GENERAL SUBJECT(S): Missions and Measures Discussion Mental Health Trust Authority The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 21st Legislative Session, contact 465-2156. After the 21st Legislative Session they will be available through the Legislative Library at 465- 3808. Time Meeting Convened: 1:40 p.m. Tape: HFC 99 - 22, Sides 1 & 2 HFC 99 - 23, Side 1 PRESENT: X Representative G. Davis X Co-Chair Therriault X Representative Foster X Co-Chair Mulder X Representative Grussendorf X Representative Austerman X Representative Kohring X Representative Bunde X Representative Moses X Representative J. Davies X Representative Williams ALSO PRESENT: JEFF JESSEE, EXECUTIVE DIRECTOR, ALASKA MENTAL HEALTH TRUST AUTHORITY, DEPARTMENT OF REVENUE; NELSON PAGE, CHAIR, ALAKSA MENTAL HEALTH TRUST AUTHORITY; PHIL YOUNKER, JR. COMMISSIONER'S OFFICE- CHAIR, ASSET MANAGEMENT COMMITTEE, ALAKSA MENTAL HEALTH TRUST AUTHORITY. LOG SPEAKER DISCUSSION 000 HFC 99-22, SIDE 1 BEGIN TAPE Co-Chair Mulder Convened the meeting at 1:40 p.m. 037 Co-Chair Mulder Provided members with a memorandum relating to the supplemental budget, missions and measures and subcommittee work (copy on file). He asked subcommittee chairmen to look at supplemental items that are within their agencies' budgets. Members were directed to look for alternative funding sources and review items and determine their justification. 236 Representative Grussendorf Questioned within which agencies the disaster expenditures would go. 387 Co-Chair Mulder Stated that the two floods and the fire disaster expenses would be under the Department of Natural Resources. The judgements against the state would be reviewed in the Department of Department of Law's budget. The Western Alaska fishing disaster would go under Department of Fish and Game. 437 Representative J. Davies Noted that the Department of Health and Social Services, Department of Community and Regional Affairs, Department of Military and Veterans Affairs, Department of Commerce and Economic Development, Department of Law and Department of Fish and Game were all involved in the Western Alaska fisheries disaster. 481 Co-Chair Mulder Discussed missions and measures. He directed subcommittee chairmen to review the mission and measures for each department. 531 Representative Austerman Questioned the Committee's input to missions and measures. Co-Chair Mulder Emphasized that the Committee would work with departments to draft missions and measures. 612 Representative J. Davies Noted the importance of agreeing on the missions and measures. He observed that the governor removed the missions and measures from the FY99 operating bill. The missions and measures were included as intent language for the FY99 operating budget. 675 Co-Chair Mulder Observed that the Office of Management and Budget has expressed concern that they would not have the time needed to reach consensus on all the missions and measures. He suggested that it is more important to have an outer form than a perfect wheel. 722 Representative Grussendorf Expressed concern that the Committee not try to resolve missions and measures for every component. He suggested that hot spots be reviewed. 760 Co-Chair Mulder Make an attempt to make it as expeditious as possible. He noted that each division should already have a mission statement. Explained that the hope or desire is that consolidations can be identified through a review of missions and measures. 847 Representative Austerman Pointed out that it behooves the Legislature to do as much as possible. The more that is done this year the less that will need to be done next year. Suggested that review of missions and measures continue during the interim. 923 Co-Chair Mulder Noted that it is a long-term process with a long-term gain. 991 Co-Chair Mulder Discussed item 3 under missions and measures. Alignment of missions. Stressed the need to prioritize within the departments. What things are essential, what things could be put on the table for reductions. 1063 Co-Chair Mulder Discussed the subcommittee process. 1121 Co-Chair Mulder Discussed work suggestions from the subcommittee. Directed subcommittee chairmen to check the state match to federal programs to make sure they are not being overmatched and to ask about opportunities to gain additional federal funds. Cautioned subcommittee chairmen not to always accept the department's figures and statements as factual; utilize the Legislative Finance Division. 1187 Co-Chair Mulder Asked subcommittee chairmen to work with the Administration and commissioners and to talk to commissioners about their more aggressive ideas. The intent is to cooperate with the Administration. 1306 Representative Austerman Asked if reductions would come off of the Governor's proposed budget. 1337 Co-Chair Mulder Directed subcommittee chairmen to begin with the FY99 authorized amount. 1358 Representative Austerman Observed that the priority for overall government has not been set. 1425 Representative Austerman Questioned how many state troopers are needed and how does the subcommittee determine the need. 1450 Co-Chair Mulder Maintained that it is an appropriate question for the subcommittee chair to ask. 1489 Representative Austerman Questioned what is necessary versus what is proper for state government. Stressed that there has not been a prioritization of the function of state government. Representative Bunde Noted that determinations will be made on what best fits the member's constituency. 