MINUTES SENATE FINANCE COMMITTEE February 25, 2000 9:03 AM TAPES SFC-00 # 37, Side A & B SFC-00 # 38, Side A CALL TO ORDER Co-Chair Sean Parnell convened the meeting at approximately 9:03 AM PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Al Adams, Senator Pete Kelly, Senator Loren Leman, Senator Randy Phillips, Senator Green Also Attending: JANET CLARK, Director, Division of Administrative Services, Department of Health & Social Services; BOB LABBE, Director, Division of Medical Assistance, Department of Health & Social Services; LISA KIRSCH, Assistant Attorney General, Human Services Section, Department of Law. Attending via Teleconference: GLADYS LANGDON, Children Services Manager, Division of Family & Youth Services, Department of Health & Social Services. SUMMARY INFORMATION SB 250-APPROPRIATIONS: CAPITAL/SUPP/REAPPROP The Committee heard testimony from the Department of Health & Social Services and the Department of Law. The Committee took no action on the bill. SENATE BILL NO. 250 "An Act making and amending capital, supplemental, and other appropriations and re-appropriations; making a re-appropriation under art. IX, sec. 17 (c), Constitution of the State of Alaska, from the constitutional budget reserve fund; making appropriations to capitalize funds; ratifying certain expenditures; and providing for an effective date." DEPARTMENT OF HEALTH & SOCIAL SERVICES Adult Public Assistance (APA) AS 47.25.430-615, Sec. 10(a) - $440,500 General Fund JANET CLARK, Director, Division of Administrative Services, Department of Health & Social Services began with Section (10) of SB 250. She noted that the Governor used a low case scenario of a four-percent growth for this program. She then went on to outline an historical growth rate for this program and gave some background on the population of adults served, essentially noting that this program is a cash supplement to Social Security Disability Insurance (SSI.) Co-Chair Torgerson asked if this program money was considered a co-pay. Ms. Clark responded that this program consisted of cash payments and was not considered as a co-pay for medical benefits. Co-Chair Torgerson asked if this was a nationwide program. Ms. Clark responded that most states provide a supplement to SSI. Senator Phillips asked if the supplementals were broken out by election districts. Ms. Clark responded that on page four of the backup materials, the department provided a fact sheet on Adult Public Assistance to highlight the corresponding demographics [in Committee file.] She continued that although there is a general five-percent caseload yearly increase, about two to three percent consists of the elderly, and seven percent consists of the disabled. Senator Leman referred to the provided backup and read, "Continued APA funding provides critical assistance as the program of last resort for this population." He noted that the state ought to encourage as the first resort: families, friends, neighbors, and church groups, etceteras as providing necessary support to these individuals. He wondered if the state fails by providing a back stop of first resort, rather than last resort, if these individuals are relying on these programs for the remainder of their lives. Ms. Clark responded that the Adult Public Assistance program does not consist of the same population as the Welfare Reform Program. She noted that the state has qualified for federal grants to help fund the research of policies that relate to individuals being able to work without loosing their Medicaid benefits. She continued to note that the department has focused on welfare reform for the past few years, but this program consists of disabled adults based on SSI standards, where an individual must be elderly and poor, or blind. She stressed that these individuals are unable to work and need these funds for utilities and rent payments. Co-Chair Torgerson asked if anything was excluded from these qualifying individual's incomes such as the longevity bonus or the permanent fund dividend. Ms. Clark responded that the state has "hold harmless" provisions in its statutes for both the longevity bonus and permanent fund program. She stated that the $929.00 qualifying income for an individual does not include these benefits. Co-Chair Torgerson asked if individuals re-qualify every year for these benefits. Ms. Clark responded that she would provide this information to Co-Chair Torgerson Senator P. Kelly stated that public policy was driving most of what is listed on this supplemental budget. He added that the only way to change this was through statutory changes. Co-Chair Parnell read the following sentence from the APA formula obligations as provided in the backup materials. "Alaska statutory provisions creating the APA financial commitment, do not permit the department to implement a ratable reduction of the APA maximum payment schedule." He asked where this reference was in statute. Ms. Clark responded that this was included in AS 47.25.430 (e), as follows: "provides the amount of state assistance and eligible individual receipts must be maintained at the 1992 level." Co-Chair Parnell asked if these levels were set forth in regulation. Ms. Clark responded affirmatively. Co-Chair Parnell referred to this same statute, under Subsection (a), which states, "Financial assistance shall be given under these sections, so far as is practicable under appropriations made by law." He noted