HOUSE FINANCE COMMITTEE April 12, 1996 1:35 P.M. TAPE HFC 96-116, Side 1, #000 - end. TAPE HFC 96-116, Side 2, #000 - end. TAPE HFC 96-117, Side 1, #000 - end. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 1:35 p.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 Harlan Knudson, Executive Director, Alaska Hospital and Nursing Home Association; Connie Sipes, Division of Senior Services, Department of Administration; Del Smith, Deputy Commissioner, Department of Public Safety; Jay Livey, Deputy Commissioner, Department of Health & Social Services; Roger Poppe, Staff, Representative Kott; Karen Brand, Staff, Senator Donley; Tom Walker, AACOP, Seward; Laurie H. Otto, Deputy Attorney General, Criminal Division, Department of Law; John Barnett, Storage Tank Assistance, Department of Environmental Conservation; Larry Streuber, Chief Facilities and Planning, Department of Health & Social Services; David Pierce, Certificate of Need Coordinator, Department of Health & Social Services. SUMMARY HB 456 An Act relating to the Board of Storage Tank Assistance; and providing for an effective date. CS HB 456 (L&C) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Environmental Conservation. HB 528 An Act relating to applications for certificates of need and licensing of nursing homes; amending the standard of review for certificates of need for health care facilities in the state; 1 establishing a moratorium with respect to new applications by prohibiting the issuance of a certificate of need or a license for additional nursing home capacity in the state until July 1, 1998; and providing for an effective date. CSHB 528 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Health & Social Services. HB 543 An Act establishing a preference when entering into state airport land leases. HB 543 was rescheduled to another time. SB 26 An Act providing for automatic waiver of juvenile jurisdiction and prosecution of minors as adults for certain violations of laws by minors who use firearms to commit criminal offenses and relating to the sealing of the records of those minors. SB 26 was HELD in Committee for further consideration. HOUSE BILL NO. 528 "An Act relating to applications for certificates of need and licensing of nursing homes; amending the standard of review for certificates of need for health care facilities in the state; establishing a moratorium with respect to new applications by prohibiting the issuance of a certificate of need or a license for additional nursing home capacity in the state until July 1, 1998; and providing for an effective date." JAY LIVEY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES discussed section 2. He observed that if 147 nursing home beds are built over the next five years it will cost the State approximately $57.0 million dollars. He stated that it is unclear where cost effectiveness review will occur if it is not part of the legislation. He stressed that cost effectiveness can be part of the certificate of need process. He maintained that section 2 is critical to the legislation. CONNIE SIPES, DIVISION OF SENIOR SERVICES, DEPARTMENT OF ADMINISTRATION stressed that certificates of need are appealed to the judicial branch. The judicial branch makes a binding finding on whether or not a certificate of need should be granted by the Department. Once a certificate of need is granted, nursing home beds are a mandatory service 2 under Medicaid that must be funded. She pointed out that the courts ultimately rule. Mr. Knudson provided members with the criteria for certificates of need (Attachment 1). He maintained that the primary purpose of the certificate of need is to assure that none are issued if there is a less costly alternative. He stated that if section 2 is adopted the certificate of need would not be needed. Co-Chair Hanley summarized that the Department determines if there is a need. The Legislature does not have the option of rejecting the construction of new beds. Mr. Knudson agreed that if the need is identified the Department is instructed to approve the beds and request funding from the Legislature. Mr. Knudson suggested that the Legislature identify how many nursing home beds will be in each region of the State. He noted that there is a proposal in the Mat-Su Valley to build 60 new beds which will create 40 new jobs and cost $6.0 million dollars a year to operate. The nursing home spent $200.0 thousand dollars to meet the requirements of the certificate of need. He pointed out that 30 of the nursing home beds in Anchorage are occupied by individuals from Mat- Su. LARRY STRIVER, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES noted that 18 states have moratoriums on nursing home beds. DAVID PIERCE, CERTIFICATE OF NEED COORDINATOR, DEPARTMENT OF HEALTH AND SOCIAL SERVICES noted that 10 states had moratoriums in 1985. Representative Martin asked how much money has been spent on beds that are empty. The Department could not answer. Mr. Livey explained that the Department pays on a per day, per patient basis. This cost is calculated based on the total Medicaid cost to operate each facility. The fixed cost is spread across the beds. Representative Brown asked why the Department does not find against the certificate of need if there is a surplus of beds. Ms. Sipes explained that criteria for the certificate of need is based on rescinded federal regulation. She stressed that it is difficult to argue against the need for long term care due to the growing population of elderly. She emphasized that if the service being offered is nursing home beds that the argument can be made to support their construction. She observed that there