Legislature(2003 - 2004)

03/19/2004 08:01 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HJR 31-CONST AM: PERMANENT FUND                                                                                               
Number 1825                                                                                                                     
CHAIR WEYHRAUCH  announced that  the next  order of  business was                                                               
HOUSE  JOINT  RESOLUTION  NO. 31,  Proposing  amendments  to  the                                                               
Constitution  of  the State  of  Alaska  relating to  the  Alaska                                                               
permanent fund  and to payments  to certain state  residents from                                                               
the Alaska  permanent fund; and  providing for an  effective date                                                               
for the amendments.                                                                                                             
Number 1860                                                                                                                     
REPRESENTATIVE SEATON moved to adopt CSHJR 31(W&M).                                                                             
CHAIR WEYHRAUCH objected for discussion purposes.                                                                               
Number 1880                                                                                                                     
JANET  CLARKE,  Director,  Division of  Administrative  Services,                                                               
Department of  Health &  Social Services  (DHSS), noted  that the                                                               
department  has 11  fiscal notes  associated  with HJR  31.   She                                                               
pointed to a  handout in the committee  packet entitled, "General                                                               
Fund Summary Impact  of CSHJR 31 on DHSS Programs."   In general,                                                               
she  stated, HJR  31 would  change the  complexion of  "permanent                                                               
fund dividend  hold harmless in  its use  within DHSS."   It also                                                               
would, with  the one-time payout  of $20,000,  impact eligibility                                                               
for a  number of programs  in the year  that the payout  is made.                                                               
She noted  that, in  addition to the  impacts on  the department,                                                               
there  would also  be impacts  to  federal funds  "that we  could                                                               
describe in each individual fiscal note that we submitted."                                                                     
REPRESENTATIVE   SEATON,  regarding   the  general   fund  impact                                                               
handout, asked if  the brackets indicated losses or  gains to the                                                               
general fund.                                                                                                                   
MS. CLARKE  answered that  the brackets  indicate savings  to the                                                               
general fund.   She indicated that  the bottom row of  numbers on                                                               
that handout reflect the estimated  impact to the department.  In                                                               
2005,  the state  general  fund would  save  $47,765,300.   After                                                               
that, the handout shows a  predicted cost of $53,130,400 in 2006,                                                               
$1,020,000 in  2007, and  $1,019,900 in 2008.   The  total impact                                                               
over that time  period, she said, is estimated to  be [a cost of]                                                               
$7,405,000.    Ms.   Clarke  stated,  "Now  each   one  of  these                                                               
situations and programs, they're  different complexities with the                                                               
permanent fund, the ineligibility, and  the impact to the federal                                                               
and general  fund.  So, if  we have time, because  of the impact,                                                               
we would like to go through each individual fiscal note."                                                                       
Number 2030                                                                                                                     
MS. CLARKE directed the committee's  attention to the fiscal note                                                               
with the  component labeled, "ATAP" [Alaska  Temporary Assistance                                                               
Program].  She described this program  as the one people think of                                                               
as  DHSS's  "welfare-to-work"  program and  assistance  to  needy                                                               
families.   She  pointed  out  that the  analysis  shows that  in                                                               
fiscal  year  2005  (FY  05),  [DHSS]  would  see  a  savings  of                                                               
[approximately]  $26.4 million.   The  bulk of  that, she  noted,                                                               
would  be  federal  funds  that   DHSS  would  not  spend.    She                                                               
explained, "The  reason that  we see  that we  would have  such a                                                               
significant reduction in that program,  is that we have estimated                                                               
that approximately 4,600 of the  5,000 individuals will receive a                                                               
dividend and they  will lose their eligibility for  that month on                                                               
the ATAP program,  and because of the  large supplemental payout,                                                               
they will also loose eligibility for an additional 11 months."                                                                  
MS. CLARKE noted  that the interagency receipts, as  noted in the                                                               
fiscal  note,  show a  savings  in  FY  05  of $2,935,900.    She                                                               
continued as follows:                                                                                                           
     That  fund source  is the  ... permanent  fund dividend                                                                    
     fund.   Those are  the hold  harmless dollars  that pay                                                                    
     for,  under  current law,  that  one  month in  October                                                                    
     where  individuals  are  ineligible and  we  hold  them                                                                    
     harmless.     And  the  legislature   has  appropriated                                                                    
     permanent  fund  dividend  funds   for  that  month  of                                                                    
     ineligibility.   Well, once there is  not [a] permanent                                                                    
     fund dividend  fund anymore,  in 2006,  that $2,935,900                                                                    
     becomes  a  general  fund  expenditure,  because  we're                                                                    
     assuming that  in 2005,  most of  the caseload  will be                                                                    
     ineligible.   But based on our  current experience with                                                                    
     our clients, we believe most  of them will come back on                                                                    
     the caseload  in 2006, and  we will need to  have those                                                                    
     resources to pay  benefits for the whole year.   But it                                                                    
     will become a general fund expenditure.                                                                                    
Number 2147                                                                                                                     
REPRESENTATIVE  SEATON  offered  his understanding  that  if  the                                                               
recipients  are  no  longer receiving  permanent  fund  dividends                                                               
(PFDs), then "we wouldn't need any hold harmless money."                                                                        
MS. CLARKE  answered that  it's correct  that those  people would                                                               
not be  held harmless.   However she  explained that  when people                                                               
are held  harmless, they get their  benefits and their PFD.   She                                                               
said, "So,  we're paying  benefits right now  for that  one month                                                               
