Legislature(2017 - 2018)SENATE FINANCE 532

05/02/2018 09:30 AM Senate FINANCE

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09:34:10 AM Start
09:34:29 AM SB193
10:25:23 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 193(HSS) Out of Committee
Bill Postponed to 1:30 p.m.
Bill Postponed to 1:30 p.m.
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                         May 2, 2018                                                                                            
                          9:34 a.m.                                                                                             
9:34:10 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Vice-Chair  Bishop  called   the  Senate  Finance  Committee                                                                    
meeting to order at 9:34 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
MEMBERS ABSENT                                                                                                                
Senator Anna MacKinnon, Co-Chair                                                                                                
ALSO PRESENT                                                                                                                  
Heather Carpenter, Staff, Senator  Pete Kelly; James Harvey,                                                                    
Assistant   Director,   Division  of   Employment   Training                                                                    
Services,   the   Department    of   Labor   and   Workforce                                                                    
Development;  Dan  Robinson,  Research  Chief,  Division  of                                                                    
Research  and Analysis,  Department of  Labor and  Workforce                                                                    
Development;   Shawnda   O'Brien,  Assistant   Commissioner,                                                                    
Department of Health and Social Services.                                                                                       
PRESENT VIA TELECONFERENCE                                                                                                    
David Morgan, Self, Anchorage.                                                                                                  
SB 193    MED. ASSISTANCE WORK REQUIREMENT                                                                                      
          CSSB 193(HESS) was REPORTED  out of committee with                                                                    
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously    published   fiscal    impact   note:                                                                    
          FN8(LWF);  and one  new indeterminate  fiscal note                                                                    
          from the  Department of Administration,  and three                                                                    
          new fiscal impact notes from the Department of                                                                        
          Health and Social Services.                                                                                           
SENATE BILL NO. 193                                                                                                           
     "An Act  requiring the Department of  Health and Social                                                                    
     Services  to  apply  for a  waiver  to  establish  work                                                                    
     requirements for  certain adults  who are  eligible for                                                                    
     the state medical assistance program."                                                                                     
9:34:29 AM                                                                                                                    
Vice-Chair Bishop  noted that the  committee heard  the bill                                                                    
on April  12, 2018  and May  1, 2018;  and had  taken public                                                                    
9:35:38 AM                                                                                                                    
HEATHER  CARPENTER,  STAFF,  SENATOR PETE  KELLY,  explained                                                                    
that the bill would ask  the Department of Health and Social                                                                    
Services (DHSS)  to apply  for the  1115 Medicaid  waiver to                                                                    
establish a  work requirement for able-bodied  adults in the                                                                    
Medicaid   population.  She   reported   that  to   maintain                                                                    
eligibility   in    the   Medicaid    program,   able-bodied                                                                    
participants would  be required  to volunteer, or  engage in                                                                    
subsistence or  work activities for  at least 20  hours each                                                                    
week.  She noted  that  pregnant  women, children,  elderly,                                                                    
disabled, and certain caregivers would be exempted.                                                                             
Vice-Chair Bishop recalled discussion  from the previous day                                                                    
that identified the  target population at 10  percent of the                                                                    
22,500 Medicaid recipients.                                                                                                     
Senator  Micciche thought  it would  be  beneficial to  hear                                                                    
from  the  Department  of Labor  and  Workforce  Development                                                                    
9:38:02 AM                                                                                                                    
AT EASE                                                                                                                         
9:38:19 AM                                                                                                                    
Senator Micciche stated that the  bill considered asking DOL                                                                    
to  assist in  identifying gaps  in employment  and training                                                                    
throughout  the  state.  He   thought  that  the  state  had                                                                    
"perpetually  accepted nonworking  healthy Alaskans  for the                                                                    
long-term" and some of us would  like to change the trend to                                                                    
help individuals  reach their full  potential. He  asked how                                                                    
DOL  envisioned  assisting  DHSS   in  a  work  program  for                                                                    
