Legislature(2017 - 2018)SENATE FINANCE 532

01/24/2018 09:00 AM Senate FINANCE

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09:03:08 AM Start
09:03:40 AM SB143
10:08:54 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Alaska Gasline Development Corporation
SENATE BILL NO. 143                                                                                                           
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
9:03:40 AM                                                                                                                    
Co-Chair  MacKinnon  recognized   that  there  were  several                                                                    
Alaska  Mental Health  Trust Authority  (AMHTA) trustees  in                                                                    
MARY   JANE    MICHAEL,   CHAIR,   AMHTA,    discussed   the                                                                    
presentation,   "Legislative  Presentation   Senate  Finance                                                                    
Committee," (copy on file).                                                                                                     
Ms. Michel turned to slide 2, "TRUSTEES":                                                                                       
     ? Mary Jane Michael, chair                                                                                                 
     ? Chris Cooke, vice chair                                                                                                  
     ? Laraine Derr, secretary                                                                                                  
     ? Paula Easley                                                                                                             
     ? Greg Jones                                                                                                               
       Jerome Selby                                                                                                             
     ? Carlton Smith                                                                                                            
Ms.  Michael  introduced  the trustees,  and  detailed  that                                                                    
Paula Easley  had been on the  board for 11 years  and would                                                                    
shortly  be  ending her  term  of  service. Greg  Jones  had                                                                    
served as  interim chief executive  officer (CEO)  and would                                                                    
also be vacating his board seat.                                                                                                
Ms. Michael discussed  two appointees to AMHTA  that had yet                                                                    
to be confirmed.                                                                                                                
Ms. Michael  reminded that AMHTA was  established to provide                                                                    
a   perpetual   trust   to  improve   the   lives   of   its                                                                    
beneficiaries.  She acknowledged  the  fiscal challenges  of                                                                    
the state, and  discussed past AMHTA projects  such as Bring                                                                    
the Kids Home.  She asserted that the  trust recognized that                                                                    
partnership with  the state and its  investment must include                                                                    
broader, overall  systems change  in the  state in  order to                                                                    
create a  progressive and sustainable  system. She  used the                                                                    
example of  the trust's  substantial investment  in Medicaid                                                                    
reform   and  expansion   as   well   as  criminal   justice                                                                    
Ms.  Michael continued  her remarks  and informed  that here                                                                    
had been  internal changes  at the  trust over  the previous                                                                    
year. The trust  had hired a new CEO after  the departure of                                                                    
its  long-standing  CEO  Jeff  Jessee.  After  an  extensive                                                                    
search, AMHTA had  hired a new CEO.  Additionally, the trust                                                                    
had   examined  its   governance  structure   and  operating                                                                    
procedures   and   hired    an   organizational   management                                                                    
consultant  that helped  the  trust navigate  organizational                                                                    
change.The trust had rewritten  bylaws and created committee                                                                    
charters. Some of the new  documents were modelled after the                                                                    
Alaska Permanent  Fund Corporation (APFC).  Stakeholders and                                                                    
the statutory  advisory board were  engaged in  the process.                                                                    
She was proud  of the committed group of  trustees and staff                                                                    
at AMHTA and reported  that the organization was financially                                                                    
and organizationally healthy.                                                                                                   
9:07:58 AM                                                                                                                    
MIKE ABBOTT,  CHIEF EXECUTIVE OFFICER, ALASKA  MENTAL HEALTH                                                                    
TRUST   AUTHORITY,  showed   slide   3,  "FY19   Anticipated                                                                    
Available Funding":                                                                                                             
     Distributable Funds  Based on 4-year averages for                                                                          
     Payout  $21,137,000                                                                                                        
     Prior Years Carried Forward  $3,042,000                                                                                    
     Land Office Average Spendable Income $4,974,000                                                                            
     Interest Average  $285,000                                                                                                 
     Total  $29,438,000                                                                                                         
     Prior Years' Total Distributable Funds                                                                                     
     FY18 $28,908,000                                                                                                           
     FY17 $28,234,000                                                                                                           
     FY16 $28,126,500                                                                                                           
     FY15 $28,497,000                                                                                                           
     FY14 $26,598,000                                                                                                           
Mr. Abbott pointed out that  the total $29.5 million request                                                                    
was drawn  from three  primary revenue streams,  the largest                                                                    
of  which   was  the  investment  yield   from  the  trust's                                                                    
investment. He detailed that $450  million of the amount was                                                                    