that there was no established formula for this in statute. Ms. Clark responded that in the past when a proposed ratable reduction was requested, the Attorney General's office advised the Department that this would be questionable by doing so without legislative action. Co-Chair Parnell added that he was under the impression that this program, was primarily driven by the elderly. He then cited this population by age as outlined in the backup. Ms. Clark responded that when someone turns 65 years old, they are counted as elderly and not as disabled. Co-Chair Parnell continued to discuss this age breakdown and noted a discrepancy in the numbers of individuals accounted for. He then asked what the department paid to an individual while they wait for an eligibility determination on SSI. Ms. Clark responded that she would provide this information to Co-Chair Parnell at a later date. Old Age Assistance - Alaska Longevity Bonus Hold Harmless (OAA-ALBHH) AS 47.45.120, Sec. 10 (b) - $292,200 General Fund Ms. Clark continued that this program was created to allow low income, elderly Alaskans to receive the same benefits from the longevity bonus payment, while holding them harmless from loosing their federal SSI, as well as their state adult public assistance payment. She added that each month about 1500 elderly adults receive this benefit. She referred to page five of the corresponding backup and gave particulars of how this program works, including an explanation of why additional monies are necessary. She summed up that the department needed a higher supplemental than there is an increment request. Senator Phillips noted that the legislature had passed the Governor's bill on longevity and assumed that this supplemental would have no affect on that. Ms. Clark responded that the department had reflected a reduction of this program in their fiscal note. She stated that she would let Senator Phillips know how much of a reduction was reflected. Senator P. Kelly asked if the Governor's bill was income based and wondered how this would impact individuals with $60,000 or $80,000 incomes who would not be eligible for services, which the department is trying to offset. Ms. Clark responded that the Governor's bill was income based and noted that in theory Adult Public Assistance is a needs based, income based program for poor elderly. She added that if this changed and the longevity bonus became a needs based, she thought there would be some changes in how the department would not hold people harmless. Catastrophic and Acute Medical Assistance (CAMA) AS 47.08, Sec. 10(c) - $608,600 General Fund Ms. Clark noted that this was a relatively new program, which separates out medical services for the very poor and replaces the General Relief Medical Program. She referred to the corresponding backup, which highlights eligibility rules and she touched on some of these for the Committee. She continued that the Governor's request was $500,000 more than what the Conference Committee supported; however the Senate Finance Committee supported the higher number last year. She noted that the original request was reduced and pointed out that the pharmacy costs related to this program, is what drives the budget request. She added that the department estimates 1,145 individuals will access this program in FY00 and a little over 900 of these will use the pharmacy benefit. Senator Phillips referred to this program's income limits and asked if there were any related exclusions, such as the permanent fund dividend. BOB LABBE, Director, Division of Medical Assistance, Department of Health & Social Services responded that he would research this for the Senator. He noted that service payments are made directly to the providers, but the recipients are allowed a certain amount of income, although it is a very small amount. Co-Chair Parnell asked if any unallocated reductions to the department programs gets allocated to the CAMA program for FY00. Ms. Clark responded that she would research this possibility. Foster Care AS 47.14.100, Sec. 10(d) - $3.7 million (Federal Receipts & General Fund) Ms. Clark stated that an amendment to this original request was given to the Committee, which reduced the amount of the supplemental by about a million dollars. She noted that when the department originally looked at the Foster Care budget, they took into consideration the growth rate of new children entering the program, along with an increase of a daily rate of $3.00. She stated that the department researched this increase and found that more money is paid for infant care and teenagers, along with a geographic differential. She concluded that more infants were entering the system than previously and they found that their original formula was flawed. She noted that as a result of this, they backed down this amount. Co-Chair Parnell recollected that an increase in last year's budget went towards Foster parent rates. Ms. Clark responded that last year the department attempted to keep up with the amount of children entering the system, but that there was no rate increase. She added that there was a rate increase codified in regulation a few years ago. GLADYS LANGDON, Children Services Manager, Division of Family & Youth Services, Department of Health & Social Services testified via teleconference from Anchorage. She spoke to the increase of infants into Foster Care due to domestic violence. Subsidized Adoption