Medicaid   recipients    that   would    promote   financial                                                                    
independence and less dependence on the government.                                                                             
JAMES  HARVEY, ASSISTANT  DIRECTOR,  DIVISION OF  EMPLOYMENT                                                                    
TRAINING  SERVICES,   DEPARTMENT  OF  LABOR   AND  WORKFORCE                                                                    
DEVELOPMENT, asserted  that the  "question was  ongoing" and                                                                    
that  DOL currently  partnered with  the Division  of Public                                                                    
Assistance (DPA)  to work with  the Temporary  Assistance to                                                                    
Needy Families  (TANF) population on the  TANF Work Services                                                                    
program  through  its job  centers.  He  explained that  the                                                                    
DOL's  job centers  located  throughout  the state  provided                                                                    
access  to online  resources or  in-person resources,  staff                                                                    
assisted  self-help  and   services,  case  management,  and                                                                    
enrollment  in  certain  federal   and  state  job  training                                                                    
programs  for  qualified  individuals.  The  work  had  been                                                                    
ongoing, and  he envisioned continued  similar collaboration                                                                    
on the bill's proposed program.                                                                                                 
9:40:43 AM                                                                                                                    
Senator Micciche  discussed the rate of  unemployment in the                                                                    
state. He  recalled seeing a  statistic that less  than half                                                                    
of Alaskans  were working. He  noted the seasonal  nature of                                                                    
employment in  the state contributing  to the  statistic. He                                                                    
asked why the state listed  7.1 percent employment rate when                                                                    
less than  half the  state was working.  He wondered  how to                                                                    
engage  individuals  that  were no  longer  on  unemployment                                                                    
rolls to help them reach their full potential.                                                                                  
DAN  ROBINSON,  RESEARCH  CHIEF, DIVISION  OF  RESEARCH  AND                                                                    
ANALYSIS,  DEPARTMENT OF  LABOR  AND WORKFORCE  DEVELOPMENT,                                                                    
offered  to  answer  the question  regarding  DOL  data.  He                                                                    
acknowledged   that  the   state   did   have  the   highest                                                                    
unemployment rate  in the country  at 7.3  percent. However,                                                                    
the  unemployment  rate was  not  high  relative to  Alaskan                                                                    
historical  averages   (7.2  percent  over  10   years).  He                                                                    
delineated that the unemployment  rate was calculated by the                                                                    
Bureau of Labor  Statistics and designed to  move slowly and                                                                    
smoothly;  it  was slow  to  reflect  economic distress.  He                                                                    
thought a better macro-indicator was  the number of jobs and                                                                    
job  loss. He  stated  the  state was  losing  jobs but  not                                                                    
significantly, however, DOL still  considered the state in a                                                                    
recession.  He indicated  that  in order  to  be counted  as                                                                    
unemployed, one  had to be  actively seeking work,  which he                                                                    
thought  was  challenging  to  discern.  He  considered  the                                                                    
"employment  to population  ratio" a  better indicator  that                                                                    
showed  what percentage  of the  working-age population  was                                                                    
working  and  recalled  that  in 2017,  62  percent  of  the                                                                    
civilian population  was working in Alaska.  The ranking was                                                                    
the 20th highest in the nation.                                                                                                 
9:44:29 AM                                                                                                                    
Mr. Robinson continued  his remarks and noted  that parts of                                                                    
rural Alaska  had very low  employment to  population ratios                                                                    
and the highest unemployment rates in the nation.                                                                               
Senator Micciche  asked what  the government  could do  as a                                                                    
team.  He thought  the issue  was larger  than that  of work                                                                    
requirements  for  Medicaid. He  asked  if  DOL had  a  team                                                                    
assembled and wondered how the  legislature could assist DOL                                                                    
in  its endeavors  to  create  employment opportunities  for                                                                    
different parts  of the state. He  mentioned social problems                                                                    
and  social  ills.  He thought  there  was  enormous  talent                                                                    
throughout the  state in  the ranks  of the  unemployed. Mr.                                                                    
Robinson reminded  the committee that his  division produced                                                                    