from  the  Mental Health  Trust  Fund,  and the  other  $100                                                                    
million  was  operating  funds.  The  operating  funds  were                                                                    
invested by  the Department of  Revenue (DOR) and  APFC. The                                                                    
fund used  a POMV-style payout,  and the $21  million payout                                                                    
represented a  4-year average of 4.25  percent of investment                                                                    
Mr. Abbot  continued discussing slide  3, and  informed that                                                                    
the  trust proposed  to deploy  $3 million  in lapsed  funds                                                                    
(again  a 4-year  average of  lapsed funds)  which had  been                                                                    
relatively  consistent for  the  previous  three years.  The                                                                    
third major  revenue stream was  the annual income  from the                                                                    
trust land office activities.                                                                                                   
Mr.  Abbott   considered  the  previous  five   years  total                                                                    
distributable funds, which represented  the culmination of a                                                                    
relatively useful  trend in growth of  spendable income from                                                                    
the  trust. He  anticipated that  the trend  would continue,                                                                    
and thought  it was not  unreasonable to expect that  the FY                                                                    
20 proposal from the trust might be above $30 million.                                                                          
Mr.  Abbott looked  at slide  4, "Trust  Land Office  Annual                                                                    
Revenue," which showed a bar  graph that showed the relative                                                                    
change and relative volatility of  revenue to the trust land                                                                    
office. Different  revenue categories were  shown, including                                                                    
the five major categories  of minerals, coal/oil/gas, lands,                                                                    
timber, and real  estate. Not all the  revenue was spendable                                                                    
for beneficiaries, and a significant  portion of the revenue                                                                    
was required to  be invested. The trust  land office revenue                                                                    
stream was split.                                                                                                               
9:11:44 AM                                                                                                                    
Mr. Abbott  spoke to slide  5, "Trust Land  Office Principal                                                                    
and  Income   Revenue,"  which  showed  the   principal  and                                                                    
(spendable)  income   portion  of  the  trust   land  office                                                                    
revenue.  The $4.9  million he  referenced  earlier was  the                                                                    
green portion of the bar graph.                                                                                                 
Co-Chair Hoffman asked to return  to slide 4 and wondered if                                                                    
there were any land sales in the FY 19 revenue projections.                                                                     
Mr. Abbott  answered in the  affirmative, and  informed that                                                                    
the FY  19 projects  were based  on anticipated  activity in                                                                    
the land office, which was  a combination of sales activity,                                                                    
leasing, easements, and other related transactions.                                                                             
Co-Chair Hoffman asked  how much land was  anticipated to be                                                                    
sold, and where the land was located.                                                                                           
Mr. Abbott  stated the  trust had  an ongoing  sale process,                                                                    
through  which land  was  consistently  available for  sale.                                                                    
Expectations  for FY  19 were  not parcel-specific,  and the                                                                    
trust  was not  obligated  to sell  any  specific amount  of                                                                    
lands in  any given time  frame. The trust  had expectations                                                                    
but  did  not  have   a  schedule  that  described  specific                                                                    
transactions in specific years.                                                                                                 
Co-Chair  Hoffman observed  that  over time  land sales  had                                                                    
been a substantial portion of  income since the inception of                                                                    
the trust. He  wondered how much total land  the trust owned                                                                    
and sold.                                                                                                                       
Mr.  Abbott  stated  that since  inception,  the  trust  had                                                                    
disposed   of  less   than  3   percent   of  the   original                                                                    
entitlement,  which  would  equate to  approximately  30,000                                                                    
9:15:03 AM                                                                                                                    
Senator von Imhof asked if the trust also purchased land.                                                                       
Mr.  Abbott referenced  the Southeast  Land Exchange,  which                                                                    
had been  congressionally and legislatively  authorized. The                                                                    
trust  was in  the process  of final  negotiations with  the                                                                    
United States  Forest Service (USFS), which  would result in                                                                    
the disposal  of some  trust lands,  and the  acquisition of                                                                    
others.  There  were other  cases  in  which the  trust  had                                                                    
acquired land, typically in order  to increase the long-term                                                                    
value of existing trust lands by purchasing adjacent land.                                                                      
Senator von Imhof asked if  the trust occasionally purchased                                                                    
land specifically for its development potential.                                                                                
Mr.  Abbott was  not  aware of  a time  when  the trust  had                                                                    
specifically purchased  land to  be developed.  He qualified                                                                    
that he was  speaking to the trust's  land portfolio itself.                                                                    
He clarified  that the real estate  investment component was                                                                    
