Legislature(2003 - 2004)

03/01/2004 01:49 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
GENERAL SUBJECT(S):                                                                                                           
Department Responses to HFC FY05 Budget Recommendations:                                                                        
     Environmental Conservation                                                                                                 
     Fish and Game                                                                                                              
     Health & Social Services                                                                                                   
The following overview was taken in log note format.  Tapes                                                                     
and handouts will be on file with the House Finance                                                                             
Committee through the 23rd Legislative Session, contact 465-                                                                    
2156. After the 23rd Legislative Session they will be                                                                           
available through the Legislative Library at 465-3808.                                                                          
 LOG SPEAKER                DISCUSSION                                                                                      
      TAPE HFC 04 - 34      DEPARTMENT OF ENVIRONMENTAL CONSERVATION                                                        
      SIDE A                                                                                                                  
 051  KURT    FREDRIKSSON,  Reviewed  the  impact   of  subcommittee                                                            
      DEPUTY COMMISSIONER, recommendation    to   eliminate   $539.7                                                            
      DEPARTMENT        OF thousand: $11.4 in general funds and the                                                             
      ENVIRONMENTAL         elimination of two positions.                                                                     
 223 Mr. Fredriksson        Noted that an increment to strengthen                                                               
                            water quality protection for $300 GF was                                                            
                            reduced to  $200  thousand.  This  would                                                            
                            impact the underground injection program.                                                         
 311 Mr. Fredriksson        Discussed the drinking water section                                                                
                            reduction of $45.9  thousand. There  are                                                            
                            1,700 Class  C  systems  (smaller  water                                                            
                            systems that  serve  25  or  more).  The                                                            
                            program would be cut in half  and phased                                                            
 416 Mr. Fredriksson        Reviewed reductions for Class C solid                                                               
                            waste management for communities of 1,000                                                           
                            or less, 163 communities would be phased                                                            
                            out. An  internet-based system would  be                                                            
 525 Mr. Fredriksson        Noted that there was a $56 thousand                                                                 
                            switch to  the  Seafood Inspection  Fund                                                            
                            from GF to receipts.                                                                              
 611  Representative Croft  Clarified that the receipts would be from                                                           
                            seafood industry fees paid the state  to                                                            
                            provide inspection services.                                                                      
 635 Co-Chair Harris        Noted that the savings would go to the                                                              
                          General Fund.                                                                                       
 657 Mr. Fredriksson        Observed that there was an $18.8 general                                                            
                            fund reduction in travel.                                                                         
 737 Mr. Fredriksson        Noted that the Subcommittee did not                                                                 
                            accept the Governor's request for  $80.5                                                            
                            GF for  homeland  security  issues.  The                                                            
                            Commissioner's  office  would  have   to                                                            
                            provide the support.                                                                              
 843 Mr. Fredriksson        Observed that the worst impact would be                                                             
                            to  the   water  quality  programs.   He                                                            
                            expressed concern that  water protection                                                            
                            programs need  to  be strengthened.  The                                                          
                           underground injection program  would not                                                             
                           go forward.                                                                                        
917 Mr. Fredriksson        Clarified, in response to a question by                                                              
                           Co-Chair Harris,  that the  full request                                                             
                           was   for   $300   thousand  and   three                                                             
                           positions: $100 thousand and one position                                                            
                           were denied.                                                                                       
1019  Representative Croft  Asked for   more  information   on  the                                                             
                           Raindrops to Ocean Initiative.                                                                     
1053 Mr. Fredriksson       Explained that the initiative looks at                                                               
                           how water  resources are  managed. Water                                                             
                           quality, environmental health wastewater,                                                            
                           facilities  construction  and  operation                                                             
                           (village  safe water  and  sewage loans)                                                             
                           would  be consolidated  in  a new  water                                                             
                           section. He provided further information                                                             
                           regarding on the reorganization.                                                                   
1145 Co-Chair Harris       Spoke   to   the   Governor's   proposed                                                             
                           amendments  and asked  how  many of  the                                                             
                           amendments  were taken  care  of by  the                                                             
1219 Mr. Fredriksson       All the Governor's amendments were dealt                                                             
                           with  in  the  Subcommittee  except  the                                                             
                           Homeland Security  position, which would                                                             
                           operate at Fort Rich with the Department                                                             
                           of  Military  and  Veterans Affairs  for                                                             
                           security and response. The position would                                                            
                           provide preparedness planning as well as                                                             
                           response. The cost includes their entire                                                             
1356  Representative Croft Questioned why  the Subcommittee decided                                                             
                           that the increment for vehicle inspection                                                            
                           and maintenance was not appropriate.                                                               
1456 Mr. Fredriksson       Explained that there was a vote in                                                                   
                           Fairbanks regarding the  continuation of                                                             
                           the   IMN   program,  which   lead   the                                                             
                           Department to  the  conclusion that  the                                                             
                           program should be reviewed.                                                                        
1600 Co-Chair Harris       Asked how closely the Department works                                                               
                           with the Joint Pipeline Office.                                                                    
1616 Mr. Fredriksson       The Department works closely with the                                                                
                           Joint Pipeline Office.                                                                             
1649 Co-Chair Harris       Questioned if he knew if Alyeska was                                                                 
                           paying for  any  joint positions in  the                                                             
                           Pipeline Office.                                                                                   
1731 MIKE           MAHER, Observed that Alyeska pays the state for                                                             
      DIRECTOR,   DIVISION functions, not specific positions.                                                                 
      OF    ADMINISTRATIVE                                                                                                      
      SERVICES, DEPARTMENT                                                                                                      