that would be ineligibility.  The  funding source for that is the                                                               
PFD fund, and  when we don't have  the PFD ... we need  to have a                                                               
funding source for that.   So, there is a cost."   In response to                                                               
a question  from Representative  Coghill, she explained  that the                                                               
federal  funds related  to the  ATAP are  block grant  funds, and                                                               
it's not a 50-50-match program.   She confirmed his understanding                                                               
that  regarding "folks  who have  been determined  ineligible for                                                               
food  stamps  -  [Supplemental  Security Income  (SSI)]  -  those                                                               
federal funds  will come into  play again  [and] will go  back to                                                               
the way  it was before  the PFD."   She continued, "But  for this                                                               
particular program, we have a  maintenance of effort requirement,                                                               
rather  than  a mat  situation,  so  ...  we  have to  keep  that                                                               
maintenance of effort.                                                                                                          
Number 2236                                                                                                                     
ANGELA SALERNO, Program  Coordinator, Director's Office, Division                                                               
of  Public Assistance,  Department  of Health  & Social  Services                                                               
(DHSS), offered the following history:                                                                                          
     As Janet  said, it's a  block grant, but it's  based on                                                                    
     what we were spending for  AFDC in 1994, before welfare                                                                    
     reform.  In  1994, we based that estimate  on 11 months                                                                    
     of federal  funds and one  month of PFD  hold harmless.                                                                    
     That's  what we  were  spending then;  that's what  the                                                                    
     feds held  us to.   So, we simply  do not have  a block                                                                    
     grant for  that twelfth month.   That's why  ..., since                                                                    
     1982,  we've  relied on  that  one  month of  PFD  hold                                                                    
     harmless  as   a  funding  source  for   the  temporary                                                                    
     assistance program.                                                                                                        
Number 2268                                                                                                                     
REPRESENTATIVE  COGHILL   offered  his  understanding   that  the                                                               
maintenance of effort agreement is not amendable.                                                                               
MS. SALERNO answered,  "No, it is not.  That  is mandated by [the                                                               
Personal Responsibility  and Work Opportunity  Reconciliation Act                                                               
of  1996  (PRWORA)]  that  brought  us  welfare  reform  and  the                                                               
[Temporary Assistance for Needy Families (TANF)] program."                                                                      
Number 2286                                                                                                                     
MS. CLARKE added for the record:                                                                                                
     We have been  able to take advantage of  changes in the                                                                    
     maintenance  of  effort  level.     In  the  governor's                                                                    
     budget,  for example,  we have  a $2.8-million  general                                                                    
     fund  savings  for 2005,  because  we've  been able  to                                                                    
     reduce  our maintenance  of effort,  because we've  met                                                                    
     our work  participation requirements, and so,  we get a                                                                    
     break on  our maintenance  of effort calculation.   So,                                                                    
     we do take advantage where we can.                                                                                         
MS.  CLARKE,  in  response  to  a  question  from  Representative                                                               
Coghill, noted  that in the  past, the maintenance of  effort has                                                               
been reduced,  based on the  tribal assistance  program; however,                                                               
"that  varies,  based  on  when those  programs  will  come  into                                                               
account.  It's a formula, basically."                                                                                           
Number 2333                                                                                                                     
REPRESENTATIVE GRUENBERG  asked if the  bottom line is  that "we"                                                               
are currently getting far less federal funds than "we" should.                                                                  
MS.  CLARKE responded,  "The federal  government took  a look  at                                                               
what  we were  spending in  1994, as  far as  federal funds,  and                                                               
that's what  every state  was held  to - ...  that was  our block                                                               
REPRESENTATIVE GRUENBERG stated  his concern is in  regard to the                                                               
hold harmless provision.                                                                                                        
MS.  CLARKE,  in  response  to  a  question  from  Representative                                                               
Gruenberg, confirmed, "Yes, if we  had not had the permanent fund                                                               
dividend hold  harmless our federal expenditures  would have been                                                               
higher and our block grant would have been higher."                                                                             
TAPE 04-40, SIDE B                                                                                                            
Number 2371                                                                                                                     
MS.  SALERNO  clarified,  "We  get  eleven-twelfths  of  what  we                                                               
Number 2362                                                                                                                     
REPRESENTATIVE  COGHILL  said  that [the  absent]  Representative                                                               
Holm would  assert that "people would  be able to take  the money                                                               
and  put  themselves into  employment,  so  there might  be  some                                                               
challenge to  the assertion."   He asked if  there is a  way that                                                               
the  state could  "prorate" the  eleven-twelfths over  a 12-month                                                               
MS. CLARKE addressed the issues as follows:                                                                                     
     One, you could reduce benefit  levels.  That would take                                                                    
     ... statutory change to reduce  the benefit levels.  We                                                                    
     are   hamstrung   with   the  maintenance   of   effort                                                                    
     requirement that  the federal government has  placed on                                                                    
     states.  They basically said,  "We agree to pay you the                                                                    
     1994  level" until  they change  that rule  again, "but                                                                    
     you, state, have  to maintain a certain  level of state                                                                    
     expenditure   to  receive   that"   -   which  is   the                                                                    
     maintenance of effort.  So, we are locked in a bit.                                                                        
Number 2284                                                                                                                     