a  separate element  of  the trust  and  had acquired  seven                                                                    
different   parcels  of   land  specifically   for  revenue-                                                                    
generating potential.                                                                                                           
Senator   von  Imhof   asked   if   the  acquisitions   were                                                                    
represented by the light blue line on slide 4.                                                                                  
Mr. Abbott answered in the affirmative.                                                                                         
Mr. Abbott discussed slide 6,  "FY19 Budget," which showed a                                                                    
pie chart  that showed how  the trust planned to  deploy its                                                                    
FY 19  revenue. He  explained that  trust funding  fell into                                                                    
three categories:  $10 million  in authority  grants, Mental                                                                    
Health  Trust Authority  Authorized  Receipts (MHTAAR),  and                                                                    
administrative  expenses  of  the trust.  He  detailed  that                                                                    
MHTAAR funds went  to state agencies and had  to be approved                                                                    
by the  legislature. Administrative operations  funding went                                                                    
towards  managing trust  assets and  making funding  choices                                                                    
and reallocations for trust beneficiaries.                                                                                      
9:19:18 AM                                                                                                                    
Mr. Abbott addressed slide 7, "Current Priorities":                                                                             
     ? Medicaid Reform                                                                                                          
     ? Criminal Justice Reform & Reinvestment                                                                                   
     Established Focus Areas                                                                                                    
     ? Disability Justice                                                                                                       
     ? Substance Abuse Prevention & Treatment                                                                                   
     ? Beneficiary Employment & Engagement                                                                                      
     ? Housing and Long-term Services & Supports                                                                                
Mr.  Abbott thought  that  the committee  was  aware of  the                                                                    
trust's  two  primary  priorities  of  Medicaid  reform  and                                                                    
criminal  justice reform  and reinvestment.  He stated  that                                                                    
every dollar  of the MHTAAR  authority grant  funding worked                                                                    
toward  one   of  the  six  established   focus  areas,  and                                                                    
sometimes  more than  one.  He stated  that  by statute  the                                                                    
trust did two-year budgeting; which  explained why the focus                                                                    
areas were the same as  the previous year. He explained that                                                                    
the  trust  would  beginning  a   new  budget  planning  and                                                                    
prioritization cycle in the subsequent spring.                                                                                  
Senator  Micciche  wondered  what  was  meant  by  "Medicaid                                                                    
Reform" or "Medicaid Expansion" when listed as priorities.                                                                      
Mr.  Abbott explained  that the  expansion  effort had  been                                                                    
accomplished, and  now the trust  was focused on  the reform                                                                    
effort.  The   trustees  had  committed   approximately  $10                                                                    
million  in  a multi-year  effort  to  support most  of  the                                                                    
state's expenses associated with  the Medicaid expansion and                                                                    
reform effort.                                                                                                                  
Senator  Micciche relayed  that the  committee had  recently                                                                    
been given a supplemental budget  and had partnered with the                                                                    
trust  on  SB  74  [Medicaid reform  legislation  passed  in                                                                    
2016].  The  legislature  continued  to  work  on  reforming                                                                    
Mr.  Abbott stated  that the  trust's  interest in  Medicaid                                                                    
reform  was  in  the  interest  of  helping  the  department                                                                    
deliver Medicaid  more efficiently and therefore  serve more                                                                    
Senator  von  Imhof  wanted to  learn  more  about  Medicaid                                                                    
reform.  She shared  that  she  was on  a  health care  task                                                                    
force.  She  hoped  to  have  a  lengthier  conversation  at                                                                    
another time.                                                                                                                   
Mr.  Abbott indicated  willingness to  have a  more in-depth                                                                    
discussion at a later date.                                                                                                     
9:23:16 AM                                                                                                                    
Co-Chair MacKinnon asked about the passage of SB 74.                                                                            
Senator Micciche believed SB 74 had passed in 2016.                                                                             
Co-Chair  MacKinnon referenced  criminal justice  reform and                                                                    
reinvestment  legislation,  as well  as  a  report from  the                                                                    
Department of  Corrections and the Department  of Health and                                                                    
Social  Services.   The  report  referenced   a  partnership                                                                    
between the  state and  the trust. She  asked Mr.  Abbott to                                                                    
discuss the  partnership and  how the  trust's beneficiaries                                                                    
were sensitive to the subject matter.                                                                                           
Mr. Abbott stated  that the trust was  committed to criminal                                                                    
justice   reform,   as   trust  beneficiaries   were   over-                                                                    
represented within  the criminal justice system  as a result                                                                    
of mental health  issues, substance abuse, and  a variety of                                                                    