data,  and he  recommended that  the legislature  access the                                                                    
data to help inform policy.  He offered that the legislature                                                                    
could  request all  sorts  of data  from  the division  that                                                                    
could  help produce  desired outcomes.  He offered  that the                                                                    
division analyzed why Alaska's unemployment  rate was 2 or 3                                                                    
percentage points  higher than the national  rate. He shared                                                                    
that seasonality  and structural unemployment  were factors.                                                                    
He described  structural unemployment as not  having workers                                                                    
with the  skills needed for  the jobs being produced  in the                                                                    
state. He noted  that there was a tremendous  amount of jobs                                                                    
in parts  of the state in  which it was necessary  to import                                                                    
workers  and vice  versa. He  reiterated  that his  division                                                                    
could help  with data related  questions in  the formulation                                                                    
of policy.                                                                                                                      
9:47:57 AM                                                                                                                    
Mr.  Harvey echoed  the remarks  of  Mr. Robinson  regarding                                                                    
utilizing   data,   which   could   identify   barriers   to                                                                    
employment. He stated that the  department was very adept at                                                                    
handling   some  barriers   to  employment,   such  as   the                                                                    
application process  and types  of training. He  thought job                                                                    
centers  might not  be the  most adept  at addressing  other                                                                    
types  of barriers  to  employment and  noted  the value  of                                                                    
partnerships.  He  offered  that   the  job  centers  did  a                                                                    
"wonderful   job"  of   outreach   and   awareness  of   job                                                                    
opportunities and in preparation for the job openings.                                                                          
He reported  that currently there were  non-stop recruitment                                                                    
efforts  in areas  such  as the  seafood  industry and  some                                                                    
centers were operating at "standing room only" capacity.                                                                        
9:49:57 AM                                                                                                                    
Senator  von Imhof  referenced  Mr.  Harvey's comment  about                                                                    
working with  different stakeholders in the  state to create                                                                    
job opportunities. She listed the  myriad of entities in the                                                                    
state  that were  stakeholders: United  Way, Foraker  Group,                                                                    
Career  Academy, union  trade groups,  University of  Alaska                                                                    
adjunct  classes, YWCA,  Alaska Vocational  Technical Center                                                                    
(AVTEC), and  the Cook Inlet  Tribal Corporation  (CITC). In                                                                    
addition,   she  discussed   the  Department   of  Commerce,                                                                    
Community and Economic  Development's (DCCED) loan programs,                                                                    
business  assistance center,  intrastate crowd  funding, and                                                                    
work readiness  programs. She thought that  the state needed                                                                    
to pair  DOL with  the existing  organizations, and  DHSS to                                                                    
fully  engage and  leverage assets  that currently  existed.                                                                    
She referenced the associated fiscal  note that requested 49                                                                    
positions. She asked whether  leveraging the existing assets                                                                    
were  factored into  the equation  of the  fiscal note.  She                                                                    
emphasized  that all  the  organizations, existing  programs                                                                    
and  resources,  institutional  knowledge, and  brain  power                                                                    
needed  to be  utilized  to better  help  the Medicaid  work                                                                    
9:52:17 AM                                                                                                                    
Senator Stevens  asked Mr. Robinson  how data  pertaining to                                                                    
seasonal work fit in. He  noted that there was much seasonal                                                                    
work in his district. Mr.  Robinson stated that the data was                                                                    
collected, compiled,  and disseminated monthly.  He informed                                                                    
the committee that areas such  as Kodiak, Aleutians East and                                                                    
West, Bristol Bay, Skagway, and  Denali Borough had very low                                                                    
unemployment rates  during the peak of  seasonal activities.                                                                    
He stated  that in single industry  communities like Skagway                                                                    
the  unemployment rate  increased significantly  in the  off                                                                    
season. Kodiak had a big  enough (more so than other fishing                                                                    
communities in  the state) population  to provide  for local                                                                    