1555 Representative Austerman Emphasized that decisions must be made on what is best for the state. 1578 Representative Bunde Stressed that it is difficult to know the right answer to what is best for the state. 1630 Co-Chair Mulder Stressed that the fiscal gap has been the major area of focus over the six years that he has been a legislator. Pointed out that if the FY95 budget were adopted, with additions for inflation and population, the state would spend $3.1 billion dollars for the current year. 1707 Representative Austerman Emphasized the need to discuss how far the state will go. 1742 Co-Chair Mulder Noted that questions will be asked and issues discussed in caucus. 1795 Co-Chair Mulder Provided members with an All Funds Fiscal Summary (copy on file). He noted that past years' deliberation have focused on general funds. 1833 Representative Foster Noted the large number of overviews and bureaucracy. Stressed that personnel in the field have been lost. Questioned if government should be reorganized to make it more efficient. 1942 Representative Bunde Noted that it is interesting to talk about the management employee ratio. Pointed out that if all funds are not recognized that there may be a false perception that something is being hidden. Observed that the cost of doing business is higher in the state of Alaska. He stressed that we are not willing to accept that it takes more state money to provide government in Alaska. 2027 Representative Kohring Observed that he has filed a bill to merge the Department of Community and Regional Affairs and Department of Commerce and Economic Development. Stressed the need to look at other areas that can be merged. Noted that Senator Halford has recommended that the Department of Natural Resources and Department of Environmental Conservation be merged. He observed that Senator Phillips recommends that items be judged by whether they are constitutional, in state statute, or was it in place before the discovery of oil. He noted that these are good questions to be asked. He maintained that the Committee should determine what is essential. They should fully fund those things that considered to be essential and eliminate nonessential programs. 2162 Representative Austerman Maintained that there needs to be an overall prioritization of what the state needs to look like over the long term. He questioned if the Department of Labor is necessary. Recommended that the Committee look at what federal programs that the state is taking in that the state will have to pay to continue. Noted that the One-Stop program has been paid for with federal funds. When the federal government stops paying the cost of the program will fall to the state. 2240 Representative Grussendorf Easiest to look at general funds and program receipts. Make sure public understands that there are other funding sources. Stressed that it is easy for people to get lost in all funds. 2278 Co-Chair Mulder Asked if retirement funds or permanent fund dividends should be reflected as appropriations or included under all funds. Pointed out that duplicate expenditures and federal funds need to be backed out. 2317 Representative Foster Stressed that it is easy to forget that there is a person behind each position. Noted that a single mother that is trying to pay her bills could hold a reduced position. Emphasized that positions are being reduced in rural Alaska. He noted that there are no Department of Environmental Conservation employees in his district. There is only one half-time Department of Natural Resources position and one Division of Motor Vehicles position in his district. Stressed that services need to be protected when cuts are made. Pointed out that there are people that live in rural areas that need the services that cannot afford high user fees. 000 HFC 99-22, SIDE 2 TAPE CHANGE Representative Foster Stressed that less government is being provided in rural areas and more in urban. 144 Representative Bunde Need to acknowledge the cost of doing business in Alaska. Pointed out that Alaska is unique. Stressed that there has to be a balance between what is wanted and what is needed and how much service the state is going to provide. 342 Representative J. Davies Acknowledged that the state needs to make sure check book is balanced, but stressed that a focus on cutting does not address the question: What is the right amount of government? Noted that economic development requires more government. Focus should be on a healthy economy and providing jobs. Stressed that if people should be allowed to pay for services they want through statutory designated program receipts. Maintained that small government is too small of a focus. 572 Representative Williams Observed that his constituents say no new taxes until spending is under control. Noted that he has tried to ask his constituents what programs they can do without. Stressed that it is clear that education needs to be funded. 