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Joint | February 9, 2015 | Committee Room | Legislative Program Evaluation Oversight Committee

Full MP3 Audio File

Welcome to the February meeting of the Program Evaluation Division oversight committee. I'd like to welcome the House sergeant in arms, Marvin Lee. Where are you Marvin? Someplace? There he is, over here. Good afternoon Reggie. How are you sir? Nice to have you with us. Ray Cook? Hello Ray. Joe Austin. Joe? He's on his way. And Mr. Crocker. Okay, on the Senate side, I don't have a list. Do I? I don't have a list. I see my friend C. Wilson. All right, well, we appreciate you being here. We have a few people on their way, but we're gonna get ahead, go ahead anyway. Pages, do we have pages yet today? I don't believe so. No, okay. Couple of things before we get underway. At the suggestion of Senator Hise at the January meeting, members of the public may access the agenda containing hyperlinks. If you haven't been on the website, there's a hyperlink on the agenda so you can click and get all the documents that you, that back up whatever is going to be heard. Each agenda item will contain weblinks, hard copies are in the folders that have been distributed to members, and for future meetings, hard copies will be available by request to members of the committee, so they will be on your desktop and we're gonna try to kill few, fewer trees. You will note that we do not have the Medicaid reorganization bill on the agenda today. That was on purpose. Couple of reasons, actually more than a couple. None the least of which is after talking with a few of you, especially the new members on the House side, we are not at all prepared to vote on this rather substantial recommendation. Substantial is probably as small a word as I can find to cover that. So there's been an inadequate time for members to prepare. There are some new initiatives that are being pursued, and some other pending and potentially conflicting initiatives, and a pending state audit from the state auditor. Good place for state audits to come from. So that's, so don't, don't believe that it's off the table. It's just not on today's agenda. So with all that said, I'd like to recognize Senator Hartsell for a few remarks. None? Well in that case, first order of business is to approve minutes from the January 21st meeting. Are there any corrections to those minutes? Seeing none, do I have a motion to approve? Senator Clark, seconded by Senator Hise, all those in favor say aye. Opposed no, ayes carry it. And we ought move on now. We are rolling. Now let's keep it up. Well, the next one is the draft legislation for review by committee. Before I start that, I need you all to step up and volunteer to be sponsors. Not every bill coming out of here should be, needs to be sponsored by the committee chairs, so any of those, any of the bills that we recommend for legislation, if you feel particularly inclined, we would hope that you would say something to one of us and let you carry the bill. That would be nice, but it is, it's also a committee bill, so it doesn't count against your total if you happen to have a total. But fewer bills, the better. I think we did some, over, over 2000 bills last year in the long session. So Wednesday, February 25th is the bill deadline for introduction. The joint legislator program evaluation oversight committee is qualified as a study committee, so these are all study bills that come out of here. On January 21st, we recommended three bill drafts listed on the agenda below. Therefore the staff will, will not provide detailed review of these three bills. They will only explain the purpose of the bill, note any changes, and respond to any questions you might have. So after discussion with the chairs, after discussion, the chair will entertain motions to recommend the bills for introduction. So we'll begin with Lisa Wilks and Bill Graphine to talk about revising the state child support initiative

that too. Thank you, Lisa. [SPEAKER CHANGES] Alright. Good afternoon. As Representative Warren mentioned, the two drafts that I covered, the first of which was dealing with the Federal Child Support Incentive payments, that draft, there were no changes made. I'm not sure if you have any additional questions, this is dealing with requiring the division of social services to retain up to 15% of the Federal Incentive payments for centralized child support services, requiring them to revise the methodology of distributing incentive payments to County Child Support Services programs and requiring the development of a plan and reports on how incentive funds are used. This was a recommendation from the subcommittee on child support. [SPEAKER CHANGES] Questions from the committee relating to the draft? Do I have a motion to authorize it for introduction? Senator Randleman. [SPEAKER CHANGES] So move, and also I'd like to sponsor the legislation. [SPEAKER CHANGES] If you would make a note on that. Okay, I have a motion from Senator Clark on second, all in favor please say aye. Opposed no. Thank you, Lisa. [SPEAKER CHANGES] Alright, and regarding the second draft, this second draft is dealing with requiring the Department of Social Services and division of child development to develop a plan requiring a custodial parent or, excuse me, a custodial parent receiving childcare subsidy payments to cooperate with County Child Support Services programs as a condition of receiving childcare subsidy payments. There were no changes made to this particular draft, however Senator Randleman had a question at last month's meeting regarding whether the term or phrase "custodial parent" also referred to, included references to other relatives, such as a grandparent. I talked with Senator Randleman and it was not clear to us that that definition or that phrase actually included that term. In fact, I looked in the statutes, the term "custodial parent" is not actually defined in statute as it related to child support. Further, in looking on the federal website as well as our state DSS website, it makes a reference to "custodial parent/custodial party" or "custodian" with respect to the DSS website. So it would be my suggestion that, to make it clear, and to go to Senator Randleman's point, that we add some language in there if the intent of the committee is to ensure that other relatives, such as a grandparent, are included that we make that revision. I have copies of the alternative draft here but as this was more than a technical change, that draft is not before you but I have copies here if anyone would like to see. [SPEAKER CHANGES] If we might, if we could distribute those. Representative Dollar. [SPEAKER CHANGES] Just a point of clarification, this does not, the change, which I guess you're going to point out to us in a just a moment, that does not in any way swerve in to the challenging waters of grandparent rights and that sort of stuff. This doesn't have anything at all to do with that, is that correct? [SPEAKER CHANGES] That's correct, no sir. This is just getting at making sure that how it's defined, how "custodial parents," how other relatives are already able to stand and receive child support payments that it's just making it clear that it also applies to this legislation and this situation as well. They're already able to, it's just, it's not clear when you just look at the phrase "custodial parent" that it also includes those other relatives. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] So it's just clarifying it here. Does everyone have a copy of the draft? Okay, so the changes are in three places. The first being, of course, to the short title.

just to make it clear that it's a custodial parent or party. The second being on line five, there's language added after the phrase "custodial parent," "or other parent or other relative or person with primary custody of a child. Then on line 16, that same phrase is added after the words "custodial parent," it says, "or other relative or person with primary custody of the child." So those are the three changes, Mr. Chair. [SPEAKER CHANGES] Okay, thank you. Questions? Senator Hise. [SPEAKER CHANGES] Mr. Chairman, this may be a question of formality, would the motion be in order to accept this as a substitute for the bill? [SPEAKER CHANGES] That probably is what makes sense, or yes. Yes, yes sir, and you so move. Do I hear a second? Second by Senator Clark for this to be a substitute for the original motion. Any discussion? All those in favor please signify by saying aye. Those opposed no. The aye's have it. We now have that substitute in front of us. Discussion ont he presentatiion of the substitute? Seeing none, do I hear a motkion to accept? Senator Randleman. [SPEAKER CHANGES] I move to present this as a an introduction and also to serve as the primary sponsor. [SPEAKER CHANGES] Terrific. Thank you, Senator Randleman. Do I hear a, do we need a second on that? No. No seconds required. Further discussion? All those in favor signify by saying aye. Those opposed no. Aye's have it. Senator Randleman, thank you very much for stepping up on that. Thank you, Lisa. Next is Joyce Jones on the state ?? treatment facilities. Joyce, good afternoon. [SPEAKER CHANGES] Good afternoon, Mr. Chair and members of the committee. I'll be reviewing changes to the bill draft regarding recommendations on publicy funded substance abuse services so if you have the blue drafts and bill summary that are in front of you, that's what I'll be speaking to. Under current law, North Carolina's public system for adult substance abuse treatment has two primary components. The community based system, which is managed by the LMENCO's who contract with providers throughout the state for an array of substance abuse services and then the three alcohol and drug abuse treatment centers that operate under the division of state operated healthcare facilities to provide inpatient substance abuse services. The bill draft that I summarized last meeting integrates the state operated alcohol and drug abuse treatment centers into the array of plublicy funded substance abuse services managed by the LMENCO's. The bill draft also reallocated direct state appropriations for the ADAC's to the division of mental health, developmental disabilities, and substance abuse services and strengthened the performance of managment systems for substance abuse services. The change that I'll point out to you is in section three, which begins on page two of the draft. If you flip over to page three, it's really something that was deleted from the draft, so you're not going to be able to see it but section three specifically directs that all of direct state appropriations for the ADAC's are to be terminated by the beginning of the 2019-2020 fiscal year. In the previous draft there was specific direction as to how much the reduction should, the amount of the reduction for each fiscal year of the transition period. That language, at the request of Representative Dollar, has been removed. That was the only change to the draft. I'm not sure if anyone has questions? [SPEAKER CHANGES] Are there any questions from the committee? Representative Dollar. [SPEAKER CHANGES] I've got a question with respect to, I believe it's section 2B, that has an April 1, 2016 date for the department to prepare and submit to the HHS oversight committee a transition plan but in section 3B on over it talks about some dates there, an August 1st date of this year, 2015 and a February 1st date of 2016 in terms of moving forward. So I guess