workers.  He reported  that his  division compiled  the data                                                                    
monthly and  it was possible  to see large  seasonal swings.                                                                    
Senator Stevens asked whether the  monthly data was compiled                                                                    
in  the  annual  reports.  Mr.   Robinson  answered  in  the                                                                    
9:54:29 AM                                                                                                                    
Co-Chair  Hoffman  asked  DOL   to  address  the  population                                                                    
downturn  in the  state.  He thought  it  could be  directly                                                                    
attributed  to  the  economic  downturn  in  the  state.  He                                                                    
wondered how  long individuals were looking  for jobs before                                                                    
leaving  the state.  Mr. Robinson  reported  that the  state                                                                    
experienced five  years in a  row with net  migration losses                                                                    
(more people  moving out of  the state than into  the state)                                                                    
representing   30   thousand   individuals.   However,   the                                                                    
migration  losses did  not equate  to net  population losses                                                                    
due to  the birth to  death ratio  of 35,000. He  noted that                                                                    
2017  was the  only year  there had  been actual  population                                                                    
loss. He  remarked that the migration  loss pattern remained                                                                    
and  historically, more  people in  their 20's  through mid-                                                                    
40's years  of age moved to  Alaska than left the  state. In                                                                    
recent  years, more  people in  their  30 years  of age  and                                                                    
children in grades  K-12 were leaving the  state than coming                                                                    
into the  state. He  thought it was  notable that  the state                                                                    
was losing more working age people.                                                                                             
9:56:34 AM                                                                                                                    
Senator Olson  thought the  goal of the  bill was  to lessen                                                                    
government dependency. He thought  that the goal seemed more                                                                    
difficult  to   accomplish  in   rural  Alaska   where  less                                                                    
opportunity existed. He asked how  many of those affected by                                                                    
the bill live in rural Alaska.                                                                                                  
SHAWNDA  O'BRIEN,  ASSISTANT   COMMISSIONER,  DEPARTMENT  OF                                                                    
HEALTH  AND   SOCIAL  SERVICES,   did  not  have   the  data                                                                    
available, but offered to provide the information later.                                                                        
9:57:45 AM                                                                                                                    
Senator Micciche assumed that  the state's unemployment rate                                                                    
calculation  was based  on a  federal formula.  Mr. Robinson                                                                    
informed  the   committee  that  each  state   had  its  own                                                                    
unemployment  rate calculation  model. He  asserted that  it                                                                    
was hard to determine if  those people not working should be                                                                    
counted as unemployed and mentioned  groups such as stay-at-                                                                    
home parents and retirees; people who  did not work due to a                                                                    
lack  of jobs.  Senator Micciche  thought a  data conversion                                                                    
was   required   to    truly   understand   the   employment                                                                    
information. Mr.  Robinson offered that the  state's economy                                                                    
challenged the  models. He  used the  big inflow  of workers                                                                    
for Bristol  Bay seafood  processing jobs  as an  example of                                                                    
the challenge.  Hew reiterated that he  "discouraged" use of                                                                    
the state's  unemployment rate as  the "best measure  of the                                                                    
state's economic health." Senator  Micciche pointed out that                                                                    
nearly   one-third  of   Alaska's   population  or   218,000                                                                    
individuals were on  Medicaid at a cost to the  state of $12                                                                    
thousand  per  capita. He  acknowledged  that  the bill  was                                                                    
costly and viewed the bill  as moving people from a lifetime                                                                    
of dependency  to "helping folks  succeed." He  thought that                                                                    
the state  needed to "shift  toward teaching a man  to fish"                                                                    
rather than expend funds on dependent systems.                                                                                  
10:00:59 AM                                                                                                                   
Senator Stevens  appreciated Senator Micciche's  remarks. He                                                                    
asked for  a list  of reasons  why working  was advantageous                                                                    
aside  from  economic  reasons. Mr.  Robinson  referenced  a                                                                    
recent study the division undertook  using the Department of                                                                    