MS. CLARKE  brought attention  to the next  fiscal note  with the                                                               
component labeled, "Tribal  Assistance."  She stated  that it has                                                               
all  the same  characteristics as  the previously  mentioned ATAP                                                               
fiscal note, and the fiscal  note analysis is basically the same.                                                               
In  response to  a  question from  Representative Gruenberg,  she                                                               
explained that  the reason the  zero amounts  show in FY  '08 [in                                                               
both the ATAP and Tribal  Assistance fiscal notes] is because, by                                                               
that time, [the department] assumes  that after the savings in FY                                                               
05,  the case  load coming  back on  in FY  06, and  the residual                                                               
costs in FY 07, it would "get back to a net zero."                                                                              
Number 2236                                                                                                                     
REPRESENTATIVE  GRUENBERG  asked   what  the  underlying  factual                                                               
assumptions are  that led to  the department's thinking  that the                                                               
amount would "even out again."                                                                                                  
MS.  CLARKE replied,  "We have  assumed that  the caseload  would                                                               
return to the levels prior  to the permanent fund dividend payout                                                               
of $20,000.   That's our main assumption.  We  have not taken any                                                               
other economic analysis."                                                                                                       
Number 2204                                                                                                                     
REPRESENTATIVE  SEATON  mentioned  the   fund  source  amount  of                                                               
[$2,935,900, listed  on the ATAP fiscal  note].  He asked  why it                                                               
occurs in 2006, but not in following years.                                                                                     
MS. CLARKE explained as follows:                                                                                                
     In  preparing this  fiscal note  to  show the  one-time                                                                    
     nature of the savings and  the cost into the future, we                                                                    
     debated  how to  demonstrate  that  for the  committee.                                                                    
     So, the  approach we took  doesn't -- those  costs will                                                                    
     continue  to  be  shown throughout  2007,  2008,  2009,                                                                    
     [and] 2010.  We basically  just showed them coming back                                                                    
     into the  base and then  getting to equilibrium.   Then                                                                    
     we have  a savings  in 2005,  below the  line.   We buy                                                                    
     back the  one-time nature of  that.   Typically, fiscal                                                                    
     notes are  not one-time, and  we struggled with  how to                                                                    
     display that  so that it  made sense to everyone.   And                                                                    
     this was our approach to do that.                                                                                          
REPRESENTATIVE SEATON  responded, "It  seems like we're  going to                                                               
have that  from general funds  every following year to  fund that                                                               
eleventh  month that  we  no longer  have it  coming  out of  the                                                               
permanent  fund  dividend."    He  mentioned  trying  to  get  an                                                               
approximation.   He said, "We only  have an expense in  one year,                                                               
and actually what  we're doing is we're  replacing permanent fund                                                               
expenditures with [general  fund (GF)] for all  years after that,                                                               
and I think we really need to see that in the analysis."                                                                        
Number 2138                                                                                                                     
MS.  CLARKE replied  that Representative  Seaton is  correct, and                                                               
she said "we" will address that.                                                                                                
Number 2118                                                                                                                     
REPRESENTATIVE GRUENBERG  asked why the  amount for FY 05  on the                                                               
Tribal Assistance  fiscal note shows  $6,091.2, while  the amount                                                               
for Tribal  assistance for  the same year  shows on  Ms. Clarke's                                                               
previously mentioned summary sheet as $5,414.4.                                                                                 
MS.  CLARKE  explained  that  the amount  on  the  summary  sheet                                                               
reflects only  the impact to the  state general fund, so  it only                                                               
includes those dollars associated with the general fund.                                                                        
MS. CLARKE  turned to  the next fiscal  note, with  the component                                                               
labeled, "PFD Hold Harmless."   She explained that this component                                                               
is the one that appropriates all of  the PFD fund in one place in                                                               
the department's budget, whereby  the department allocates [those                                                               
monies] to the different programs.   [The fiscal note] shows that                                                               
[the department]  would eliminate the use  of the PFD fund  in FY                                                               
05.   In response  to a  question from  Representative Gruenberg,                                                               
she explained  that nothing  from this fiscal  note shows  on the                                                               
summary  sheet, because  none  of  the money  is  a general  fund                                                               
expenditure.    In response  to  a  question from  Representative                                                               
Gruenberg regarding  why the  summary sheet  is being  limited to                                                               
general fund  impact, rather than  showing the total  impact, Ms.                                                               
Clarke  said that  it was  a matter  of running  out of  time and                                                               
usually the legislature is interested in a general fund impact.                                                                 
MS.  CLARKE stated  that there  are some  programs that  are "100                                                               
percent federal," where  the funds do not flow  through the state                                                               
budget.   She said,  "Food stamp  benefits and  SSI [supplemental                                                               
security  income]   benefits  that  we've  been   holding  people                                                               
harmless,  we presume  in  this  analysis that  there  is no  PFD                                                               
payment  and  they're not  ineligible,  but  those federal  funds                                                               
would be increased and federal  government would make those funds                                                               
available to pay those benefits directly."                                                                                      
Number 2000                                                                                                                     
MS. CLARKE  directed attention to  the next fiscal note  with the                                                               
component labeled,  "Adult Public Assistance."   She defined this                                                               
component  as a  program that  pays benefits  to poor  elderly or                                                               
disabled individuals.  Of the  15,800 individuals receiving Adult                                                               