      OF REVENUE                                                                                                                
1752 Mr. Fredriksson       A number of these positions would be                                                                 
                           eliminated. The attention is to focus on                                                           
                            permitting and  oversight.  Coordination                                                            
                            would come from senior management. Staff                                                            
                            in water and other programs is dedicated                                                            
                            to oversight and the pipeline.                                                                    
 1855 Co-Chair Harris       Expressed concern that the state of                                                                 
                            Alaska not become complacent in  regards                                                            
                            to spill  prevention.  He  observed  the                                                            
                            quality  of  Alaska's  system  and   the                                                            
                            potential problems  associated with  oil                                                            
 2033 Representative Croft  Questioned  if  the   homeland  security                                                            
                            position was a new position.                                                                      
 2044 Mr. Fredriksson       Noted that the position is currently in                                                             
                            the FY 04 budget, it was recommended for                                                            
                            elimination but was restored.                                                                     
                            DEPARTMENT OF HEALTH AND SOCIAL SERVICES                                                        
 2128 JOEL     GILBERTSON, Noted that the FY05 budget was reduced by                                                            
      COMMISSIONER,         $35.6 million, which corresponds to the                                                             
      DEPARTMENT OF HEALTH  increment request for Medicaid. There is                                                            
      & SOCIAL SERVICES,    a  commitment   on  the   part  of   the                                                            
                            Department  to  reducing  costs  to  the                                                            
                            Medicaid budget.  He observed  that  the                                                            
                            Department's proposed  FY05  budget  for                                                            
                            Medicaid included  $91.3 million  in  GF                                                            
                            savings   through   cost    containment,                                                            
                            efficiencies and refinancing.                                                                     
 2403 Representative        Clarified that an increment was not fully                                                           
      Hawker                funded. The program was not cut from the                                                            
                            previous fiscal year.                                                                             
 2469 Mr. Gilbertson        Pointed out that the Medicaid budget is                                                             
                            driven by  caseload.  In response  to  a                                                            
                            question   by   Co-Chair   Harris,   Mr.                                                            
                            Gilbertson stated that the growth is not                                                            
                            a result  of  [coverage] expansion.  The                                                            
                            caseload has increased. Denali Kid  Care                                                            
                            is more effective in signing up clients.                                                            
                            The   eligibility   has   not    changed                                                            
                            drastically.  Assumptions  and  changing                                                            
                            demographics account  for  most  of  the                                                            
                            growth,  which  is  a   national  trend.                                                            
                            Seniors and  disabled  are  driving  the                                                            
                            program's  cost,  which  is  a  national                                                            
 2728 Representative Joule  Questioned if the client  growth applies                                                            
                            for Medicaid of services.                                                                         
 2801 Mr. Gilbertson        Noted that Medicaid is a separate                                                                   
                            application, but   many  are  signed  up                                                            
                            through Native health  corporations. The                                                            
                            Department signs some individuals through                                                           
                            Adult Public Assistance.                                                                          
 2936 Mr. Gilbertson        Stressed that the Department is working                                                             
                            to  contain  costs,  but  that  grow  is                                                            
                            continuing. The reduction would be  very                                                          
                           challenging   for  the   Department   to                                                             
                           implement. Many savings require statutory                                                            
                           and   regulatory   change,  and   public                                                             
                           comment. The Department  would be forced                                                             
                           to achieve the bulk of the savings in the                                                            
                           last 6 months of the year because of the                                                             
                           implementation time.                                                                               
3137 Representative        Questioned if it would be helpful to                                                                 
      Hawker               begin the work in FY04.                                                                            
3223 Mr. Gilbertson        Agreed that it would be helpful to start                                                             
                           looking at  optional service reductions.                                                             
                           Adult dental service would be one of the                                                             
                           earlier items to  be eliminated, seniors                                                             
                           would  lose speech,  hearing and  vision                                                             
                           care, and  waivers would  be eliminated,                                                             
                           along with personal care. The Department                                                             
                           would also have to  look at rates. There                                                             
                           would   be   reductions   of   physician                                                             
                           reimbursement by 10 percent. Municipally                                                             
                           supported programs would be affected.                                                              
3438 Representative        Questioned if legislation was needed to                                                              
      Stoltze              pro rate physician rates.                                                                          
3455 Mr. Gilbertson        Explained that reductions would occur by                                                             
                           regulations, but they would still require                                                            
                           a lengthy process.                                                                                 
3518 Representative        Questioned if elimination of entire                                                                  
      Hawker               programs are necessary.                                                                            
3719 Mr. Gilbertson        Fundamental changes need to occur through                                                            
                           statute.   Maintained   it    would   be                                                             
                           appropriate to have the public discourse:                                                            
                           what are the impacts to the individuals?                                                           
3857 Mr. Gilbertson        Some of the growth has occurred through                                                              
                           Fair Share and has  grown as a conscious                                                             
3937 Representative        What is the proportion of optional                                                                   
     Hawker               services versus mandatory services?                                                                 
4001 JANET         CLARKE, Observed that the Division is: 60 percent                                                            
      DIRECTOR,   DIVISION optional and 40 percent mandatory.                                                                 
      OF    ADMINISTRATIVE                                                                                                      
      SERVICES, DEPARTMENT                                                                                                      
      OF HEALTH AND SOCIAL                                                                                                      
4022 Mr. Gilbertson        Emphasized    that   Medicaid    doesn't                                                             
                           distinguish    between   optional    and                                                             