I guess my question is, it would seem like we're going ahead and making moves by a couple of dates certain, at least a couple of items by dates certain, prior to the time in which the plan is actually scheduled to be shared with the appropriate oversight committee and the general assembly. So I'm just kind of wondering how, why we're doing that and how that's envisioned to work. [SPEAKER CHANGES] Well, I'll defer to the program evaluation staff, but my understanding of why those dates precede the date that the plan will be submitted is to give the department the information they'll need to actually develop the plan. So, for example, the division of mental health is required to calculate and notify the LMENCO's by August 1st, 2015 of an estimated share of these fund allocations, so I believe the intent is for that information to then be included in the report that's submitted. So in other words, the department is getting information beforehand so that they can have a complete report to present. [SPEAKER CHANGES] Senator Pate. [SPEAKER CHANGES] Thank you, Mr. Chair. Ms. Jones, would you or someone else from the staff know what the most recent allocation was to the three ADAC units? [SPEAKER CHANGES] I'll let Denis Thomas from Fiscal Research answer that question. [SPEAKER CHANGES] Denise? [SPEAKER CHANGES] Mr. Chair, Denise Thomas, Fiscal Research, Senator Pate, it's approximately $40 million dollars for the three ADAC's. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] Follow-up, and so do we have a goal in mind for each of these three years as I understand it, or will the ADAC's come in and make their case for the appropriations that are necessary? [SPEAKER CHANGES] The only goal that's expressed in the draft, Senator Pate, is that all direct state appropriations for the ADAC's will be terminated, effective July 1, 2019 but the draft does not specify the exact amounts each fiscal year that the reductions will be taken, just by July 1, 2019 they will terminate. [SPEAKER CHANGES] Further questions, Senator Hise. [SPEAKER CHANGES] I guess the question may be directed to Representative Dollar then, as the one who kind of wanted that out and to put it as a direct cutoff, if that's okay. Representative Dollar? [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] What do you envision for this as we try to build out community services and try to make services more available in local districts, what do you envision as the budget reduction and the money put to those services up through 2019 or do you envision this as a runs fully funded through 2019 and then just suddenly cuts off? [SPEAKER CHANGES] Well, no. Senator, I would agree with where you're going in terms of doing it on a glide path but rather than have it laid out as specific percentages, I just know that we're going to have a glide path, we're going to have a plan that will be coming forward in that way. We don't get sort of unintentionally caught up in having to meet a certain percentage but I would certainly agree with you that you have to start it and do it on a glide path. My concern was having specific percentages but I think obviously the point is well taken. We've got to make sure that we're making substantial progress toward that with a end date that you all have laid out there. [SPEAKER CHANGES] So the question before the committee is should the joint committee recommend this bill for introduction and if so I need a motion. Pardon me? As amended, sorry. Senator Hise? [SPEAKER CHANGES] Mr. Chairman, I move for introduction as well as ask to be added as sponsor. [SPEAKER CHANGES] Thank you very much. You all heard the motion. I don't think it needs a second, is that right? Is that what we said before? Okay. All those in favor signify by saying aye. Those opposed no. The aye's have it and a bill will be prepared for introduction as amended. Mr. Stanley. Thank you Joyce. [SPEAKER CHANGES] Thank you, Mr. Chairman, members of the committee, good afternoon. You should have a copy of the bill and the summary, I'm told it's canary colored, which I think is yellow. I was also told to be brief so I'm going to be

But if you'd like me to go into more detail about any of this just stop me and I'd be happy to do that. [SPEAKER CHANGES] Brief is good. [SPEAKER CHANGES] Okay, the bill does four main things. First of all it creates a task force on veteran service members and their families in the Department of Administration. The second thing it does is require that a subcommittee of that task force develop a strategic plan that defines the state's vision and mission for veteran service members and their families. Third thing it does is require state agencies that provide a service, benefit or discount that is targeted or directed at veteran service members and their families to collect and report to the task force information about the number of persons served, the type of benefit provided and the source of funding and the final thing it does is create a new Joint Legislative Veterans and Military Service Members Oversight Committee. The task of that committee in addition to the normal oversight committees would be to review reports by the task force that was created in this bill. I'd be happy to answer any questions. [SPEAKER CHANGES] Thank you. Senator Pate. [SPEAKER CHANGES] At the appropriate time, Mr. Chairman, I would recommend that if we prepare this bill for introduction and I'll be glad to sponsor it. [SPEAKER CHANGES] Terrific. Any further comments or questions? Seeing none, Senator Pate this is the appropriate time. [SPEAKER CHANGES] Move the following, that that draft be prepared for introduction and we will discuss this later on. Thank you very much. [SPEAKER CHANGES] Thank you, Senator. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Motion before the committee is to prepare this for introduction. All those in favor signify by saying aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed, no. Ayes have it and we're only five minutes behind. Next, review of first drafts of legislation as instruction by the committee at our last meeting on January 21st. Because the bills have been seen by the, the drafts have not been seen previously, staff will explain each section of the bill and respond to any questions. Yes, sir, Mr. Cherry. [SPEAKER CHANGES] Thank you, Mr. Chairman, members, this is the Green Bill and the bill summary. This is a pretty straightforward draft. As you know the report of the [??] evaluation division found the different categories licenses processed by DOI had different levels of effort but yet the same fee was charged, so what we do in this bill, it only has one substantive section. There's already statutory language that was in Article 2 of Chapter 58, which is the insurance statutes that gave the Department of Insurance the authorization to contract for all kinds of online services. What we've done is add language that says with respect to contracts between their agent services division that relates to processing of these licenses and applications that they can include a fee schedule. Previously the existing section only says a reasonable fee which kind of implies that they couldn't charge different fees for different categories and we've simply made that clarification in the statutory language and it gives them the option to do that. It doesn't mandate that they do it. It will affect, if the next contract for these kinds of online services. The current contract that's in effect now, this bill is not intended to have any impact on that. So, Mr. Chairman I'll be happy to answer any questions. [SPEAKER CHANGES] Representative Dollar. [SPEAKER CHANGES] Refresh my recollection, but as I recall this was the presentation that I believe Michaux made on this. [SPEAKER CHANGES] Right. [SPEAKER CHANGES] And DOI's good with it, everybody's happy with it and if that's the case unless somebody just wants to sponsor it, I'll sponsor it so somebody else don't have to. Unless somebody just wants to. [SPEAKER CHANGES] We know of no opposition. [SPEAKER CHANGES] Seeing no one jumping to the floor, Representative Dollar I greatly appreciate that. I'll take that as a motion to approve. [SPEAKER CHANGES] Motion to approve. [SPEAKER CHANGES] All those signify yes by saying yes. [SPEAKER CHANGES] And no, no, and the bill passes and we move on to, thank you very much, Mr. Cherry. Miss Turnau. [SPEAKER CHANGES] Thank you, Mr. Chair, members of the committee. This draft is golden yellow in your packet. This draft comes from Dr. Berner's presentation from the School of Government. It requires the School of Government

Speaker: Do you coordinate a working group to develop standards for state agencies to guide evaluation of pilot projects? The school of government is required to make a preliminary report to this committee, the director of PED and the office of state budget and management by December 1, 2015. The committee is required to provide feedback to the school of government on the preliminary report, and then the final proposed standards must be presented to the committee and to OSBN by December 1 of 2016. OSBN is then required to adopt rules to implement the proposed standards and to report to this committee upon adoption of the rules. After June 1, 2017, all state entities are required to conduct and complete pilot projects requested by the general assembly in accordance with the standards adopted by OSBN. The school of government is authorized to prepare and propose updates to the pilot project standards as it deems necessary and must present those updates to OSBN for review and adoption. OSBN has been required to report to this committee on any changes to the rules. The school of government must publish proposed updates to the standards on its website at least 90 days before the proposed standards are submitted to OSBN. This draft also appropriates 150 thousand dollars from the general fund to the school of government for the 2015, 2016 fiscal year to implement the requirements of this act, and Mister Chair I'm happy to answer any questions. Change Speaker: Do we have any questions? See none. I do have, Senator Heights, please. Change Speaker: Real quick because it’s an appropriation area, which one of the budget areas does the school of government fall under? is that under the university system, or is that? Change Speaker: I'm unsure; maybe someone from Fiscal has the answer to that. Change Speaker: Who can help us out? Change Speaker: University. Change Speaker: Denise? Change Speaker: Yes sir, the school of government is at the University of North Carolina, Chapel Hill. Change Speaker: And your funding is through the University, and not through some other--to your knowledge your funding is through the University? Change Speaker: To my knowledge, yes. I'm not on the ED team, so, yes. Change Speaker: Representative Hurley? Change Speaker: I would like to help sponsor this, or if anyone would like to help then I would be glad to do that. Change Speaker: Great. Then can I take that as a motion to approve? Then no further discussion. Motion to prepare this for introduction, Representative Hurley will be the sponsor, all those in favor say aye, those oppose no. The ayes have it, and we are rolling. Mister Hummel, thank you sir. Change Speaker: [inaudible 0:03:07.7] evaluation division [inaudible 0:03:10.4] controlled substances [inaudible 0:03:19.9] guideline to continuing education requirements for health care providers. Change Speaker: The performance of the Department of Health and Human Services controlled substances reporting system is hindered by access barriers, lack of data connectivity, and limited analytical capacity. The lock in program, also administered by DHHS at the time was not operational; it was costing MEDICAID program an estimated 1.3 to 2 million dollars annually. When it was operational, the program suffered from several short comings. For the contract of the CSR lacked important features and cost the state more for less functionality. And last, there was no coordinated strategy or performance management system for monitoring of use and prescribed controlled substances. At the time we recommended that the state direct state officials and occupational licensing boards to develop and adopt statewide opioid prescribing guidelines, and requiring continuing education to prescribers who have used controlled substances. Also recommended a series of improvement to CSRS access and utilization. Also required modification of the contract with Health Information Designs to improve CSRS performance and functionality and to expand monitoring capacity established by the data use agreements with the prescription behavior surveillance system. Recommendations also--