Public Assistance  currently, 14,600  would become  ineligible in                                                               
the month  that they  received the  PFD and,  because of  a large                                                               
payout,  would lose  an additional  three months  of eligibility,                                                               
thus they  would be ineligible for  a total of four  months in FY                                                               
Number 1963                                                                                                                     
REPRESENTATIVE SEATON  asked if the amount  of [$3,792,300] shown                                                               
on the  Adult Public  Assistance fiscal note  in the  category of                                                               
[general fund (GF)] for FY 06  would continue on each year as the                                                               
general fund expenditure.                                                                                                       
MS. CLARKE  answered that's correct.   She  moved on to  the next                                                               
fiscal note  with the component  labeled, "Child  Care Benefits."                                                               
She  explained  that  it's  not  a program  that  has  been  held                                                               
harmless  with  the PFD  hold  harmless  program.   However,  she                                                               
stated, "We  will see, in 2005,  that we have a  reduction in the                                                               
general  fund requirements,  as well  as our  federal block-grant                                                               
dollars, because  of this  program."   She said  [the department]                                                               
believes  that this  caseload would  also  return to  predividend                                                               
payout status  in 2006,  and 2007, based  on ineligibility.   She                                                               
said  [the   department]  is   predicting  that   3,570  families                                                               
currently  receiving assistance  would  either  lose benefits  or                                                               
have an increased  copay that would produce savings  in 2005, and                                                               
"costs" in 2006.                                                                                                                
Number 1910                                                                                                                     
MS.  CLARKE  referred  to  the fiscal  note  with  the  component                                                               
labeled, "Work Services."  She continued as follows:                                                                            
     Because of  our maintenance of effort  requirement with                                                                    
     the federal  government, we have shown  some GF savings                                                                    
     in our benefit components  for Temporary Assistance and                                                                    
     Tribal Assistance.   But because  we would not  want to                                                                    
     jeopardize our  maintenance of effort with  the federal                                                                    
     government -  there'll be  considerable penalties  - we                                                                    
     show that  we would  spend that $12,281,800  in general                                                                    
     fund dollars  in 2005 on  Work Services  activities, or                                                                    
     other   activities,  to   be  determined,   related  to                                                                    
     Temporary  Assistance and  "welfare  to  work."   Those                                                                    
     would have yet to be determined of how we would spend                                                                      
     those (indisc. - coughing).                                                                                                
REPRESENTATIVE SEATON observed,  "And then it shows  as a savings                                                               
over the next two years."                                                                                                       
MS. CLARKE  answered that's correct.   She  said there is  a one-                                                               
time increase  and then a  one-time savings until  equilibrium is                                                               
Number 1868                                                                                                                     
MS.  CLARKE noted  that the  next  three fiscal  notes relate  to                                                               
different  parts  of the  foster  care  program [with  components                                                               
labeled, "Foster  Care Base Rate," "Foster  Care Augmented Rate,"                                                               
and "Foster  Care Special Need"].   She  stated that a  number of                                                               
children who are  in foster care, in the month  that they receive                                                               
the  payout, will  not be  eligible  for the  federal Title  IV-E                                                               
program,  thus a  slight increase  is shown  in the  general fund                                                               
expenditures in 2005 and a decrease in 2006.                                                                                    
Number 1843                                                                                                                     
REPRESENTATIVE GRUENBERG  observed that  each of the  children in                                                               
foster  care would  receive the  $20,000  payout.   He asked  who                                                               
would manage that and what the cost to the state would be.                                                                      
MS. CLARKE  replied that,  currently, the  PFDs that  children in                                                               
foster care receive are placed in  a trust account that the state                                                               
of Alaska manages  on behalf of those children,  because they are                                                               
in  state  custody.   In  response  to follow-up  questions  from                                                               
Representative Gruenberg,  she confirmed that [the  money] is not                                                               
used for the  care of the foster children, but  it is retained in                                                               
trust for them, and the department is the trust fund manager.                                                                   
Number 1799                                                                                                                     
REPRESENTATIVE  GRUENBERG asked  what  oversight the  legislature                                                               
"or anybody" has  regarding the management policies,  the rate of                                                               
return,  and how  well  the state's  been  meeting its  fiduciary                                                               
MS. CLARKE answered that [the  legislature] has full authority to                                                               
review the  policies and  practice related  to the  management of                                                               
those  funds.     In  response  to  a   follow-up  question  from                                                               
Representative Gruenberg, she said she  is not aware of any audit                                                               
or oversight conducted in this matter.                                                                                          
Number 1770                                                                                                                     
REPRESENTATIVE BERKOWITZ said he  was wondering if the department                                                               
has any  idea how much Alaskans  spend on health care  and health                                                               
MS. CLARKE responded that she doesn't know.                                                                                     
REPRESENTATIVE BERKOWITZ requested that she  find out and let him                                                               
Number 1743                                                                                                                     
MS.  CLARKE  directed  attention  to the  fiscal  note  with  the                                                               
component  labeled,  "Commissioner's   Office"  [designating  the                                                               
department affected  to be  DHSS].   She explained  that, despite                                                               
the name,  it is an overall  fiscal note related to  the Medicaid                                                               
program,  which   is  comprised  of  many   programs  within  the                                                               
