Senate Finance, 5/7/26, 9am

[FOREIGN LANGUAGE] Call Senate Finance Committee meeting to order. Today is May 7th, a couple of minutes after 9:00 a.m., State Capitol, Senate Finance Room. Joining me today, Chairman Steadman, Chairman Olson, Senator Keehl, Senator Merrick, Senator Kaufman, Senator Cronk, and myself, Senator Hoffman. We have quorum to conduct business. Business.

The first item on today's agenda is HB 27, Medical Major Emergencies. This is the first hearing on this bill. Invite Representative Mena to the table to introduce the bill to the committee.

Thank you, uh, Co-Chair Hoffman and members of the Senate Finance Committee. For the record, my name is Genevieve Mena. I represent House District 19 in the legislature, the Anchorage neighborhoods of Airport Heights, Mountain View, and Russian Jack. Thank you kindly for hearing House Bill 27 on major medical emergencies. The goal of House Bill 27 is to modernize Alaska's system for emergency medical services by including time-sensitive emergencies that are strokes and heart attacks.

I have introduced this bill in a previous legislature after having conversations with various physicians and individuals who work in EMS who identified a gap in Alaska's EMS system. And to provide a little bit of background, uh, the evolution of EMS started in the '60s to address a need to respond to trauma care in America. And a strong EMS system, rather than just focusing on ER care, is important for preventing lives by identifying this golden hour where somebody is in a crisis situation where they might have experienced a trauma and ensuring that that person can avoid death by getting that individual to the right person, to the right place at the right time. As part of this movement, the state created the Alaska Office of EMS, and this office has developed Alaska's trauma system of care throughout the '90s and the past few decades by coordinating public and private agencies, funding agencies through federal pass-through grants, and developing training and protocols. This system of care helps create a network to create and connect the methods of providing care between prehospital care, transportation, treatment to home, and supporting hospitals and clinics.

This office has also designated certified trauma centers throughout the state, ensuring that hospitals meet state and national standards for different levels of trauma. However, our modern EMS system has now evolved beyond trauma care, and the golden hour does not just pertain to trauma, but also to strokes and heart attacks. The issue is that in Alaska, we do not have a system of care for these time-sensitive emergencies for strokes and heart attacks. And in 2022, 744 Alaskans died from trauma, but also 217 Alaskans died from strokes, and 510 Alaskans died from cardiovascular diseases such as severe heart attacks. We also have unique challenges in meeting this golden hour due to the rurality of our state, our transportation issues, and issues trying to standardize what the best practices are between coordinating within clinics, hospitals, and EMS providers.

There are now best practices and improved technology for addressing severe strokes and heart attacks and designating stroke centers and severe heart attack centers. But no one is coordinating these hospitals, these provider organizations, and communities on improving this care. What this bill does is that it expands the Office of EMS's powers to replicate Alaska's trauma system of care and allow the office to create a system of care for strokes and heart attacks as well. It also allows EMS to replicate their current trauma designation process to apply for strokes and severe heart attacks. At least 41 states have or are finalizing regional or statewide stroke and heart attack protocols to ensure that, uh, patients are transported directly to Level 1 stroke centers.

This bill will help reduce transfer times throughout our state to meet this golden hour, which will in turn help improve outcomes and cost savings to the state. And in states with established stroke systems of care, costs have decreased, uh, $1,724 per stay. We can't change when a patient arrives to a hospital, but we can help improve these workflows to diagnose the case and make this decision-making process more efficient.

Thank you, Representative Mena. Do members of the Senate Finance Committee have questions of the prime sponsor at this time?

Seeing none, before we go to invited testimony, we have 3 individuals that are available for questions from the committee. Wendy Allen a nurse consultant with the Department of Health. He is online. Dr. Bob Lawrence, Chief Medical Officer with the Department of Health, is also online. And Heather Rogers, Administrative Operations Manager for the Department of Health.

We will go to invited testimony at this time and hear from Brian Webb, a retired paramedic. Mr. Webb, you have the floor.

[FOREIGN LANGUAGE] Yes, thank you to the chairs and committee members. And for the record, my name is Brian Webb from Anchorage. I represent myself, and I've been in EMS for over 50 years between the military, overseas contracting, and in Alaska. I want to speak today for what HB 27 means to us in Alaska EMS and our delivery of care. I've testified in other committees on my support for HB 27, and I vigorously continue that support.

Today I want to inform the committee of how important it is for time-sensitive medical emergencies to be able to mirror what was mentioned about the statewide system of care that was established for trauma via House Bill 168 way back in 2010. That's been nothing but a positive program for Alaska EMS for the past 16 years. That bill gave trauma the ability to bring all that statewide data collection together under a single roof, and it allowed trauma to then identify hotspots in the state, then to recommend allocation of additional resources, as well as to develop a sys— a design pattern to enact preventive measures. The data also allowed Alaska EMS to target our resources, which were training, protocols, and equipment acquisition for really what mattered in trauma care. HB 27 is going to do this as well for time-sensitive medical emergencies.

And trauma's ability to also design that voluntary facility designation system for Level 1 through Level 5 trauma centers to perform inspections and to oversee facility recertifications, that's the same type of program that HB 27 proposes, but for the time-sensitive medical emergencies. So it's going to allow Alaska EMS the ability to know where to take the stroke and cardiac patient to, and perhaps importantly, bypassing closer facilities who may not be able to best treat that medical patient in favor of that right facility. So this is going to allow Alaska EMS the power to help decrease morbidity and mortality for the citizens in Alaska. So all of these factors from the current trauma system apply for what HB 27 is trying to accomplish with its proposed statewide system of care, thereby assisting prehospital and hospital systems alike with the opportunity for better patient outcomes and reduction, importantly, in permanent disability. And this ultimately is going to result in cost savings for families, insurance companies, and the state as well.