                           mandatory  services  the  same  way  the                                                             
                           Department  does.  Under   the  Medicaid                                                             
                           structure    prescription   drugs    are                                                             
                           optional, but the  state recognizes that                                                             
                           they are still part of a core service.                                                             
4123 Representative        Acknowledged that prescription drugs are                                                             
      Hawker               a critical part of the anticipated                                                                   
                           growth.    Referred to  the  Legislative                                                           
                            Budget and Audit Committee audit on  the                                                            
                            Medicaid Program. The  report felt  that                                                            
                            there were unnecessary inefficiencies.                                                            
 4245 Mr. Gilbertson        Noted that the audit indicated that there                                                           
                            are number  of  programs that  could  be                                                            
                            improve. The  Department has  worked  to                                                            
                            improve program integrity and strengthen                                                            
                            their own audit process. Did not know if                                                            
                            SB 41 would achieve the reductions.                                                               
 4514 Representative        Referred to the growth in personal care                                                             
      Hawker                attendants: from $8 to $56 million in                                                               
                           three years.                                                                                       
 4641 Mr. Gilbertson        Observed   that   the   Personal    Care                                                            
                            Attendance  program has   grown  due  to                                                            
                            regulations    from     the     previous                                                            
                            TAPE HFC 04 - 34, Side B                                                                        
 4621 Mr. Gilbertson        Pointed out that personal care can keep                                                             
                            clients out of  long term nursing  beds,                                                            
                            but acknowledged the need to  assure the                                                            
                            use. He  agreed that there  is room  for                                                            
                            savings. The  Department  has  tried  to                                                            
                            manage  the  Medicaid  program  as   one                                                            
                            budget. There  are  grants for  behavior                                                            
                            health, which  will do  no good  without                                                            
                            vibrant  Medicaid  services,  since  the                                                            
                            clients are the  same. There are  common                                                            
                            clients across programs that need to  be                                                            
 4249 Mr. Gilbertson        In   response   to    a   question    by                                                            
                            Representative  Croft,  Mr.   Gilbertson                                                            
                            noted that  the  Department proposed  to                                                            
                            handle growth within the  Department and                                                            
                            came forward  with a  number of  savings                                                            
                            through  efficiencies,  refinancing  and                                                            
                            cost containment, some of which were not                                                            
                            accepted. The Department proposed to use                                                            
                            the efficiencies to  fund the growth  of                                                            
                            Medicaid.  The  state  of   Alaska  lost                                                            
                            federal financing in FY05.                                                                        
 3987 Representative Croft  All but  5.6  of the  efficiencies  were                                                            
                            taken, but they were not applied to  the                                                            
                            Medicaid growth.  Additional  $35.6  was                                                            
                            reduced in the Medicaid program. Referred                                                           
                            to reductions to family planning.                                                                 
 3909 Mr. Gilbertson        Observed that federal funding was reduced                                                           
                            in the Subcommittee.                                                                              
 3899 Co-Chair Harris       Questioned what services were reduced.                                                            
 3852 Mr. Gilbertson        Explained that family planning, not                                                                 
                            abortion,   was   reduced.    Counseling                                                            
                            services and contraceptive services were                                                            
3844 Co-Chair Harris       Questioned the need for the permanent                                                                
                           fund dividend hold harmless provision.                                                             
3823 Mr. Gilbertson        There are a number of services that                                                                  
                           provide assistance on a  cash basis such                                                             
                           as TANF. The state by statute is required                                                            
                           to   discount  income   earned  by   the                                                             
                           permanent   fund    dividend   in    the                                                             
                           distribution  of  these services.  Money                                                             
                           from  the  Permanent  Fund  is  used  to                                                             
                           supplement for  any  loss  benefits that                                                             
                           result   in   ineligibility  for   these                                                             
                           services.  The   cost  comes   from  the                                                             
                           Permanent Fund.                                                                                    
3601 Ms. Clark             Observed that the benefits are maintained                                                            
                           for one month in October.                                                                          
3538 Representative        Asked the Commissioner to discuss items                                                              
      Hawker               that were added back by the Subcommittee.                                                          
3445 Mr. Gilbertson        Discussed transactions made by the                                                                   
                           Subcommittee.  He   observed  that   the                                                             
                           Department    would   further    examine                                                             
                           reductions for FY05.                                                                               
3227 Mr. Gilbertson        Referred to the reinstatement of $500                                                                
                           thousand  in  funds for  Pioneer  Homes.                                                             
                           There was a  seven-year rate increase to                                                             
                           keep up with the cost of the homes. There                                                            
                           have  been  two  years  without  a  rate                                                             
                           increase. The proposal would continue the                                                            
                           effort to keep the  rates up. This would                                                             
                           general  fund return  would replace  the                                                             
                           savings that  the Department  would have                                                             
                           realized from a rate increase of pioneer                                                             
                           home residents.                                                                                    
3152 Mr. Gilbertson        The second item is a reinstatement of                                                                
                           $500 thousand in GFMH; the reduction was                                                             
                           taken as  part of  the governor's budget                                                             
                           submission to eliminate the Alaska Youth                                                             
                           Initiative (AYI). The Department believes                                                            
                           the funds can  better serve kids through                                                             
                           other programs. The reinstatement of $500                                                            