department.   She  said  the department  decided  to prepare  one                                                               
fiscal  note  associated  with Medicaid  and  the  commissioner's                                                               
office, rather than  "spread it out among  its different pieces."                                                               
She stated that  the changes and savings in  the Medicaid program                                                               
would be  phenomenal, totaling  $80.691.500 in  FY 05,  and $31.2                                                               
million in  general fund savings  in 2005.   She said,  "We again                                                               
show  the same  thing where  those dollars  would add  back.   We                                                               
presume that  the clientele  would return  ... to  eligibility in                                                               
2006, and  there are different timelines,  depending on services,                                                               
that would have residual costs in 2007-2008."                                                                                   
MS.  CLARKE noted  that  on the  second and  third  pages of  the                                                               
fiscal   note,  the   department  has   outlined  its   different                                                               
assumptions  related to  the caseload,  which has  many different                                                               
service levels and  eligibility groups.  She  commented that it's                                                               
a complex analysis.                                                                                                             
Number 1697                                                                                                                     
CHAIR  WEYHRAUCH  asked  if  there  would be  any  way  for  [the                                                               
department] to provide a qualitative analysis.                                                                                  
MS. CLARKE  replied that the  department has been looking  at the                                                               
numbers and  the impacts  on eligibility  groups.   She predicted                                                               
that  "the changes  would  be profound  in the  short  term on  a                                                               
number of our programs and clients."                                                                                            
Number 1675                                                                                                                     
REPRESENTATIVE  COGHILL,   speaking  once  again  on   behalf  of                                                               
Representative  Holm, said  he  thinks  that that  representative                                                               
would  assert  that people  would  take  the one-time  payout  to                                                               
improve  their lot  in life.   He  observed that  there are  huge                                                               
assumptions  that cannot  be empirically  tested.   He said,  "To                                                               
look to the more noble side of  human nature, I would say that we                                                               
would try to reduce the rolls, rather than level them out."                                                                     
Number 1615                                                                                                                     
MS. SALERNO responded as follows:                                                                                               
     We agree with you.  We  do believe that there will be a                                                                    
     portion  of  our  temporary  assistance  caseload  that                                                                    
     [does]  take  the  opportunity to  improve  [its]  lot.                                                                    
     Unfortunately,  our largest  caseload, ...  over 15,000                                                                    
     people, are  those on adult  public assistance.   These                                                                    
     are elderly and  disabled folks who are  on the program                                                                    
     because they  cannot work.   Those are the  folks we're                                                                    
     most concerned  about, specifically around the  loss of                                                                    
     Medicaid.   These are folks  who have no other  form of                                                                    
     support or  medical assistance, and I  think they can't                                                                    
     go  without their  medical assistance.    So, that's  a                                                                    
     huge impact on the community as a whole.                                                                                   
     Our temporary  assistance caseload is dropping,  as you                                                                    
     know.  We're very happy  with the results we've had and                                                                    
     are happy  to see folks  leaving us.  The  adult public                                                                    
     assistance  caseload, by  and large,  never leaves  us,                                                                    
     and that caseload grows at  about 2 percent every year.                                                                    
     We have introduced  some cost-containment measures that                                                                    
     are  paying off  - mostly  around better  filtering for                                                                    
     people getting  on.   But once people  are on,  they go                                                                    
     through   a  very   rigorous   process  of   disability                                                                    
     determination,  and they  tend not  to leave  us.   So,                                                                    
     that's really the impact we're concerned about.                                                                            
Number 1558                                                                                                                     
REPRESENTATIVE  SEATON  indicated  that  he  wants  an  alternate                                                               
fiscal note [produced].   He said he is concerned  about the idea                                                               
of saying, "Okay, here's cost," and  then, as soon as that amount                                                               
is staying  stable for  several years,  "we don't  show it."   He                                                               
explained that  gives a false impression  of "what this is."   He                                                               
offered an example.   He encouraged the department  to prepare an                                                               
alternative fiscal note that shows what is ongoing.                                                                             
Number 1509                                                                                                                     
REPRESENTATIVE  GRUENBERG said  the question  has not  been asked                                                               
regarding  what   the  proposed  legislation  would   do  to  the                                                               
population of  Alaska.  He  predicted some people would  take the                                                               
money and  run.  Second,  he suggested  that if people  have been                                                               
motivated to move to Alaska because  of the PFD, then perhaps the                                                               
numbers  of people  immigrating  to Alaska  would  decrease.   He                                                               
asked if the department has considered either issue.                                                                            
MS. CLARKE answered no.                                                                                                         
Number 1429                                                                                                                     
JACK KREINHEDER,  Chief Analyst,  Office of the  Director, Office                                                               
of Management  & Budget (OMB),  Office of the  Governor, provided                                                               
comments  on behalf  of Representative  Holm's staff  regarding a                                                               
broader perspective on the impact  of the proposed legislation on                                                               
state  finances and  state agency  finances.   He noted  that the                                                               
governor  does   support  the  POMV   aspect  contained   in  the                                                               
resolution, but that the administration  has not taken a position                                                               
on  the $20,000  payout  element.   Regarding  fiscal impacts  on                                                               