AS 13.26.062, AS 25.23.190-240, Sec. 10(e) - $408,900 Federal Receipts Ms. Clark continued that this requested money was for the subsidized adoption program to cover caseload growth and the department has undertaken to enhance their ability to claim additional Federal Title 4 (e) Funds. She noted that the department originally thought this would be a general fund request, but these federal receipts can be earned to make up for the projected shortfall in this program. She continued that this program was for children with special needs or those that are difficult to place. She added that this program allows for a small stipend to adoptive parents. Senator Leman referred to page 13 of the backup and read that there were 752 children classified as racial or with ethnic factors. He asked what this specifically meant and whether these were children that were additionally difficult to place. Ms. Clark responded that she did not know for certain, but would research this for the Senator. Senator Green asked if these special needs children qualify for a larger stipend in an adoptive home, rather than their own home. MS. Clark responded that this was a good question, but that she did not have an answer for it. She did note that the subsidized and guardian payments were contractual arrangements between the state and the adoptive parent. She added that these payments were on average about half of what the department pays for Foster Care. Ms. Clark stated that she would provide the information, which Senator Green specifically requested. Senator Phillips noted that out of a total of 1,095 children, a third of them were either Fetal Alcohol Affected (FAE) or Fetal Alcohol Syndrome (FAS) and asked what the department is doing about a problem that is mostly preventative. Ms. Clark responded that U.S. Senator Ted Stevens provided $6 million dollars for the next five years to establish a State of Alaska FAE and FAS program. She noted that this could lead to statutory changes regarding this problem. Co-Chair Parnell noted that the department made this request in Legislative Budget & Audit (LB&A) in the form of a Revised Program for the Legislature (RBL), as well as in this supplemental. He asked if there was any indication from LB&A when this will be taken up or which avenue they are really pursuing. Ms. Clark responded that the department had put four of these supplementals (federal only) into the LB&A process. She added that the department is a bit confused about how the legislature wants to consider these budgets. She continued, that as a result of this confusion, the department chose both avenues depending on what might be the most expedient. Frontline Social Workers, Sec. 10(f) - $261,800 Federal Authority Ms. Clark offered that this request was to deal with some unexpected increases in this program's basic operating cost. She noted a list of various reasons why this money was necessary on page 18 of the provided backup. She specially noted that in the past the department has lapsed significant dollars in personal services related to this program, although the department is not doing this anymore. She added that the department holds positions vacant to live within their vacancy assessment of 7 percent. She noted that the department does not have the flexibility to transfer funds from personal services as the department has in the past to take care of unexpected costs. Ms. Clark outlined that the department had to enhance security services in their Anchorage office since some clients had brandished guns and made threats. She added that the department contracted with a security company on site. She gave various other examples of unexpected costs and added that this program's federal funds came to the program as part of the Temporary Assistance for Needy Families (TANF Block Grant.) She offered that one of the transfers allowed under another federal source is called the Social Services Lot Grant, presently this is all budgeted towards to the Frontline Social Workers program. McLaughlin Youth Center, AS 47.14, Sec. 10(g) - $120,000 General Funds Ms. Clark offered that an overcrowding situation has persisted at this facility over the years, especially in their detention unit. She added that this results in more overtime costs, including commodity purchases such as food and clothing for children housed in detention. She added that other unexpected costs were due to clients with mental health needs that required one-on-one supervision. She continued that this also resulted in an overtime situation. She outlined other reasons why there was a shortfall of money for this program. Tape: SFC - 00 #37, Side B 9:50 am Co-Chair Parnell asked what the department budgets for in overtime hours. GEORGE BUHITE, Director, Division of Juvenile Justice, Department of Health & Social Services responded that the department keeps averages of how many hours of overtime are necessary to keep their facilities running. He stated that overtime hours were hard to predict and gave examples for the month of July of overtime at $37,000 and for January $101,000 for this past year. He noted that overtime costs fluctuate between these two extremes. He explained that the department tries to stay within their budget and if they leave positions vacant, while the population spikes, this is problematic because there is not enough ready staff. He pointed out that for every eight to ten detainees, another