are states that have 75 nursing home beds for every 1,000 people over the age of 3 65 years of age. Florida has limited nursing home beds to 29 per 1,000 people over 65 years of age. She pointed out that there is great disagreement as to what is the need of nursing home beds. She stressed that there will be a 30 - 60 year commitment for each bed that is built. She emphasized the importance of cost effective review. Co-Chair Hanley asked what percentage of the cost of a nursing home bed is paid for by the State. Mr. Knudson explained that each bed costs approximately $250 dollars. Mr. Livey stated that between 85 - 90 percent of all nursing home expenditures are paid through public funds. Co-Chair Hanley pointed out that the Legislature would be critical of adding new beds which will result in an increased Medicaid budget when the State is having difficulty funding existing beds. He acknowledged that there is a need. He expressed frustration with the lack of legislative input. He expressed a preference for a two year moratorium. He noted that section 2 would provide a statutory change but is not part of an overall strategy. He suggested that section 2 would not be necessary if the moratorium is longer than one year. He suggested that section 2 be deleted, the moratorium be extended, section 1 be deleted, and an additional member be added to the working group. Representative Martin noted that Medicaid is the fastest growing program in the State. Mr. Knudson suggested that the study group identify the total number of nursing home beds to be authorized by the State. He noted that in New York community based care is the fastest growing Medicaid cost. He stressed that assisted living and other alternatives should be addressed. Co-Chair Hanley pointed out that if community based care is added and nursing home beds remain the same there would be an expansion of service. He noted that community based care is generally cheaper than institutional care. He stated that the legislature should determine the number of nursing home beds or the number of eligible nursing home and community based slots. He emphasized that nursing home beds are the most expensive way to expand care. He pointed out that the monetary aspect is a limiting factor. He emphasized that the legislature needs to have oversight. Representative Mulder MOVED to conceptually adopt an amendment to: Delete section 1; delete section 2; after "services" add "one of whom is a licensed nursing home 4 administrator, who operates a community nursing home in Alaska on page 3, line 24; delete July 1, "1997" and insert July 1, "1998" in section 6; and amend the title to reflect the changes. Co-Chair Hanley reviewed the amendment. Representative Mulder questioned if the report of the working group should be delivered to the second regular session. Representative Brown pointed out that the legislature would have more time to act if the report is presented to the first session. Ms. Sipes referred to page 3, lines 6 - 10. She noted that this section refers back to section 1. Mr. Livey explained that any applications on file when the bill becomes effective would be reviewed. He noted that (b) would allow these applications to be reviewed based on the findings. He stressed that the findings would allow a more balanced look at applications in terms of whether services could be provided in the community. Ms. Sipes suggested that section 1, subsections (1) and (2) be deleted and the remaining subsections of section 1 be retained. Representative Mulder WITHDREW his motion to amend HB 528. There being NO OBJECTION, it was so ordered. In response to a question by Representative Grussendorf, Mr. Knudson asserted that a one year moratorium would be sufficient. Mr Livey stated that the Department would prefer to retain section 2. He added that a two year moratorium would be better than a one year moratorium. Representative Mulder MOVED to conceptually adopt an amendment to: Delete section 1, subsections (1) and (2); delete section 2; on page 3, line 24 after "services" add "one of whom is a licensed nursing home administrator, who operates a community nursing home in Alaska; delete July 1, "1997" and insert July 1, "1998" in section 6; and amend the title to reflect the changes. Representative Martin expressed concern with the deletion of section 2. Ms. Sipes clarified that a standard of review will remain in statute. The added requirement for cost effectiveness review will not exist. Co-Chair Hanley spoke in support of the two year moratorium. (Tape Change, HFC 96-116, Side 2) Representative Mulder pointed out that a repealer of May would be better than July in regards to the construction season. 5 Representative Mulder MOVED to AMEND his conceptional amendment to delete "July 1, 1988" and insert "May 1, 1998". Representative Kelly suggested that April would be better. Co-Chair Hanley noted that May would allow time for legislative changes. There being NO OBJECTION, it was so ordered. Representative Brown spoke in support of section 2. There being NO OBJECTION, a conceptional amendment was adopted to: Delete section 1, subsections (1) and (2); delete section 2; on page 3, line 24 after "services" add "one of whom is a licensed nursing home administrator, who operates a community nursing home in Alaska; delete July 1, "1997" and insert July 1, "1998" in section 6; delete "July 1, 1988" and insert "May 1, 1998"; and amend the title to reflect the changes. Representative Martin MOVED to reinstate section 2. Representative Kohring OBJECTED. A roll call vote was taken on the MOTION to reinstate section 2. IN FAVOR: Brown, Navarre, Martin OPPOSED: Grussendorf, Kelly, Kohring, Mulder, Parnell, Therriault, Foster, Hanley The MOTION FAILED (3-8). Representative Mulder MOVED to report CSHB 528 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 528 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Health & Social Services. SENATE BILL NO. 26 "An Act providing for automatic waiver of juvenile jurisdiction and prosecution of minors as adults for certain violations of laws by minors who use firearms to commit criminal offenses and relating to the sealing of the records of those minors." KAREN BRAND, STAFF, SENATOR DAVE DONLEY testified on behalf of SB 26. She observed that the legislation would automatically treat juveniles who are 14 years of age and older and who has committed a second offense with the use of a deadly weapon as an adult. She noted that violent crimes are identified under AS 11.41. She explained that "firearm" 6 was replaced with "deadly weapon" in the Senate Finance Committee. A deadly weapon is defined as a firearm, axe, metal knuckles, club, knife, or explosives. She stressed that SB 26 is supported by the National Rife Association, National Education Association, Spenard Community Council, and the Anchorage, Juneau and Fairbanks police departments. She observed that five other states have adopted similar legislation. She emphasized that jail time is required for a first time offense for a juvenile gun related charge in these five states. In response to a question by Representative Martin, Ms. Brand noted that there are approximately 16 juveniles incarcerated that would have been affected by the legislation. The Department of Law estimates that 18 juveniles would be affected a year. Ms. Brand referred to the Sponsor's response to the Department of Corrections' fiscal note for SB 26 (copy on file). She noted that Senator Donley disagrees with the estimated impact of the fiscal note. She observed that the Department of Corrections took into consideration of the fiscal note that a new facility would have to be constructed to house juveniles, including juveniles that are already incarcerated. She maintained that SB 26 does not require the construction of a new facility. DEL SMITH, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY testified in opposition to the automatic waiver of fourteen year old juveniles to adult status. He emphasized the need for a comprehensive approach to juvenile crime. He noted that current law allows the waiver of fourteen year old juveniles when appropriate. LAURIE OTTO, DEPUTY ATTORNEY GENERAL, DEPARTMENT OF LAW noted that automatic waiver provisions are in AS 47.10.010. She referred to page 2 of the legislation. She observed that there are provisions for discretionary waivers in cases that are not covered by the automatic waiver law that would allow waiver when appropriate. She added that AS 47.10 allows discretionary waiver of anyone regardless of age if the State can show that they are not amenable to treatment as a juvenile. Representative Kelly asked if juveniles under 16 are being currently waived to adult status. Ms. Otto pointed to her experience in the criminal justice system. She stressed that the legislation would waive eighth and ninth graders into adult prisons for misdemeanor crimes that include kicking people with boots. She observed that the legislation applies to any crime in AS 11.41, not 7 just felony crimes. She noted that "deadly weapons" can include feet shod in boots. She emphasized that the legislation requires that all 14 year old offenders that have committed a second offense with a deadly weapon belong in adult jails. She asserted that 14 year old juveniles do not belong in adult jails. She acknowledged that the State does need to deal with juveniles more seriously. She maintained that the major problem in the juvenile system is with those that commit minor crimes. She asserted that it needs to be clear that there are consequences for breaking the law at an early age. Ms. Otto stated that the Department is not aware of a case where a juvenile has fallen through the cracks and deserves to be put in an adult jail. She maintained that the McLaughlin facility does a good job of getting kids through school and treatment. She stressed that these children will be held in the juvenile system for six years. She stated that lack education contributes to adult criminal behavior. She emphasized that juveniles do not have to receive an education in adult jails. Ms. Otto noted that the Governor's Conference on Youth and Justice, Juvenile Offenders Work Group has developed a strong statement of philosophy for the juvenile offender's system. She stressed that the group did not want to extend waivers to children under sixteen. She observed that many states are going to a three tier system. Juveniles in the third tier can be given a juvenile sentence and an adult sentence. If they complete their time in the juvenile system without any problems the adult sentence is dissolved. If they violate their juvenile sentence the adult sentence is imposed. She maintained that this approach is an appropriate middle ground. Representative Kelly expressed support for juvenile adjudication. Ms. Otto noted that all the children that would come under the bill would be adjudicated. Representative Kelly expressed frustration that juveniles need to come before the court. Ms. Otto acknowledged that consequences need to be swift. Representative Therriault noted that steps have already been taken to make waiver into adult status easier. Representative Grussendorf asked if Ms. Otto would be more supportive if "deadly weapon" was changed to "firearm". Ms. Otto replied that if the bill applied to sixteen year olds, firearms and felonies she would be more supportive. She reiterated that there is not currently a problem. She spoke in support of a three tier system. 