state agencies, he said  the one thing to keep in  mind is that a                                                               
POMV  would provide  a  stable,  large stream  of  income to  the                                                               
state.  He added, "In this case  it would be about $800 million a                                                               
year."   Any negative impacts  to state agencies  could certainly                                                               
be offset through that stable earning stream, he said.                                                                          
MR. KREINHEDER noted  that another point to keep in  mind is that                                                               
some of  the negative impacts  that might be discussed,  in terms                                                               
of loss of permanent fund  payments to state agencies, would also                                                               
happen with  a POMV without  the $20,000  payout.  He  offered an                                                               
example.  Under  that approach, he said,  the long-term dividends                                                               
would be  somewhat smaller  than the  status quo  and, therefore,                                                               
there  would be  similar types  of impacts  or fiscal  notes, but                                                               
smaller.  He  suggested, "Maybe 20 percent of  what you're seeing                                                               
here, if  dividends might be  a couple hundred dollars  less than                                                               
MR. KREINHEDER  said he thinks  some of the  previous discussions                                                               
regarding the  impacts on DHSS caseloads  are certainly relevant.                                                               
In terms  of financial  impacts on  state agencies,  "those would                                                               
certainly be compensated through the  income stream that would be                                                               
provided through  this POMV approach  or some  other [approach]."                                                               
He offered to answer questions.                                                                                                 
Number 1262                                                                                                                     
JERRY BURNETT,  Director, Administrative Services,  Department of                                                               
Corrections  (DOC),  revealed  that,  in the  current  year,  DOC                                                               
received approximately  $6.8 million  in PFD criminal  funds, and                                                               
he mentioned  a budget  in FY 05  of approximately  $5.3 million.                                                               
He  stated that  the  effect  of [HJR  31]  would  be a  one-time                                                               
availability of PFD criminal funds  in an amount of approximately                                                               
$180  million, with  no PFD  criminal funds  in the  future.   He                                                               
said,  "How those  would be  distributed to  agencies, again,  is                                                               
entirely  up  to  the  legislature   [and]  OMB."    Mr.  Burnett                                                               
explained  that PFD  criminal funds  in  DOC are  used to  offset                                                               
general fund expenditures.   He said [DOC] is  not concerned with                                                               
funding source,  but rather with the  total of funding.   He said                                                               
it would be a policy call for the legislature.                                                                                  
Number 1205                                                                                                                     
REPRESENTATIVE BERKOWITZ stated that he  is not in favor of "this                                                               
concept" at all.  Notwithstanding  that, he suggested, "You could                                                               
take that $180 million [and] set  up an endowment with it, and it                                                               
would generate  $9 million a  year, which would, I  think, exceed                                                               
the annual appropriations ... from felon funds now."                                                                            
Number 1187                                                                                                                     
REPRESENTATIVE  GRUENBERG asked  if victims'  rights would  get a                                                               
similar one-time only shot.                                                                                                     
MR. BURNETT  clarified that  the one-time only  shot that  he was                                                               
speaking  to was  in  regard  to the  entire  range for  victims'                                                               
rights [and] DOC.   He said, "If it's shared  as currently, where                                                               
the Department of  Corrections is getting close to  60 percent of                                                               
each  annual  appropriation, we  could  offset  in one  year  the                                                               
entire  ...   $102  million   that  we   might  receive."     But                                                               
theoretically,  under  this  plan,  in one  year,  (indisc.)  the                                                               
victims' rights, it  would have to be  a multi-year appropriation                                                               
percentage that they receive."                                                                                                  
Number 1157                                                                                                                     
REPRESENTATIVE  GRUENBERG asked  if  anybody  has considered  the                                                               
effect that  giving a family  of four  $80,000 might have  on the                                                               
level of criminal activity.                                                                                                     
MR.  BURNETT replied  that he  is  certain that  people have  had                                                               
discussions  about  that, but  it  would  take some  research  to                                                               
quantify that.   He said, "Almost certainly, any  boom that we've                                                               
had in  the past has changed  the level of criminal  activity one                                                               
way or the other."                                                                                                              
Number 1088                                                                                                                     
DENISE  HENDERSON,   Executive  Director,  Council   on  Domestic                                                               
Violence  and  Sexual  Assault   (CDVSA),  Department  of  Public                                                               
Safety, told  the committee that  she would speak briefly  to the                                                               
impact  that [HJR  31] would  have  on CDVSA.   Currently,  CDVSA                                                               
receives  a  large  portion  of  PFD  "crim"  money  [PFD  monies                                                               
withheld from criminals] and a portion  of this money goes out to                                                               
support   the  shelters.     She   said  $200,000   of  that   is                                                               
automatically    appropriated   to    the   batterer-intervention                                                               
programs, so the one-time payout  would have a substantial impact                                                               
on the  money that  [CDVSA] receives  and is  able to  provide to                                                               
shelters and programs for batterers.                                                                                            
Number 1018                                                                                                                     
SHEILA   KING,    Finance   Officer,    Postsecondary   Education                                                               
Commission,  Department  of   Education  and  Early  Development,                                                               
stated  that [HJR  31] would  provide  a one-time  influx of  PFD                                                               
garnishment  cash for  the  student loan  program.   She  brought                                                               
attention  to  the  fiscal  note  [with  the  component  labeled,                                                               
"Student Loan Program" and affecting  the Department of Education                                                               
and Early Development],  which shows that receipt of  funds to be                                                               