730 Representative Foster Stated that he has watched the budget be cut, at the same time that legislation has been passed with new fiscal notes. 782 Co-Chair Mulder Noted that is less legislation has been introduced due to the fiscal gap. MENTAL HEALTH TRUST AUTHORITY 815 NELSON PAGE, CHAIR, ALAKSA MENTAL HEALTH TRUST AUTHORITY Provided members with a handout "The Trust, Alaska Mental Health Trust Authority, HB 51" (copy on file). He maintained that the recommendations by the Trust are based on a ver rigorous winnowing process. He emphasized that the recommendations are the tip of the iceberg in terms of what is needed, wanted or desired in mental health programs. The Trust starts with recommendations form advisory boards and commissions. The Trust 999 Mr. Nelson Beneficiaries of the trust are people with mental illness; people with mental retardation and similar disabilities; chronic alcoholics with psychosis; and people with dementia. Beneficiaries range in age from birth to death. 1079 JEFF JESSEE, EXECUTIVE DIRECTOR, ALASKA MENTAL HEALTH TRUST AUTHORITY, DEPARTMENT OF REVENUE Discussed history of the Mental Health Trust Authority. He noted that the as a territory Alaska did not have meaningful services. When Alaska was a territory the mentally ill were sent to the Morningside institution in Oregon. The federal government paid for the Morningside institution. Concerns were expressed at statehood regarding Alaska's ability to pay for the care of the mentally ill. At statehood a three pronged strategy was adopted to pay for the mentally ill. The state was given $6 million dollars to build the Alaska Psychiatric Institute, the state received an amount of funding that would decrease over 8 years to wean the state, and the mental health land trust was created. State received 1 million acres of land and act as the trustee. The state did a good job at selecting lands for the trust. To generate revenue. 1289 Mr. Jessee Noted that the state did a good job at selecting premium land. At statehood Alaska received 102 million acres of other federal land. The land was all lumped together. The best 500 thousand acres of the 1 million acres were taken out of the Trust. He observed that 5,000 Alaskans received portions of trust land without paying compensation to the Trust. 1321 Mr. Jessee In 1979, an attempt was made to clear the title of trust lands held by individuals. The legislature passed a law to make all trust lands general state land. The Mental Health Trust Income Account was formed to compensate the Trust. One and a half percent of what was earned from all state land was supposed to go into the Trust. 1430 Mr. Jessee Noted that the state did not put any money into account. A lawsuit was initiated to return the land to the Trust. 1435 Mr. Jessee Alaska Supreme Court would not allow land to be taken, and told the state to put it back. Three settlements before a solution were reached. 1477 Mr. Jessee Outlined the terms of the settlement. The settlement would reconstitute the land trust of 1 million acres. A one-time $200 million dollar cash compensation was negotiated in recognition that the reconstituted land was not equal in value to the original land selection. An independent Board of Trustees would administer the Trust. The Trust Authority was free to use trust resources to act as a catalyst for change. 1527 Mr. Jessee Noted that there was concern that programs were fragmented and there was duplication and inefficiencies, which caused people to fall between cracks. An umbrella appropriation bill was created for one comprehensive set of services. It also included prevention programs. 1659 Mr. Jessee Discussed page 2 of the handout, Mission and Vision. The Trust has a fiduciary responsibility to its beneficiaries to enhance and protect the Trust and provide leadership advocacy, planning, implementation, and funding of a comprehensive integrated mental health program to improve the lives and circumstances of its beneficiaries. 1693 Mr. Jessee Discussed page 2, Trust Responsibilities. Manage the land and cash assets of the Trust in perpetuity; provide leadership & advocacy for beneficiaries; and recommend the state's budget for the Comprehensive Integrated Mental Health Program. 1711 Mr. Jessee Discussed page 3. Noted that there were concerns that the Department of Natural Resources would manage land. This has not been a problem. The focus of proper management was successful. Investment in the Trust Land Office, in the Department of Natural Resources was successful. The FY98 return was close to 70 percent. 1801 Mr. Nelson There has been steady growth of trust. The Trust Land Office is generating almost $5 million dollars in income. 1842 Representative Williams How was the money made? 1889 Mr. Jessee Timber sales, lease agreements, gravel sales and other sources. Will provide the Legislature with a five-year plan. 1902 Representative J. Davies How is principle defined? 1920 Mr. Jessee Explained statutes governs what is the principle and what is considered income. Income is available to spend. Principle must be protected. 