8 TOM WALKER, ALASKA ASSOCIATIONS OF CHIEF OF POLICE, SEWARD spoke against the legislation. He agreed with remarks by Ms. Otto. He emphasized that fourteen year old juveniles should not be automatically waived to adult status. Mr. Smith stated the Anchorage Police Department does not support the legislation. Representative Brown referred to the fiscal note. MARGARET PUGH, COMMISSIONER, DEPARTMENT OF CORRECTIONS spoke in support of the fiscal note. She noted that 14 to 15 juveniles would be added per year. She noted that there are currently 20 juveniles in adult facilities. She stressed that a few juveniles can be incorporated, but that a large population of juveniles cannot be accommodated in existing adult facilities. She stated that it is not in the State's or the juvenile's best interest to have 14 year olds in with convicted adult felons. She emphasized that they would be subject to sexual and other assaults. She acknowledged that SB 26 does not require additional education. She maintained that lack of education is a major contributing factor in juvenile crime. She stressed the moral obligation to provide education at a higher level than what is available for adult offenders. Representative Brown asked what level of education is being provided to juvenile offenders currently in adult jails. Commissioner Pugh noted that the Department of Education is concerned that the level being provided does not meet federal requirements. Commissioner Pugh noted that it is impossible to keep juveniles separated from adults offenders 24 hours a day. She stressed that every effort is made to provide a safe environment. Commissioner Pugh explained that the McLaughlin school model was used to estimate operation costs. Representative Mulder observed that the fiscal note was not attached until the House Finance Committee. Commissioner Pugh stated that she believes that separate services would need to be provided for juveniles in adult facilities. Representative Mulder stressed that discussion in the Senate would have been altered if there had been a fiscal impact note. SB 26 was HELD in Committee for further consideration. (Tape Change, HFC 96-117, Side 1) 9 HOUSE BILL NO. 456 "An Act relating to the Board of Storage Tank Assistance; and providing for an effective date." ROGER POPPE, STAFF, REPRESENTATIVE KOTT testified in support of HB 456. He noted that the legislation would extend the sunset of the Board of Storage Tank Assistance and add an additional member to the Board. He noted that the Board was originally created in 1990 to deal with regulations and laws involving environmental concerns relating to underground storage tanks. The Board oversees regulations regarding spills, building new tanks, provisions of grants and loans and provides mediation between the Department of Environmental Conservation and owners. The Board is due to sunset on June 30, 1996. The Legislative Budget and Audit Committee Report recommended the Board be extended to the year 2000. He pointed out that on December 22, 1998 new federal regulations will go into effect. There are currently seven members on the Board. The Legislative Budget and Audit Committee recommended that an eighth member from the public at large be added. Representative Brown questioned the cost of the Board. JOHN BARNETT, EXECUTIVE DIRECTOR, BOARD OF STORAGE TANK ASSISTANCE replied that the Board's annual budget is $114.0 thousand dollars. This covers travel, public assistance expenses and one employee. Representative Brown questioned if the purpose of the Board is to decide who gets state subsidizes in the form of cleanup assistance. Mr. Barnett acknowledged that one of the Board's functions is to set the ranking system which determines the priorities for receipt of funds. The program is focussed on smaller businesses with a priority to public health threats. The Board also mediates disputes. The Board is a judicial appeal board. Representative Brown asked if the ranking system could be administered by the Department of Environmental Conservation. Mr. Barnett noted that the ranking system is subject to dispute. The tank owner has the ability to appeal decisions. There are approximately 1,000 applications on file. Only 2 or 3 cleanups are being funded annually. There are a constant number of disputes that must be mediated. The ranking is reviewed each year and changed through regulation and public notice and review. Representative Brown questioned if costs could be reduced by the use of the teleconference network. Mr. Barnett noted that travel costs have been reduced. The savings has been 10 spent on educational assistance in the form of a newsletter. He observed that their budget has not increased over the past five years. Representative Brown noted that the Board of Public Broadcasting is being eliminated. She maintained that the Storage Tank Assistance Program is an unnecessary subsidy to people that have a responsibility through their businesses. Mr. Barnett noted that the Board has proposed ideas for possible changes to the program in the future. Consideration is being given to a loan or grant program based on need. Representative Brown maintained that the program is a blatant form of corporate welfare. Representative Kohring MOVED to report CSHB 456 (L&C) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 456 (L&C) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Environmental Conservation. ADJOURNMENT The meeting adjourned at 3:30 p.m. 11