HOUSE FINANCE COMMITTEE May 1, 1995 8:30 A.M. TAPE HFC 95-107, Side 1, #000 - end. TAPE HFC 95-107, Side 2, #000 - #519. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 8:45 a.m. PRESENT Co-Chair Hanley Representative Martin Co-Chair Foster Representative Mulder Representative Brown Representative Navarre Representative Grussendorf Representative Parnell Representative Kelly Representative Therriault Representative Kohring ALSO PRESENT Glenda Straube, Director, Child Support Enforcement Division, Department of Revenue; Michael Johnson, Staff, Representative Davies; Jim Nordlund, Director, Division of Public Assistance, Department of Health & Social Services; Kathy Tibbles, Division of Family and Youth Services, Department of Health & Social Services; Curtis Lomas, Director, Welfare Reform Program, Department of Health & Social Services; Dan Austin, Staff, Representative Brown. SUMMARY HB 78 An Act relating to the maximum amount of assistance that may be granted under the adult public assistance program and the program of aid to families with dependent children; proposing a special demonstration project within the program of aid to families with dependent children and directing the Department of Health and Social Services to seek waivers from the federal government to implement the project." CSHB 78 (FIN) was reported out of Committee with "no recommendation" and with 22 fiscal impact notes; 14 by the Department of Health & Social Services, 12 dated 4/5/95; 3 by the Department of Commerce and Economic Development; 2 by the Department of Labor; 1 by the Department of 1 Education; 1 by the Department of Revenue; and 1 by the Department of Public Safety; and with a zero fiscal note by the Department of Environmental Conservation. HOUSE BILL NO. 78 "An Act relating to the maximum amount of assistance that may be granted under the adult public assistance program and the program of aid to families with dependent children; proposing a special demonstration project within the program of aid to families with dependent children and directing the Department of Health and Social Services to seek waivers from the federal government to implement the project." Co-Chair Hanley provided members with a committee substitute for HB 78, Work Draft 9-LS0392\G, dated 4/28/95 (copy on file). Representative Mulder MOVED to adopt Work Draft 9-LS0392\G, dated 4/28/95 (copy on file). Representative Brown OBJECTED for purpose of discussion. Co-Chair Hanley reviewed changes made by the work draft: * Sec. 1 Adopts CSSB 109 (L&C); * Sec. 6 WAIVER APPLICATION. Changes the date the Department of Health & Social Services shall seek appropriate waivers from the federal government from December 31, 1995 to February 15, 1996 to allow for more time to respond to federal welfare reform measures before Congress; * Sec. 8 WORKFARE. Adds (c)(3), an exemption from the requirement to participate for persons who are enrolled as full-time students in good standing in a career education program, college or university, as defined in regulations adopted by the Alaska Commission on Postsecondary Education; and * Sec. 15 AFDC PAYMENT LEVELS. (3) returns language to statute for a single-person household that does not consist of a dependent child; deleting the language that did not restrict the Department from paying benefits for this category, but would have allowed them to pay at the higher level of $514 hundred dollars instead of the reduced amount of $505 hundred dollars. This category covers pregnant women and single parents 2 whose children qualify for SSI payments. There being NO OBJECTION, Work Draft 9-LS0392\G, dated 4/28/95 was adopted. GLENDA STRAUBE, DIRECTOR, CHILD SUPPORT ENFORCEMENT DIVISION, DEPARTMENT OF HEALTH AND SOCIAL SERVICES reviewed section 1. She noted that only 46 percent of persons with child support orders pay anything. She observed that over half of these individuals have the ability to pay, but work in a cash or self employed position. She explained that section 1 will ensure that a self employed obligator establish a payment plan or pay their arrears to retain their occupational licenses. She stated that persons would lose their drivers licenses if they do not pay their arrears or set up a plan in 150 days. She anticipated that collections of AFDC reimbursements would increased by $2.1 million dollars. She explained that an additional $3 - $4 million dollars would be collected and distributed directly to Alaskan children. She noted that a total of $5 to $6 million dollars in additional collections will be made. She could not estimate the number of AFDC recipients that would be able to leave AFDC with the addition of these collections. Co-Chair Hanley emphasized that there will be some individuals who will be able to come off of AFDC with the passage of the legislation. Ms. Straube