So I'd ask that you pass HB 27 through the committee and help us build our statewide time-sensitive medical emergencies model, just as we did for trauma in 2010. So I appreciate the opportunity to speak, and thank you for your time. Thank you, Mr. Webb. We will open the public hearing at this time, and we will go to Lauren Simpson Gomez, the state government relations director for the American Heart Association.

Please identify yourself and proceed with your 2 minutes of testimony.

Yes, thank you, Co-Chair Hoffman and members of the committee. Can you hear me all right? We can hear you loud and clear. Thank you. Perfect.

I'm Loren Simpson Gomez on behalf of the American Heart Association. We are pleased to support HB 27, which aims to incorporate stroke and heart attack into the existing statewide emergency system of care, ensuring that Alaskans receive timely and effective treatment during these critical medical emergencies. The Association advocates for quality systems of care based on nationally recognized standards for heart attack and stroke patients. When dealing with a time-sensitive medical emergency, like a stroke and heart attack, the right care at the right time or at the right facility is essential. Each year, approximately 795,000 people in the United States experience a new or recurrent stroke.

A care system that reduces stroke-related deaths by just 2 to 3% annually could save 20,000 lives in the United States alone. Additionally, research shows that heart attack care systems not only improve patient outcomes, but are also more cost-effective than fragmented approaches to emergency care. For a state as geographically large and diverse as Alaska, the importance of a coordinated statewide approach cannot be overstated. By implementing a system of care with scientifically proven measures for patient— for every patient, every time and adhering to national standards for heart attack and stroke care, we can significantly improve outcomes and save lives in Alaska. For these reasons, the American Heart Association supports HB 27 and urges your aye vote.

Thank you for the opportunity to testify today. Thank you for that testimony. We will go to Matsu and hear from Amber Simonetti. Um, please, with the executive team member for the Alaska Stroke Coalition. Please identify yourself and proceed with 2 minutes of testimony.

Hello, this is Amber Simonetti. Can you hear me okay? We can hear you.

Wonderful. Thank you for the opportunity to testify at the committee. For the record, my name is Amber Simonetti. I'm an Alaskan. I'm a registered nurse.

I have been the chest pain and the stroke coordinator at Mat-Su at the Anchorage Community Regional Medical Center for the last 7 years, and I have been an executive team member of the Alaska Stroke Coalition. So I'm here today to urge you to pass House Bill 27 and to fund the Department of Health to implement it. From a medical standpoint, stroke, STEMI, or heart attacks, and trauma share one defining feature in that time is treatment. Every delay increases death and disability. In our great state of Alaska, geography and weather magnify that risk.

And so to put these conditions into a statewide systems of care approach, it will help ensure that the right patient gets to the right level of care isn't dependent on luck, location, or which agency happens to respond. What this does is it helps to improve the return on investment amongst these patients. And so not only are strokes and heart attacks a life and death emergency, they're an incredibly expensive condition when the system fails. A severe stroke can mean long-term disability, inability to return to work, years of high-cost care. The same thing for heart attacks.

And so preventing just a handful of those catastrophic outcomes can repay this investment many, many times over. In severe strokes called large vessel occlusions, or LVOs, economic modeling shows that every 10 minutes earlier the treatment generates roughly $10,000 in net monetary benefit per patient. Which leads— which translates to about an additional month of disability-free life. That's the value of speed. And so if we improve system performance, then we can— even modest time savings will produce an outsized value.

So saving 30 minutes of time to treatment for 8 patients having a large vessel occlusion stroke would produce a benefit of around $240,000 value— $240,000, which is about the size of the program cost that's being discussed here. We treat over 100 of these severe strokes annually in Alaska, and they represent only 30% of all the strokes in the state. The second return on investment for this proposed bill is that data unlocks dollars. The CDC's Coverdell Program funds state health departments to build stroke quality program improvement system registries. And so, we have applied in the last cycle, but we were recommended and not funded.

The reviewer feedback emphasized gaps in the exact areas that HB 27 addresses when properly funded. Statewide tracking, credible burden measures, targeted focus, and rigorous evaluation capacity. A funded HB 27 implementation strengthens Alaska's next federal application and supports additional opportunities tied to rural and frontier emergency systems of care.

Finally, I'd like to address a common misconception, which is, isn't this already covered by the Alaska Stroke Coalition? I'm very proud of the work that we've done in the Alaska Stroke Coalition and what we have done to to convene hospitals, EMS, and clinicians, and how to move best practices quickly. But this is clinical implementation at the patient access level. We're a nonprofit, and we don't have statutory authority to set statewide standards, require reporting, or operate statewide epidemiology and surveillance. We also do not have stable public funding or data authority to run a statewide registry.

That's the Department of Health's job, and HB 27 clarifies and empowers that role. Funding HB 27 is a smart investment. Faster coordinated care reduces disability and death. The value of speed is measurable at about $10,000 per patient per 10 minutes for severe stroke cases. The requested funding is targeted and it positions Alaska to bring federal resources home and build a sustainable rural emergency care system.

So, on behalf of the Alaska Stroke Coalition, on behalf of my role as a stroke and chest pain coordinator at Mat-Su Regional, and on behalf of my my citizenship as an Alaskan. I urge you to please pass House Bill 27 and fund its implementation. Thank you very much. Thank you, Miss Simonetti. We will go to Juneau and hear from Rick Janik.

Is he in the room or are you online? Hi, yes, this is Rick. Can you hear me okay? Yes, we can. Thank you very much.