1957 Mr. Jessee Discussed cash assets. Managed by the Permanent Fund Corporation. Trustees concern that there not be variation between years and inconsistency in funding levels. The total payout of fund started at 3 percent and is now at 3.25 percent. The number will grow to the projected rate of return of the permanent fund and inflation. There was concern that in years where the permanent fund doesn't make a sufficient profit that the payout amount would dip into the principle. Contracted to develop a principle reserve sufficient to pay payout in a sustained downturn in the market. The contractor recommended that 400 percent or 4 years of the payout should be set aside in case of a downturn. 2105 Mr. Jessee The Trust lost $30 million in less then a month during the last downturn. Because of the Trust's setup there was no impact on the payout. 2136 Mr. Jessee Discussed page 3, Trust Land Management Framework and Revenue vs. Operate costs. Mr. Jessee Discussed Page 4, where funds go. 2171 Mr. Mr. Jessee Spoke to the cost per unit of service. How will it be known if the beneficiaries have received what they need. 2226 Mr. Jessee Concluded that the Trustees must determine what needs to be accomplished and then make strategic benefit analysis. 2251 Mr. Jessee Discussed Page 6, Changing the Culture. He noted that the Trustees are looking for healthy, safe, economically secure, productive beneficiaries who are living with dignity as valued member of their communities. 2307 Mr. Jessee Discussed Page 7 Measures used to gage success. 2330 Mr. Jessee Referred to the Governor's Council on Disabilities and Special Education, Investment in Results Outcome Based Decision Making. He noted that results based budgeting must penetrate into the community. Make sure it is translated into the grass roots levels. 2375 Mr. Jessee Mentioned the concept of Life Domain. It is clear to the Trust; success depends more than just treatment. They need additional assistance HFC 99-23, SIDE 1 TAPE CHANGE 96 Mr. Jessee Pointed out that beneficiaries need health care to be employed. 114 Mr. Jessee Discussed Page 8, Harborview Developmental Center. The problem was that for the state to take the remaining budget of Harborview and put it into community would take decision to fund two programs at the same time during transition. 201 Mr. Jessee Trustees decided to put money into Harborview so that the Legislature could put their money back into the community. Only one of two states to have community care for mentally ill. 300 Mr. Jessee Discussed Page 9, Housing. The Trust partnered with the Alaska Housing Finance Corporation (AHFC). Observed that AFHC has shown a willingness to work with the Trust and a willingness to rethink their program as it relates to beneficiaries. 379 Mr. Jessee Discussed Alcohol and Drug Abuse. Provided members with a booklet, "Results Within Our Reach" (copy on file). Referred to page 3 of the booklet. 433 Mr. Jessee Discussed Page 10 of the prior handout "The Trust, Alaska Mental Health Trust Authority, HB 51", Department of Corrections. Stressed that until 2 years ago there were no mental health services for mentally ill women inmates. They were put in segregation cells for up to 23 hours a day. The Trust did a study to identify the health needs and scope of the problem. The Trust funded a planner position to develop an effective treatment plan. The Trust paid for all of the service for half of the first year, two- thirds of the second year and half of the third year. 640 Mr. Jessee Discussed Healthy Families Program. The Trust is funding a study to see if the program is working and effective. 680 Co-Chair Therriault Questioned how long the study would run. 693 Mr. Jessee Explained that they are presently contracting experts to determine how long the study needs to run. The Trust will consult with the Legislature to determine if the study questions are appropriate. 763 Mr. Jessee Discussed page 11, Seniors. 50 percent of those over 80 have some form of dementia. The senior care system has a growing need. 838 Mr. Jessee Discussed Page 12, Alaska Psychiatric Institute (API). There is a three-prong strategy to deal with the aging hospital. Noted that Anchorage uses API for its emergency psychiatric care. Pointed out that statute changes need to be made in order to switch programs to community based service. 948 Mr. Jessee Discussed page 13, Mental Health Quality Assurance. Emphasized consumer satisfaction, quality of services and fiscal accountability. Agencies that had up to three reviews now have one review that focuses on their entire program. 1063 Mr. Jessee Discussed economic security. Noted that health care insurance is a major problem with employability. Loss of Medicaid is an issue for employment in low paying jobs. 1118 Mr. Jessee Discussed Page 14, Better use of existing resources. Observed that coordinated transportation is encouraged to reserve resources. The Trust matches federal funding to develop local coordinated transportation plans. Efficiencies need to be done to justify expense in transportation 1213 Mr. Jessee Discussed The Alaska Mental Health Trust Authority's FY00 Operating Recommendations. 