                           thousand  was made  at  the Subcommittee                                                             
                           with language encouraging the Department                                                             
                           to use  the funds toward  support of the                                                             
                           Bring  the  Kids  Home Initiative.  This                                                             
                           would bring  the 400 plus kids  that are                                                             
                           currently  out of  state  placements for                                                             
                           psychiatric treatment centers. There was                                                             
                           a decrement to the Alcohol Safety Program                                                            
                           for adults, with a desire to move toward                                                             
                           an   offender    finance   system.   The                                                             
                           Administration believes individuals must                                                             
                           take  responsibility for  their actions.                                                             
                           The Department feels it can work with the                                                            
                           Courts  to  ensure   DWI  offenders  are                                                           
                            accountable.  The  proposal acknowledges                                                            
                            that it will take time for  the offender                                                            
                            finance system  to  be  implemented  and                                                            
                            therefore the Subcommittee reinstated  6                                                            
 2950 Representative Croft Put all back or only $408.0 to the                                                                   
                            Pioneer Homes. Ms.  Clarke replied  that                                                            
                            the full amount was  put back. The  rate                                                            
                            increase  will  happen,  but  there   is                                                            
                            recognition that the Department may  not                                                            
                            receive all the funds due to nonpayment.                                                          
 2903 Mr. Gilbertson        Explained, in response to a question by                                                             
                            Representative Croft, that the Department                                                           
                            is  not  currently  operating  the   AYI                                                            
                            program. The  funds are  being used  for                                                            
                            other out patient services  for troubled                                                            
                            youth.  The   AYI   program  served   an                                                            
                            alarmingly small number of kids for  the                                                            
                            amount   of   dollars   invested.    The                                                            
                            Department feels  it  can serve  a  much                                                            
                            larger  number  of  kids  through  other                                                            
                            programs. The Department's objective  is                                                            
                            to bring kids home from out of state and                                                            
                            provide    residential    services    or                                                            
                            outpatient and direct kids  toward lower                                                            
                            cost alternatives.                                                                                
 2744 Ms. Clarke            Explained that the Department is trying                                                             
                            to change the  nature of the funds,  not                                                            
                            eliminate but refocus.                                                                            
 2719 Representative Croft Questioned what would happen if someone                                                              
                            offends  but  can't   pay  for   alcohol                                                            
                            treatment. He questioned if there should                                                            
                            be some GF component left to  fund those                                                            
                            who can't pay.   Mr.  Gilbertson replied                                                            
                            that it is in  the Department's interest                                                            
                            to assure  that  whatever  reimbursement                                                            
                            structure is used is able to finance the                                                            
                            system. The courts can  hold individuals                                                            
                            accountable; they must  attend treatment                                                            
                            and report  back to  court. An  offender                                                            
                            payment structure  would  represent  the                                                            
                            true costs. The  Department believes  in                                                            
                            individual accountability  and  that  an                                                            
                            offender-financed   system     can    be                                                            
                            successful.   It    is   ultimately    a                                                            
                            transaction between the court system and                                                            
                            offender. Treatment  would not  be  paid                                                            
                            for; the funds go toward monitoring.                                                              
 2523 Mr. Gilbertson        Discussed alcohol treatment residential                                                             
                            beds.  The  Department has moved  toward                                                            
                            outpatient services, taken a reduction of                                                           
                            $600 thousand GF savings  from treatment                                                            
                            residential alcohol beds.  The Governor's                                                         
                           budget proposed a $300 thousand reduction                                                            
                           GF  in   reducing  the  least  effective                                                             
                           alcohol  grants.  This was  restored  in                                                             
2348 Representative        Clarified this reinstatement of funds;                                                               
      Hawker               there was concern by rural members of the                                                            
                           subcommittee. There  are $65  million of                                                             
                           program reductions.                                                                                
2235 Ms. Clarke            Explained that the Department had cut $50                                                            
                           thousand and  the  Subcommittee restored                                                             
                           $150 thousand  for psychiatric emergency                                                             
                           services due  to  concern by  the Alaska                                                             
                           Mental Health Trust Authority.                                                                       
2207 Mr. Gilbertson        Emphasized that the Department doesn't                                                               
                           believe  the  reductions  are  risky  or                                                             
                           aggressive.    The seventh  item,  which                                                             
                           moves  toward  utilization of  targeting                                                             
                           case management, will  be more difficult                                                             
                           to achieve. Legislation  was proposed to                                                             
                           allow  the   Department  to   engage  in                                                             
                           targeted  case  management.  This  would                                                             
                           allow  the refinancing  of approximately                                                             
                           $270 thousand  GF. The  Subcommittee did                                                             
                           not believe that  the reduction could be                                                             
                           realized and restored the reduction.                                                               
2189 Mr. Gilbertson        Noted that $220 thousand GF for day                                                                  
                           treatment program in Kodiak.  This was a                                                             
                           reduction in FY04.                                                                                 
2102 Representative        Explained that there was an effort in the                                                            
      Hawker               prior budget to provide services through                                                             
                           identifying school districts as Medicaid                                                             