Um, my name is Rick Janik. I'm a registered nurse. Uh, I work I work for Air Laponquest and EW Medicine. I've been a nurse in Alaska caring for Alaskans for greater than 25 years, but today I'm speaking as an Alaskan. I'm also a volunteer for the Alaska Medical Director Advisory Committee, the State of Alaska Trauma Systems Review Committee, and I contribute to the Alaska Stroke Coalition.

During a stroke, a patient's losing 2 million brain cells a minute. We have an opportunity to impact that, and I hope this committee will join me in doing that through ASP27. Unfortunately, Alaska is, as you've heard, one of only a handful of states that still don't have this type of designation. Systems of care, similar to what we have in trauma, enhance communication and teamwork amongst healthcare providers. They streamline care, permit better shared decision-making, including with experts, especially in a geographically diverse state like ours.

They've also been shown to reduce healthcare costs and they allow for data integration for continuous quality improvement. Ultimately, a system of care improves patient outcomes. Help us today overcome some of the tyranny of time and distance that Alaskans experiencing stroke or STEMI may encounter, and I encourage this committee to support HB 27 without reservation. Thanks. Thank you, Mr. Janick.

Is there anyone else online to testify? Is there anyone in the audience who would like to testify today on this piece of legislation?

Seeing none, we will close the public hearing. Before we hear from closing comments from the sponsor, Senator Keele, can we review the fiscal notes? Thank you, Mr. Chairman. House Bill 27 has one fiscal note from the Department of Health. In emergency programs under public health.

They estimate a cost of $252,400. That is made up of $214,500 general fund and $37,900 in federal funds. Most of that is for one permanent full-time public health specialist and a significant new investment in IT. Thank you. Thank you, Senator Keel.

Do members have questions on the finance— on the fiscal notes? Senator Kaufman. Thank you. Not specifically on the fiscal note, but I guess before we're done, I'd just like to know about the definition. So part of what I have is surprise that this is one of those we don't always already do this.

Of things. But I'm just wondering, so we have trauma, we have— so we add this heart attack and stroke. Is there anything else like poisoning or— I guess being not really familiar with, with the definitions here, is there anything else that may not be included in what we're talking about? Representative, thank you for the question. For the record, Genevieve Mena, House District 19 representative.

Through the co-chair to Representative Kaufman. There's trauma, there's heart attacks, there's also sepsis. We had discussed potentially including sepsis in earlier versions as we were drafting the bill, but we had decided to settle on heart attacks and strokes given the amount of work and coordination and other organizations that have been mobilized behind those efforts. And happy to defer any additional questions on that. With regard to Mr. Webb.

Senator Kaufman. No, thanks. I'm fine. Thank you. People at the table are senators today.

Representative. Senator Cronk. Thank you, Mr.— Is Mr. Webb still available? Mr. Webb, are you still online?

Yes, I am. Please proceed, Senator Cronk. Thank you, Mr.— Hey, Brian, thank you for everything you do. Hey, I got a question. Regarding this bill.

How do you envision this bill helping rural EMS? As you well know, most of our rural EMS is volunteers. So what is your vision on this bill helping rural EMS?

Thank you for that question. And for the record, it's Brian Webb from Anchorage once more. Yes, actually for rural EMS, just as what happened with trauma, you know, comms grants and different types of funding streams, So that helps us with our training. That helps us with our equipment acquisitions to be able to better treat these time-sensitive medical emergencies. And, you know, so it's kind of a double-edged sword for both training and also equipment acquisition for all EMS services and especially for our rural services.

I hope that answered the question for you. Senator Cronk. Thank you, Mr. Chair. Yeah, thank you, Brian.

I appreciate you and everything you do. Thank you. Thank you, Senator Cronk. Members have additional questions at this time? Senator Keehl.

Thank you, Mr. Chairman. I do have one on the fiscal note, and I think the department's got an admin manager or something. I was curious about the cost to improve the IT system. It shows $75,000 for year 1 and then more than $50,000 going forward. A little insight on how that compares.

What do we spend on this IT system for trauma registry now? Heather Rogers, do you have a response to Senator Keele's question?

Good morning. For the record, Heather Rogers, Administrative Operations Manager for the Division of Public Health. Through the Chair, Senator, I don't have that information in front of me, but I can absolutely We get back to you. Thank you, Senator Keel. That's fine.

Thank you. Further questions at this time? Seeing no additional questions from members of the Senate Finance Committee. Representative Mena, do you have any closing comments before we set this bill aside? I just want to thank the Finance Committee for hearing this bill today.

Thank you. Thank you. We'll set this bill aside for further consideration by the Finance Committee. That brings us to our last item today, which is House Bill 133, payment of contracts. This is the first hearing on the bill.

I invite Representative Himschute to be able to introduce House Bill 133 to the Finance Committee.

Thank you, Mr. Chairman. Thank you to the members of the committee for hearing my bill today. I'm Rebecca I represent House District 2. It's, uh, 21 communities stretched across 500 miles of the coast of Southeast Alaska, also known as Northern Senate District A. Um, across Alaska right now, private contractors, nonprofits, municipalities, and Alaska Native organizations are routinely forced to wait weeks, months, and in rare occasions, even a year or more to receive payment from the state for work that has been satisfactorily completed completed. These delays are systemic.

They span across administrations and across various agencies. While private contractors working on public works have been protected since 1990 in statute with a promise of interest payment if the state is late, we do not have the same standard for our nonprofits, municipalities, and other private contractors and tribal organizations. This bill intends to set a standard of practice and address the fairness issue of not providing the same protections to all the entities that we do business with. The state's partners sometimes cannot make payroll, or they may have to take out a line of credit, draw on very limited reserves, and at times they even have to stop providing services. So the question is, Should the state's business partners be expected to carry the burden of our failure to pay on time?

