On the heels of the state’s announcement that Alaska has become the 29th state with a confirmed case of measles this year, the Dunleavy administration told legislators on Thursday the state’s vaccine program has a $21 million hole in it thanks to the governor’s expanded liquidation of accounts.

The Alaska Vaccine Assessment Account that the administration targeted is used to make vaccines universally available at health care providers throughout Alaska and can be tapped by the Department of Health and Social Services to respond to emergency outbreaks of disease—like measles—without legislative approval.

The news came on Thursday afternoon when the Senate Finance Committee met with officials from the Office of Management and Budget to discuss the administration’s unprecedented expansion of the annual sweep of accounts, part of a normally obscure and generally inconsequential accounting practice for Alaska state government. It was the first time legislators, the public and in some cases even state employees handling the programs learned that the accounts will be zeroed out.

Normally the sweep of accounts into the Constitutional Budget Reserve is avoided entirely, but the House failed to reach the three-quarter vote needed to reverse the action after minority House Republicans withheld their vote as leverage for a $3,000 PFD.

The Dunleavy administration seized upon the opportunity and liquidated dozens of accounts that were normally held outside of the sweep—including the Power Cost Equalization fund and the Higher Education Investment Fund—leaving many programs without the funds to operate. The administration’s recommended letting the sweeps of about $2 billion stand and replace the funding for the programs in piecemeal, veto-able chunks.

The impact on the state’s vaccination program is not immediately clear—as was the impact for many of the accounts and programs affected by the sweep. Much to the senators’ frustration, OMB officials frequently said they didn’t yet know the full impact of their actions.

Vaccinations

Alaska’s vaccine program is funded through a mix of federal and state dollars. Federal money is used to provide vaccinations to fund under-insured, Medicaid and Alaska Native vaccinations under the Vaccines for Children program.

The state money, which is raised through assessments on insurance companies and other providers, is used to make vaccinations broadly available at health care providers with bulk purchasing of all childhood vaccines and select adult ones through the Alaska Vaccination Assessment Program. The state funding covers vaccines for insured children and some uninsured adults, but the benefits of the bulk purchasing are felt by all.

The first years of the program reportedly reduced the overall cost of vaccines by 20 to 30 percent.

The program requires no undesignated general fund dollars and thereby is not directly or indirectly connected to political fight over how the state will use earnings from the Alaska Permanent Fund.

The program was made permanent this year by the Alaska Legislature—through legislation sponsored by Senate President Cathy Giessel—as a public-private partnership and allows the state to essentially buy vaccines in bulk and relieve the burden for smaller health care providers. The legislation, which has yet to be signed, also reworked the program’s savings account.

Giessel’s sponsor statement also explained that the vaccine assessment account, which was the one that Dunleavy administration targeted, “will allow the Commissioner of the Department of Health and Social Services to administer the program and react more nimbly in the event of an outbreak without first seeking legislative approval.”

In one document produced by AVAP, it explained that “not implementing the proposal may greatly impact immunization coverage rates, which are already below the national average, potentially leading to an increased burden in vaccine-preventable diseases and higher health care costs.”

That all comes as the Department of Health and Social Services announced on Tuesday that it confirmed a single case of measles in an unvaccinated teenager living in the Kenai Peninsula Borough. The teenager may have exposed the disease others at Froso’s Family Dining in Soldotna on July 8-9 and July 11-13 and then again on July 14 at the Urgent Care of Soldotna and Central Peninsula Hospital.

Let it stand

The Office of Management and Budget, helmed by the controversial Donna Arduin, has made no secret of its disdain for dedicated funds and separate accounts, but it said earlier this year that it was a discussion best saved for the interim.

But with the failure of the reverse sweep, the administration has grabbed at the opportunity to begin zeroing out these accounts and transferring the money to the Constitutional Budget Reserve. It puts the future of programs like the Power Cost Equalization subsidies for energy costs in rural Alaska and the state scholarship program in question as they currently no longer have the funds to operate.

The vaccination program has income from assessments on insurance companies, but without its savings account could be put in a pinch if called on to respond to an outbreak.

The Legislature could resolve much of these issues with a three-quarter vote that would put all the swept accounts back in place, but the administration on Thursday recommended to just let the sweeps stand and instead have the Legislature restore only the funding for the programs to operate this year. This move could be done by a majority vote but would also be open to veto by Dunleavy.

Legislative Finance Division Director David Teal argued strongly against such a move. He said the precedent and long-term impacts by allowing the expanded sweep to stand would cause widespread chaos for state government.

“The chaos caused by not having a reverse sweep is massive,” he explained, noting that the administration’s expanded thinking about it should also include the Alaska Permanent Fund’s earnings reserve account that’s used to pay dividends and for a portion of state government. “That’s why I say you have simply no choice other than getting this reverse sweep done with a three-quarter vote.”