other  concerns.   The  trust   had  been   a  long-standing                                                                    
participant  in a  variety of  criminal  justice reform  and                                                                    
reinvestment efforts.  He stated that the  report referenced                                                                    
by Co-Chair  MacKinnon had been  paid for by the  trust, and                                                                    
it was  one of the  ways sought to support  criminal justice                                                                    
reform  efforts.  The  trust   sought  to  measure  outcomes                                                                    
associated   with   incremental  pieces   within   different                                                                    
elements   of  criminal   justice  reform.   The  associated                                                                    
research,  data  gathering,  reporting, and  analysis  would                                                                    
continue;  and the  trust would  continue to  be one  of the                                                                    
largest funders of the effort.                                                                                                  
Mr. Abbott continued his remarks.  He thought the report had                                                                    
demonstrated  that  there  was  savings to  the  state,  and                                                                    
thought there  was recidivism benefits  as well as  a result                                                                    
of criminal justice reform action  taken by the legislature.                                                                    
He  stated  that the  trust  was  very appreciative  of  the                                                                    
legislatures continued efforts over the previous two years.                                                                     
9:26:46 AM                                                                                                                    
Co-Chair MacKinnon  asked if  there were  improved treatment                                                                    
options  for  beneficiaries  and other  Alaskans  that  were                                                                    
seeking substance abuse treatment.                                                                                              
Mr. Abbott  thought there  was directional  improvement, yet                                                                    
not seeing the level of  benefit believed to be necessary in                                                                    
order to  get the full  improvement in the  criminal justice                                                                    
system that was sought.  He opined that continued investment                                                                    
and ongoing  practice was required  to realize  the benefits                                                                    
that  were   being  sought.  There  were   limitations  with                                                                    
facilities, resources, and in the criminal justice system.                                                                      
Co-Chair Hoffman asked what the  trust was doing to mitigate                                                                    
the opioid crisis.                                                                                                              
Mr.  Abbott   stated  cited  work   with  the   division  of                                                                    
behavioral  health and  the division  of  public health  and                                                                    
funding a number  of the divisions' activities.  Much of the                                                                    
work  the  trust had  been  doing  toward general  substance                                                                    
abuse  would   make  a  difference   in  the   opioid  abuse                                                                    
specifically.  The  trust  was  working  to  expand  overall                                                                    
capability,  as   well  as  working  to   expand  individual                                                                    
program. The trust's efforts were  a combination of capacity                                                                    
building  and direct  services  in  treatment, housing,  and                                                                    
other elements of the substance abuse treatment continuum.                                                                      
Co-Chair Hoffman  asked if  Mr. Abbott  could cite  a dollar                                                                    
amount that had been expended on the effort.                                                                                    
Mr. Abbott  agreed to provide  the information in  two days'                                                                    
9:29:31 AM                                                                                                                    
Senator von  Imhof asked  the relationship  between Medicaid                                                                    
funding and substance abuse treatment centers.                                                                                  
Mr. Abbott  relayed that in  its current form,  Medicaid did                                                                    
not provide  much funding  for substance  abuse. One  of the                                                                    
targets of the  reform effort was to  improve the connection                                                                    
between  Medicaid  paid  services and  substance  abuse.  He                                                                    
thought the committee  would hear from DHSS on  a variety of                                                                    
reform efforts, primarily funded  by the trust. He mentioned                                                                    
trying to  seek waivers from  the federal government  in aid                                                                    
of expanding  services for some Medicaid  beneficiaries that                                                                    
would  make  more  substance  abuse  treatment  fundable  by                                                                    
Senator  von Imhof  recalled reading  an  article about  the                                                                    
Trump administration  stating that waivers were  required to                                                                    
shift funds  to substance abuse treatment.  She thought more                                                                    
waivers  were becoming  available as  states struggled  with                                                                    
the issue.                                                                                                                      
Mr.  Abbott stated  that DHSS  was  in the  final stages  of                                                                    
developing   the   waiver   application  for   the   federal                                                                    
government in order to access  more funds for the purpose of                                                                    
substance abuse treatment.                                                                                                      
9:31:57 AM                                                                                                                    
Mr. Abbott reviewed slide 8, "Operating Budget":                                                                                
     ? Governor's budget is very similar to trustee-                                                                            
     approved budget, with one exception                                                                                        
     ? Governor's budget includes $18 million increase in                                                                       
     GF/MH for comprehensive continuum of care for                                                                              