Directed the Department of Medical Systems to improve the efficiency and effectiveness of the Medicaid lock in program and establish a state wide strategic planning and performance management system. Last session this committee introduced a bill, Senate Bill 749, linked in your online agenda, I believe, but some of us are already handing out written copies of that. It was stopped in Finance Committee last session and this committee has directed our division to come up with some recommended changes based upon actions taken by various stakeholders affected by this bill. According to section 1, based upon June 2014, North Carolina Medical Board adopted more comprehensive opioid prescribing guidelines that provide specific clinical guidance and information about board expectations for patient management. We recommend modifying section one to direct healthcare providers and occupational licensing boards adopt the new opioid prescribing guidelines developed by the medical board. No actions have been taken with regards to sections two and three, therefore no modifications will be required. However, section four, DHHS has established a new memorandum of understanding of the National Association Boards of Pharmacy to participate in PNP interconnect. They've also modified the HIA contract to include system feature, a system feature requiring users to annually update their profiles, process and validate user credentials, to provide quarterly deidentified and identified data transfer of the NCCSRS database to the Department of Health and Human Services. The modifications also include additional ad hoc reports and four more standing reports. Therefore we would recommend several changes to parts under section four. Based upon section five, no action has been taken by DHHS so no changes are required. Section six, the lock in program regained operation in November of 2014 and as if March 2015 200 individuals will be locked in a year. We recommend a modification of section six to require the audit date be changed to be conducted within six months of the new legislation taking law. No action has been taken as it relates to section seven, therefore no modifications are needed. At this point I'd be happy to handle any questions at the direction of the chair. [SPEAKER CHANGES] I'm happy to take questions. Senator Tarte. [SPEAKER CHANGES] Yeah, thank you Mr. Chair. At the appropriate time I move that we adopt and I would be happy to be a prime on this. [SPEAKER CHANGES] Perfect. Any further questions? Senator Hise? [SPEAKER CHANGES] I'd like to join on this bill as well, please. [SPEAKER CHANGES] Great, adopt as amended, and we'll get to that. This is something that's near and dear to my own heart as a matter of fact and I wanted to also give a little bit of a shout out to Senator Bingham. We worked on some of this a couple years ago and how important this is as you all may know and you may have stated that deaths from prescription drug abuse will soon, could soon be the number one cause of death in North Carolina. This is a tragic issue across the United States and I'm pleased to see North Carolina jumping to the floor in it, so with that said. [SPEAKER CHANGES] So, let me also mention, Mr. Chair if I might. [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] Clark had a great deal to do with initiating this, the study itself to begin with, because of issues that had arisen particularly in Cumberland County in the military [??] [SPEAKER CHANGES] Right, so with that said, Senator Tarte. Oops, wait a minute, Representative Hurley? [SPEAKER CHANGES] I just have one question. On page three the quarterly transfer, it says a quarterly transfer. [SPEAKER CHANGES] What line are you on. [SPEAKER CHANGES] Seven. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Start straight on seven, six. The quarterly transfer, a copy of the complete CSRS database to DHHS, and I don't know, can you explain that a little bit? [SPEAKER CHANGES] Sure, at the time of the report we identified that this data that actually resides with the state system data resides with the contract, that data never made it back to the state therefore the state never had the capacity or the data to actually be able to comb through it and do the analysis it needed to. All of that was a portion of what the contractor was doing, so we recommended that because other states also have that built into their contract, the state actually retain the data that they're paying for. [SPEAKER CHANGES] With that said, Senator Tarte, now is the time.

Mister Chair, my earlier comment please that we may adopt as amended. [SPEAKER CHANGES] As amended. Great. All those in favor of the motion, signify by saying aye. Those opposed no. The ayes have it. I'm going to have to revise how the, the wording's going to be, Senator Tarte, that we're being asked to. Let's try that wording again here. [SPEAKER CHANGES] Update the bill. [SPEAKER CHANGES] Update, and revise. [SPEAKER CHANGES] And revise for introduction. [SPEAKER CHANGES] Update and revise for introduction. No problem with that? No problem, consistent with what we have discussed. Senator Hise is the second no problem and therefore, I think we're in good shape. Moving on. [SPEAKER CHANGES] Let's vote on it again, just in case. [SPEAKER CHANGES] Just to be careful then, let's, let's do vote on again. All those in favor say aye. Those opposed no. The ayes have it, and we are moving on. And we have Senator Tarte and Senator Hise and Senator Clark. Great. Yes. And now we are at the list of committee recommended legislation that did not pass out of the 2013, 14 session. And this is a, a spreadsheet. When everyone has that in front of it, in front of that, mister Turcott, please proceed. [SPEAKER CHANGES] Thank you, mister chairman. This is the white handout. It's appropriate because I'm colorblind. I can't tell the difference between pink and green and so forth. These are all bills that were recommended by your committee previously but did not pass. On the handout, you'll see the titles of, of the, of the short titles of the bills before along with the bill numbers. The version online, there are links directly to the bill sheets on these. The chairs are asking you to review any of these bills that you as an individual member might consider for introduction. These bills would not carry the recommendation of the current joint legislative program evaluation oversight committee. They were recommended by the previous committee, but they would have to be reintroduced as individual bills, and the chair is just, wants you to review them, any of them, and if you see fit as individual members or a group of you, you can reintroduce these bills. I'll be glad to explain any of the concepts behind any of these bills at your direction, mister chairman. [SPEAKER CHANGES] If there are members requesting explanation of any individual bills, please note. Senator Bingham. [SPEAKER CHANGES] Thank you mister chairman. I believe House, House Bill 1204 is one I'd worked on in the past, and I, I, I don't know where, but I guess it fell through the cracks somehow. But if you would touch on that, I'd certainly appreciate it, John. [SPEAKER CHANGES] Yes, sir. Members of the committee, the series of reports that the program evaluation did on, on the motor vehicle, on the motor vehicle fleet, we found a consistent problem of, of agencies not tracking mileage and use of these vehicles and what this, what this bill would have done would require, would do if you reintroduce it, is it would require the department of administration to implement a pilot project to test use of telematics. Now, there has been, there was some language in the appropriations bill, a special provision, requiring DOA, the motor, motor fleet to work cooperatively with the information technology services on a, a test of telematics. However, their study that they were required to report on did not clearly show results of telematics. Now, as I understand it they do have some data, they did develop some data. One of the vendors has developed some data and they have actually tested, but it was not formal, and you do not have the benefit of that at this time. So what that bill, Senator Bingham, would have done, is formalize all that. I think the agreement they came to, the DOA came to was well, let's go ahead and test it anyway. We'll try it, we'll try it, but they, once again we have a pilot project that didn't

Speaker: It was not properly designed and you don't have the results of that before you, even though there is some data available. So that's the background on that, sir. Speaker Change: Any further questions on any of the bills listed? Senator Hise? Speaker Change: Thanks. I thought we'd introduced it again last session but I know from the beginning Senator Mansfield had begun work on requiring all the agencies to replace their performance measures and others. Was that introduced last time, or do we have a reference on that bill? Speaker Change: Mister Chairman, that bill was not a bill that was recommended by this committee previously. That was a bill that former Senator Mansfield first developed, i think you came back later on and co-sponsored it, but I don't have that bill number, but it could be re-introduced at this session. What it does is it sets up a what's called a "taxpayer investment accountability board," It's an ex-afficio board that would set up requirements for state agencies to maintain consistent information, such as performance measures, organization charts, logic models on their programs, program inventory, that is a list of what they do. Efficacy of those programs, whether or not they've been tested for evidence, while they have some promise based upon research and the one serious provision of that bill is that it would have made the agency heads liable on their bonds if they didn't keep the information that was required, and an individual taxpayer could walk in and say, "Well I’d like those performance measures," and if the agency couldn't produce them then they could be prosecuted for not having them. That was a pretty tough provision, pretty stout. That's accountability on steroids. So, that's that legislation. I recall a lot of it because I worked on it. Speaker Change: Any further questions? Senator Payton? Speaker Change: Thank you Mister Chairman. I wonder if Mister Tercott [SP]could speak on house bill 1036/senate bill 755? Speaker Change: Yes, Senator Payton, we received a report from a state auditor that was critical of a contracting procedures of DHHS and one of the problems with one of the contracts was that the contract manager who was overseeing the contract, I believe it was NC Tracks, left the job as contract manager and went to work for the contractor within a matter of days and was working on that contract, so the committee took a dim view of that, agreed with the state order and requested legislation be drafted to prohibit that practice. What that legislation does is it puts a six month cooling off period on contract managers. It requires the agencies to designate individuals who are responsible for contracts, being contract managers, and it basically prohibited those contract managers from accepting employment until six months post them departing. There were other provisions of that act, but that was the substance of it. Senator. Speaker Change: Further questions? For these repeals that were--whoops, I do have another question. Senator Bingham, thank you. Speaker Change: Thank you Mister Chairman. Mister Chairman, this telematics pileup that we've spoken up could not see an opportunity to save this state a lot of money because in working on this in the past and speaking with John about this, now that we have a school of government setting up a process in which we can come up with something that's sensible, you know, I'd like to not let this fall through the cracks if we could. Speaker Change: As I understand, all of the bills on these can be introduced by individual members. You're all free to do that. Contact drafting division and any of you want to get together, and make sure that your teams are on them and we'd appreciate it and move forward if Mister Tercott. Speaker Change: Mister Chairman, one of the vendors that's working with DOA did call me and offer to present results of some tests that they've done. What I might suggest, mister Chairman, at one of our future meetings have that vendor in to talk about results that they had from the test that they--