                           recipients.  School  district   was  not                                                             
                           qualified as Medicaid recipient.                                                                   
2034 Mr. Gilbertson        Discussed   a   GF  decrement   in   the                                                             
                           Governor's budget  regarding educational                                                             
                           costs  for   youths  in  out   of  state                                                             
                           placement. The  Governor's budget pushed                                                             
                           for a $375  thousand cost savings, which                                                             
                           was reinstated by the Subcommittee.                                                                
1992 Mr. Gilbertson        Noted that federal Title 10 grant money                                                              
                           for family planning was eliminated: $400                                                             
                           thousand for family services                                                                       
1924 Representative        Observed that a subcommittee member with                                                             
      Hawker               concerns brought the item forward. The                                                               
                           Subcommittee decided that the item needed                                                            
                           to be reassessed.                                                                                  
1857  Representative Croft Questioned  what   were   the  concerns.                                                             
                           Representative Hawker  replied that  the                                                             
                           concerned  was that  the  money was  not                                                             
                           being used as represented in Fairbanks.                                                            
1839 Mr. Gilbertson        Pointed out that the Governor's budget                                                               
                           contained authorization for  the receipt                                                           
                            of  these  funds  for   family  planning                                                            
 1832 Mr. Gilbertson        Observed that there was an increment of                                                             
                            $200 thousand for  Youth Court  funding,                                                            
                            which was  the  result of  a  change  in                                                            
                            federal funding.                                                                                  
 1713 Representative        Clarified that the item was Subcommittee                                                            
      Hawker                initiative. He observed that funding for                                                            
                            youth courts has  declined and  stressed                                                            
                            the support for the program. Youth courts                                                           
                            were segregated and given an increment of                                                           
                            $200, which brings the aggregate to $500                                                            
                            thousand statewide.  ($479  GF  and  $29                                                            
                            matching   federal.)   He   noted   that                                                            
                            Representative   Ogg   (who   introduced                                                            
                            legislation to  fund  youth  courts)  is                                                            
                            happy   with   the   appropriation.   He                                                            
                            emphasized that  money invested  in  the                                                            
                            front end of an issue saves downstream in                                                           
                          social costs.                                                                                       
 1538 Vice-Chair Meyer      Clarified that, under Representative                                                                
                            Ogg's   legislation,   money   collected                                                            
                            through fines would go into  the General                                                            
 1444 Mr. Gilbertson        Reviewed an effort to align operations                                                              
                            and     restructure      administration,                                                            
                            management and  some operations  of  the                                                            
                            public health nursing program. The intent                                                           
                            is  to   utilize   other  resources   in                                                            
                            communities. The  Department  looked  at                                                            
                            urban areas with other  federally funded                                                            
                            provider services available.   He  noted                                                            
                            that there  is an  effort  to work  with                                                            
                            health care partners. The  section chief                                                            
                            is working with communities to  identify                                                            
                            some services that can be transitioned to                                                           
                            other  providers  and  assure  that  the                                                            
                            transition is  seamless transition.  The                                                            
                            Department identified a 4-year  savings,                                                            
                            which was reduced to a six-month savings.                                                           
                            There was reinstatement of $ 535 thousand                                                           
                            in GF and $370 in IA.                                                                             
 1234 Mr. Gilbertson        Discussed the provision for exceptional                                                             
                            relief, which the Commissioner can grant                                                            
                            to health care facilities for additional                                                            
                            reimbursement.  This   allows   continue                                                            
                            operations when there are  deficits. The                                                            
                            Department  believes   that  they   must                                                            
                            continue to push on sustainability of the                                                           
                            infrastructure and  eliminate  redundant                                                            
                            infrastructure.  The    Department   had                                                            
                            notified the State Hospital and  Nursing                                                            
                            Home  Association  that  they  would  no                                                          
                           longer grant exceptional relief requests.                                                            
                           This has always been discretionary item.                                                             
                           There are  two or  three facilities that                                                             
                           utilize  the provision:  Sitka, Wrangell                                                             
                           and Wesley.                                                                                        
1055 Mr. Gilbertson        He noted that most of the facilities in                                                              
                           question have long-term  and acute care.                                                             
                           The  state  has   attempted  to  support                                                             
                           infrastructure by  overpaying the  long-                                                             
                           term care side. The  State has paid $640                                                             
                           per day for long-term beds.                                                                        
840 Mr. Gilbertson         Observed that there is decreased demand                                                              
                           in some communities and that the state is                                                            
                           trying to identify what  services can be                                                             
                           used  for   underutilized  space.  Local                                                             
                           governments  own   most  facilities.  He                                                             
                           emphasized that $700 a day (for long-term                                                            
                           beds) is  not sustainable over  the long                                                             
713   Representative Croft Concluded that  the state  is overpaying                                                             
                           for some long-term care to keep hospitals                                                            
620 Mr. Gilbertson         Stressed that it is not the intention to                                                             
                           keep the costs from going out to smaller                                                             
                           communities.   Cordova   asked   to   be                                                             
                           identified  as   an   underserved  area.                                                             
                           Smaller facilities have  more volatility                                                             