noted that obligators that owe the State $1.6 million dollars for AFDC reimbursements. Co-Chair Hanley pointed out that the federal government is contemplating similar legislation. Ms. Straube noted that the cost of the program will be born by the federal government. She stressed that there will be no cost to the State since federal incentive payments will be high enough to absorb any money the State would have to pay as a match. Representative Brown noted that fishing licenses were not being included. Ms. Straube noted that the State already has the right to cease limited entry permits. Representative Brown questioned the exclusions contained on page 7. MICHAEL JOHNSON, STAFF, REPRESENTATIVE DAVIES explained that the exemption refers to the $25 dollar business license which is needed to enter into any business in the State. He added that drivers licenses are excluded in this portion of the bill because they are contained in the next section of legislation. He explained that driver's licenses would be revoked to accommodate the way licenses are issued. He 3 noted that individuals are allowed temporary 150 day occupational licenses to allow them to come into compliance. In response to a question by Representative Grussendorf, Co- Chair Hanley explained that the ratable reduction would remain in the legislation. Ms. Straube observed that in the State of Maine, where they raised $21 million dollar, only 40 licenses were revoked. In response to a question by Representative Therriault, Ms. Straube emphasized that child support is based on 20 percent of the individual's income. She stated that a table or process will be implemented to guide the development of payment plans. Representative Brown discussed amendments provided to the Committee. She stated that Amendment 9-LSO392\F.9 would eliminated sections 2, 3 and 4 (Attachment 1). She maintained that these sections would have an adverse effect on a minor living at home with a single, working parent who is not un welfare. She noted that if the parent has no health insurance, the minor would not be eligible for medical care or insurance. Representative Brown noted that Amendment 9-LSO392\F.13 would not count the income of the adults when assessing a person's eligibility (Attachment 2). Representative Brown noted that Amendment 9-LSO392\F.13 states that if both parents are unmarried minors then child support should be based on the income of the child's grandparents, instead of the child's parents (Attachment 3). She explained that the amendment would require the teen father's family to provide a portion of support. Representative Brown stressed that only 141 individuals of 11,089 teens who are on AFDC would be effected by section 2. Co-Chair Hanley noted that section 2 would require teen parents to live at home. JIM NORDLUND, DIRECTOR, DIVISION OF PUBLIC ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES stated that the Governor has included the requirement for teen parents to live at home. He stressed that it is a better situation for the teen mother to have the support of her family when raising a very young child. He added that it is important that the environment is safe. He spoke in support of Amendment 9-LSO392\F.13 which would not count the income of 4 the adults when assessing a person's eligibility. He stated that it is reasonable for the teen father's parents to be responsible for the child. KATHY TIBBLES, DIVISION OF FAMILY AND YOUTH SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES expressed concern that the teenager not be required to live at home if the environment is not safe. She observed that the legislation allows waivers in circumstances where the home environment is abusive or where the parent is not allowing the child to live at home. She discussed the fiscal note provided by the Division. She noted that the assessment of the home environment is estimated at 10 hours. Private social workers would be contracted. CURTIS LOMAS, DIRECTOR, WELFARE REFORM PROGRAM, DEPARTMENT OF HEALTH AND SOCIAL SERVICES stated that the amendments proposed by Representative Brown could be incorporated into the current waivers. Representative Brown MOVED to adopt Amendment 1, 9- LSO392\F.13. Representative Mulder OBJECTED. Mr. Lomas could not estimate the number of teen parents that would be affected by Amendment 1. Co-Chair Hanley noted that a teenager living at home could be eligible for AFDC and Medicare even if there parents had an income of $50.0 thousand dollars a year and health benefits. Representative Brown asked if there was a way to craft an amendment to exclude grandparents who can afford care for the teen and their child. Mr. Lomas stated that the amendment could be tied to a percentage of the poverty level. Co-Chair Hanley noted that a tier system could be devised. Representative Brown doubted