With House Bill 133, we would provide payment— prompt payment parity for tribes, municipalities, nonprofits, and all private contractors. Failure to pay for satisfactory performance within 30 days will result in the payment of interest of 10.5% to match the existing statute for private contractors on public works. The bill stair steps agencies into compliance. We start with a report on the first day of the 35th Legislature detailing any late payments, the cause for the delay, and the duration of the delay. In fiscal year '28, we set a standard of 45 days, which will satisfy most of the late payments, and then we stair step that to the 30-day expectation in fiscal year '29.

Additionally, delayed payments would be recorded in the state's online open checkbook. That's what the bill does. I'm here with my staff, Ella Lubin, to answer questions, and I'm really grateful for your time. Members of the Senate Finance Committee, do you have questions of the prime sponsor at this time? Senator Keehl.

Thank you, Mr. Chairman. I thank you for bringing the bill forward. I appreciate attempts to get the state to live by the same rules we impose on others. If you don't pay your state land lease, there's interest and penalties, and if you don't pay your taxes, there's interest. So that makes sense.

Can you talk to us about— is there any differential treatment where the state is the entity passing through federal money or grant money? Is there any way to accommodate if that doesn't come to the state on time? Representative. Thank you. Through the chair, Senator Keele, that's a great question.

The bill addresses that. If the source of the funding, federal funding or whatever, is not on time, it's whichever is later, when the funding arrives or the payment deadline. If the federal funding is late arriving or whatever other funding source is late arriving, the clock doesn't start ticking until that money has arrived. Senator Kiel. Thank you, Senator Kiel.

Senator Cronk. Thank you, Mr. Chair. And I don't have a question, I just have something to add. I mean, Representative Himschuh talked about this yesterday.

So as a private contractor, for me working on fires, it was sometimes 2 or 3 months before I would actually get paid for the services I provided. And then even afterwards, people working on fires would call me and say, hey, I haven't been paid for 2 months. So I, I think this is a really good bill to at least get this accountability back because we should be paying our people doing some work in a timely fashion. So if this bill helps do that, and I think part of bringing back the payroll back to certain departments is going to help be more efficient also, but I think this bill is a good bill to actually make sure our people doing the work get paid in a timely fashion.

Thank you, Senator Cronk. Senator Kaufman. Thank you to the bill sponsor. We chatted earlier about the definitions around completion, the concept we were discussing that establishing satisfactory performance can be challenging sometimes to assure that everything that should have been done was done. Could you just talk a little bit, your thoughts on that, on how that's managed within the the goal of the bill.

Representative. Thank you. Through the chair, Senator Kaufman, every award from the state comes with benchmarks, with quality standards, and it's a huge variety of those. The bill doesn't address that specifically. We entrust the agencies to ensure that when they award funds from the state or pass-through funds, that that money is that there's accountability for that.

So this doesn't address that, but it does say the work has to be satisfactory prior to payment. Senator Kaufman. Thank you. Thank you. How much of this problem do you perceive is as a result of lack of personnel to process the paperwork necessary to cut the checks?

Thank you, Senator Hoffman, for the question.

We have exact information on that. I can tell you the 3 reasons that surfaced the most were technology, training, and staffing. Do we have exact numbers on staffing? The issue in answering a question like this is we're working from 2025 and the bill actually goes into effect in 2027, '28, and '29. We are assuming the return of personnel services and accounting back into the agencies is going to help a little bit.

But you are accurate in your question about how much of it is personnel. Do we have an exact number on personnel?

I think it was something like 5 positions total. While she looks that up, Senator Steadman. Thank you. I think, Mr. Chairman, and to the bill sponsor, I think this is an issue we need to deal with, but I'm not so sure how— well, it's pretty, pretty broad and deep because you look at the amount of fiscal notes we got here, right?

I think, Mr. Chairman, we should have some data back from the departments and asking them how pervasive this is across the entire organization of the state and have that type of information at the table also, because I'm not so sure that the legislation will fix the problem. It's probably pretty systemic. When I'm looking at this, it's been going on for quite a few years, so I think we should have some testimony from some of the department heads as to why they are late. [FOREIGN LANGUAGE] Yes.

Comments upon Senator Steadman's comments. Thank you, Chair Hoffman. Through the chair to Senator Steadman, the bill has had more than 13 hearings, and in the course of those hearings, we have heard from department heads. It also has 15 fiscal notes. Many of those are zero fiscal notes.

Many departments are on time or believe they can be on time. But for the 7— yeah, for the 7 fiscal notes, we have Um, every department head or division leader who spoke to the bill explained that they understand they should be within 30 days and explained what their needs were. And then in addition, we do have the report coming on the first day of the 35th, and then the bill stair steps into full application across 3 fiscal years. So the idea is to not yank the rug out, but to allow our departments to gradually reach the point where we can honor our partners, our business partners, with parity with our private contractors. Senator Steadman, we do have available for questions Pam Halloran, the Assistant Commissioner for the Department of Health, and we have Hannah Lager, the Director of the Division of Administrative Services from DCCED.

Do you want them, either one of them or both of them? Them to respond to your comments? Yes, that would be nice because I think even though there might have been numerous hearings in the other body and even in this body, this is the first hearing at the finance table here and we deal with all their budgets. So if there's, you know, we need to have a good handle on how deep this problem is to see if this is, you know, part of a solution we should implement or or the entire solution or what have you. So yes, I would like to hear from them.

Thank you, Senator Steadman. Pam Holloran, are you on in person? Please come forward and identify yourself. Did you get Senator Steadman's concern?

Good morning. For the record, Pam Halloran, I'm the Assistant Commissioner for the Department of Health.