     substance use disorder services                                                                                            
Mr. Abbott stated that the  trust would typically comment on                                                                    
concerns with the governor's  proposed operating budget, but                                                                    
almost  all  the  trustee's  recommendations  for  operating                                                                    
budget  expenditures   were  supported  in   the  governor's                                                                    
proposed budget. The trustees  did not specifically identify                                                                    
the  governor's recently  announced initiative  of deploying                                                                    
$18  million  for  comprehensive  substance  abuse  disorder                                                                    
services  but was  in full  support.  He thought  it was  an                                                                    
excellent demonstration  of state support for  the services.                                                                    
He stated that there  were minor differences between trustee                                                                    
recommendations   and   the  governor's   proposed   budget,                                                                    
primarily  around  funding  sources.   The  trust  gave  the                                                                    
governor's proposed budget a strong endorsement.                                                                                
Senator  Micciche  asked  Mr. Abbott  to  clarify  how  much                                                                    
Undesignated General  Funds (UGF) came from  the legislature                                                                    
to  the trust,  or if  the trust  was fully  self-sufficient                                                                    
from fundraising from the original land grant.                                                                                  
Mr. Abbott  stated that  the trust did  not employ  any non-                                                                    
trust funds.  As a  result of the  settlement in  the 1990s,                                                                    
only the trustees  could deploy trust funds.  In many cases,                                                                    
the  trust  needed  the   legislatures  agreements  on  some                                                                    
deployments. The trust recommended  funds to be appropriated                                                                    
to others. He thought  that historically the administration,                                                                    
legislature, and trust had worked well together.                                                                                
Senator  Micciche stated  that  typically the  presentations                                                                    
were started with a history of the trust.                                                                                       
9:35:27 AM                                                                                                                    
Mr. Abbott turned to slide 9, "Capital Budget":                                                                                 
     ? Homeless Assistance Project and Special                                                                                  
     Needs Grant                                                                                                                
       Trustees recognize the housing and homelessness                                                                          
     crisis in the state                                                                                                        
       Trustees respectfully requested an increase of                                                                           
     $5.3 million in state funds to address this issue                                                                          
Mr. Abbott  stated that most  of the trust's  priorities had                                                                    
been addressed  in the governor's proposed  budget, with the                                                                    
exception  of the  Homeless Assistance  Project and  Special                                                                    
Needs Grant. The trust had  deployed millions of trust funds                                                                    
towards  addressing a  variety of  housing and  homelessness                                                                    
issues  over the  years. He  acknowledged the  constraint on                                                                    
capital budgets  but believed that additional  investment in                                                                    
housing  would   have  a  significant  positive   effect  in                                                                    
substance  abuse treatment,  recidivism,  and other  general                                                                    
mental  health issues.  He referenced  research that  showed                                                                    
lack  of  housing  led  to   lack  of  resolution  of  other                                                                    
difficult   issues.  The   trust   believed  that   marginal                                                                    
investments  in  housing  were believed  to  reduce  overall                                                                    
state  expenditures and  will  improve  challenges in  other                                                                    
areas as well.                                                                                                                  
Senator von  Imhof asked if  the trust gathered data  on the                                                                    
participants  that received  trust services.  She wanted  to                                                                    
see  the fundamental  links between  cause  and effect.  She                                                                    
thought  more sophisticated  collection of  data would  help                                                                    
fine-tun where support needed to be directed.                                                                                   
Mr. Abbott  agreed with Senator  von Imhof, and was  glad to                                                                    
share   additional  data   pertaining  to   the  beneficiary                                                                    
9:39:14 AM                                                                                                                    
Senator  von  Imhof thought  the  $5.3  million request  was                                                                    
relatively   small  and   wondered  if   the  trust   had  a                                                                    
recommendation as to where the funds would be spent.                                                                            
Mr.  Abbott   identified  that  the  trust   considered  two                                                                    
programs  to  be excellent  investments  for  the state.  He                                                                    
discussed  expansion  of  permanent  supportive  housing  in                                                                    
regional  hubs  and  cities. He  cited  a  rapid  re-housing                                                                    
program, which  was a  system of deployment  of funds  on an                                                                    
incremental basis  to help individual families  stay housed.                                                                    
It included  rent support  and other  types of  funding that                                                                    
kept people  in housing  they were  in. Rapid  rehousing was                                                                    