Speaker: And I haven't seen it, I don't know what's in it, I don't know whether the device’s were effective or not, but the vendor did call in fact last week, i think there may have been some word about this effort. Speaker Change: We could then turn into one of our committee bills perfect, let's get that on our agenda. Speaker Change: Yes sir. Speaker Change: Great. Speaker Change: And if possible invite them for the next meeting. Speaker Change: Yes sir. Speaker Change: Any further comments? being none, as I said, these bills are open for introduction by members and we hope you will take advantage of that an we'll work on this one as part of a committee study. Speaker Change: Right. Speaker Change: Thank yoU Senator Bingham. Moving on now to PED report on elimination of personal services contracts. Miss Con--coo--....I apologize for my lack of pronouncing ability. [pause] Speaker Change: Good afternoon Mister Chairman and members, my name is Meg Kunyi [SP] and I am a program evaluator with the Program Evaluation Division. Today I'll present a report; North Carolina should eliminate the use of personal services contracts in favor of using existing mechanisms. My presentation should take about 30 minutes after which I would be happy to answer any questions at the direction of the chair. You should have ion front of you a copy of today’s report and todays slides. Sean Hamil and Doctor Pamela Taylor join me on this evaluation team. We wanted to acknowledge the excellent cooperation we have received from all North Carolina state agencies and University of North Carolina constituent institutions, particularly the Department of Administrations Division of Purchasing Contract, or PNC. The Office of Information Technology services are OITS, the Office of State Budget and Management are OSBM and the Office of State Human Resources or OSHR. Our evaluation examines the states use of personal services contracts, which administrative code defines as services provided by a professional individual on a temporary or occasional basis, including those provided by a doctor, dentist, attorney, architect, professional engineer, scientist, or performer of the fine arts and similar professions. As you'll hear during this presentation, this definition means different things to different agencies. our report has five findings. First, agencies have circumvented state law when procuring personal services and have also compensated contractors at high rates. Second, the state reporting requirement fails to capture the magnitude of the use of personal services contracts. Third, executive branch agencies have violated state law by not obtaining approval for IT personal services. Fourth, the lack of a shared definition and process for personal services contracts has led to erroneous procurement, classification and reporting. Finally, personal services contracts are unnecessary when existing mechanisms with greater oversight could be used. To address these findings, the general assembly should prohibit the use of personal services contracts, require all executive branch agencies to obtain non-IT supplemental staff through the Office of State Human Resources, and require state IT purchase to approve the procurement of IT personal services contracts from individuals. I will not provide some background information on the use of personal services contracts and state government and how it fits into North Carolinas overall structure of purchasing and contracting. In North Carolina, central purchasing authority for all executive branch agencies are vested in two entities; the department of administrations division of purchase and contract, which oversees the procurement of non-IT goods and services, and IT strategic sourcing within the Office of Information Technology services which oversees the procurement of IT goods and services. These agencies establish procurement rules and ensure compliance with these rules. In general agencies must obtain approval of state purchasing to enter into contracts for goods and services over 25 thousand dollars. However, administrative code exempts agencies from having to obtain approval from state purchasing for personal--

Speaker: Services contracts, no matter the dollar amount, although personal services contracts allow agencies to acquire short term services without creating permanent positions, or obtain services that might be difficult to recruit for state positions, all of this is done without comprehensive state over sect. The personal services exemption allows agencies to solicit personal services contractors in any manner, including, by sole source without competitive bidding, select a vendor based on internal criteria, negotiate the duration, terms, and amount of the contract, and execute the contract without higher level state revue or approval. Because of this latitude agencies are susceptible to misusing personal services contracts. Our evaluation resulted in five findings; first, agencies have circumvented state law when procuring personal services and have also compensated contractors at high— State law requires executive branch agencies to obtain approval from the Governor and State Purchasing prior to procuring non-IT contracts for consultant services. Consultant services are provided by individuals with specialized knowledge who provide counsel, review and analysis. According to administrative code, a personal service may also be a consultant service, thus even though administrative code exempts personal services from higher level review agencies must follow consultant law if a personal services contract is of a consultant nature. We identified 12 personal services contracts of a consultant nature subject to the approval of state purchasing and the Governor in fiscal year 2013. However, none of these consultant contracts were submitted for approval as required by law. Also, state law requires that retirees returning to work for the state adhere to earning limitations in order to receive state retirement benefits and have their earnings reported each month to the Department of State Treasure by the Agency of Re-employment. We determined that three retirees who performed contracted services in fiscal year 2013 received retirement benefits even though they exceeded their earning limitation. in addition, only one of twelve retirees re-employed through personal services contracts was reported accurately for every month required and six were not reported at all. Currently the Department of State Treasure does not have a way to verify whether agencies are accurately reporting re-employed retirees, but it plans to develop a compliance team to address this issue. In addition to violating the law, agencies have compensated personal services contractors at states exceeding the highest paid state executives. Although state law does not limit the dollar amount agencies can pay for personal services, a state procurement objective is to acquire suitable services at the lowest possible cost, while ensuring open competition. In order to calculate an annual equivalent salary for personal services contractors, we took the contract amount and divided it by the number of hours worked to get an hourly rate, and then we multiplied that rate by two thousand hours, or 50 weeks of work. We found that from fiscal year 2010 to 2013, agencies compensated over 250 personal services contractors at an hourly rate that, if they had been paid all year, would have been equivalent to an annual salary greater than 164,150 dollars which was the average of the highest paid state executives in state government in fiscal year 2013. Our second finding is although reporting requirement for personal services contracts is the state’s primary mechanism to monitor use, it fails to capture the magnitude of the number and cost of personal services contracts and provides insufficient oversight. Since 2001, state law has required agencies of all three branches of government to report the use of personal services contracts with annual expenditures greater than 25 thousand dollars. OSBM then compiles an annual report on the type, number, duration and cost of personal services contracts. The exhibit seen here shows the number and total dollar amount of personal services contracts reported from fiscal year 2008 to 2013. In fiscal year 2013--

Agencies reported a total of 462 personal services contracts totaling over 28.7 million dollars. Although the number of contracts reported to OSBM has declined each year since the 2008 recession, the amount spent on personal services contracts increased 14% from Fiscal Year 2012 to 2013. This indicates that agencies have spent more for a fewer number of contracts. OSBM reports on the number and dollar amount of contracts each year but it does not analyze trends in the use of personal services contracts, or question agencies on any observable changes in use or on the data they provide. Moreover, although directed to report on the effectiveness of personal services contracts, OSBM has not done so since March 2010. In addition, we found that the current reporting requirement does not provide an accurate picture of the use of personal services contracts statewide. To understand the magnitude of personal services contracts captured by the reporting requirement in Fiscal Year 2013, we requested each agency report the number and total dollar amount spent on personal services contracts for less than $25,000 not reported to OSBM. Although state agencies procured almost 15,000 personal services contracts, the annual reporting requirement captured 3% of these contracts and less than half of the 57.8 million dollars procured. Our third finding is: Executive Branch agencies have violated state law by not obtaining approval for IT personal services contracts and OITS lacks the process to ensure compliance with the law. Although administrative code exempts IT personal services from the approval of State IT purchasing, the General Assembly enacted session laws in 2011 and 2013 to make it a requirement for agencies to obtain approval prior to procuring IT personal services in any amount. The current review process is designed to prevent agencies from procuring personal services when they could be provided by State employees or through the IT short term staffing program which provides staff to meet short term service needs in categories such as software coding and integration at market competitive rates. This statutory requirement will expire at the end of this Fiscal Year, at which point administrative code will once again exempt IT personal services contracts from higher level approval. Although State law required agencies to obtain approval for IT personal services during Fiscal Year 2013, we found that 95% of the IT personal services contracts over $25,000 were not approved by state IT purchasing. As a result nearly 1.7 million dollars was spent without the required approval. At this time, State IT purchasing lacks a process to ensure agencies follow the law. Although administrative code grants it the authority, it did not conduct any compliance reviews during Fiscal Year 2014 and has no plans to do so during 2015. Our fourth finding: The lack of a shared definition for personal services contracts has led to erroneous procurement, classification and reporting. Recall that administrative code defines a “personal service” as a service provided by a professional individual on a temporary or occasional basis. Based on this definition we determined that a personal services contract should meet all of the following three criteria. First, the individual should be an independent contractor. According to the IRS no employer/employee relationship can exist between the payer and the independent contractor. This means the State can direct the result of the contractor’s work, but not how that work gets done. Second, the contract duration is for a temporary or occasional basis. A temporary basis is typically understood as continuous work that lasts less than a year. An occasional basis is understood to mean infrequent periods of time throughout the year or for the duration of a task. Third, the individual should have unique professional skills that can only reasonably be performed by that individual. On this slide, you’ll see the different ways in which agencies have defined and used personal services contracts. Many of the arrangements do not meet the criteria I just laid out.