We surely do wish that we could pay our vendors, our grantees, our contractors on time. Our fiscal notes, if you've seen them, there's 6 of them, and they face the reality of the impact of this legislation on the department. As far as contributing factors to the late payments, I would say that there's a number of— turnover is a major problem, although that is getting better. Also, as far as the department, it's training. The accounting system is very complex, particularly for the Department of Health.

We manage over 200 federal programs, and those are very complex to manage within the accounting system. So when we are trying to pay an invoice, we need the money to be in the right place, in the right line in the budget at the perfect moment that we need to pay that vendor. Sometimes we have to take pause and we have to move money to find a transaction, find money somewhere else in the budget and do a transaction called a revised program or RP to move the funding to the appropriate place. That happens at several levels. Within the budget where we track our federal programs as well as tracking our appropriations.

So let me make sure that I've captured all the contributing factors. Another contributing factor for the department would be volume. We have over 448 grants. We have 295 contracts that we're managing at any given time. We— and then as you know from the conversations we've had with you over the years, within some of our agencies, particularly Division of Public Assistance, our staff have been very strained trying to solve many of the eligibility backlog issues.

And as far as where the problem occurs, I'm still trying to identify that. I—.

We know that an administrative staff member receives an invoice, but we know the administrative staff member isn't authorized to approve an invoice. That needs to then be shifted over to a program staff member who then evaluates whether the goods and services were satisfactory and whether the invoice should be paid or whether we need to reach back out to the vendor to have a conversation about that. So the problem could be with our administrative staff, but it also could be with our program staff. Maybe somebody is out of the office. Maybe the position is vacant.

It is that That's the reality that we're facing. I can tell you some of the things we're doing to try to improve on that is the, the Shared Services of Alaska deconsolidation that's occurring. Department of Health actually accepted more positions than it was originally allotted. So what we're doing to improve our timely payments is that is we're providing one position for each one of our divisions. So we've accepted a total 7.

We have 6 divisions. We have our fiscal office, which will also accept— so we're accepting more positions so that we have more capacity for timely payment processing. We're also making this very visible to our staff. We're producing monthly scorecards with trend lines so they can see themselves and see exactly where they're at. So we're making this very visible to our to our administrative operations managers that oversee the administrative functions within our division, but also the division directors and my leadership team.

So we recognize that we're not where we want to be. We are tracking it. We recently— for up until now, we haven't had the opportunity, the ability to export payment data out of our grant system. We recently did that because of this legislation. We can now track our grant payments from the date that the fiscal report and the program report are approved all the way to payment date.

So we have eyes on it. So now we can watch those trend lines steadily improve. Senator Steadman. Just a clarification. I got two questions.

But the first one, you mentioned you responded because of this legislation. Clarify that? Through the chair, Senator Steadman, we— yes, on the grants, we didn't have reporting capabilities out of our grant system. And because of this legislation, we were able to bump that timeline up and get that reporting so that we could include that data in our fiscal notes. Understood.

And then just a basic business question, you know, you You track your accounts payable and your accounts receivable just from a general management perspective. Do you track your accounts payable in aggregate to see what accounts are payable in the next 30 days or 60 days or 90 days? And so you can track how late off of a schedule if there's a whole bunch of them out 90 days past 120 days or—. Through the chair—. Through the chair, Senator Sutton, we do have tracking mechanisms to track invoices all the way down to the vendor and where— and its timeliness.

It's an understatement. Okay. Let me rephrase it. So as a business manager, one of the things is pretty common is to run a report I want to see my schedule of accounts receivable and accounts payable because I'm always trying to time the cash flow. Obviously you want to collect it quick and pay it out slow.

But I need to know from a management perspective what's 30 days out look like, 60, 90, 120, you know, those type of standard business stuff. And I'm trying to ask, does the department have the ability or or do they run those type of reports so you could pull up and see, well, you have, you know, 3 vendors that are out 120 days, to go ask somebody on staff what is the issue on these 3, you know, these, you know, 120 days. Am I going to see them at 160 days, or is it— is there problems with these guys, or what happened? Senator Sedman. Through the chair, now that I'm thinking about my prior response, I do not believe that we— because the data that I used to pull this data is from invoice date to payment date, I am going to rephrase my prior answer and say we— I don't believe we have a tracking mechanism for because we're not entering invoices into the system until they're paid, per se.

So we've been discussing that internally, whether or not we need software so we can do exactly as you're suggesting. We are looking for workflow software where we can actually, in a dream, and I haven't identified it yet, but a vendor would send an invoice to a common portal and we would be able to track the workflow of that invoice payment all the way from admin all the way to the program manager and back again. Currently we don't have eyes on that. Thank you, Senator Steadman. Senator Keogh.

Thank you, Mr. Chairman. So a comment first. There was a little confusion about whether there was a proposal for for Health to take its payroll back. They were never one of the departments proposed for that. But Ms. Halloran, you said in the shared services deconsolidation 7 positions have come to Health.

All the budget documents say 5. Ms. Halloran? Through the Chair, Senator Keele, that's correct. Because of our timely payment problem and because there's a couple— there's another initiative that we're working on in the department that we identified the need for additional staff. So the original— the governor's budget came out with 5 staff, and we have since worked with the Department of Administration to accept 2 additional staff in order to meet timely payment timelines.

And another initiative which we're doing in the department which is going to help our timely payments is that we are working within the department to utilize our accounting system IRIS the way it was originally intended and the way we were originally trained to do it back in 2007. 2017, Where administrative staff actually do the entering of these transactions as opposed to taking the time to put them in a portal where they are done by a different team. So we are going to now have these transactions entered at the division level, and we needed the additional capacity for that. And what that is going to do is that is going to allow our divisions to know immediately whether the transaction will process. Senator Kiel.