an estimated $50  million in FY 05, with a  minimal decline after                                                               
CHAIR WEYHRAUCH  asked if  that money would  go into  a revolving                                                               
loan   made  available   to   other   students  for   educational                                                               
MS. KING  answered yes.   She  explained that  it would  become a                                                               
pledge receipt recycled into one of  the trusts and would be used                                                               
to  take  out  some  bonds or  provide  "recycling  receipts  for                                                               
programs."  In  response to a question from  Chair Weyhrauch, she                                                               
said the current amount received  is about $5 million; therefore,                                                               
it  would be  approximately $45  million more  than was  received                                                               
last year.                                                                                                                      
Number 0961                                                                                                                     
REPRESENTATIVE SEATON,  regarding the student loan  fund, offered                                                               
his understanding  that it's about bonding  and transferring that                                                               
money to the  general fund, so it's not as  if the one-time money                                                               
would  be  money  that  would   enable  [the  department]  to  do                                                               
something that it couldn't do already.                                                                                          
MS. KING responded as follows:                                                                                                  
     Our  funds  do not  go  to  the general  fund;  they're                                                                    
     corporate   receipts.      The  corporation   and   the                                                                    
     commissioner   are  self-sustaining   entities.     The                                                                    
     receipts  that come  in for  the loans  are pledged  as                                                                    
     bonds, because we've used bonds  to finance the program                                                                    
     to make ourselves a self-sustaining  entity.  Any money                                                                    
     that we've  paid to the  state has been as  a dividend.                                                                    
     We did  just do a bond  issue to return $75  million to                                                                    
     the  state,  as  you're  probably aware,  and  that  is                                                                    
     separate  and  outside  of the  trusts  that  fund  our                                                                    
Number 0892                                                                                                                     
GUY BELL,  Director, Central  Office, Division  of Administrative                                                               
Services, Department of Labor &  Workforce Development, said that                                                               
department  offers  a number  of  federally  funded job  training                                                               
programs.      He   mentioned    the   Division   of   Vocational                                                               
Rehabilitation  and  the Division  of  Employment  Security.   He                                                               
said, "We're estimating  a one-time impact on  federal funding of                                                               
about $6.1  million in  job training funds."   He  clarified that                                                               
[that  impact] would  be a  reduction in  funds.   He said  it is                                                               
estimated  that  76  clients  with  the  Division  of  Vocational                                                               
Rehabilitation  will exceed  the  income threshold  by virtue  of                                                               
[the $20,000]  payment, which  will have a  $175,000 impact.   In                                                               
the senior community service employment  program, which has a 125                                                               
percent poverty threshold,  it is estimated that  215 people will                                                               
be  affected,  with  a  reduction  in  federal  funding  of  $1.7                                                               
million.  In the adult training  program it is estimated that 228                                                               
people would  not be  eligible for  one year,  with an  impact of                                                               
about  $1 million.   In  the youth  training program,  784 people                                                               
[would not  be eligible],  with an  impact of  approximately $3.2                                                               
CHAIR  WEYHRAUCH  asked if  [HJR  31]  would  have an  impact  of                                                               
allowing  people to  enter into  a business  that they  otherwise                                                               
would not be able to start without  the money.  He asked if there                                                               
might be  the potential for  growth and  employment opportunities                                                               
in the state.                                                                                                                   
MR.  BELL  replied  that  [the  department]  has  not  done  that                                                               
analysis; however,  he said  that link could  be surmised.   With                                                               
the  one-time  payment,  people could  seek,  through  their  own                                                               
means,  the job  training that  [the department]  would otherwise                                                               
CHAIR WEYHRAUCH  noted that  there has been  a lot  of discussion                                                               
regarding the multiplier  effect on the economy.   He asked about                                                               
the impact on the state.                                                                                                        
MR.  BELL responded  that  he would  have to  get  back to  Chair                                                               
Weyhrauch on that  query.  He said that certainly  there would be                                                               
a one-time "heating"  effect that would have  an immediate impact                                                               
on the economy, but would diminish quite rapidly.                                                                               
Number 0752                                                                                                                     
MICHAEL  BARNHILL,  Assistant Attorney  General,  Commercial/Fair                                                               
Business Section, Civil Division  (Juneau), Department of Law, in                                                               
response  to a  question from  Chair Weyhrauch,  said he  doesn't                                                               
think  there would  be any  commercial  impact [from  HJR 31]  to                                                               
Alaska,  beside what  has already  been  voiced regarding  fiscal                                                               
impacts.   In  regard to  individual financial  impact, he  noted                                                               
that there  would certainly  be an  individual income  tax impact                                                               
for all  residents for  receiving $20,000  more income;  it would                                                               
put  them  into  higher  tax brackets,  as  well  as  potentially                                                               
putting them into "alternative minimum tax scenarios."                                                                          
Number 0692                                                                                                                     
REPRESENTATIVE GRUENBERG  asked what the  impact would be  on the                                                               
Department of Law.                                                                                                              
MR.  BARNHILL indicated  that he  would not  attempt to  estimate                                                               
what the impact would be for  each section of the department.  As                                                               
to his  own section, he  reported that litigation  would probably                                                               
have to be  handled up front, regarding  the constitutionality of                                                               
the  provision.    In  response   to  remarks  by  Representative                                                               