done on a  limited basis thus far, and data  showed that the                                                                    
program  was dramatically  reducing  emergency room  visits,                                                                    
substance abuse, and recidivism.                                                                                                
Vice-Chair  Bishop   thought  that  data  would   drive  the                                                                    
operating  budget  down. He  thought  seeing  the cause  and                                                                    
effect,  and  the  savings  that   could  be  realized  were                                                                    
important to address the problems being discussed.                                                                              
Mr.  Abbott agreed  with Vice-Chair  Bishop, and  emphasized                                                                    
that housing  was a key  element in addressing  the problems                                                                    
of people with a variety  of challenges. He relayed that the                                                                    
trust  had  funded  a  position in  the  mayor's  office  in                                                                    
Fairbanks,  and the  position was  generating data  that the                                                                    
trust relied  upon. He encouraged  members to  consider data                                                                    
from  a variety  of data  sources  on a  local or  statewide                                                                    
level that  could help illustrate  the benefits  of programs                                                                    
such as listed on slide 9.                                                                                                      
Co-Chair MacKinnon  noted that  the governor had  proposed a                                                                    
unique way  of funding  some projects  that was  not typical                                                                    
for  the capital  budget. She  thought  that Alaska  Housing                                                                    
Finance  Corporation (AHFC)  dividends  might be  available.                                                                    
She thought the approach was  tied to the successful passage                                                                    
of  legislation that  would ask  Alaskans  to contribute  to                                                                    
sustaining  the  programs. She  was  not  sure the  approach                                                                    
would be successful.                                                                                                            
Mr. Abbott  mentioned that AHFC  was also working  to expand                                                                    
its  commitment to  permanent  supportive  housing and  were                                                                    
requesting  proposals form  agencies that  might be  able to                                                                    
provide the services. The trust  was eager to see the impact                                                                    
that  such expansion  might have.  He thought  there was  an                                                                    
indication of  the growing consensus around  the benefits of                                                                    
investments in housing.                                                                                                         
9:44:26 AM                                                                                                                    
Mr. Abbott showed slide 10, "Administrative Budgets":                                                                           
     Trust Authority                                                                                                            
     ? Trustees approved: $4,135.3                                                                                              
     ? Governor's proposed budget: $3,867.4                                                                                     
     Trust Land Office                                                                                                          
     ? Trustees approved: $4,568.4                                                                                              
     ? Governor's proposed budget: $4,213.2                                                                                     
     Total difference: $623.1                                                                                                   
     Impacts our ability to generate revenue and provide                                                                        
     grants and oversight of existing programs for                                                                              
Mr. Abbott  detailed the trust diverged  from the governor's                                                                    
proposed budget with regard to  its proposed funding for the                                                                    
administrative budget for the  trust authority and the trust                                                                    
land office  (housed in the Department  of Natural Resources                                                                    
[DNR]).  The trustees  had determined  that the  appropriate                                                                    
level of  funding for the  two agencies listed on  the slide                                                                    
was $8.7  million, while the  governor had  recommended $8.1                                                                    
million  to essentially  flat-fund  the administrative.  The                                                                    
trustees  recommended two  separate appropriations  entirely                                                                    
funded by trust resources.  The trust respectfully requested                                                                    
that  the  funds  be  restored  to  its  budget.  The  trust                                                                    
believed that  the impact of  the 8 percent  reduction would                                                                    
reduce  the   effort  of  the   trust  in   deploying  funds                                                                    
intelligently and  managing lands  and resources.  The trust                                                                    
sought the committee's support in restoring the funding.                                                                        
Vice-Chair  Bishop   had  read   through  the   DNR  finance                                                                    
subcommittee  notes  and  had identified  the  area  of  the                                                                    
trust's budget that Mr. Abbott had referenced.                                                                                  
Senator Micciche  asked how often the  governor adjusted the                                                                    
trust's budget. He  did not recall it being an  issue in the                                                                    
Mr. Abbott believed the current  budget was one of the first                                                                    
Senator  Micciche  asked  if there  had  been  communication                                                                    
between    the   governor's    office   and    the   trust's                                                                    
administrative team.                                                                                                            
Mr.  Abbott believed  there  had been  a  frank exchange  of                                                                    
views between the  two parties. He furthered  that the trust                                                                    
had conferred with the director  of the Office of Management                                                                    
and Budget  (OMB). The  director had  written a  very useful                                                                    