                           and higher costs. The designation allows                                                             
                           them more flexibility for operations.                                                              
454 Representative         Observed that the intent is to facilitate                                                            
      Hawker               on going transitions.                                                                              
407 Mr. Gilbertson         The Department's assumptions were based                                                              
                           on historical data.                                                                                
337 Ms. Clark              Noted that the Subcommittee met with the                                                             
                           Alaska Mental Health Trust Authority and                                                             
                           agreed  that  general  funds  should  be                                                             
                           expended to  match their  programs. Care                                                             
                           coordination and  respite  services were                                                             
                           increased by request of the Alaska Mental                                                            
                           Health Trust Authority.                                                                            
246 Ms. Clark              Continued that the cost containment                                                                  
                           package    included     an    aggressive                                                             
                           containment in the  Medicaid program for                                                             
                           senior &  disability. The  Alaska Mental                                                             
                           Health   Trust   Authority   asked   for                                                             
                           restorations  in   this  component.  The                                                             
                           proposal does not match with the overall                                                             
                           reduction    to    Medicaid    by    the                                                             
144 Ms. Clark              Observed that the Subcommittee recognized                                                            
                           a  need  for  the  capacity  to  address                                                             
                           problems  if  cost  containment  in  the                                                             
                           Medicaid program is not realized.                                                                  
 126 Ms. Clark              Pointed out that there was a request by                                                             
                            Alaska Mental Health Trust  Authority to                                                            
                            add back $100 thousand in GFMH to restore                                                           
                            a grant for sexual offenders and victims,                                                           
                            which was a reduction in FY04.                                                                    
 054 Mr. Gilbertson         Discussed the $250 thousand increment and                                                           
                            $250   thousand   federal   match    for                                                            
                            assessment  and  planning  with  in  the                                                            
                            Department  to  look  at   the  Medicaid                                                            
                            program for  long-term cost  containment                                                            
                            and growth is at a responsible level.                                                             
                            TAPE HFC 04 - 35, Side A                                                                       
 054 Mr. Gilbertson         Noted that Medicaid program is optional                                                             
                            and stressed the  importance of  finding                                                            
                            ways to make the program sustainable over                                                           
                            time. The Governor's proposal included no                                                           
                            reduction to the Human Service Community                                                            
                            matching  grant.  The   first  committee                                                            
                            substitute included a reduction to  this                                                            
                            component.  The  final  amendment  would                                                            
                            restore the reduction to the FY04 level.                                                          
 118 Mr. Gilbertson         There is a total of $5.6 million in new                                                             
                            and   restored    increments.        The                                                            
                            Administration   feels     that    these                                                            
                            amendments are part of the prudent effort                                                           
                            to continue to control  costs, refinance                                                            
                            and  find  efficiencies.  It  would   be                                                            
                            impossible of achieving these savings on                                                            
                            July 1, 2004. The Department will need to                                                           
                            be aggressive in containing costs during                                                            
                            the second half of the fiscal year.                                                               
 215 Representative         Noted that all the proposed amendments                                                              
      Hawker                were incorporated into the Subcommittee                                                             
                            report, with the exception of  items 61,                                                            
                            62 and 75, which pertain to  the Tobacco                                                            
                            Cessation program.                                                                                
 389 Mr. Gilbertson         Observed that the Governor's budget, in                                                             
                            error, did not include the restoration of                                                           
                            funding  from   the  Tobacco   Cessation                                                            
                            program. The amendment would realign the                                                            
                            FY05 budget  proposal with  FY04,  which                                                            
                            would  include  the  commitment  of   20                                                            
                            percent of the funds from the settlement                                                            
                            to   cessation    efforts.   In    FY04,                                                            
                            legislative action redirected $1 million                                                            
                            of the tobacco funds toward the Medicaid                                                            
                            match.  The   FY05  budget,   mistakenly                                                            
                            included the FY04 budget as  passed, not                                                            
                            as  requested  by   the  Governor.   The                                                            
                            amendment would direct the full amount to                                                           
                            tobacco control efforts, not toward  the                                                            
                            Medicaid match.                                                                                   
 527 Representative         Clarified   that   there   were    three                                                          
      Hawker               adjustments. There is an increase and                                                                
                           decrease in tobacco  cessation funds and                                                             
                           other funds of $1.61 million, which nets                                                             
                           out  to general  fund increase  of $1.61                                                             
643 Co-Chair Harris        With the transactions the full 20 percent                                                            
                           is included.                                                                                       
703 Mr. Gilbertson         Explained that the new general fund                                                                  
                           amount would be  required to replace the                                                             
                           $1 million  of tobacco  settlement funds                                                             
                           that were  used for the  Medicaid match.                                                             
                           The  transactions restores  the full  20                                                             
                           percent, but requires  general funds for                                                             
                           funds  used for  Medicaid.  The original                                                             
                           FY04 budget substitution occurred in the                                                             
                           Senate. The amendment fully restores the                                                             
                           commitment  of  20   percent,  which  is                                                             
                           supported by the Administration.                                                                   
                           DEPARTMENT   OF   LABOR  AND   WORKFORCE                                                           