Corrections  (DOC)  data, which  dealt  with  the effect  of                                                                    
employment  on recidivism.  He was  surprised  to find  that                                                                    
most of  the released prisoners  had worked, but  unless the                                                                    
job was high  paying it did not affect  recidivism. He noted                                                                    
the different  "levels of employment" and  the importance to                                                                    
analyze  "distribution." He  elucidated  that much  research                                                                    
existed that jobs  mattered psychologically and economically                                                                    
"but not  just any job." There  were many jobs that  did not                                                                    
produce the same noneconomic benefits  as higher paying jobs                                                                    
did. Senator Stevens appreciated Mr. Robinson's remarks.                                                                        
Senator Micciche  clarified that  he would rather  spend the                                                                    
same  amount  of  funds to  provide  "meaningful  employment                                                                    
opportunities"  than on  Medicaid.  He  maintained that  the                                                                    
state   had   to  utilize   every   tool   to  reduce   DHSS                                                                    
10:04:48 AM                                                                                                                   
Senator von Imhof commented on  Mr. Robinson's remarks about                                                                    
meaningful jobs showing less recidivism.  She hoped that the                                                                    
message was not  to shun jobs with less pay  and less hours.                                                                    
She wanted  to ensure  that the  message was  to find  a job                                                                    
that  offered  experience   and  increased  opportunity  for                                                                    
advancement and pay raises. Mr.  Robinson clarified that his                                                                    
division was  policy-neutral and  did not  message anything.                                                                    
He referenced  a study  that showed  the outcomes  of retail                                                                    
employment over  10 years.  He noted  that the  study showed                                                                    
the  outcomes that  Senator von  Imhof discussed.  He stated                                                                    
that retail  jobs lead  to other jobs.  He pointed  out that                                                                    
retail workers  that stayed in  retail jobs  had substantial                                                                    
increases in income 10-years later.                                                                                             
10:06:45 AM                                                                                                                   
Vice-Chair Bishop moved to invited testimony.                                                                                   
DAVID MORGAN, SELF,  ANCHORAGE (via teleconference), relayed                                                                    
that he was  a healthcare economist and had  lived in Alaska                                                                    
since  1984.  He discussed  his  employment  history in  the                                                                    
healthcare field  and reported that  he was a member  of the                                                                    
Healthcare Commission for 5   years. He discussed statistics                                                                    
from the  State of Kentucky.  He reported statistics  on the                                                                    
Kentucky   Medicaid   population.    Roughly   1.3   million                                                                    
individuals  were receiving  Medicaid and  approximately 350                                                                    
individuals were  eligible for  the work program.  He stated                                                                    
that roughly 40 percent  of eligible individuals on Medicaid                                                                    
worked;  18  percent  worked   part-time,  12  percent  were                                                                    
exempt, and  6 percent were  in school. The  program focused                                                                    
on  the   7  to  10   percent  who  could  work   given  the                                                                    
10:11:14 AM                                                                                                                   
Mr.  Morgan  continued  with his  testimony.  He  referenced                                                                    
President Bill  Clinton's Welfare-to-Work program,  which he                                                                    
believed  had been  successful.  He  mentioned other  states                                                                    
that  were attempting  to utilize  the  program. The  states                                                                    
believed  that  an underclass  was  being  created that  was                                                                    
"living off of the public  domain" and was unhealthy for the                                                                    
individual and  the economy. He delineated  that the Clinton                                                                    
plan  had  welfare  agencies identify  individuals  for  the                                                                    
program  and treated  the  individual as  if  she was  newly                                                                    
unemployed  through  the  labor department,  which  required                                                                    
some amount  of data  programming. He  stated that  the 1996                                                                    
Clinton plan  was not "touch  feely." The state  of Kentucky                                                                    
was  anticipating  reductions   in  Medicaid  enrollment  by                                                                    
95,000 over 5  years that represented roughly  $2 billion in                                                                    
savings.   He  stated   that   he   would  provide   contact                                                                    
information  for  individuals  involved in  the  program  in                                                                    