For example, one agency contracted with a university instead of an individual and called it a personal services contract. Other agencies define supplemental staff as personal services contracts. Supplemental staff are not independent contractors, but have temporary employments of an employer/employee nature. Also, agencies have procured services that do not require a particular individual to perform a specialized service such as general administrative report. Further complicating matters, PNC, OSBM and the Office of State Controller provide inconsistent direction on the definition of a personal services contractor and whether a personal service is with an independent contractor or of and employer/employee nature. Agencies have also procured services from the same individual for two to four years in a row rather than on a temporary or occasional basis. Approximately 21% of the personal services contracts reported to OSBM from 2010-2013 were for one year or more of full time work rather than temporary work. When agencies contract with the same individuals for the same service year after year, it raises questions as to whether the service should be competitively bid or whether it would be better to have a state employee perform the service. Finally, our fifth finding is personal services contracts are unnecessary because existing mechanisms with greater oversight allow agencies to procure services from individuals on a temporary or occasional basis. Given the misuse of personal services contracts described, we identified several ways agencies could procure temporary services from individuals through mechanisms other than personal services contracts without losing purchasing flexibility. To do so we recategorized the 462 personal services contracts over $25,000 reported to OSBM in fiscal year 2013. Approximately 34% of the personal services were procured by the judicial and legislative branches and the University of North Carolina system, all of which are permitted by state law to have separate purchasing policies and procedures. The other 66% were procured by executive branch agencies, excluding University of North Carolina constituent institutions. We recategorized these personal services based on the scope of the work, deliverable and the individuals performing the service. First, 6% of the personal services contracts were recategorized as IT service contracts. If OITS determined the requested service from an individual couldn't be billed through its short-term staffing program or by a state employee, it could direct agencies to use the process for an IT service contract. Second, 5% of the personal services contracts could've been processed as non-IT service contracts which are subject to the approval of state purchasing. Third, 8% of the contracts were consulting contracts, subject to the approval of PNC and the Governor. Fourth, almost 1/3 of the contracts could've been billed through the Office of State Human Resources Temporary Solutions Program. The program operates like a short term staffing agency and retains professionals from various occupations such as administrators, accountants and truck drivers. State agencies can use the program to fulfil staffing needs during peak production and transition periods. Finally, 15% of the contracts were recategorized as supplemental staff because the services were of an employer/employee nature and could not be filled through temporary solutions. In the next couple of slides, I'll take you through how oversight entities will be affected if executive branch agencies had used these five mechanisms instead of personal services contracts over $25,000 they reported to OSPM in fiscal year 2013. Since state law already requires OITS to approve the procurement of IT services from individuals, its responsibility would remain the same. However since only one IT personal services contract reported to OSBM was approved in fiscal year 2013, OITS should expect to annually review approximately 25 more requests over $25,000. Next, PNC would see only a minimal increase in workload if agencies were required to go through the process for service contracts when acquiring services from

Speaker: Individual independent contractors. This means it would have to review and approve approximately 22 more service contracts a year. In regard to consultant services from individuals, PNC and the Governor will continue to review requests as before. They should expect review approximately 36 more consulting contracts each year if agencies follow the proper approval requirements, which as stated they have failed to do in the past. Without the option of using personal services contracts however, agencies would have clear instruction that all non-IT consultant contracts must be approved even if they are with individuals. Approximately one third or almost 150 of the personal services could have been provided through Temporary Solutions. Temporary Solutions has processes in place to ensure staff are appropriately classified and compensated. We found that the state could have saved almost one million dollars in fiscal year 2013 if all executive branch agencies had used Temporary Solutions instead of procuring personal services contracts. Executive order four issued in February 2013 now requires cabinet agencies to employ supplemental staff through Temporary Solutions but it does not require the participation of counsel of state agencies. If the general assembly required all executive branch agencies to submit requests for supplemental staff to the Office of State Human Resources, the state would have greater assurance that temporary staffing needs were filled with the best qualified individuals for the most competitive rates. Finally, approximately 70 of the contracts were categorized as supplemental staff. Aside from requiring agencies to give a staff a break after 11 consecutive months of work, the Office of State Human Resources has no other policies governing agencies used or compensation of supplemental staff hired directly by the agency. The implementation of guidelines could help the state streamline and monitor the use of supplemental staff. Based on these findings we have three recommendations. Because agencies are misusing personal services contracts and agencies can acquire services from individuals through existing mechanisms with greater oversight, the general assembly should prohibit agencies from using personal services contracts. Therefore, PNC and OITS should update administrative code to remove the references to personal services. Moreover, the general assembly should direct state purchasing to modify procurement manuals, to reflect the changes in the law, and notify agencies of the changes. Lastly, the general assembly should repeal the statutory reporting requirement of personal services contracts. To be clear, prohibiting personal services contracts would not take away an agency’s ability to respond to immediate, short-term or unique service needs. Sometimes procuring a service with an individual independent contractor is the best and most efficient way to procure services and perform agency operations. That is why we recommend simply redirecting agencies to use the existing process for a service contract when procuring services from individual independent contractors. This would streamline the process and provide more state oversight. It would also prevent agencies from using the problematic term, "Personal service." as a catch all for all service needs. In addition, agencies would maintain purchasing flexibility. For non-IT services from individuals under 10 thousand dollars agencies would not have to go through state purchasing. Over this amount the agency could request a sole source justification if the individual has unique qualifications. Another option is to request a special delegation if an ongoing temporary or occasional service is necessary to perform agency functions. Moreover, agencies can obtain verbal approval from state purchasing when they need services in an emergency situation. Our second recommendation is the general assembly should require all executive branch agencies, including counsel of state agencies, to obtain non-IT supplemental staff through the Office of State Human Resources Temporary Solutions program. If an agencies supplemental staffing need cannot be met through Temporary Solutions, the --

office of state human resources should direct agencies to hire supplemental staff. Accordingly, the general assembly should direct human resources to develop policies to guide how agencies hire and use supplemental staff and to perform periodic audits to ensure agency compliance. Lastly, for all uses of temporary solutions and supplemental employment, human resources should be required to report biannually to the general assembly and staff. Finally, or third recommendation is the general assembly should enact legislation to require OITS to review and approve service contracts with individuals. Because session law 2013 360 is set expire at the end of this fiscal year, the general assembly should codify the law. This codification would continue state oversight and require agencies to obtain approval from OITS and OSBM prior to procuring IT services from individuals. This codification should include several modifications. First, the language referring to personal services should be modified to read "service contracts with individuals." In addition, OITS should be directed to conduct regular compliance audits and prepare a biennial report. In summary, we found that agencies have violated state law when procuring personal services, that the state provides insufficient oversight of the use of personal services contracts and personal services contracts are unnecessary when existing mechanisms can be used. To address these findings, the general assembly should prohibit the use of personal services contracts, require all executive branch agencies to obtain non-IT supplemental staff through the Office of State Human Resources, and require OITS and OSBM to approve the procurement of IT services with individuals. As members of this committee, you have a few options in response to the report. You can accept the report, refer it to any appropriate committee, and/or instruct staff to draft legislation based on any of its recommendations. This report, which includes a consolidated response from OSHR, OSBM, and the Department of Administration is available on our website and each entity has a representative hear to answer any questions you might have. At the back of our report you can also find a listing of the personal services reported to OSBM in fiscal year 2013. Mr. Chairman, I'll now take questions at your direction. [SPEAKER CHANGES] Thank you very much, Ms. ??. You'll also note in the report that there was a response from one of the agencies, okay all the agencies. We do have here as well someone from the Department of Administration that may wish to add something before we open it to the committee for questions, comments, etc. Does someone from DOA want to comment? Seeing no desire for anyone to comment. The desire of the chair is that we have some discussion. We can vote to accept or not. We can vote to have a legislation drafted but I really don't want us to take specific action, move forward, until we've had an opportunity for you all to conjutate on it and we'll come back next meeting for action, if there is going to be action by the committee. So you have an opportunity to think about it, talk to whomsoever you wish, hear from others, and then we'll see about some action. So first we'll start with questions and comments from the membership. First was Representative Dollar. [SPEAKER CHANGES] Thank you, Mr. Chairman. If I had made a recommendation today it would be to reject the report, frankly, and that's nothing personal, it's just that my long experience in and out of state government, there are several things that I see quite problematic in here. One of them is running all this stuff through temporary solutions. They are wholly inadequate for the task. There's no question that one can come up with more than one personal service contract that shouldn't have been signed or was ill-advised or ill-supervised. Those things go on, and it's also true that broader questioning of contracting in the state of

North Carolina is something that needs quite a bit of work, frankly legal work, but that's kind of a broader issue. We expect these agencies, if you think about it, you just take the three largest agencies we have, if they were actually independent businesses, they would be among the five or six largest businesses in the state of North Carolina. Nobody's as big as Walmart but you start coming down from that and you're talking about the size entities that we're talking about and I would not want us to say, "Okay, you're no longer can do personal services contracts." Not that there's certain things that shouldn't be tightened or you've got to go through Temporary Solutions, which is wholly inadequate for the size enterprises that we're talking about. So I think there's significant questions there. I think if we did anything, what we probably ought to do is to take the concerns that have been raised and go to the agencies, both council of state as well as cabinet agencies, as well as the university system, and say, "Okay, we have these concerns, let's put a consortium together and let's come up with some workable recommendations for fixing those problems that have been identified and possibly other problems with personal services contracts." I think if we attempt to dictate along the lines of the recommendations that have been made, we're just making problems much, much worse in state government. [SPEAKER CHANGES] Senator Pate. [SPEAKER CHANGES] Thank you, Mr. Chair. I believe the governor, the other night, was speaking on his state of the state address about wanting to see information technology services become its own department or separate operating agency and I wonder how that might impact the findings in this report. [SPEAKER CHANGES] One more, Senator Hise, hold on, Senator Tarte, you're next. [SPEAKER CHANGES] Thank you, Mr. Chair. A couple comments, first of all I would absolutely echo Representative Dollar's position. There's no way I would accept this as written right now. We've got a lot of work and questions. It strikes me that first, is how do we find a balance in accountability so these abuses don't continue to occur, at the same time avoid adding just layers and layers of bureaucracy that slows down the process. There's many things in this report that are troubling. First of all, we make this statement that we have violated state law, that in and of itself, I would love a list of what actual violations, who and what dates, and what are we doing about pursuing violations of law? How they occurred, is that a lack of knowledge of the rules or is that willful noncompliance and those are very significantly different issues, if we have that occurring. I also, like Representative Dollar, to say that we're going to absolutely not allow and we're going to prohibit these types of arrangements. It's hard to believe they're never appropriate, based on the speed to contracting verse normal RFP type processes. The other thing that struck me in this as well is that if you look at is it appropriate that the purchasing contract division is absolutely appropriate place and are they even capable of taking on this work, particularly IT, with them hiring general counsel. If you look at past state contracts, the IT, I believe we have something, and I'm going to recall this and I'll be wrong, but approximately 74 IT contracts that were 100% over budget and 50% past their due date and I would assume a lot of these and other contracts were through the PNC. I don't think they have a demonstrated track record to deliver and perform in this area and I'm not sure, as an example, with the NC Tracks contract and talking with one of the partners from Computer Science Corporation, as he stated to me, why should the vendor be penalized for writing a completely one-sided contract that is to their advantage? If we don't have expertise to negotiate that kind of contract, we are in grave trouble to be able to enforce this. That's just the start of where this goes. I think there's things we absolutely need to do in this. One of the last comments to make is the perception on slide 22 where we have the general assembly, the judicial branch, and the university system not subject to this, only the executive branch, it sure has a bad perception that everybody else has to apply to the rules but us. I'm not sure that's appropriate as well, so lots of questions, this is absolutely, we've got these kinds of issues going on it needs to be addressed but

