe this one is consistent with those RPL's; there is no difference between them. Representative Martin - Just because we did something wrong in the past doesn't mean we should continue. David Teal - There is no other opinion. This request came to us to late and we'd already asked Legal Services on the prior two. Chairman Phillips hearing objection called for a roll call vote. Yea: Representative Croft Nay: Representative Therriault, Senator Halford, Senator Pearce, Representative Martin, Senator Phillips Chairman Phillips - The motion FAILED by a vote of 1-5. Senator Halford - The settlement was a negotiated deal that used a process which has had constitutional questions from its inception. If we are getting into the discussion about how the approval mechanism works then we as a Committee should request free analysis from Legal Services. Is our disapproval a statement of the specific item or a process question? Chairman Phillips - Mr. Teal, would you honor Senator Halford's request. Representative Therriault - Also referencing the last five year's actions. Tracy Cramer - Exxon Valdez Oil Spill Settlement Council, ? Rescue Center - The Shulak land acquisition, the Horseshoe Bay acquisition, the .... Representative Therriault - Were those all yours with the lack of this language in the capital budget? Tracy Cramer - That's the problem. Legal Services has determined that the legislature had to previously look at an action on ? so LB&A can't now take action. Representative Therriault requested the list of those actions. Tracy Cramer - Last year the corporation ? the same language ? Chairman Phillips requested Mr. Teal follow through on that request. OTHER BUSINESS - WESTERN ALASKA DISASTER RELIEF STATUS REPORT David Liebersbach - Acting Director, Division of Emergency Services - The Governor declared a disaster on the third of June for lack of fisheries in Western Alaska, including Bristol Bay, the upper Yukon drainage for a total of 99 communities. The second disaster declaration on September 16 included or added four more communities for a total of 104 communities. Senator Halford - In the definition of a disaster area, you are including basically all of Western Alaska, the coastal areas and then up river Yukon and Kuskokwim to what point at the high point? David Liebersbach - On the Yukon to Eagle, Canadian Border and the entire Yukon drainage and Koyukuk and Bettles. Senator Halford - What about the Kuskokwim? David Liebersbach - Not the entire Kuskokwim. Not McGrath. I believe Aniak. We do have a map with all communities involved. Representative Martin - I'm concerned that the Governor and administration may be expanding what we normally consider a disaster from an active disaster of a flood or earthquake or volcanic eruption to what is economic and where does the Department fit in. I think you're being used; you have to follow orders, of course, and this is strictly an economic thing rather than a natural disaster. Have we expanded the word or has the Governor and Legal Services for some reason other enlarged this concept? David Liebersbach - No, I do not believe so because the determination on the cause of this disaster was linked very scientifically if you will. I wasn't involved in that but I understand it was linked to the El Nino and the forming of the waters that cause the lack of salmon from coming the second year in a row. Senator Halford - I thought there was a new Washington report that came out which said the opposite? That it wasn't El Nino but it was the variability of the fisheries itself. Didn't that just come out in the last two or three days? David Liebersbach - I'm not aware of that report but it's possible. Senator Halford - It was a news item at the time it came out. Representative Martin - But El Nino didn't discriminate on certain rivers and coastlines. El Nino affected everything on the Pacific Rim so why are we saying just certain regions? If El Nino is to blame so everyone in South East, Cook Inlet, etc., should share. David Liebersbach - Operationally we put 11 mobile teams managed out of a central Bethel location to take applications from communities in Western Alaska, Bristol Bay and lower Yukon. Four mobile teams were managed out of Fairbanks managing the upper Yukon and Koyukuk. This has been going on through August and all of those teams are back out of the field and all of our field operations are completed. Additionally managed out of Bethel was processing and delivering of fish to three coastal communities in lieu of subsistence stock. We also coordinated operation with volunteer organizations through VOFATD; that organization was headed by Red Cross and coordinated with them for any kind of volunteer or donations to meet unmet needs that we could round up. Senator Halford - What were the communities where purchased fish was delivered? David Liebersbach - Cooper Bay, Chevak and Salmon Bay. What the declaration called for was the emergency living expense program that you have a hand out that describes the eligibility. It included salmon fishing vessel permits, crew permit on those vessels and fish processing plant. Those that live permanently