Gruenberg,  he  said,  "This would  increase  the  likelihood  of                                                               
eligibility  litigation,  whether  the  current  eligibility  for                                                               
PFD's is  constitutional, both for  state and  federal purposes."                                                               
Regarding whether  a one-time large payout  would increase crime,                                                               
he said, "You're guess is as good as mine."                                                                                     
REPRESENTATIVE  GRUENBERG  asked about  potential  constitutional                                                               
problems, either in the legislation or the application.                                                                         
MR. BARNHILL  replied that the  constitutional issues  that could                                                               
be  raised with  respect to  eligibility for  the dividend  would                                                               
relate to  the privileges  and immunities  clause of  the federal                                                               
constitution and  the equal protection  clause of both  the state                                                               
and  the  federal  constitutions.     In  response  to  follow-up                                                               
questions  from  Representative   Gruenberg,  he  suggested  that                                                               
people  who are  not currently  eligible for  the permanent  fund                                                               
dividend could raise an argument  that that violates the right to                                                               
equal  protection  and  the  rights   under  the  privileges  and                                                               
immunities  clause  to  equal  treatment  as  nonresidents.    He                                                               
pointed out  that those arguments  have been raised in  the past,                                                               
and the  one-year durational residency requirement  has generally                                                               
withstood challenge.  He noted  that there have been recent cases                                                               
in the  U.S. Supreme  Court questioning the  validity of  the 12-                                                               
month durational residency  requirement in certain circumstances.                                                               
He  added,  "Whether  this  is  one  of  those  circumstances  is                                                               
anybody's guess."                                                                                                               
REPRESENTATIVE  GRUENBERG said  he  sits on  the House  Judiciary                                                               
Standing Committee,  which is next  in line to  hear HJR 31.   He                                                               
asked  Mr.  Barnhill  to  provide that  committee  with  a  legal                                                               
memorandum from  [the Department of Law]  regarding "those recent                                                               
developments in this area and how  this might effect the issue of                                                               
challenges to that, and the chance of success on that."                                                                         
MR. BARNHILL  said he would work  with Representative Gruenberg's                                                               
office on that matter.                                                                                                          
Number 0453                                                                                                                     
SHARON BARTON, Director, Central  Office, Permanent Fund Dividend                                                               
Division, Department  of Revenue,  focused attention on  a fiscal                                                               
note  with  the  component  labeled,  "Permanent  Fund  Dividend"                                                               
[affecting  the Department  of Revenue],  which she  described as                                                               
straight forward.   She indicated that the  fiscal note addresses                                                               
elimination  of  the  division  and the  cost  reduction  to  the                                                               
budget.   She noted that  some functions  would go on  beyond the                                                               
end  of the  program:    Fraud investigations  would  need to  be                                                               
cleaned up; collections would go  on for some years; and 18-year-                                                               
old  filers would  have until  the eighteenth  year out  to file.                                                               
She said  there is not  cost for that  shown on the  fiscal note,                                                               
because  the  commissioner's office  would  have  to cover  those                                                               
functions, such  as appeals  that are expected  to come  for some                                                               
time.   She  stated,  "With the  increase in  the  amount of  the                                                               
dividend,  we would  have  a lot  more appeals,  and  it will  be                                                               
worthwhile  for more  of those  individuals  to take  them on  to                                                               
Number 0322                                                                                                                     
REPRESENTATIVE  GRUENBERG suggested  that  the  ultimate cost  of                                                               
defending  these cases  would  fall back  to  the [Department  of                                                               
Revenue].  Additionally, he suggested  that with a family of five                                                               
getting $100,000,  much more stringent  measures would  be needed                                                               
to ensure against fraudulent applications.                                                                                      
MS. BARTON answered, "Yes to all  of that."  She noted that there                                                               
would  be  additional  formal  appeals  officers  to  handle  the                                                               
increase in  appeals.  She stated  that they would apply  all the                                                               
same  rules they  always  have; however,  the  quantity would  be                                                               
greater.   She  stated  the  intent to  add  an additional  fraud                                                               
investigator.  She  noted that since other parts  of the division                                                               
would be  phased out, the  fraud unit  could be given  more help.                                                               
She  said  it would  not  be  known  whether more  resources  are                                                               
necessary  to keep  on the  fraud investigator  into 2006,  until                                                               
that year approaches.                                                                                                           
Number 0201                                                                                                                     
REPRESENTATIVE  GRUENBERG  asked  Ms.  Barton  to  consider  what                                                               
additional  indices  of  residency   and  eligibility  should  be                                                               
required,  because there  will be  a  lot more  people with  more                                                               
money than they've ever seen  in their lives and, therefore, with                                                               
more motives for fraud.                                                                                                         
MS. BARTON said  that the rules are in place  now.  She explained                                                               
that the  filing closes in two  weeks, on March 31,  for the 2004                                                               
dividend,  so the  regulations can't  be changed  at this  point.                                                               
She proffered  that [the division]  can certainly  scrutinize the                                                               
applications with more diligence.                                                                                               
Number 0101                                                                                                                     
The committee took an at-ease from 9:36 a.m. to 9:37 a.m.                                                                       
Number 0088                                                                                                                     
CHAIR WEYHRAUCH announced that HJR 31 was heard and held.                                                                       

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