post must be added. He noted that overtime costs are included in the overall budget. Co-Chair Parnell used the example of Public Safety and how they budget at least six to ten hours a month per trooper, and if there is an aberration they are able to account for this. He asked how much the unallocated reduction was allocated to Bethel's youth detention facility. Mr. Buhite responded that the department's portion of the unallocated reduction for the Division of Juvenile Justice last year was $250,000. He noted that $108,000 of this was allocated against McLaughlin, $50,000 for the Fairbanks Youth Facility, $50,000 for the Johnson Youth Facility, and a reduction of a part-time clerk position in Southeast. He stated that none of these funds were allocated to the Bethel facility. He noted that when it came time to take a reduction, he applied these as such to those facilities that could absorb it. He felt as though this facility would not be able to handle such a reduction. Senator Phillips referred to the spikes in population and asked if there was a pattern of when these occur. Mr. Buhite responded that there has been an historic pattern with a building in the fall, which peaks around Christmas. Senator Green asked Mr. Buhite to refresh her memory, regarding family medical leave. Mr. Buhite responded that if an employee has a situation in their family or a personal injury, this employee can take leave beyond the standard leave allowed. Ms. Clark added that these employees can take up to 18 weeks under the state's family medical leave provision. She noted that if they use this leave, the employee is still paid out of the department's budget, as long as the hours are accrued. Senator Green asked about a situation where as many as eight employees at McLaughlin were on family medical leave. Mr. Buhite responded that McLaughlin has a very stable, but aging work force. He added that some of them have elderly and dying parents to care for. He also noted that as some employees get older, they are more apt to have injuries from trying to restrain detainees, and such. Bethel Youth Facility, AS 47.14, Sec.10(h) - $97,000 General Fund Ms. Clark offered that this supplement was related to the size of the resident population in the detention unit. She added that this supplemental was comprised of $73,000 in additional overtime and $24,000 in additional commodity and food related expenses for detainees. She noted that in September of 1999, the facility housed five residents adjudicated for murder, attempted murder or conspiracy to commit murder. She added that this facility is very small and that these individuals took special care and attention. Mr. Buhite explained how overcrowding affects these facilities and their corresponding programs. He noted that last week they averaged 17 to 18 young adults on an eight- bed unit and in the general unit (19 beds), this facility averages 26 young adults per day, overall through February of this year. Medicaid AS 47.07, Sec. 10(I) - $6,264,700 General Fund Ms. Clark stated that based on this program's annual expenditure pattern, the projected Medicaid need for general funds for the rest of the fiscal year will be short. She noted that in this program's weekly projection runs, an actual shortfall in general funds is actually $9.5 million, but staff is working to reduce this number. Mr. Labbe added that staff continues to maximize the division's federal claim by re-coding of claims by Alaska Natives that are served through agreements with Indian Health Service or Tribal providers. He added that with a Medicaid client who is an Alaska Native receiving services through a private provider, the state receives a 100 percent federal reimbursement. He detailed the progress on these efforts thus far for the Committee. Senator Leman asked that when the above analysis is conducted, in terms of someone qualifying as an Alaskan Native with reimbursement potential, he asked if these individuals must first qualify or is a determination made strictly on nationality. Mr. Labbe responded that when a person applies for Medicaid they identify themselves as being qualified and through private providers, the department can verify these numbers. Senator P. Kelly asked if there were any differences in service that a person would receive under Indian Health Service (IHS) as versus Medicaid. Mr. Labbe responded that the IHS package, since the tribes have moved to compacting, is somewhat flexible based on what the individual tribal program is willing to provide to their beneficiaries. He mentioned an historical, basic package that did not include some things that might be covered under Medicaid, but there have been some expansions of services allowed. He used the example of long term care and noted that this is not typically included because it is so expensive to provide. He continued that as tribal elders work with the department to find ways to finance these services, the state makes attempts to get the federal government to pay 100 percent for these services at the same time, making it more feasible that the federal government can support this program. Co-Chair Parnell referred to Indian Health Service collections and noted that if the state thinks they can get $3 million for this year, would the department look to previous years for additional monies for reimbursement through Indian Health Services. Mr. Labbe responded that last year the department had