in the declared areas were eligible for the emergency living expense. Senator Halford - How did you determine where the people worked in the process? Diane Alcantra - Recovery Manager, Emergency Services - Through their 1099 for the prior year. Senator Halford - If they worked one day in a processing plant during the prior year they were eligible? An awful lot of that is seasonal and some of the areas you are talking about had so little economic activity in good years so I wonder where some plants work for a week and that was it and others haven't worked for years. Diane Alcantra - We accepted their information and self declaration. Senator Halford - Any income from fisheries regardless of how small made them eligible if you worked in one of the three categories. David Liebersbach - The monetary eligibility was the maximum of $1500 per person or maximum of $5000 up to $5000 per family. It was to be applied only towards food and that was other than those who were food stamp eligible but same types of food, electricity, water or sewer and fuel for heater purposes. The awards if you were found eligible you award would be dispensed via authorization to a vendor and payment to a vendor can be half of the recipient for those things based on the recipient's designation of how they would like that award dispersed. The status of the program right now again on the fact sheet given to you at the bottom shows that we have taken 5343 applications; we've approved 2424 of those; we expect to complete the application approval process by the end of October and disbursement of those approved moneys to the vendors will be by the middle of November. We are still taking applications via 1-800 and that will be available until October 31. We anticipate more applications; right now they are running about 30 new applications a day. Senator Halford - have you dispensed the new applications yet? David Liebersbach - Yes, we have. Representative Croft - On what basis were you rejecting the applications? On what were the most rejected? Diane Alcantra - Not a resident of the effected areas or didn't work in the effected industry. David Liebersbach - The fish program total of 12,000 fish were acquired chum salmon; they were processed, frozen and shipped 8150 of those salmon to the three communities and it is in lieu of their normal subsistence take. Whatever remaining 3900 fish yet to be shipped and those are pending freeze up as the folks don't have the capability of maintaining them out there particularly with potential electrical cutoffs. Senator Halford - How does that compare with their normal harvest? David Liebersbach - We have Fish and Game in developing the needs, etc., and I can't give you that answer right now. Diane Alcantra - I believe it is somewhat less; it was based on what leaders canvassed community. Senator Halford - Is the fish all for human consumption? David Liebersbach - Yes, we are not providing fish for dog food. There is through the volunteer organization an effort to get fish for dogs in communities on the Yukon. Senator Halford - Do you have any idea what you paid for the fish per pound? Carol Carroll - I do not have it available but will get the information. We do have it; I just don't have it calculated out. Senator Halford - I just hope the state paid the average market value instead of more. David Liebersbach - We purchased the fish, paid to have them processed and shipped. They were not hatchery fish; they were purchased through a fish purchasing in Kotzebue and processed in a processing plant and stored in Unalakleet and shipped to the communities in need. Senator Halford - How did you account for the money in terms of the source of the appropriation? What are the source of funds for the expenditures? What is the balance in the disaster relief fund? David Liebersbach - It came from the disaster relief fund. Diane Alcantra - I don't know what the balance is. Carol Carroll - The balance of the disaster relief fund at the time of the declaration was $20,000; I do believe it is that right now. Senator Halford - So there was $20,000 in the fund and you've spent $7 million, where does the money come from? Carol Carroll - There is a process in Statute where you can go and access money to spend before coming to do a supplemental. We will be coming to the Legislature for a supplemental. We did follow the process in Statute. Senator Halford - The process in Statute deals with going to other appropriations transferring appropriations in a kind of priority series. You did not attempt to transfer or look at any other appropriations? Carol Carroll - We worked through the Division of Finance and we have a Memorandum of Understanding with them. It is the same way that we do the DNR fire. Senator Halford - Are you familiar with the opinion that was circulated a couple of weeks ago on that process? Carol Carroll - No, I am not. Senator Halford - But there was no effort to utilize other appropriations or transfer appropriations into the availability account or whatever the disaster relief fund is called? Carol Carroll - Not to my knowledge. Senator Halford - It still comes back to the