Thank you, Mr. Chairman. I guess I will save concerns over the operating budget process and what does and doesn't get told to the subcommittees for another time. The follow-up, I guess, relative to the bill would be I think we'll go over the fiscal notes in more detail in a minute, but they talk about positions, and I can't remember if that's all at health or some of that's elsewhere. Does that mean that with the deconsolidation you won't need the same kind of fiscal notes that we're staring at today, that you have the resources reallocated internally? Ms. Ellerand?

Senator Keele, through the Chair, we based our fiscal notes off of FY25 actual data. That was what we knew. That was our reality. We hope that it will improve and that we can pay every single invoice on time with this added capacity, but I can't tell you whether one position— I have some divisions that are paying 900 invoices late. So I can't tell you right now whether one position will solve this problem or not, but we are working towards it.

And we are hoping that these positions will definitely help in that area. Thank you. Maybe we will go to invited testimony that might spark additional questions. So we will go to Lori Wolf, who is the president and CEO of the Four Acre Group.

She is online. Please identify yourself and present the committee with your invited testimony.

Good morning, members of Senate Finance Committee, Co-Chairs Senator Hoffman, Olson, Steadman, and Vice Chairs Senator Merrigan, members. For the record, my name is Lori Wolf. I'm the President and CEO of the Foraker Group. Thank you for inviting me to testify in support of House Bill 133. This calls for prompt payment from the state to Alaskan nonprofits, municipalities, and tribal organizations in grants, contracts, and reimbursements.

Thank you to Representative Himschu for introducing House Bill 133. And Senator Kawasaki for introducing its companion Senate Bill 129. Together they represent critical state legislation in support of the work being done on behalf of all Alaskans. Our data shows late payments happen in almost every department and can be by 3 months to more than a year, of payments from $25,000 to over $1 million. This is why we're here today.

The call for the state to pay its bills on time is nothing new. For decades, it's what the state has been mandated to do with private contractors. Specifically, under current law, AF 39.10.200, which notes that if you are a private business or contractor working on a public project, the expectation is that you will be paid on time or face penalties and interest. The company can even stop work, uh, until payment is received. While stopping work is not an option for us, we want the same prompt payment expectations for HUD's food partners.

To be clear, the impacts are not just missing payments. It is a laundry list of issues that ripple out from the delay. Among them, cash flow issues and financial planning challenges, operational and program delays, and negative impact on staffing. I encourage you to review the testimony provided on TOPSTA 133 and Senate Bill 133. House Bill 129 that further demonstrates how late payments impact Alaskans.

From seniors to infants, transportation to the arts, education to domestic violence, and everything in between, the state relies on nonprofits, tribal organizations, and municipalities to deliver services every day in a stable and consistent way to Alaskans. We're asking for government efficiency. Applying this existing set of rules to nonprofits to the state, municipalities, and tribal organizations is simply a practical extension of ensuring that the state funding has— that has already been allocated is used as intended. Indeed, this state is not asking— we are not asking the state for new money. It is simply— we are simply asking that the allocated funds be paid on time.

Fixing the problem means not just more efficient use of time and money by the state and our organizations, It also means Alaskans get the services they depend on, and all the businesses that we work with also get paid on time. The ripple is clear. Paying your bills on time means all— we all get to pay our bills on time, and our economy is stronger, more stable, and more predictable as a result. I strongly urge you to move this bill to the Senate floor so that every lawmaker will see that it is simply common sense to pay bills on time. And be a dependable partner for all Alaskans.

This is the opportunity to do something good and right that benefits us all and for the health and well-being of our economy. Thank you again for the opportunity to testify today. I'll remain on the line for questions. Thank you, Ms. Wolf. We will go to Ketchikan and hear from Stephanie Bushong, who is the Transit Deputy Director Director for the Ketchikan Gateway Borough.

Please identify yourself and proceed with your invited testimony.

Thank you, Mr. Chair. Can you all hear me? Yes, we can. Perfect.

Thank you. Again, thank you, Mr. Chair and members of the committee. My name is Stephanie Bushong, Transit Deputy Director for the Ketchikan Gateway Borough. I'm here in strong support of House Bill 133.

House House Bill 133 is straightforward. It establishes a 30-day prompt payment standard for work already completed under state agreements. That is the same expectations we place on Alaska families, businesses, nonprofits, municipalities, tribes, and contractors every single day. This bill simply applies the same standard to the state. It's not extraordinary, it's just responsible governance.

To be clear, this is not tied to any one administration or department. In my experience, delayed payment has been a longstanding systemic issue across nearly two decades of my work in Alaska, affecting every sector and every region that does business with the state. In Ketchikan, public transit is essential infrastructure. Last year we provided more than 500,000 rides and we were recognized nationally at the Community Transportation Association of America's Small System of the Year. Our operations are strong and we are compliant, and yet we're not waiting just 30 days for state reimbursements.

We're waiting months. For municipal systems like ours, those delays mean the borough is effectively subsidizing the state, floating money that's already been approved. And that strain does not stay within transit alone. It puts on other municipal departments that rely on timely reimbursement to maintain essential services and operations. Obligations.

Across Alaska, the impact on our nonprofit transit peers can be even more severe. Most operate without a general fund or reserves to bridge payment delays. Executive directors and board members are— have personally funded payroll out of their own accounts or taken out lines of credit just to keep agencies open. In some cases, organizations are using credit cards to cover the cost of capital projects. And essentially an essential operating expense because state payments are delayed for 6 months or more.