Kentucky. Mr.  Morgan concluded that a  "dependent community                                                                    
was not healthy one."                                                                                                           
10:16:41 AM                                                                                                                   
Vice-Chair  Bishop asked  Mr. Morgan  to submit  his written                                                                    
testimony through the office of the co-chair.                                                                                   
10:17:25 AM                                                                                                                   
Senator Stevens  had heard stories  of individuals  that had                                                                    
chosen to stay  on welfare due to low income  jobs. He asked                                                                    
whether there  was an  average income  at which  people were                                                                    
incentivized to move  off welfare or whether  the answer was                                                                    
even quantifiable. Mr. Robinson  stated that data existed on                                                                    
the duration  of unemployment, but  not on a number  and the                                                                    
answer would be complex.                                                                                                        
Vice-Chair Bishop commented that  the meeting had lasted for                                                                    
50  minutes. He  thought  the dialogue  was  worthy and  was                                                                    
deserving of  a longer conversation. He  thought the subject                                                                    
of  TANIF alone  warranted additional  dialogue. He  relayed                                                                    
that  the Tanana  Chiefs Conference  had lowered  their TANF                                                                    
enrollment number by working with  DOL. He thought the state                                                                    
was  fortunate to  have an  exemplary  analysis division  in                                                                    
DOL. He  thought Alaskan employment  did not fit in  the box                                                                    
of   "big   labor"   regarding   how   the   state   counted                                                                    
unemployment. He  thought by having  the two  agencies, DHSS                                                                    
and DOL working together the outcome would be beneficial.                                                                       
10:21:15 AM                                                                                                                   
Senator Micciche discussed the  fiscal notes. He stated that                                                                    
the  committee's intent  was  to edit  the  fiscal notes  to                                                                    
reflect the cost for competing  the waiver application only.                                                                    
He furthered  that an indeterminate  cost would  be provided                                                                    
for  the  outyears.  The current  outyear's  estimates  were                                                                    
based  on   assumptions  from  national   actuarial  studies                                                                    
applied to  2017 Alaska data.  The committee wanted  DHSS to                                                                    
work  with DOL  to determine  whether existing  programs met                                                                    
the federal requirements. The  committee requested that DHSS                                                                    
provide   the  hard   costs   for   completing  the   waiver                                                                    
application process in a revised fiscal note.                                                                                   
Senator  Micciche  MOVED  to report  CSSB  193(HSS)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
forthcoming fiscal  notes. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSSB  193(HESS) was  REPORTED out  of committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal  impact note:  FN8(LWF);  and  one new  indeterminate                                                                    
fiscal  note  from  the Department  of  Administration,  and                                                                    
three new fiscal impact notes  from the Department of Health                                                                    
and Social Services.                                                                                                            
10:22:36 AM                                                                                                                   
AT EASE                                                                                                                         
10:24:09 AM                                                                                                                   
Vice-Chair Bishop informed that the committee would be                                                                          
drafting a Letter of Intent to convey the following:                                                                            
     It is the  intent of the Alaska  State Legislature that                                                                    
     the Department of Health and  Social Services work with                                                                    
     the Department  of Labor  and Workforce  Development to                                                                    
     complete   a   needs-based    analysis   on   workforce                                                                    
     development and employability  of the target population                                                                    
     outlined in the  fiscal notes for Senate  Bill 193. The                                                                    
     goal  of  the  analysis  was  to  further  refine  cost                                                                    
     estimates  associated  with  this legislation  to  help                                                                    
     promote successful outcomes.                                                                                               
Vice-Chair Bishop discussed the agenda for the afternoon                                                                        
10:25:23 AM                                                                                                                   
The meeting was adjourned at 10:25 a.m.                                                                                         

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