an aggressive retroactive claim effort in place, but noted that this effort is now pretty much exhausted. Abortion Services for Medicaid Eligible Women, AS 47.07.030, Sec. 10(j) - $300,000 General Fund Ms. Clark stated that currently the department has $215,000 in pending abortion claims and they project $85,000 for the remainder of FY00. She noted that Medicaid providers rendered these obligations after the judgement of the Superior Court in a lawsuit challenging the constitutionality of the state funding limit. She added that Medical Assistance has no valid appropriations to pay these claims. She noted that this was not really a supplemental, but a separate appropriation because the department does not have the ability, in the Medicaid program, to pay these claims except if they comply with the Hyde Amendment in the Medicaid Program. She continued that the department does not have any other valid appropriation to pay for these claims even though the department has been ordered to do so. Senator Phillips asked what would happen if the legislature does not appropriate these dollars. LISA KIRSCH, Assistant Attorney General, Human Services Section, Department of Law responded that currently a contempt motion exists in the Superior Court charging that the state is failing to comply with a valid court order. She anticipates that if the state is not willing to pay for these services, which have already been provided it is likely the court will order sanctions against the state. She added that the forms these sanctions would take are difficult to predict, but would most likely include fines of some sort. Co-Chair Parnell asked Ms. Kirsch to describe the procedural posture of this case and what stage it is presently at. Ms. Kirsch stated that this case first arose in June 1998, as a complaint for declaratory judgement and a request for a temporary restraining order. She then gave an historical account of how this trial progressed and the issues considered as a result. She stated that this case generally challenged the regulation that directs the money either from Medicaid and General Relief Medical (GRM) to pay for these abortions. She continued that the temporary restraining order foreclosed the state from enforcing this regulation. She explained the procedural aspects of this case and noted that the Superior Court ruled that failure to fund medically necessary abortions constrains and interferes with a fundamental right, namely the right of privacy. She continued that the court found that Alaska's constitutional right to privacy entitles Medicaid eligible women funding for medically necessary abortions. She stressed that the court did not direct that the state had to pay for abortions, but if they paid for pregnancy related and childbirth services, then they must pay for these abortions. Ms. Kirsch continued to outline at what stage this case was at in regards to the Alaska Supreme Court hearing, including an outline of related motions, which have been filed to date. Co-Chair Parnell read a footnote to the Supreme Court's Order, dated December 30, 1999, as follows: "The injunction does not actually compel an appropriation, rather in effect, it simply relaxes legislative restrictions on funding already appropriated." He thought that what the Supreme Court was saying is that the money appropriated into the Department of Health & Social Services had some restrictions on it. He interpreted this to mean that the department was not permitted to provide for elective abortions, but the court was saying that they are willing to remove these restrictions on the appropriated money and if the department chooses to, they can spend this money on abortions in accordance with the lower court injunction. He asked if this was an accurate statement. Ms. Kirsch responded that she was reluctant to speak for the justice who wrote this footnote. She felt as though Co-Chair Parnell's interpretation was a reasonable one. Co-Chair Parnell noted that the department had requested $300,000 to provide these services and in effect he wondered if this did not undermine the state's legal position on appeal. Ms. Kirsch responded by walking the Committee through the "separation of powers" issue, which the state had used to argue their case based on the fact that the court should not be able to re-appropriate funds. She continued to outline for the Committee those additional issues the state has made to argue this case. She noted that under the Separation of Powers Doctrine, the court does have the ability to intercede except under exceptional circumstances, but the court does not have the power to order an appropriation. Co-Chair Parnell asked again, that if the legislature chose to fund this request, would the legislature not be undermining their legal position on appeal. Ms. Kirsch responded that she did not believe so. Her position thus far, has been that there is no funding currently available and that the court cannot appropriate or re-appropriate those monies set aside. She summed up that if the state complies with the court order and the state prevails on appeal, the state will have some recourse. She continued that if the state is not in compliance with the lower court order in the interim, the state faces the issue of contempt. She added that within the framework of "separation of powers," she did not believe a special appropriation would undermine this, since the appropriation