That is not acceptable. When payments are delayed, service stability is put at risk, and that lands directly on real Alaskans getting to medical appointments, to work, to school, and to the grocery store. While the broader chall— while there are broader challenges in transit, including federal timing, capital backlogs, capacity constraints, House Bill 133 is practical. It's an immediate step the legislature can take now and one this administration could put squarely in the wins column. I've seen this issue from multiple roles: as a state employee, as a consultant, and now as a local transit administrator.

The problem's real, it's persistent, and it's solvable. House Bill 133— 133 addresses it directly. I urge you to support House Bill 133. Thank you, Mr. Chairman, members of the committee, for your time. I'd be happy to answer any questions.

Thank you, Ms. Bichon. We do have a question from Senator Steadman. Thank you, Mr. Chairman. Could you help with the committee a little bit? Because, you know, are they— is the state normally 60 days late, 90 days late, 120?

Is there a recurring pattern that you see from a management perspective on this? Because Ms. Pizzoli. Through the Chair, Senator Simon, this is a, it has been ongoing for many years. And unfortunately, I don't see a pattern from our stance. We see tiny payments of maybe even $3,000 for travel reimbursements, for instance, that are taking sometimes 8 months, right?

That's not as big of an income or as big of an impact But I mean, 8 months for small little things that shouldn't take that long are— is ridiculous. There's also— we also— I mean, it's kind of in between, right? It might be 45 days. A lot of my peers across the state are seeing 6 months or more for vehicles and for large purchases that are really, really impacting service.

Thank you for that. We will go to— we will open up public testimony at this time. And we will go in the room to Charles Westmoreland. Please come forward and identify yourself and give us your public testimony.

For the record, my name is Charles Westmoreland. I am the Director of Business and Development with Wasserman and Associates. Thank you for allowing me to speak with you today about House Bill 133. For more than 40 years, our firm has provided IT services, project management, and general consulting to the state of Alaska. We are also the managing partner of Alaska IT Group, a consortium of 3 companies with more than 60 employees that provide similar services to state and municipal governments.

Under current state contracts, most payments are structured under a net 30 basis. The standard practice works well when payments are made on time. However, for firms like ours, payroll makes up a majority of our expenses, sometimes as much as 80%. This requires us to carry enough cash or refer to a line of credit to cover at least a month's worth of salary for our employees. Firms like ours sometimes have to bridge that gap by using a line of credit backed by receivables.

When an invoice is 60 or 90 days late, it often is no longer considered reliable collateral for when we need to borrow. In our experience, most state agencies do pay within a reasonable time frame. However, when they do not, there is zero consequence. Influence when that occurs. House Bill 133 is designed to address that.

This bill establishes clear expectations and accountability. It also allows predictability for small and mid-sized businesses, which tend to be an important cog in the state's vendor community. We strongly support this bill. We hope you will as well. Thank you for your time and consideration.

I would be happy to answer any questions. Thank you, Mr. Westmoreland. Is there anyone else online that wants to testify? Is there anyone in the audience that would like to testify at this time? Seeing none, we will close the public hearing.

And we will— Senator Steadman. Can we back up? We can back up. You want to hear from Hannah Lauger? Do you have from the department again?

Which department? We have Hannah Lager, who is the Director of Admin Services for DCCED.

Hannah, are you online?

Hi, Ann. Thank you. For the record, my name is Hannah Lager. I'm the Administrative Services Director for the Department of Commerce Community and Economic Development. Generally speaking, the department's payments do fall within 30 days of invoice date.

97% Of those get paid out within 30 days, and most are paid within 2 weeks, so a much shorter timeframe. Where we do see challenges, we are actively working to address those. That's often, as Director Halloran mentioned, when staff turn over. For us, that typically is where we see invoices go to an inbox that no longer is monitored. So we're working to do practical things like switch those invoices to shared email inboxes where they can be checked by multiple staff.

We're also actively working with vendors where we see challenges in late payments to help them bill us more timely or get the bills to a state where we can pay them more quickly. Most of our late payments in fiscal year 2025 were to one multinational vendor whose bills were not coming through to the appropriate place to be paid timely. But moving forward, we are also using purchasing cards so vendors are paid more quickly, and we can then take the time to reconcile those on the state side without impacting our private vendors. Um, to Senator Steadman's question earlier, we do also have a robust monthly projection process that looks at prior year payments to vendors and then monitors as those are coming in through the current year to make sure that we are keeping track of where they are in their payment process throughout the year. We're also reviewing our data points for consistency and making sure that we have really good reporting going forward.

I think, uh, hearing the bill has been a good opportunity to improve some of those reports that we were monitoring.

Ms. Lugar, if this legislation were in effect, how would that impact your division? And more importantly, will, will it entice you to pay your vendors more expeditiously.

Yes, to the chair, Senator. I think we already are doing a great job paying our vendors and we are actively working where we are seeing challenges to address those. And so I appreciate the legislation bringing more light to this issue and we will absolutely continue to do our best to pay our vendors online— our vendors more quickly. Thank you. Senator Stegner.

That's a non-answer, but— Mr. Chairman, can we have Pam Holguín back up, please? Pam Holguín, are you still online? Oh, she's still here in the room.

Can you answer the question that I stated? How will this improve your ability to pay bills online on time if this legislation signed into law?

To the chair— was it Senator Sedman's question? Sorry, I don't remember.

The legislation will— we will strive to adhere to the legislation to pay everything on time. We strive now. The capacity issues have been a problem for us.