same question. The Constitution says that money can be expended subject to an appropriation. Somewhere there has to be a book that has an appropriation that this expenditure is coming from. Carol Carroll - This is the same process we have used for almost all of the disasters I am aware of if we didn't have money in the fund. Representative Martin - I would disagree with that Senator Halford. We are usually talking about natural disasters; this is one which was generated as an economic one and I would say other regions experienced disasters, i.e., crab, and they didn't get any relief. I think you are stretching the rules by saying this is similar to a natural disaster. In a lot of those places we get reimbursed by the Federal Government when we use general funds; we are not going to be reimbursed this time for an economic disaster. Representative Croft - What legal opinion was Senator Halford referring to? Is that the way you want ???? Senator Halford - It's probably the same response I got when I asked. I don't know who to ask the question but the disaster Statute is very specific in terms of how you go through the process to get money and I don't know whether, you guys are trying to manage and operate programs and you are talking about probably the three poorest communities in Alaska and even in a good year they are so in a bad year I don't want to act like I don't care about buying fish to give to Hooper Bay; I don't. I don't have a problem with it but the process requires an appropriation and you have now got $7.5 million and somewhere someone has had to appropriate some money. (End, Tape 2: LB&A-980210 Tape 2 Side 2) Representative Therriault - It says here that the eligibility limits will be set at the highest allowed to serve the largest population; so what were the limits set at? Mary Riggen-ver - 60% of median income for Alaska. It is roughly equivalent to 150% of poverty. Senator Halford - What are the Federal guidelines for poverty for a family of four. Representative Martin - It's $28,000 for a family for four. Janet Clarke - I would like to point out that this low income home energy assistance program is part of the $10 million package Senator Stevens worked to get for the State of Alaska. The bulk of the funds $8.3 million are already going out to tribal entities (tape inaudible, blowing), Yukon Kuskokwim Bristol Bay (tape too faint) to complete the package. Other regions have received the funds directly from the Federal Government. This is the Bristol Bay region share. We felt that it would help make funds available for longer times during the winter. Currently, we are able to serve an average of about 35 ? during the winter or three months over the winter. Representative Martin - According to the latest Department of Labor Bristol Bay is the richest area not only in Alaska but in the Nation per capita income. It has always been up there. Janet Clarke - This will go to low income people who live in Bristol Bay. Representative Croft - Why does this money have to come through us? What route did the other money take and why did this take the same route? Mary Riggen-ver - In several areas of Alaska the block grant is administered directly by tribal organizations and the state handles the balance. The Bristol Bay is one handled by the state so the money directly to the tribes that are directly managing the block grant recipients and the state take the money for the area which is Bristol Bay. Senator Halford - What is the eligibility number again for a family of four? Janet Clarke or Mary Riggen-ver - I think 150% of $28,000. I know $42,000 doesn't sound right. When we were doing children self expansion at 200% poverty was at about $40,000; I'm not sure. Senator Halford - What do they get? Mary Riggen-ver - I don't have the figures but it seems to me for a household of one the 60% of median income was about $1080 for a month and as far as the grant amounts we're looking at an average for household between $2000-3000, probably around $2500 and it depends on household size and income. Senator Halford - So this is $2000-3000 on top of the $5000 in the direct grant? Mary Riggen-ver - No, this would be the only funds they have in this area. Senator Halford - I was just going to say I still have a question about ? but if we are trying to match ? fair we can't very well say let's give it to everyone else through a tribal entity and those who come to the state and try to work with the state you can't have it. That is less than ?; this may be the right deal for everyone else, defeating it will have an unfair outcome. Senator Pearce - How is it actually paid out? Is it after the fact that the person pays their energy assistance which I assume is to help pay their electric bills or does the person pay their bill and we reimburse them or do we pay a percentage of the bill. ? - Grants are paid out directly to the vendor and we can allocate part of the grant to oil and part to electricity and basically it is what they tell us on their application as to how they want it. It's made as a direct payment so if they have past due bills it goes to pay past due as well as current or