952 ED FISHER, DEPUTY Provided a quick introduction to the                                                                      
      COMMISSIONER,        Department   of   Labor  and   Workforce                                                             
      DEPARTMENT OF  LABOR Development. He noted that their general                                                             
      AND        WORKFORCE fund budget is 11 million, which is one                                                              
      DEVELOPMENT          half of one percent of the entire                                                                    
                           Governor's budget. The majority of their                                                             
                           funding  comes  from federal  and  other                                                             
                           state    funds.   General    funds   are                                                             
                           concentrated in four programs, three that                                                            
                           require a state match. Observed that the                                                             
                           Subcommittee  eliminated two  positions:                                                             
                           one in the Alaska Labor Relations Agency                                                             
                           and one  in Labor  Standards and Safety.                                                             
                           The  Subcommittee  also  reduced  client                                                             
                           services in the Division of Occupational                                                             
1129 Mr. Fisher            The Alaska Labor Relations Agency is                                                                 
                           facing a reduction of  $42.6 thousand of                                                             
                           $362 thousand  total budget.  This would                                                             
                           require the layoff of  a clerical person                                                             
                           (1  out  of  4)   in  the  Alaska  Labor                                                             
                           Relations   Agency.  He   stressed   the                                                             
                           importance of the position.                                                                        
1227 Mr. Fisher            Observed that one of the two requested                                                               
                           positions in Wage & Hour technician would                                                            
                           be reduced.  He noted that  auditing and                                                             
                           the effort of Alaska hire would be would                                                             
                           be reduced  by half. He  observed that a                                                             
                           reduction by one position would result in                                                            
                           no  auditing  in   either  Anchorage  or                                                             
                           Juneau.  Each position  audits  20 -  25                                                             
                           percent  of   certified   payrolls.  The                                                             
                           reduction would result in a waiting list.                                                          
 1446 Mr. Fisher            Noted that the Senior community services                                                            
                            employment program would be funded  with                                                            
                            interagency  receipts  from  the   state                                                            
                            employment  and  training  program.  The                                                            
                            Department is proposing  a reduction  of                                                            
                            $100 thousand  in  GF,  which  would  be                                                            
                            replaced with  technical vocational  and                                                            
                            educational program funds.                                                                        
 1547 Mr. Fisher            Clarified that the Department does not                                                              
                            support the staffing reductions.                                                                  
 1622 Vice-Chair Meyer      Referred to the Alaska hire  program. He                                                            
                            noted that one-person was transferred to                                                            
                            the Governor's Office  to market  Alaska                                                            
                            hire. He felt that auditing could be done                                                           
                            on an  as needed  basis,  as opposed  to                                                            
                            auditing all of the payrolls.                                                                     
 1717 Co-Chair Harris       Questioned how audits for out of state                                                              
                            hires are completed.                                                                              
 1734 Mr. Fisher            Explained that the Department attempts to                                                           
                            match payrolls  against  permanent  fund                                                            
                            dividend applications. If a person  does                                                            
                            not apply for a  permanent fund dividend                                                            
                            they would not be credited as  an Alaska                                                            
                            resident. The permanent fund application                                                            
                            and dividend are evidence of  a one-year                                                            
                            Alaska  residence.  The  intent  is   to                                                            
                            enforce the Alaska hire provision.                                                                
 1837 Mr. Fisher            Noted that many commissioners have                                                                  
                            declared  the   entire   state   to   be                                                            
                            underemployed.  If  employers  are   not                                                            
                            meeting 90  percent Alaska  hire,  under                                                            
                            statute, there are enforcement penalties.                                                           
                            This only applies to state funded jobs.                                                           
 2003 Vice-Chair Meyer      Noted  that   the   Independent   Living                                                            
                            component was fully  funded. The  target                                                            
                            reduction was reached in the Department.                                                          
 2042 Mr. Fisher            Noted that there are two small amendments                                                           
                            that  were   not  dealt   with  in   the                                                            
                            Subcommittee: lease  funds for  Worker's                                                            
                            compensation and the  Fish Fund (79,  81                                                            
                            and  83  in  the   Governor's  operating                                                            
 2226 Co-Chair Harris       Clarified that the leases are for                                                                   
                            facilities.  He   maintained  that   the                                                            
                            function should be with the Department of                                                           
 2256 Vice-Chair Meyer      Noted that the Department of  Health and                                                            
                            Social Services also has  an independent                                                            
                            living program.                                                                                   
 2316 Mr. Fisher            Observed that the programs are different.                                                           
                            The Department  of  Labor and  Workforce                                                            
                            Development  component  is   a   federal                                                            
                            requirement. The focus is to  help those                                                          
                           that are about to be institutionalized or                                                            
                           are institutionalized to remain in their                                                             
                           home. There is a savings in the long run.                                                          
2437  Representative Croft Doesn't support  the elimination  of the                                                             
                           wage  and  hour  position, but  did  not                                                             
                           propose an amendment at that time.                                                                 
                           DEPARTMENT OF FISH AND GAME                                                                      
2612 KEVIN         BROOKS, Discussed impacts of the Subcommittee's                                                              
      DIRECTOR,   DIVISION work on the Department's budget. Observed                                                            
      OF    ADMINISTRATIVE that  the   departments  overall  budget                                                             
      SERVICES, DEPARTMENT proposed by the  Governor were just over                                                             
      OF FISH AND GAME     $138 million. The GF portion is 20                                                                   
                           percent or $26 million. Discussions on GF                                                            