There are some pieces of the legislation, which is not the fault of the sponsor, that we're going to have a difficult time to track timeliness the way our accounting system is built now because accounting system does not have a field for satisfactory performance. So the invoice date that's entered into the system is the invoice date that the vendor sends the invoice. It's not the date that the department determines that the invoice is satisfactory, all the goods and services have been delivered. So that's— so tracking will be difficult to determine if we can track to the metrics that are outlined in the bill. But this legislation has definitely put eyes on a problem, and we're working to adhere and to meet meet the timelines as we can in the department despite all the issues that I have already addressed.

Senator Steadman. Yes, and then continuing with the previous opportunity you had here to testify a few minutes ago, you missed your opportunity to run out the door.

So from a manager's perspective, can you as a manager run like every 30 days a balance sheet if you don't know what your accounts receivable and accounts payable are? How do you produce a balance sheet to know if you're going forward or backwards? Ms. Sellering.

Through the Chair, Senator Steadman, we run frequent reports and I don't believe, at least at my level, I'm not running reports to look at encumbrances and look at looking at timely payments against encumbrances to the extent that we should, whether a payment is occurring every 30 days.

We were constantly running expenditure and revenue reports and we are constantly looking at encumbrance balances. When we are seeing— we are seeing what we can do is we can see that the needle is not turning on an encumbrance, we are not seeing payables off an encumbrance. Then we can react. But as far as— as far— it might be easier if the vendors use vendor self-service, which is an opportunity for them. There's— I don't know that that is an option for grantees, but there is vendor self-service.

We could have more transparency on invoices when they're due, when they use the vendor self-service which actually highlights the invoice as opposed to an invoice that's coming in the mail that's sitting on somebody's desk. [FOREIGN LANGUAGE] Just a brief comment. I appreciate the information because some of these questions is helpful.

But it's difficult to run a business if you can't time your cash flows. You don't know when you're getting— as the member across the table from me said, you know, if they're dealing with fire claims or what have you, or running forest fire divisions or whatever, they don't know if they're going to be paid in 30 days or 60 days or 120 days.

So I think it's— we need it. Well, I think, Mr. Chairman, at some point, probably next year, because we're almost into this year, we need to have some of these questions go down to all our departments. And get a holistic view of this. Because it looks like through some of the fiscal notes, some departments don't seem to have a problem.

And some of them seem to be problematic for years.

So anyway, thank you, Mr. Chairman. Thank you.

Before we go to closing comments from the prime sponsor, we will go to the fiscal notes from Senator Keogh. Mr. Chairman, does this bill have fiscal notes? Does it? Sorry. A few.

If I may, Mr. Chairman, do this a little differently. Can I give you a list of the zeros and then we'll spend time on the ones with— That would be good. Okay. Please. We have zero fiscal notes from the Department of Administration and Procurement and Property Management, also Division of Finance.

From Commerce, Community and Economic Development, we have a zero from their admin service shop. From Family and Community Services, zero from admin services. Same from Fish and Game admin services. Same from Labor and Workforce Development Commissioner's Office. Department of Law admin services gave us a zero.

Natural Resources admin services and Public Safety admin services. They all have fascinating analyses on page 2. I encourage all the members to take some time and read them on your own time. The fiscal notes with the fiscal impact, Mr. Chairman, For fun, I added them up. We'll go through and get an aggregated total of just under 1.1 million in 8 full-time positions.

Department of Military and Veterans Affairs and Homeland Security and Emergency Management estimates a cost of $458.4 thousand. That's $114.6 in GF, the same in interagency. $229.2 Million in CIP receipts for positions. Department of Health and Admin Support Services, and I think most or all the rest will be in Health. So in Admin Support Services, they have a first-year cost of $93.8 million.

That becomes $159.5 million going forward. That's— in first year, that's $18.8 million in federal receipts, $37,500 in GF match and $37,500 in interagency, 1 position. In their Behavioral Health Administration, the department— or the division estimates that penalties are cheaper than a position, and so they estimate they will pay $26,400 going up to $30,000 in the out years in penalties, all UGF. In Medical Assistance Administration, they do add a position. For 93.8 in year 1, 159.5 going forward.

That's a 50/50 split between federal receipts and general fund match. In Public Assistance Administration, same total, 1 full-time position, 93.8 in year 1, 159.5 in the out years. Different split, that's 51.6 fed, 42.2 in GF match, and then that proportion holds in the out years.

In public health admin services, which is different than public health— or public assistance admin, it took me a second.

They also note for one full-time position, it's going to sound familiar, 93.8 in year 1, 159.5 in the out years, but a different match or split, that's 10.3 in federal receipts $83.5 million in GF match. Then the last one is from Senior and Disability Services Admin. They also estimate a penalty is cheaper than a position, so it's about $19,000 in unrestricted general funds, a little less in year 1, a little more in the out years. [Speaker] In light of the time, if individuals have specific questions on the fiscal notes, can they forward them to my office and we will forward them on to the proper department for a response.

Before we set this bill aside, Representative Himschute, do you have any closing comments? Thank you, Chair Hoffman. I can be very quick. One of the things to note, I think, is that some departments have a heavier load of this type of payment. It may make sense that some departments are having an easier time meeting the 30 days.

They just don't have the same load. Also, in other states where they are able to pay on time, there's often a unified grants management system that we don't have in Alaska. And I want to remind everyone that the fiscal notes that we're looking at are, are looking at what we can do right now versus where we'll be in 3 years. But the idea is to stair-step. Finally, this bill is not really looking to place blame anywhere.

We're not looking to call anyone out. We're just looking to set a fair standard that matches what we provide for private contractors on public works. We're just looking for a standard that we believe the state can meet and should meet. Thank you for bringing this issue to the Senate Finance Committee. That concludes the committee's work.

This morning. Our next meeting is scheduled for this afternoon at 1:30. We do have earlier floor session than normal, which is at 10:30. So with that, we will be adjourned.