future. Senator Halford MOVED to approve RPL#06-9-0140, Health & Social Services, Emergency Energy Assistance, $1,700,000 Federal Receipts. Chairman Phillips hearing no objection, the motion was APPROVED. David Liebersbach - You have the financial plan and budget before you. Other state programs involved in this was a waiver or refunding permit fees except for the $15 retained for (tape inaudible). Waiver of the PCE cap for these folks Senator Halford - Was this for residents of the effected area only? David Liebersbach - Yes Senator Halford - We may get a challenge from outside permit holders on the differential between in-state and out-of-state permit fees? The second thing you said was a waiver of the PCE so they'll be able to spend more than $7.50, the amount now. That, of course, is drawing down ? appropriated account which means the PCE account goes bankrupt quicker? ? - I believe, the PCE issue was not becoming eligible for ? because they were not paying their bills directly. I don't do that program but that was what I understood. So that because we pay the vendors for them then they ? not eligible for the (tape inaudible, coughing). Senator Halford - Well, that is an administrator's question. Waiving the cap has an effect on the Feds ? Program. I may have misstated that; I don't believe the cap was waived. Maybe I'm wrong on that. Annalee McConnell - The PCE Program normally the utility bills are paid by the person and because in this case the payments are being made to the utility company and not as cash grants to individuals we had to make an accommodation for that. Any payments made on behalf of a person to the utility company could count for PCE. It does not change the amount the person would be eligible for or the utility would get. It is simply an administrative matter. The whole aim of this program was not to do direct cash grants but make the money available for the most essential living needs like the utilities and food and otherwise we would have had an bad situation for both the utilities and customers. `we were already having people who were getting cut off notices and having their service cut off. Senator Halford - So that has no cost; it is part of the cost of the other program? Annalee McConnell - Yes, there is no cost impact to it at all. Representative Martin - It does have a cost. I really think this whole thing is getting to the legislators' authority in receiving money and spending money, you're not only expanding money without proper authority but you are cutting off revenue that go to agencies of the state and I don't think you have the right to do that. Let the legislature battle it out but I really think under the name of emergency you went too far with constitutional responsibility that belongs to the legislature. David Liebersbach - At this point in time there are several programs that the Governor is putting in quite a bit of time with the Congressional delegation and different Federal organizations to bring more money into the state. At the original declaration we requested a FEMA declaration; that although in writing has not been for all practical purposes was turned down because FEMA didn't want to set a precedent; they have an issue on both West and East Coast long term issues of low fisheries so they did not want to set a precedent with that. Senator Halford - Has FEMA ever declared an economic disaster? Annalee McConnell - FEMA has twice declared fisheries disaster, once in Washington State in the `80's and once in Alaska in the late 70's. They have been concerned about their budget situation right now and although they did not directly provide a FEMA disaster, FEMA is heading up and actually Secretary Wick himself is heading up an international agency to provide financial assistance to Alaska. Senator Halford - While FEMA didn't do that, FEMA has been heading up this task force of multiagencies a result of that was the receipt of $10 million from the Department of Energy which is an emergency fund they have and that was Federal money available. is that the money that went through the tribal organization in the interior and we just approved ... David Liebersbach - That is correct. The SBA has declared this a disaster and they do currently have teams in Alaska going out and taking applications for low interest loans. The SBA's program includes political subdivisions which are antiguous to the area to the declared areas. As an example it includes some of the areas like Kenai Peninsula for the low interest loans. Senator Halford - So if you have a boat loan, a permit loan and you didn't make any money two years in a row and you live in Kenai or Mat-Su or somewhere else and you are an Alaska resident you can access the SBA program if there is a way to consolidate or somehow guarantee a loan? ? - You can apply for low interest loan at 4% for a working capital loan to pay your expenses so there is some flexibility ? gearing up costs. Senator Halford - What about area of eligibility for that loan? ? - It has to be in the disaster area or one of the political subdivisions and you had to have been effected by the disaster. Senator Halford - So if you are a Bristol Bay fisherman who lives in Kenai you are eligible; are you eligible if you live in the Mat-Su Borough? David Liebersbach - Also the FDA, Department of Agriculture through food banks has provided a couple hundred thousand dollars worth of food primarily to the school system ? school lunch program to effected communities out there to feed. The Bureau of Indian Affairs has provided some emergency assistance funds I don't have a figure on that. Senator Halford - Are they going through state appropriation or directly David Liebersbach - Those are going directly through the Federal agencies such as DIA; likewise I believe with the food bank. There are a myriad of other what appears to be other Federal sources that are coming in; money from different agencies to and it is varying. Right now they are going through there `99 budget but Senator Steven's has tagged on to some bills a total of another $50 million in Federal money. Not all that would come direct to the state; some of that will go to SBA to about $5 million for them to back up their programs that they are doing now. It does include quite a bit of money for direct branch to the communities and it provides for some money to reimburse or basically the state to recover some of its cost. It is similar to but not like the FEMA program. Some of it is very new. It comes through the Department of Agriculture and I believe the Department of Commerce so there is a multitude of ways additional $50 million that have not been approved or assigned yet but between the Congressional delegation and the Governor's office in Washington and here quite a bit of work is going on. Annalee McConnell can provide further details on that issue. Chairman Phillips - I would like to have a copy of this, send it to the Legislative Budget & Audit Committee members and perhaps the Finance Committees. I am tell you you are going to have more questions coming. This is the first time I've seen a layout of what areas to the state. I've been reading about it but I couldn't visualize it. Representative Therriault - The possibility of an additional $50 million from Congress will that allow for the ? in the state general fund and your total here of $7.8 million is that just obligated and the number might be higher? David Liebersbach - Yes, we expect that we may need - the remaining applications that have not been processed at this time that those applications that are approved will probably take up the remaining $4.1 million out of the original $12 million finance plan. Senator Halford - You listed that one of the things you are taking into (tape inaudible, paper shuffling) is $1.5 million match for last year's program. That program was a combination of municipal grants and $500 to each individual I think they were loans at that point, what happened to that program? After we adjourned, there was the statement the communities couldn't make the match and that program was dying but is that program in place and the other program is on top of it or what's happened to that. David Liebersbach - The Magnuson Stevens money which I believe you were referring to required a match by either from communities or from the state. Most of the communities were unable to match and has been sitting there With this declaration they have allocated $1.5 million of this $12 million grant to provide that match so that program can go forward. Senator Halford - And that program included municipal grants for stream work and activity in municipalities and also helped municipalities with lost tax revenues from fishing taxes, etc., the answer included an individual low interest, no interest loan program, that didn't have that much interest initially because it was such a small amount, but what happened to that program? David Liebersbach - I don't have a solid answer on; that; that program was administered by ? (tape inaudible, paper shuffling) so I don't have details on it. It was administered by CCRA. Senator Halford - Does anyone in Juneau know what happened to that program? Annalee McConnell - The might recall that at the end of the session there were no general funds provided to match the Federal Magnuson Stevens money of over $7 million and we did say at that point that if we were able to secure an arrangement with the Feds where they would accept in kind or we were able to match projects up we would actively pursue that, however, that has not panned out and of course we now have a situation for the second year in a row of these communities hit very hard by lack of fish runs. Their ability to match those Federal funds is basically nonexistent. The whole point of that program was to provide jobs in the communities on various kinds of community construction projects. There was no individual assistance ? part of the Magnuson Stevens act it was all in this area of community projects to try to provide some replacement income. Senator Halford - Wasn't there something out of the commercial fishing revolving loan fund that was part of that package? Annalee McConnell - I don't think that was the particularly part of the Magnuson Stevens Act, the declaration. The revolving