reply  to the  trust that  he was  happy to  share with  the                                                                    
committee. He summarized that  the director had communicated                                                                    
about the  trust following the  same spending  discipline as                                                                    
other  agencies. He  thought that  it could  be demonstrated                                                                    
that the  trust spent its  money wisely. He cited  growth in                                                                    
the  trust's budget  and  revenue streams,  as  well as  the                                                                    
quality of the  deployment of its resources  that showed the                                                                    
trust's  administrative  expenses  were well  spent  in  the                                                                    
effort  to support  its  beneficiaries.  He appreciated  the                                                                    
director's  perspective  on  the  budget,  but  respectfully                                                                    
disagreed and  requested the  committee follow  the guidance                                                                    
of the trustees  on the issue of  the trust's administrative                                                                    
9:48:39 AM                                                                                                                    
Co-Chair Hoffman asked if Mr.  Abbott could briefly describe                                                                    
how the additional requested funds would be spent.                                                                              
Mr. Abbott  informed that the proposed  reduction would have                                                                    
an incremental impact on the  trust's personnel. There would                                                                    
be positions  left vacant or eliminated,  and/or contractual                                                                    
efforts  on behalf  of trust  lands would  be truncated.  He                                                                    
expected  that  the  proposed  lesser  funds  would  have  a                                                                    
marginal  but  measurable  impact  on  the  quality  of  the                                                                    
trust's   land  management   efforts  or   the  quality   of                                                                    
beneficiary support.                                                                                                            
Senator Micciche commented that he  had worked with the DHSS                                                                    
budget for years  and worked for reductions.  He thought the                                                                    
trust  had helped  reduce spending.  He  was concerned  that                                                                    
administration was  putting pressure on programs  that could                                                                    
save the state money.                                                                                                           
9:50:50 AM                                                                                                                    
Co-Chair  MacKinnon   thought  it  was  important   for  the                                                                    
committee  to   point  out  that  UGF   was  different  than                                                                    
Designated General Funds (DGF).  She thought the subject had                                                                    
been contentious.  The DGF associated  with the  trust could                                                                    
not be spent in other  places. The committee, at the request                                                                    
of previous CEO Jeff Jessee, has  asked the trust to use its                                                                    
assets  in  a different  way.  The  committee had  seen  the                                                                    
strategy  play out  for two  years.  She referenced  Senator                                                                    
Micciche's remarks  about the  difference in  the governor's                                                                    
proposed  budget  and   the  trust's  administrative  budget                                                                    
request.  She offered  her full  support in  trying to  work                                                                    
with  the administration  to increase  funding  but not  use                                                                    
Co-Chair  MacKinnon  continued  her remarks.  She  used  the                                                                    
example of  the University  of Alaska (UA).  The legislature                                                                    
had  not  taken   from  UA  tuition,  which   was  DGF.  She                                                                    
referenced  Department  of Fish  and  Game  funds that  were                                                                    
designated  and passed  through  to  local communities.  She                                                                    
pointed out  that the  DGF were different  and used  for the                                                                    
highest  and best  use to  provide services.  She referenced                                                                    
Medicaid  and  noted  that   the  legislature  had  actively                                                                    
pursued  federal  funds  to benefit  the  people  of  Alaska                                                                    
through Medicaid.  The committee was endeavoring  to use DGF                                                                    
and   federal  funds   to  stop   the  downward   spiral  of                                                                    
unemployment in the state.                                                                                                      
9:55:24 AM                                                                                                                    
Co-Chair  MacKinnon acknowledged  that each  of the  members                                                                    
represented  communities that  used DGF  and had  been under                                                                    
heavy scrutiny over the previous five years.                                                                                    
Vice-Chair  Bishop referenced  slide 4,  and considered  the                                                                    
revenue generated  by the minerals  sector. He  wondered why                                                                    
one would limit the revenue stream.                                                                                             
Senator  Micciche pointed  out that  there were  initiatives                                                                    
that  reached   across  department's  ability   to  generate                                                                    
revenue  for   services  for  Alaskans.  He   referenced  an                                                                    
possible  initiative "Save  our  Salmon,"  which he  thought                                                                    
would  directly  and adversely  impact  the  ability of  the                                                                    
trust   to  deliver   services   through  beneficiaries   by                                                                    
complicating  any proposed  mining developments.  He thought                                                                    
the  state had  adequate protection  in place  for fish  and                                                                    
natural resources without compromising  the ability of state                                                                    
departments to deliver services.                                                                                                