I'm not sure this has got the answers. [SPEAKER CHANGES] Next is Senator Hise. [SPEAKER CHANGES] Thank you, Mr. Chairman. A couple things just to get out. I think that when we've come out with a realization, and this isn't new to this committee report, it's been in the newspaper all year and others, that agencies have circumvented and violated the state law to procure personal services contracts, then response from the General Assembly is necessary that's coming forward, and I think we need to take some time to get that right, but we've seem some large indications of, and the number one reason often given is speed. We wanted to do it cause it was faster. We can't wait for OSHR or OSIT to actually approve this or others and a lot of these as they've shown are high dollar contracts going to individuals that come in and we wind up with situations where we doing build the state personnel necessary to operate systems in government, we send it out to contracts and when the contracts are terminated we have nothing to go back to and we wind up in a negotiating position to extend that contract again for sometimes twice as much money for another period. So these are things that are difficult on us, on the state. I think there is also an issue here with OSHR purchasing contract, OIPS, there needs to be strict timeline given that they must respond with answers to agencies. There is no reason you should be putting in a request for a reclassification of a position and waiting 60 days to get it done before you can hire the individual, before you can post the job, before you can then go out and go through the interview process and try and bring an individual into state government. When that takes that long there's a push on state agencies to say oh, well we can just do this as a partial service contract and we can have someone in here in two weeks. So we have government bureaucracies that are forcing agencies to go around state law and others because they have to function and operate, so I think there's two sides of it that are there, but I think we're going to have to approve some efficiencies in the approval process, put some things in place, but you can't, I don't care what the law is or how inefficient it is, you can't have people just pop up and say this isn't working for me let's try something else. That's not the nature of state law. [SPEAKER CHANGES] Thank you. Representative Hurley. [SPEAKER CHANGES] Thank you, Mr. Chair. I was just looking at, and as co-chair of Department of Public Safety, I just wanted to know, there are several pages here. Can you give me examples and if they are doing this and they're not notified that once they did it one time there's not a trigger there to let them know wait a minute, you shouldn't be doing this? Is there not, is there training at all for the agencies? [SPEAKER CHANGES] Currently there is contract training for agencies, but it's optional to answer that question and in regard to all of the Department of Public Safety contracts, many of those are actually supplemental staff that were erroneously reported as personal services contracts. So they actually have a different definition of personal service as somebody who's not an independent contractor which is most of the other agencies defined them as with independent contractors. [SPEAKER CHANGES] Follow up? No? Any further comments or questions at this point? I would like to commit PED for moving forward on this. We knew need, this is something we've got to address. I don't think anyone in here would disagree with that. There's been abuses. There's been problems. We knew this was not gonna be a simple process of a couple of bills and everything's find and dandy. We will get plenty of input I'm sure from agencies that want to talk to us individually as well as possibly come back and make some comments to our committee. I don't wanna see this go away nor do I think that it should, but there's apparent feeling on the committee that we need to proceed carefully. With that I'd like to call on my Co-chair Senator Hartsell. [SPEAKER CHANGES] Thank you, Mr. Chairman. I'd like to put this in a little context if I might. We've been looking, this committee has been looking at the issue of state contracting, the personal services contracting, that sorta thing for at least five years that I know of trying to get at least something where we have some oversight and management of those and some legal review. The issue, and this situation seems to me is not what it was

reject the report, with all due respect, it's a question is whether we reject some of the recommendations from the report. The report is a statement of what has been discovered and we may not like some of the recommendations and, in fact, it's interesting, I note that the governor's office has actually accepted some of these and they approved some of them. So I'm not sure, I acknowledge that many of these departments are larger than many corporations in North Carolina but those corporations also have people who have lawyers who review these things and we, apparently, have had limitations associated with that because all this started when we've discovered that we didn't have anybody who had, we couldn't even get a copy of the state health plan contract from the vendor and we couldn't review it and nobody looked at it and that was at least five years ago and so we started, and sort of perpetuated some of the things we're trying to clean this up. So, Mr. Chairman, I would liek to ask that we at least accept the report and then work ont he recommendations because I think the complaints and I think many of them are legitimate, please dont' misunderstand me that we might we need to look back and review some of those recommendations in the context of what has been suggested here today. So I would move we accept the report. [SPEAKER CHANGES] A motion has been made to accept the report as presented. We can then move on to how we deal with the recommendations but first, motion on the floor to accept the report as presented. All those in favor say aye. All those opposed no. The aye's have it. The report is accepted. Now, from here, Representative Hise, or excuse me, Senator Hise, I didn't mean to promote you. [SPEAKER CHANGES] Mr. Chairman, I know we've got a lot of questions about where were going with this and I think ?? time the best may be to get a group together and put us a subcommittee to work with the group to develop legislation and hopefully have it ready for us at the next meeting, something we can consider, but we've got a lot of viewpoints here and drafting legislation's not that far outside our wheel well. [SPEAKER CHANGES] I couldn't agree more with that, without objection we'll appoint a subcommittee of three of us, perhaps you would be willing to serve, Senator Hise? [SPEAKER CHANGES] We would ask the Senator, Representative Dollar also. [SPEAKER CHANGES] I was going to ask Representative Dollar if he'd be willing to serve. Senator Tarte, would you be willing as well? And we need one more from the house and I would ask, Reprsentative Saine has volunteered so we have four members, two frmo each house, to participate on the committee to take a look at this, come back to us at the next meeting on what recommendations they would have for action, right? Thank you very much, very much, for your patience and your presentation, and now we move on to Ms. Neno. [SPEAKER CHANGES] Okay, good afternoon Mr. Chairman and members of the board. My name is Sarah Neno and I am a senior program evaluator in the Program Evaluation Division. Today I'm presenting a report entitled "Implications of Funding, Alcohol and Substance Abuse Treatment or Prevention With Alcohol Tax Earmark." This presentation should take approximately twelve minutes, after which I would be happy to answer your questions at the direction of the chair. The report and slides are available online. I served as the project lead for this study with key contributions from Brent Lucas and Carol Shaw. We want to acknowledge the assistance and cooperation we received from the Alcoholic Beverage Control Commission and the department of health and human services. During today's presentation I'll be referring to the Department of Health and Human Services as DHHS and to the Alcoholic Beverage Control Commission as the ABC Commission. The 2014 budget bill directed this committee to consider examining the benefits and disadvantages of redirecting a portion of the alcohol tax revenue from DHHS to the ABC Commission. In September 2014, the committee voted to add this item to our work plan. Unlike most program evaluation studies, this report does not include findings and recommendations

Speaker: But instead is structured to provide information about how DHHS uses the alcohol tax earmark, the ABC commissions plan to fund its new underage drinking prevention program, and potential changes that could make the ABC commissions program more effective. The ABC commission is a receipt supported agency administratively housed in the department of public safety. The commission is responsible for controlling all Aspects of alcoholic beverage distribution and consumption. Last year North Carolinas ABC store sales generated approximately 330 million dollars in tax revenue for state and local governments. In Fiscal year 1314, local ABC boards, county commissions, and DHSS received 14.7 million dollars for alcohol and substance abuse treatment, education and research. So the local ABC boards here, they receive 10.6, county commissions received 2.7, and DHHS received 1.4 million and that earmark there is the subject of this study today. This study was prompted by a question from the ABC commission from the general assembly to redirect this existing 1.4 million dollar alcohol tax earmark away from DHHS and to give it instead to the ABC commission to partially pay for the continuation of a new underage drinking prevention program called "Talk It Out." After PED embarked on the study, the ABC commission approved an increase in the bailment surcharge to pay for the underage drinking prevention program and no longer needs the DHHS earmark. Although the ABC commission has resolved this funding issue, the general assembly may wish to consider a few actions. First, consider directing the ABC commission to develop well designed goals and targets, to gauge the success off the Talk It Out program. The general assembly also may consider improving oversight for the Talk It Out program and requiring formal coordination with other state agencies. I will now talk about how DHHS uses the alcohol tax earmark. As stated earlier, each year DHHS receives approximately 1.4 million dollars in earmarked funds. DHHS distributes these funds among nine regional local management entities, manage care organizations. These organizations have contracts with local providers to supply treatment services to individuals with alcohol and substance use disorders. The earmark provides care for approximately 290 people each year at an average cost of 4800 dollars per person. Loss of the earmark would affect DHHS in two ways; first DHHS would immediately lose 1.4 million dollars from their budget for alcohol and substance abuse treatment. Second, the alcohol taxes earmark is part of North Carolinas Maintenance of Effort, or MOE, for the Federal Substance Abuse Prevention and Treatment block grant, and maintenance of effort is a requirement that state funding for substance abuse, prevention and treatment programs is sustained at its existing level. Any reduction in the alcohol tax earmark would result in a dollar per dollar reduction in the federal block grant, or another 1.4 million dollars, so if the alcohol tax earmark were redirected to the ABC commission, DHHS would lose a total of 2.8 million fewer dollars to spend on alcohol and substance abuse programs. Now I will discuss how the ABC commission will continue funding its underage drinking prevention program. The Talk it Out program was launched in December 2014 and it consists of a variety of vivid TV, radio and social media advertisements that seek to raise awareness about the dangers of underage drinking and to encourage parents to discuss the issue with their children. you may have heard or seen a talk it out message on your local station; talk it out is the first large scale underage drinking prevention program that the ABC commission has undertaken. DHHS is supportive of the Talk It Out program and believes that it may be complimentary to their own prevention efforts and that it does not duplicate any existing state prevention programs. By devoting resources to the Talk It Out program, the ABC commission has more than tripled the amount of s--