1289 Mr. Nelson Their operating recommendations are divided into Mental Health Trust Authority authorized receipts (MHTARR) that are paid to programs by the Trust and general fund/mental health funding which comes from the state. 1301 Mr. Nelson Pointed out that capital appropriation emphasizes the partnership with AHFC for housing as one of the critical life domain issues. Observed that a substantial portion goes toward the Alaska Psychiatric Institute. Maintained that all flow from setting priorities, results and measure. 1333 Co-Chair Mulder Asked the source of the $15 million dollars for the replacement of API. 1346 Mr. Nelson Explained that federal funds would be available to fund community programs that are part of the API process. He noted that decisions must be made in regards to what is done with the old hospital, how the new hospital is funded, and what will be done with patients that used to be in the old hospital but would now be served in the community. The Federal Substance Abuse and Mental Health Administration will provide some funding. Some funding would come from the federal Department of Housing and Urban Development. Noted that they are looking for federal funds for the building. 1391 Representative G. Davis Pointed out that the Mental Health Trust Authority funded the task force on insurance that will be out next week. 1432 Co-Chair Therriault Noted that the under the agreement the interest from the Trust was not suppose to replace general funds. Asked what level of general funds spending is mandated by the settlement. Mr. Jessee Clarified that the settlement doesn't eliminate the responsibility of the state to fund a mental health program under its constitutional responsibility. 1497 Representative J. Davies Observed that the agreement stated that the Alaska Mental Health Trust Authority would propose a mental health budget. If the budget they recommend is not adopted by the legislature, the legislature is directed to explain why items were not funded. 1524 Mr. Nelson Agreed. The process provides that budget recommendation be given to the governor by Sept 15 of each year. The settlement requires the Governor to also present reasons if budget is not accepted. 1561 Co-Chair Mulder Asked what are the adjustments to the FY99 base. 1573 Mr. Jessee Discussed adjustments to the mental health base. Each year the boards recommend additional programs under the overall umbrella. They are parts of the existing mental health general funds budget that should be under the overall umbrella. He explained that the $4 million dollars identified for the Office of Public Advocacy and Pioneer Homes would only resize the box 1619 Co-Chair Therriault Asked if the Trustees put together the entire request for all mental health. Mr. Jessee Yes entire package goes independently to the legislature and the governor. At the time of the settlement it was acknowledged that there is no way to mandate level to the state. Allows Trustees to make recommendations and see why their advice was not accepted to make better recommendations. 1677 Representative Williams Questioned why Ketchikan Residential Center was not included in the budget. 1687 Mr. Jessee Clarified that the project was included in the Alaska Mental Health Trust Authority's recommendation. The Governor's letter of rejection focused on the fiscal gap. 1734 Representative Williams Noted that the project is ongoing and questioned what would happen to it. 1748 Mr. Nelson The Trust will continue to press for its recommendations. The Trust is trying to be aware of the fiscal problems. 1779 Co-Chair Therriault Pointed out that the fiscal situation has gotten worse since the Governor submitted his budget. 1805 Representative G. Davis Referred to a letter from a realtor in his district. The Alaska Mental Health Trust Authority now manages his lease. His lease has increased from $211 to $2,900 dollars a year. 1865 Mr. Jessee Clarified that the Authority has picked up leases that were formerly managed by the Department of Natural Resources, but emphasized that they are obligated to honor all terms of lease. Fair market value is used when leases are reevaluated. 1937 Mr. Nelson Pointed out that the Trust has to exist in perpetuity, but acknowledged that it needs to be a good neighbor and that promises were made. 1963 Representative J. Davies Referred to Page 3 of the organizational chart. Pointed out that other state lands refers to the Department of Natural Resource's management of other state lands. One of reasons this structure was set up was to allow mental health lands to be managed for the benefit of trust while recognizing that the general good needed be kept in perspective. 2011 Mr. Jessee The Trust Land Office set up regulations to look at compatibility with trust management. 2081 Mr. Jessee In response to a question by Representative J. Davies, Mr. Jessee noted that the Department of Natural Resources has competing interests. No matter what they do someone will be upset. Noted that the Department of Natural Resources refers timber sales to the Trust. Discussed cooperative efforts with the Department of Natural Resources. 2291 Co-Chair Mulder ADJOURNMENT The meeting adjourned at 4:00 p.m. HOUSE FINANCE COMMITTEE LOG NOTES February 17,1999 House Finance Committee 1 2/17/99