Senator Stevens referenced an audit of AMHTA funds.                                                                             
Mr. Abbott looked at slide 11, "Legislative Priorities":                                                                        
     ? Protect Criminal Justice Reform                                                                                          
     ? Pass SB 76, Title 4 Revisions                                                                                            
     ? Pass Trust Investment Legislation                                                                                        
Mr. Abbott  relayed that LBA  had initiated a  special audit                                                                    
on trust-related  activity in December  2016. The  audit was                                                                    
wide-ranging  in   scope  and   dealt  with   open  meetings                                                                    
compliance, as  well as looking at  whether some investments                                                                    
trustees had  made over the previous  6 to 8 years  had been                                                                    
properly authorized.  The audit  was supposed  to be  done a                                                                    
month  previously and  was  expected to  be  brought to  the                                                                    
Legislative Budget  and Audit Committee  for review  in late                                                                    
February or early  March 2018. He stated that  the trust had                                                                    
been working  diligently with auditors  for the  previous 12                                                                    
Mr.  Abbott  stated  that  the  trust  believed  legislative                                                                    
action was  necessary to clarify what  the trust's authority                                                                    
was  related to  investable revenue  streams. The  trust was                                                                    
working with members  to start a conversation  on the topic.                                                                    
The trust wanted to start  the conversation before the audit                                                                    
was done in order to have timely resolution.                                                                                    
10:00:16 AM                                                                                                                   
Mr.  Abbott continued  to speak  to slide  11. He  discussed                                                                    
other legislative  priorities. He stated that  the the trust                                                                    
continued to  be engaged in ongoing  legislation relating to                                                                    
criminal  justice reform.  He relayed  that Steve  Williams,                                                                    
AMHTA Chief Operating Officer, was  a member of the Criminal                                                                    
Justice Commission. The commission  was evaluating a variety                                                                    
of  proposals and  the trust  was prepared  to weigh  in and                                                                    
protect  the  core  objectives envisioned  in  the  criminal                                                                    
justice reform legislation that had passed.                                                                                     
Co-Chair MacKinnon referenced  the trust administrative team                                                                    
and wondered  if Mr.  Abbott wanted  to introduce  anyone in                                                                    
the gallery.                                                                                                                    
Mr.  Abbott  introduced   Steve  Williams,  Chief  Operating                                                                    
Officer;  Andy Stemp,  Chief  Fiscal  Officer; Wyn  Menefee,                                                                    
Chief  of Operations,  Trust Land  Office; Carlee  Lawrence,                                                                    
Katy  Baldwin, Senior  Program Officer;  and Kelda  Barstad,                                                                    
Program Officer.                                                                                                                
Mr.  Abbott  introduced  individuals from  advisory  boards,                                                                    
including  the Alaska  Commission on  Aging, the  Governor's                                                                    
Council  on  Disability and  again,  and  the Mental  Health                                                                    
Board. He described the boards  as critical partners to help                                                                    
and   guide  the   trust  as   it   made  programmatic   and                                                                    
organizational choices.                                                                                                         
Co-Chair  Hoffman  supported  Co-Chair  MacKinnon's  earlier                                                                    
comments.  He had  worked on  legislation with  former AMHTA                                                                    
CEO Jeff Jessee.  He was proud of the work  of the committee                                                                    
in representing the  diverse areas of the  state. He thanked                                                                    
the board members for their work.                                                                                               
Vice-Chair Bishop  commented that he  had read in  the paper                                                                    
that there were several  hospitals that had increased mental                                                                    
health bed capacity.  He asked if Mr. Abbot  had any further                                                                    
Mr.  Abbott  thought  the   article  had  referenced  Valley                                                                    
Hospital  and  Alaska  Regional  Hospital.  He  agreed  that                                                                    
anything that  increased the capacity  of care in  the state                                                                    
was positive.                                                                                                                   
10:06:05 AM                                                                                                                   
Senator Micciche  referenced the state's poor  statistics in                                                                    
areas of public health.  He mentioned opioid abuse, domestic                                                                    
violence, and  suicide. He thought the  issues were directly                                                                    
related  to  public  safety  and  recidivism  reduction  and                                                                    
discussed the  balance with protecting the  public. He asked                                                                    
Mr.  Abbott to  communicate how  the legislature  could help                                                                    
aid in the trust's mission.                                                                                                     
Co-Chair  MacKinnon thanked  Jeff Jessee  for his  work with                                                                    
the trust. She thanked board members for their service.                                                                         
Co-Chair MacKinnon  discussed the  agenda for  the remainder                                                                    
of the week.                                                                                                                    

Document Name Date/Time Subjects
012418 AMHTA SFC Presentation.pdf SFIN 1/24/2018 9:00:00 AM
SB 143