that those that have the resources to pay would choose to subject themselves to the requirements of qualifying for AFDC. A roll call vote was taken on the MOTION to adopt Amendment 1. IN FAVOR: Navarre, Brown, Grussendorf OPPOSED: Kelly, Kohring, Mulder, Parnell, Therriault, Foster, Hanley Representative Martin was absent from the vote. The MOTION FAILED (7-3). Representative Brown MOVED to adopt Amendment 2, 9- LS0392/F.2. Representative Parnell summarized that Amendment 2 places an expressed duty of support on the child's grandparents until the minor has reached the age of 5 majority. DAN AUSTIN, STAFF, REPRESENTATIVE BROWN explained that Amendment 2 provides that the grandparents of the child who is the minor's father would carry a child support obligation when they are the noncustodial grandparents. The parents of the custodial mother would not have an obligation placed on them if the mother is living at home and her parents are providing support. The support would be based on 20 percent of their income. He explained that the mother's parents' duty would be expanded in a shared custody situation. In the case where custody is split by 50 percent then each grandparent would be responsible for the 50 percent of the time they do not have custody. If a grandparent has custody more than 75 percent of the time than they would not be responsible for support beyond their care. (Tape Change, HFC 95-97, Side 2) Mr. Austin stressed that under current law the mother's parents are responsible for her care and support until she is an emancipated minor. Mr. Lomas stated that there is an obligation of the parent to support the teen. There is no obligation on the part of the grandparents to provide support of the grandchild. The legislation would place an obligation on the grandparents until the minor parent reaches the age of majority. Ms. Straube stressed that the teen father has an obligation to pay unless he is in the house with the infant and the mother in an unemployed parent program. She observed that teen father's income may be minor. In response to a question by Representative Mulder, Ms. Straube stated that there has not been a consistent policy in regards to the obligation of the minor father's parents. Representative Mulder suggested the amendment should clarify that the child's parents, even if they are a minor, should have an obligation. Representative Brown MOVED to amend Amendment 2 by deleting "instead of the income of the child's" and insert "and". She noted that the amendment to the amendment would read "incomes of the child's grandparents and parents." There being NO OBJECTION, it was so ordered. Representative Parnell expressed concern that teen mothers are going to go after their parents because the percentage of the parent's income is greater than the amount the teen mother is receiving in the home. 6 Mr. Lomas stressed that section 1 (1) states that there is no obligation for child support if the minor is living with the parent. Representative Brown MOVED to adopt Amendment 2 as amended. There being NO OBJECTION, it was so ordered. Representative Brown MOVED to adopt Amendment 3, 9- LS0392\F.8 (Attachment 4). She explained that the amendment would delete the ratable reduction of 1.7 percent. She spoke in support of Amendment 3. Representative Mulder OBJECTED. In response to a question by Representative Navarre, Mr. Nordlund stated that 20 percent of AFDC recipients receive subsidized housing and 50 percent receive food stamps. A roll call vote was taken on the MOTION to adopt Amendment 3. IN FAVOR: Brown, Grussendorf, Navarre OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). Representative Parnell questioned if a minor child could have the Child Support Enforcement Division pursue the grandparents for support. Mr. Lomas stated that the provision would apply to any minor parent. Representative Brown provided members with Amendment 4 (Attachment 5). She explained that the amendment would allow the Department to be in control of the benefits. Representative Mulder maintained that the Department will still oversee the contract. Mr. Nordlund stated that the amendment would not restrict the Department. Representative Brown MOVED to adopt Amendment 4. There being NO OBJECTION, it was so ordered. Representative Mulder MOVED to report CSHB 78 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. Representative Parnell expressed concern with the adoption of Amendment 2. Mr. Nordlund stated that the Department of Health & Social Services recognizes the demonstration project as a good concept. He stressed that the Department objects to the ratable reduction. He noted that the Department feels that the child support provisions in section 1 will raise enough 7 money to pay for the demonstration projects. ADJOURNMENT The meeting adjourned at 10:05 a.m. 8