State health officials told the Senate Labor & Commerce Committee on Friday that Alaska risks losing federal rural health funding if the state does not join a multi-state nursing compact by the end of 2027.

Commissioner Heidi Hedberg of the Department of Health said Alaska received $272 million in the first year of the Rural Health Care Transformation Program, the second-highest award in the nation and the highest per capita. As part of the application, Alaska committed to implementing five professional licensing compacts, including the nurse licensure compact.

"If Alaska does not implement these compact licenses by the end of the calendar year 2027, there is risk of losing a portion of the rural health transformation funding," Hedberg said. "The exact amount is not known."

The Rural Health Care Transformation Program, created by Congress through H.R. 1 last year, aims to strengthen Alaska's health care system by improving access, stabilizing providers and advancing care delivery systems, particularly in rural communities.

Sen. Gray Jackson asked about the potential funding loss. Deputy Commissioner Anna Latham of the Department of Commerce, Community and Economic Development explained that because the grant is competitive, states are ranked annually based on progress toward their commitments.

"If we did not, we will have a clawback of funding and then it will impact the future funding," Latham said. "But because it is constantly changing every year, we do not know that exact amount."

The Centers for Medicare and Medicaid Services identified the five professional licensing compacts as key policies for the program. The nurse licensure compact is one of them.

Hedberg said the compact would also address Alaska's severe nursing shortage. During the pandemic, when she directed public health, licensing delays impacted the ability to bring in needed staff when hospitals were under strain.

"The compact could have helped remove those barriers by allowing qualified nurses to practice in Alaska more quickly while maintaining the authority to regulate and discipline," Hedberg said.

Latham said Alaska graduates about 350 licensed nurses each year while facing a shortage of around 1,100 nurses across the state. The department has made the nurse licensure compact its top legislative priority for the past three years.

"The reality is that we are already losing ground, and we want to remove barriers that keep qualified people from practicing where they are needed most," Latham said.

Sylvan Robb, director of the Division of Corporations, Business and Professional Licensing, told the committee that joining the compact would reduce administrative burden on the division. The nurse licensing program requires 13 staff members, including eight licensing examiners, at an annual cost exceeding $3 million.

If Alaska joins the compact, the division would no longer process applications for nurses holding multi-state licenses from other states, since those nurses already meet standards higher than Alaska's requirements. Robb said even eliminating one examiner position would save more than the $6,000 annual compact membership fee.

Sen. Yont asked about the number of nurses licensed in Alaska. Robb said the division licensed approximately 3,500 registered nurses for the first time in Alaska last year. The state currently has just over 26,000 licensed registered nurses and just under 1,000 licensed practical nurses.

Sen. Dunbar asked how many of those licensed nurses live in Alaska. Robb said the division has mailing addresses but does not track where nurses actually live or whether they are working.

The committee also heard from Danette Schloder, chair of the Alaska Board of Nursing, who said the board has unanimously supported joining the compact since 2019. A 2023 survey of all actively licensed registered nurses and licensed practical nurses in Alaska found 92% wanted the state to join the compact.

"Our nurses are telling us loud and clear that they want this policy changed," Schloder said.

Opposition testimony came from Shannon Davenport, president of the Alaska Nurses Association, who said the compact would not address unsafe working conditions, high patient-to-nurse ratios, chronic understaffing and burnout.

"The nurse licensure compact would not fix these issues," Davenport said. "Instead, it would undermine state oversight, divert licensing fees out of Alaska, and make it harder to ensure that nurses practicing here meet the high standards Alaskans have come to expect."

Vicki Berg, chief executive officer of the Montana Nurses Association, testified that Montana has been part of the compact since 2015 but still faces staffing challenges. She said the compact does not create new nurses or improve retention.

"If the NLC truly fixed staffing issues, Montana would be one of the best staffed states in the country," Berg said. "This is simply not the reality."

Katie Capozzi, president and chief executive officer of the Alaska Chamber, testified in support. An Alaska Chamber public opinion survey in 2024 found 86% of Alaskans supported joining the compact, including 84% of those working in the health care sector.

The committee took no action on the bill. Senate Bill 124 would allow Alaska to join the nurse licensure compact, which currently includes 43 states and two territories.