State funding used for alcohol and substance abuse prevention. And we thought you might want to see clips, so we included a clip today. [SPEAKER CHANGES] It's gonna be chilly today. I'm gonna have to bundle you up when we take our walk. You want something to eat? I'm all ready for you. What about some mashed bananas, huh? It's your favorite. [SPEAKER CHANGES] It's never too early to talk to your kids about the dangers of alcohol. [SPEAKER CHANGES] Look what I have for you. Okay. [SPEAKER CHANGES] But it can be too late. [SPEAKER CHANGES] Just a little more [SPEAKER CHANGES] Today's the day to start the conversation and stop underage drinking. Talkitoutnc.org [SPEAKER CHANGES] So clearly you're not gonna forget something like that when you see it. The ABC commission is supported by a bailment surcharge that is added to the cost of liquor that is sold in ABC stores. Today, the ABC commission has spent about $2.3 million of its cash reserves on developing the talk it out program, and that's been spent primarily to hire administrative staff and to purchase advertisements. The ABC commission estimates that in the future it will cost approximately $3 million a year to operate the program. In December 2014, the ABC commission voted to increase the bailment surcharge from 80 cents to $1.40 per case of liquor to fully pay for the program. I'm now gonna talk about measures that the general assembly may wish to consider to improve the ABC commission's efforts. PED's review of the talk it out program revealed the lack of specific, well designed goals with which to measure program efforts and a lack of targets to measure progression towards the accomplishment of stated goals. Well designed goals specify the outcomes or results the program hopes to achieve and dates by which outcomes should be accomplished. Similarly, targets provide milestones towards reaching an overall goal and indicate how well program efforts are achieving a specific goal. PED reviewed eight stated goals of the ABC commission's stated efforts, and each of them could be better designed. For example, one of the ABC commission's current goals is to increase the number of parents discussing underage drinking with their children. As you can see, this goal is missing numerical indicator to quantify success, and also is missing a completion date. The PED example below shows what a well structured goal would look like. By December 2016, the percent of parents discussing underage drinking with their children will increase by 25%. This additional information is important for the ABC commission and for legislators to know in order to gauge how well the program is accomplishing its stated goals. The talk it out program is entirely funded, staffed, and developed by the ABC commission. In August, the governor's substance abuse and underage drinking prevention and treatment task force will receive a report on the talk it out program's activities. However, the task force has no oversight or evaluation functions. Talk it out is modeled after a well established program in Utah called parents empowered. Utah's parents empowered program is managed by an interagency council that approves all program and expenditures, all programatic, you know, decisions and expenditures, and receives an annual report on the use of funds, program impact, and other results. During interviews with PED staff, Utah officials stated that this coordinated oversight helps agencies avoid working in silos and reduces duplication of effort. The ABC commission has engaged in initial outreach efforts with local and state agencies to provide them with information about the talk it out program, to explore areas of commonality, and to learn about other prevention programs. However, there is no formal requirement that the ABC commission coordinate activities or communicate with other state prevention programs. Formal coordination with other state agencies may leverage the state's existing expertise in the development, implementation, and measurement of alcohol and substance abuse prevention programs. During the course of preparing this report, the program evaluation division suggested that the ABC commission and DHHS consider developing a voluntary

memorandum of understanding. Such an agreement would dilineate how the agencies will coordinate and collaborate on alcohol and substance abuse prevention issues in the future and may address such issues as strategic planning, communication, use of resources, and outcome measurement. Originally, the ABC Commission sought the $1.4 million dollar alcohol tax earmark to support its new underage drinking prevention program. The ABC Commission raised its ?? surcharge to fully fund the Talk It Out Program and no longer needs DHHS's alcohol tax earmark. The general assembly may consider directing the ABC Commission to develop Talk It Out Program goals and targets and improving program oversight and coordination with other state agencies. As members of this committee, you may accept the report or refer the report to any other appropriate committees. DHHS and the ABC Commission have reviewed a draft of this report and have representatives here today to answer questions. This report is available online and includes comments from both agencies. This concludes my presentation today. I'll be pleased to answer any questions committee members may have at the direction of the char. Thank you. [SPEAKER CHANGES] Thank you very much. Are there any questions from members of the committee? Representative Hurley. [SPEAKER CHANGES] I don't really have a question, I just want to say I was at the, when they started this and at the school where the students were and the students saw the very graphic ads, which really does make you think, and they are attention getting when you're watching television. And I know this is not the funding that they they're going to be using but the JPS Oversight Committee could oversee anything that they do and I just, with this report, I mean that's what I understand, because they're under us, the ABC Commission. So with that said, I just... [SPEAKER CHANGES] I'm sorry, I got lost here for a second. Did you ask her a question? [SPEAKER CHANGES] No. [SPEAKER CHANGES] Any other questions? Senator Hise. [SPEAKER CHANGES] One thing I want to say on these. First of all, I'm glad we're off the block grant funds for the solution for this because taking away the matcihng funds for treatment, you know, two-to-one damage kind of coming out but the other concern I have and I think there is some oversight, I think goals are necessary and outcomes, I think they need to have an understanding of baseline of how many parents are having annual conversation and then we can look at this program and see where theyi move. Similar smoking programs across the nation have had very questionable results as to whether they've had any impact on actually reducing teen smoking or others, as impactful as the ads have been and shocking, we don't knjow if they move the needle. That's kind of coming in. One of the other requirements I think that needs to be there is if we're going to spend money on this purpose then we need to make sure its only spent on the purpose of promoting or reducing teen drinking or encouraging parents to do that. You need to kind of set those parameters. We've also seen in other programs when they have a legislative source of funding, they sometimes like to switch that advertisement to start saying contact your legislator and others to make sure we continue to get our funding as they move forward. There's one prominent that's kind of done that so I tihnk making sure that that's there focus and that's there direction and that's what they're approved to spend on may be important. [SPEAKER CHANGES] Thank you, Senator Hise. I recognize that Mr. Jim Gardner from the ABC, Chairman of the ABC Commission is here, would you care to comment at all on this, Mr. Gardner? Does anyone in the committee have questions for Mr. Gardner? Nope. Hey, hey, hey, we like that. So I suspect that, oh, I'm sorry, I'm sorry Representative Lucas, please. [SPEAKER CHANGES] No, it's not actually a question, it's just an observation, sir. [SPEAKER CHANGES] Okay. [SPEAKER CHANGES] I appreciate this report and it's a great need for the continuation of this, especially as it relates to parental advice on prevention. In my area, we've had a proliferation of parental promotion of teenage drinking

Organized parties that have really led to violence, and kids been killed as a result of this. And I just think that we, we, really need to hone in on this. [SPEAKER CHANGES] Thank you Representative Lucas. I'm, I hear parents frequently relieved to hear their kids are just drinking instead of just doing drugs and I'm thinking, you don't get it. There's, there is a significant problem, no question. Representative Dollar. [SPEAKER CHANGES] Just really briefly, I think that, and I'm sure I speak for a number of people, that we should commend Governor Gardner for his efforts on this. He's really taken it on as a long term cause to try to do what we can to lower the incident of underage drinking and all of the deaths and violence and other things that are, that adhere to that. And also I think we would be remiss if we didn't thank the industry itself for going along with some of the cost changes there that comes out of, come out of their products basically, because the industry needs to understand that it's responsible and it has a stake in this as well, so I think we should have kudos to both. [SPEAKER CHANGES] Your comments are well received. I couldn't agree more that this, one of those industries that really has stepped up to take their share of responsibility and put their money where their mouth is. No question about it. The, and Governor Gardner I apologize if I was impolite in not recognizing you properly. I, that's the problem with moving here from another state. You don't, I have no history and I'm kinda lost in the wilderness so, what's new about that. Appreciate it. I think the, the right action on this is this goes to appropriations. That's who will be dealing with it, but we'll need a motion to accept the report. Do I hear such a motion? I saw Representative Lucas's hands and, hand up, and thank you very much. All those in favor say aye. Those opposed no. The ayes have it, and we'll send it with a notation on to appropriations. And right now we're down to the, almost to the end. Mister Lucas. [SPEAKER CHANGES] Thank you mister chair. You should have in your packets a couple of pieces of pink paper talking about the overnight respite pilot. My name is Brent Lucas. I'm a program evaluator here with PED. Today I'm gonna provide you an overview of our evaluation of a pilot program for overnight respite at adult daycare facilities. Session law 2011 104 authorized DHHS to conduct a pilot of overnight respite of four adult daycare facilities. The legislation directed us to determine the perceived success of the pilot and the feasibility of continuing it. Adult daycare facilities in North Carolina provide daytime services, often referred to as respite services to the elderly or disabled for caregivers. These services allow caregivers to take time, to take a temporary break from the, from the pressures of providing care. Beginning in late 2011, the pilot allowed four adult daycare facilities to provide overnight respite, to provide respite services at night, which was prohibited before the pilot. DHHS's division of health services regulation administered the pilot and regulated the four pilot facilities. DHHS also regulates other providers of overnight respite care such as skills, skilled nursing facilities and assisted living facilities. If you remember from our presentation in December, our report had four findings. First, participants, caregivers, pilot facilities, and DHHS perceived the pilot to be successful, but only, only one pilot consistently provided overnight respite. In the report, you'll see that our surveys, the surveys we conducted showed that most of the 66 overnight clients and their caregivers were satisfied with the service. However, we found that only one of the four, one of the four pilot facilities consistently offered the service and one didn't offer it at all. Our second finding was that the legislative mandate for the overnight respite pilot and DHHS's implementation of the pilot only met two of the ten recommended components of a well designed pilot program. The implementation of these eight additional, or these eight components would provide ya'll with useful information. Our third finding is that the legislative prohibition against using state or Medicaid funding for overnight respite in adult daycare facilities hindered the effectiveness of the pilot. Although Medicaid's innovations in community alternatives waivers already fund overnight respite at other facility types such as skilled nursing, the pilot's legislation specifically prohibited these sources from being used to fund the pilot. The home and community care Block Grant also couldn't be used as a source of funding. Thus, clients had to pay for the service out of pocket. From our surveys of caregivers