                           reductions  centered on  the  Commercial                                                             
                           Fisheries Revolving  Loan  Fund (CFRLF).                                                             
                           There was an attempt to restore items in                                                             
                           the Governor's budget and move Commercial                                                            
                           Fisheries Revolving Loan Fund monies into                                                            
                           other  areas. There  was  a transfer  of                                                             
                           CFRLF funds to Commercial Fisheries.                                                               
2955 Mr. Brooks            Observed that an additional $1.377.9                                                                 
                           million   was   transferred   into   the                                                             
                           Commercial Fisheries Revolving Loan Funds                                                            
                           (CFRLF) component.  A transfer  was made                                                             
                           from   subsistence  and   replaced  with                                                             
                           general funds. There was a reduction for                                                             
                           test  fish  receipt  authority  of  $350                                                             
3006 Co-Chair Harris       Asked for an explanation how the CFRLF                                                               
                           has been developed.                                                                                
3030 Mr. Brooks            Explained   that    the    Division   of                                                             
                           Investments   in   the   Department   of                                                             
                           Community   and   Economic   Development                                                             
                           manages the CFRLF  program. The earnings                                                             
                           are  being  used;  the Fund  is  stable.                                                             
                           Testimony of fishers indicates that they                                                             
                           support  the use  of  the  funds in  the                                                             
                           Division of Commercial Fisheries.                                                                  
3133  Representative Croft Questioned if the  viability of the loan                                                             
                           Fund would be affected.                                                                            
3148 Representative Fate Noted that there are surplus funds.                                                                  
3197 Mr. Brooks            Observed that the use of $2.2 million                                                                
                           would not jeopardize the corpus of fund.                                                           
3228 JIM        DERRINGER, Explained that the CFRLF has a cash                                                                  
      STAFF,               balance of $20 million. The Funds                                                                    
      REPRESENTATIVE FATE receives $13 - $14 million in payback.                                                                
                           Each year $3 million is used to fund the                                                             
                           Division  of   Investments.  Any  excess                                                             
                           earnings are available for other budgets.                                                            
                           He observed that $184 thousand was going                                                             
                           to Department of  Community and Economic                                                             
                           Development and $180  thousand was going                                                             
                           to    Department     of    Environmental                                                           
                            Conservation.   The   intent   was    to                                                            
                            consolidate these funds. The amount that                                                            
                            can be used without affecting the Fund is                                                           
                            $2.5 million.  The Subcommittee  decided                                                            
                            that $2.2 million could be used.                                                                  
 3402 Co-Chair Harris       Referred to the Agricultural Revolving                                                              
                            Loan Fund, which  is being depleted.  He                                                            
                            expressed concern that the uses of funds                                                            
                            for Commercial  Fisheries not  adversely                                                            
                            affect the CFRLF.                                                                                 
 3443 Mr. Derringer         Noted that the Agricultural Revolving                                                               
                            Loan Fund  does  not  earn  as  much  in                                                            
                            interest. Only earnings  are being  used                                                            
                            from the CFRLF.                                                                                   
 3520 Mr. Brooks            Noted that the interagency receipts of                                                              
                            $200 thousand were added in each of  the                                                            
                            Commercial  Fisheries  and  Sport   Fish                                                            
                            components. The feeling  was that  there                                                            
                            are projects  that  would  benefit  both                                                            
                            recreation and commercial fisherman.                                                              
 3622 Co-Chair Harris       Asked what occurred in the Subsistence                                                              
 3630 Representative Fate   Explained that  the revolving  fund  was                                                            
                            moved  to   commercial   fisheries   and                                                            
                            asserted back general  funds. There  was                                                            
                            discussion  regarding   the   need   for                                                            
                            subsistence funding at  that level.  The                                                            
                            Department  stated  that  without  state                                                            
                            funding and co-management that the state                                                            
                            would  not  have  input   in  regulation                                                            
                            development.  The  state would lose  its                                                            
                            voice  in  co-management  with  out  the                                                            
                            funding. Observed that  the Division  of                                                            
                            Subsistence  was  funded  with   general                                                            
 3756 Mr. Brooks            Explained that three years ago the                                                                  
                            Division  of  Subsistence  general  fund                                                            
                            support  was  zeroed  ($1  million)  and                                                            
                            replaced    with    Alaska    Industrial                                                            
                            Development and Export Authority dividend                                                           
                            receipts. Last year $800 thousand of the                                                            
                            million was replaced by the CFRLF, which                                                            
                            had the effect of a 20 percent reduction.                                                           
                            Now that  money  is being  switched  for                                                            
                            general funds and the CFRLF  dollars are                                                            
                            being  placed  into   the  Division   of                                                            
                            Commercial Fisheries. The  result is  an                                                            
                            increase of $1.4 million.                                                                         
 3928 Mr. Brooks            Observed that there were a number of                                                                
                            technical amendments. Funding is based on                                                           
                            an assessment  of  interagency  receipts                                                            
                            from all  departments.  The  mail  clerk                                                            
                            position had  to  be created  before  it                                                          
                           could be transferred, since it was                                                                   
                           deleted in their original submission.                                                              
4119 Mr. Brooks            Continued to review technical amendments.                                                            
                           He observed that there was a million                                                                 
                           dollar transfer for leasing to assess                                                                
4214 ADJOURNMENT           The meeting was adjourned at 4:10 PM                                                               

Document Name Date/Time Subjects