loan fund has been working with fishermen the last two years to restructure boat loans that are held through that program. Senator Halford - This was an individual program that I thought was at least at the point it is explained at the same time the appropriations bill was put on in Finance and then got changed to I guess a community program receipts or something. I thought it was in the same bill. Annalee McConnell -No, There was a piece of impact to the fisheries loan program I don't know the dollar amount off the top of my head but I'm pretty sure that was not part of the Magnuson Stevens Act. If I can check it though, if I'm wrong I will let you know. Senator Halford - I bet it was Representative Ivan's bill but that bill had all the stuff in it I thought. I don't know who to request it of but I would like to have somebody or perhaps Ms. McConnell coordinate what is available in combination of currently approved and things that are working their way along in consort relief to a family of four, pick a community, that live in Quageluk. What does the package represent to them and I would also like to know how it compares to their income from the fishery on the average was in the past. On the one hand we are dealing with a lot of these and these are the poorest communities in the state but within the region they are also the richest communities in the state and their worst year they have probably ten times the average income as Hooper Bay, Chevak, Scammon Bay. I would like to know how the allocation of this benefit goes based on what we all know is the real need of those communities. Annalee McConnell - Senator Halford, we can certainly do that; I can give a lot of it to you right off the top of my head. To put it in perspective in a typical FEMA disaster such as what we had with the Miller's Reach fire the maximum aid which would have been available to a family would have been $13,400. We do not expect to come anywhere close to that amount of aid per family here and I must point out the families in this art of the state although there are certainly exceptions are at the low poverty level. They're also in communities where there are no other jobs. The individual we spoke to the Mat-Su Valley to drive to another job the business they worked for burned down. That kind of situation. We don't have that of course in the villages. so the assistance we provided, the $1500 in basic living expense for food, home heating fuels, electricity in many cases is only going to be $1500 for a family and I think there is something David Liebersbach said which might have been a little confusing to you. he said that our program was $1500 per individual for a maximums of $5000 per family but the only get up to $5000 if you have more than three people in the family. You only get $5000 if you have more than three people in the family if you have three direct fisheries jobs, the permit holder, the crew licensee or fish processing operator. So if there is only one person in the family who has a commercial fishing income then the maximum with $2500 even if they have three children. That is really a very small amount of money. Mary Riggen-ver mentioned we able to get licenses funds; that is obviously a very critical factor in Alaska in these villages if you are not going to have a home heated over the winter you are going to have people freezing to death so the amount we are looking at there is probably $2500 maximum per household if they meet the income eligibility so which people who are not going to get that program. Also the aid which we are hopping to secure through the Federal Government which Senator Stevens' is working on would be limited to people who were below the Federal poverty level. So I don't think we are going to have a situation where somebody has a permit or happens to be able to make a lot of money this year is going to get a tremendous amount of money this year; in fact, the aid is going to the people who needed it the most. It is going to very basic things of food, fuel, electric water and sewer service. Senator - You will get back with us on how all the information is put together. Annalee McConnell. Yes. Some of it we may not know for a while depending on the timing of the Federal funds but we can certainly give you write up what we told you families would be getting. It is sometime hard when you aren't in the villages to remember the kind of impact when you have so many people in the community who are dependent both on subsistence and commercial fishing for their entire year's income and it was (too faint) to get some of the Federal agency people to understand that this is different from a normal disaster that they might deal with like a hurricane where someone may not be able to go to their job two-three weeks but three months from then they will have a job. In this case, if you miss fishing you don't have enough income over the winter and I think they do understand that now. In helped a tremendous amount when Secretary Daly came out and visited some of these villages and we were able to arrange for some people from other Federal agencies to come up here so they really did