in interviews with staff at the pilot facilities, we found that these funding restrictions hinder the pilot. Our fourth finding was that, although organizations affiliated with respite care have anecdotal evidence supporting the need for overnight respite services, none have empirical data to justify this demand. Since there was no data on this demand for the service, we tried to get it ourselves with our surveys. Our surveys of non-pilot adult daycare facilities show that they estimate about 17% of their current clients across the state would use the service for an average of twenty nights a year per person. Our report also had two recommendations. Our first recommendation was to allow the pilot program to expire on June 1st of this year, asset out in its establishing legislation. Our second recommendation was to require future pilot projects to adhere to standards established by UNC school government. As I discussed earlier, the pilot could have been better designed and implemented by DHHS. With this, we also propose three alternatiev recommendations should the general assembly desire to continue allowing adult daycare facilities ?? respite in the future. Our first alternative recommendation would continue the pilot and it would allow these four facilities to receive state and Medicaid waiver funding for these services. Continuing the pilot in this way could provide more information for you to make a decision later on. Our second alternative recommendation would stop the pilot and would allow all adult daycare facilities to offer the service with the approval of DHSR, but these facilities couldn't receive state or Medicaid funding for the service. Our third alternative recommendation would stop the pilot and allow all adult daycares across the state to offer the service and they could all receive state and Medicaid funding for it. After the presentation of this report in December, the committee requested cost estimates or fiscal analyses of each of your three alternative recommendations. Deborah Landry from Fiscal Research has those analyses ready for you all. [SPEAKER CHANGES] Please. [SPEAKER CHANGES] Good afternoon, Mr. Chair, members of committee. My name is Deborah Landry and I'm with the Fiscal Research Division and I'm a fiscal analyst with that division. I believe the handout you have is pink for these slides also, if you want to follow along. Excuse me while I put on my glasses. I'm not going to go over the alternative recommendation, as Brent just already did that. I would like to go ahead and give you some brief background on Medicaid as it's integral in the analysis of this report. As Brent said, overnight respite is an allowable service but only under a waiver program for Medicaid. North Carolina does have the two waiver programs that currently cover overnight respite, as mentioned by Brent. Innovations in community alternatives program for disabled adults, or CAPDA, as I'll refer to it in the rest of the report. The innovations waiver does allow participants to receive respite in their own home or in a facility and they also, important to this analysis to understand that every individual has a budget under the innovations waiver and services must be provided within that budget. The same goes for the CAPDA program. They do allow in-home and overnight respite in institutions under the CAPDA program and they also, participaints in that program have an established monthly budget and all services must be provided to them within that budget. Therefore, there is no anticipated Medicaid impact if you expanded overnight respite to adult day health facilities. It would just be adding another provider type that could provide respite for Medicaid participants. To go over that, it's because only waiver participants are eligibile, not all Medicaid participants, waiver participants have the set budget, as I had mentioned. All waivers have to have cost, or these particular waivers have cost neautrality and half the number of participants that are eligible each year. They already cover overnight respite in other settings and it would require amending the waivers just to allow the provider to type. Medicaid referred to that as a technical amendment to the waiver. The first alternative was to extend the pilot as it currently exists and if you extended it as it currently existed and allowed Medicaid funding there would be no anticipated Medicaid impact based on what I just went over and also the division of health service regulation, because they're doing it right now already anticipate there would be no additional cost to them. The'yre already assuming it under their current personnel. As we go over the next couple of recommendations it's important to note that the fees and the receipts that were estimated in this are based on adult day health centers being treated just like adult daycare homes, and that would be an initial fee of

Speaker: Fifty dollars, a construction fee which is a separate fee of 250 dollars, and a renewal fee yearly of 315 dollars. The alternative 1b is to discontinue the pilot and allow all adult daycare facilities to offer overnight respite provided they meet the current regulations. You can see on here this is the health service regulations staffing cost estimate, the receipts that are shown here are the licensors fees that we just discussed. So the fees in year one are much higher because they're the initial fee and the construction fee, and year two and the ongoing would be the ongoing receipts. This is estimated that about 70 of [??] would come on board. There's about 101 facilities that are adult daycare or adult day health. If they're going to accept Medicaid it has to be an adult day health facility. We'll talk a little bit more about the home [??] block grant later on which adult daycare facilities could receive that funding. So this includes two nursing consultants, an engineer or architect, and a processing assistant, and this is yearly ongoing cost. The first year is shown higher because of non-recurring costs of personnel when you first hire. I think it's important to note that the pilot legislation required that the adult day health facilities be inspected every six months. Division of House Service Regulation inspects all other facilities yearly, so this is an analysis that if you changed it from the pi lot legislation of every six months, to the normal yearly inspection you would actually need less staff and then there would be less cost for that. So this brings it down to one nursing consultant and one engineer architect, and you can see the cost there. Alternative on 1C says to discontinue the pilot and to allow all adult care facilities to allow overnight respite, and to collect Medicaid receipts. In this case, what changes is the receipts for Adult Health Service Regulations would not only be the [??] but they would be able to get Medicaid administration and training for their staff and they have to do it based on the number of Medicaid recipients that you'd be anticipated in those facilities called a penetration rate that they would have to estimate. So that's the main difference between this and the previous estimate would be the addition of Medicaid receipts. I do want to then this second would be the same issue of going from yearly inspections to every six months. The Home and Community Care block grant is a block grant that's administered through the Division of Aging Adult Services and it goes down to the local area agencies on aging. That block grant currently does provide respite services. They are currently only daytime respite services. You could expand the Home Community Care block grants allowable services to include overnight respite. There would be no additional funding requires, it would just mean that if people decided to do overnight respite it would take away from other services being provided. The Home and Community Care block grant decisions on what to fund within the allowable services admitted at the local level. Every county has a plan for their Home and Community Care block grant, and then it's just administered through the area agencies on aging. They would decide which of the services provide at what level. Just for your information in the last fiscal year they spent about 400 thousand dollars just on respite and again this would be just during the day. And that concludes my report, I would be happy to take any questions at the direction of the chair. Speaker Change: Thank you very much Senator. Any questions from the committee? Representative Dollard [??]? Speaker Change: Just one quick question. So if you took the least cost option in years two, three, four and five and out, that's about 61 thousand dollars which could be covered in the block grant, am I understanding that correctly? Speaker Change: Let me go backwards. So, in alternative 1C would be allowing Medicaid and the licensure fees. Speaker Change: You had a cheaper option. Speaker Change: Yeah, no, I'm sorry. Thank you for pointing that out, I meant to point that out. I need to make a correction and I'll send the correction to PED. Your two should go all the way out; it's just a formula problem in my cell. It should all be 129 all the way out. I apologize for that. Speaker Change: Well, whatever the cheapest option is. Speaker Change: That's the cheapest option would be to allow Medicaid because then health service regulation can pull in Medicaid receipts for administrative and training. It's not Medicaid going out to clients, it's their administration fees.

area for the state's portion. You would have to come up with state dollars, correct? You couldn't use the block grant, or could you use the block grant for that? [SPEAKER CHANGES] That's a good question and I'd have to get back with you on that. Susan, Mr. Chair, Susan. [SPEAKER CHANGES] Susan. [SPEAKER CHANGES] Mr. Chair, Representative Dollar, members of the committee. You are over matched in the block grant with state dollars. So one option would be that you can reduce the amount of money going to the block grant to pay for this service, which would be a net zero impact to your state fund budget, and you would cover that effectively without new state dollars. You'd just be using it for a different purpose. You wouldn't be putting it in a block grant but you'd be putting it in to block grant like services, which would be adult daycare or overnight respite. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Further questions? Being none, I think the action is that this go on to appropriations. We also, I suppose we need to accept the report, so a motion to accept the report. Representative Hurley. All those in favor say aye. Those opposed no. The report is accepted and we'll send it on with any recommendation or evaluation from appropriations, is that correct? Apparently so. One piece of housekeeping, Senator Tarte, as an advisory member of the committee you can't make that motion that you made, so I'm going to have the motion made by Senator Hise, second by Senator Clark, but we'll get you on the bill. Senator Tarte, go ahead. [SPEAKER CHANGES] Mr. Chair, if you can check, I believe I have been added as a full member, but if you can confirm, it's not a big deal right now. [SPEAKER CHANGES] Alright, we'll check, and if you are you are and you be the man. I'm trying to see if there's anything else. We are going to meet again on February, excuse me, March, February 23rd, so we will meet again on February 23rd and hopefully we'll have a report from the subcommittee and that way we make it in under the wire on the current cutoff for submission of bills. Any further business to come before the committee at this point? Seeing none, meeting adjourned at 3:39.