in this instance is only for a finite period of time. She stated that by the department coming to the legislature, they have shown that they have made every effort to comply with the court order, receiving an interim amount of funds to stay in compliance with the lower court order until the appeal can be completed. Co-Chair Parnell referenced the invoices, which make up the $300,000 request, and asked what range of dates did they reflect. Ms. Clark responded that these started after the Superior Court decision of last April when the department commenced accepting and pending claims, but not paying them. She noted that she would let the Senator know what the service dates were for these. Senator Leman added that he would like in addition to the list of service dates, also invoices, and who was invoiced. He noted that the witnesses had been using some terms interchangeably, which caused some confusion. He referred to the backup regarding the definition of therapeutic abortions, and noted that the $300,000 request was for elective, not medically necessary abortions. He continued to define the difference between medically necessary and elective abortions. Ms. Kirsch noted that there was a great deal of difficulty associated with the terms therapeutic and medically necessary abortions. She continued to discuss her perspective on differences between these two definitions. Senator P. Kelly noted that it was his understanding that therapeutic abortions were also elective. He then referred to the "separation of powers" issue, and clarified that the judge in the Superior Court has said that if the department can find the money, the department is allowed to fund these abortions. He wondered that if these abortions are an absolute right, why the department has not made the necessary appropriation. Ms. Kirsch noted that the department's monies are appropriated for specific purposes. She noted that none of these funds are available for abortion purposes and she added that this was the reason why plaintiffs targeted Medicaid money. Senator P. Kelly responded that he appreciates how the department has handled this issue thus far. He felt that if the court fines the department as a result of this litigation, the legislature should take money out of the court's budget, since he felt that this case was such a bold violation of "separation of powers." SFC-00 # 38, Side A Ms. Kirsch outlined for the Committee the briefing schedule related to this litigation. Senator Green asked if it was not true that federal Medicaid does not pay abortions. Ms. Kirsch responded that no, Medicaid only pays for those narrow exceptions, such as rape, incest and a life- threatening situation for the mother. She added that the state must also pay for these types of abortions in order to qualify for federal funding. Senator Leman requested from the department, the number of these exceptional abortions performed. Ms. Clark responded that she had this information for FY99. She noted that during this period Medicaid paid for 18 abortion totaling $11,065. She continued that one of the reasons the department believes that they do not have funds available to comply with this court order, is that they have such a long list of other supplementals, as outlined previously. She concluded that this reflects a short- funding situation. Child Care Benefits, AS 47.27.635, Sec. 10(k) - $1,500,000 Federal Authority Ms. Clark stated that the department would use a reimbursable service agreement to transfer this money to the Department of Education for their short funding in the childcare subsidizes program. She explained how this would work. Energy Assistance Program, AS 47.05.010 Sec. 10(l) - $1,767,700 Federal Receipts Ms. Clark stated that the department could not keep up with President Clinton's announcement of additional emergency contingency funds available for the "Home Heating Program." She noted the related national formula that allocates these dollars is based on how much a state spends for heating expenses. She added that with the Northeast experiencing a cold winter, Alaska has received a smaller portion of these monies through this national formula. Senator Phillips asked about the income limits related to this program, and asked if there were any exceptions, such as the permanent fund dividend. Ms. Clark responded that this was a totally federal funded program and that she would have to get back to the senator on this issue. Co-Chair Parnell asked if this request would eventually be less than $1.7 million. Ms. Clark responded that this amount would be more at a total of $2.361.1 million. Ms. Clark continued that there were several miscellaneous supplementals to consider, but noted specifically the Foster Care program. She added that this supplemental included some clients that were supposed to be covered by Medicaid, but who eventually were not. She added that as a result, the state must pay these costs, for such as things as broken eye glasses, etceteras. She continued that there were a few reconciled audits with grantees that are owed additional money and also noted a ratification in Section 2 for an over-expenditure in the Medicaid program for FY99 in the amount of $3.271.6 million dollars. She outlined specifically how this supplemental came to be. Co-Chair Parnell noted that SB 250 would be HELD in Committee. ADJOURNED Co-Chair Parnell adjourned the meeting at 10:51 AM. SFC-00 (17) 02/25/00