finally get that message. Senator Halford - I don't see this package being a bad thing for anyone but I am concerned with the appropriation question, the constitutionality of the disaster relief fund. I supported this in the general fund for last year's program but I do think the constitutional question is almost overwhelming and I would like to see if OMB can request from the Attorney General's office a written opinion of how that Statute works, its constitutional affirmative I hope they would say; the legislature would say in affirmative and what process was followed. And I recognize that the process that has not been followed in the past, not that it was just always done this way. I think that is not the real answer. If the process is wrong then whenever it gets down to individual benefits someone from another region is upset because their economic disaster didn't get declared because there weren't enough people or something. I think if we have a constitutional question your process is in danger of being enjoined by a Judge on constitutional grounds and that could happen fairly quickly if somebody were apt to go after it. We've had great programs defeated by attorneys one with I think Zoebel very quickly in the past. Annalee McConnell - I will talk to the Department about that; we did of course follow the procedure in which the Governor sends a letter to the President and Speaker and offers the opportunity of a special session and the Statute says that if they concur in writing that a special session is not necessary one doesn't have to be held. We did outline in that letter that we would be requesting a supplemental. There are a couple of things that have made this situation more difficult. We no longer have a disaster fund that is funded in anticipation of disasters. We always have disasters in Alaska; they may not always be as large as this but we know we have them. In former years, there was a fund and we normally went first there and only when you got to a situation where you had either so many smaller ones or a big one was the fund tapped out. We have of course proposed to the legislature on a number of occasions in the last three years that now that many of the past disasters were closed out which was the reasons the legislature stopped funding or we were told the reason they stopped funding disaster appropriations we have cleaned those past disasters up and I think it would be appropriate to next session to talk about what is a responsible level for this disaster fund. The other thing is that obviously in the middle of a disaster is not the time to try to figure out if the practices have been followed for years have some problems with them but when the crisis is over I think it is appropriate to take a look at it. Chairman Phillips - We will conclude that. The next thing we have is the Salary and Benefit Study mini report. Tom Williams - Senate Finance Committee Aide, Staff assisting the LB&A Committee - At your direction we took a look at all of the responses which came in from Committee members regarding the salary study. In addition, Legislative Auditor, Legislative Finance Director and I each took a look at it in light of the comments and looked for technical issues; we met with KPMG and expressed some technical concerns and asked them to more thoroughly describe how they reached some of their conclusions, asked them to compare their samples to the broader composition of employees, and to tell us how much validity it had and didn't have. They were agreeable to do that, add some more definitions, make things clear based on the data already compiled and they will be coming back with a third draft for us to look at which will address those concerns. We expect them to have a final report back to the Committee for release next meeting. Representative Therriault -I would just ask that the next draft be ? more closely otherwise when we come out with the final product there is going to be a lot of confusion. A lot of these things should be worked out before anything is turned out. I should have said something at a previous meeting; I was surprised that I already had two two-inch thick documents that were radically different in their findings and while I kept them to my self I'm not sure everyone else did. Tom Williams - Yes, it will be scrutinized by staff; again there were a little different expectations of what that preliminary draft would be. It will be a different process. Representative Therriault - When will the next meeting be? What time frame are we talking about in the completion of the final product? Chairman Phillips - That is up to me I assume; my guess it will probably be in the third week of November. Is that about the right time frame? First week in December? I want to avoid the Thanksgiving Holidays. Tom Williams - KPMG said they will be able to get this to us by the 15th or late October. Chairman Phillips - I'm looking at the third week in November; first week in December for the next meeting. We'll make it before Representative Martin leaves. ADJOURNMENT Chairman Phillips adjourned the meeting at 6:20 p.m. (End, Tape 3: LB&A-980210 Tape 3 Side 1)