Legislature(2011 - 2012)BARNES 124
02/02/2012 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB170 | |
| HB290 | |
| HB184 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 184 | TELECONFERENCED | |
| += | HB 290 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
HB 290-ESTABLISH ENDOW ALASKA GRANT PROGRAM
9:00:49 AM
CHAIR MUNOZ announced that the next order of business would be
HOUSE BILL NO. 290, "An Act creating the endow Alaska grant
program in the Department of Commerce, Community, and Economic
Development to encourage community development."
9:01:41 AM
REPRESENTATIVE SADDLER moved to adopt CSHB 290, Version 27-
LS1094\D, Kirsch, 2/1/12, as the working document. There being
no objection, Version D was before the committee.
9:02:04 AM
ERIN HARRINGTON, Staff, Representative Austerman, Alaska State
Legislature, recalled that at the prior hearing the committee
raised questions that revolved largely around the applicability
of the language to the circumstances in Alaska. The legislation
was originally drafted based on a law in Iowa, where all
communities are neatly organized into counties. The
aforementioned doesn't mirror the situation in Alaska, in which
areas may be organized or unorganized, as communities or
boroughs, and communities and independent municipalities that
are not in boroughs. In addressing the points raised by the
committee and working with Alaska community foundations, quite a
few changes were made to HB 290 to make it relevant for Alaska.
The committee packet includes a memorandum dated February 1,
2012, which relates the changes encompassed in Version D.
However, everywhere the memorandum incorrectly refers to Version
I it should refer to Version D. She pointed out that in
addition to the changes that make the legislation relevant to
Alaska there are also two policy changes. The first policy
change is in Section 1, where the language clarifies that the
funds raised and matched through the Endow Alaska program are
meant to grow their unrestricted endowed funds of community
foundations and thus make them available in perpetuity to
support a broad range of needs and communities as determined by
the involved residents making the decisions where the earnings
on the funds are spent. The second policy change is that
Version D removes the requirement that grantees demonstrate
substantial compliance with the national standards of the
National Council on Foundations. The aforementioned was the
result of continued discussion with members of the community
foundation organizations in Alaska. There were concerns that
the requirement that grantees demonstrate substantial compliance
with the national standards of the National Council on
Foundations would place an undue hurdle with regard to
communities being able to access this program. She pointed out
that the committee should have a handout regarding the timeline
involved in demonstrating compliance with the national standards
of the National Council on Foundations. The process is fairly
lengthy in that it takes from 300 days to 450 days and there are
associated costs. Currently, there are only two community
foundation organizations that meet this accreditation standard.
Although other community foundations have chosen not to seek
accreditation, she didn't believe there is any question of the
quality of work or commitment of those foundations.
MS. HARRINGTON then detailed the changes encompassed in Version
D. On page 1, lines 11-12, language was added to clarify that
the purpose of the grants under this program are to grow the
unrestricted endowed funds. She then explained that on page 2,
lines 5-6, the language didn't accurately describe the Alaska
Community Foundation (ACF), which is envisioned as the lead
philanthropic entity in Alaska, and therefore it was deleted.
The language requiring the Council on Foundations national
standards compliance was also deleted. Throughout the
legislation the language "community affiliate organization" was
replaced with "community foundation affiliate" in order to more
clearly describe the entities in Alaska. The ambiguous language
regarding the ranking for applicants [on page 2, lines 17-18]
was also deleted. The sponsor didn't want the language to imply
that the needs in 2013 somehow dictate the use of the funds in
2085. [On page 2, lines 16-17] language was inserted to clarify
that funds should be used to help create new community
foundations as well as grow existing community foundations. On
page 2, line 31, the language "plan for distributing grant
funds" was replaced with the language "spending policy". The
legislation was also inconsistent with regard to definitions,
and thus the language on page 3, lines 3-5, was deleted. In
proposed AS 11.33.180, the term "organization" was replaced with
"foundation affiliate" in order to more clearly describe the
organizations in Alaska. The language on page 3, lines 10-11,
that specified that no more than five grants could be received
within a single borough in a year was removed since not all
Alaska communities are located in boroughs. The final provision
of the legislation regarding definitions was reordered to
correspond with the hierarchy of community foundations and the
affiliates underneath them. Ms. Harrington then provided a
document relating the hierarchy of community foundations. She
explained that community foundations can hold within them
affiliate funds, which are known as community foundation
affiliates in terms of HB 290. These community foundation
affiliates can have independent boards that work at the local
level. For instance, the nonexistent Kodiak Community
Foundation would have a local level policy board, but they would
be an affiliate to a higher level community foundation that
would actually hold the funds and have the fiduciary
responsibility for it. With regard to partner foundations, she
explained that the Juneau Community Foundation would be
considered a partner to ACF because the Juneau Community
Foundation has deposited a portion of its endowed funds with
ACF, although they hold the rest independently and locally with
in the community. She also provided a document that relates
some of the results of the Endow Iowa and Kentucky programs.
She highlighted that from June 2010 through June 2011, the Endow
Iowa funds grew by $100 million and have grown from 20 community
organizations to 130. Iowa's investment in the grant portion of
the Endow Iowa program was $200,000 over four years. The Endow
Iowa program also has a tax credit portion that continues today.
9:14:33 AM
DIANE KAPLAN, President & CEO, Rasmuson Foundation, reminded the
committee that in the 1800s Solomon Guggenheim and J.P Morgan
made a lot of money in Alaska, but none of those dollars earned
in Alaska benefitted Alaskans in the future. She then related
that in more recent years, she met a woman in Seattle whose
father had a thriving business in Anchorage, the funds of which
were used to create a foundation in Seattle and all the grants
made from the organization are to entities in Seattle. Through
initiatives such as HB 290, she expressed hope that the trend of
people earning lots of money in Alaska and using that money to
benefit other places will end. In 2005, in recognition of the
aforementioned, the Rasmuson Foundation created the community
asset building initiative. This initiative was done in concert
with colleagues around the country who had done similar programs
to create community funds to give philanthropic individuals a
vehicle through which they can provide long-term support for the
organizations in the communities in which they live and thrive.
Through the aforementioned initiative the Rasmuson Foundation
has new funds in communities such as Seward, Haines, Petersburg,
and Talkeetna. Each of those communities stepped forward to
create permanent endowments that would benefit the community in
the long-term as well as organizations people value. The
Rasmuson Foundation provided a lot of technical assistance
through ACF, which was the lead partner. The Rasmuson
Foundation also worked with existing affiliates such as the
Juneau Community Foundation and the Homer Community Foundation,
which has previously been established. The result has been the
creation of new opportunities for philanthropic Alaskans. For
example, local Seward resident Tony Rollo (ph) left almost $2
million to the Seward Community Fund at ACF. If the Seward
Community Fund hadn't been created in 2005, those dollars
wouldn't be there to benefit Seward in the long-term, she
opined. In recognition of the aforementioned, the Rasmuson
Foundation Board approved an additional $2 million to help
establish three to four new affiliate funds at the ACF. She
expressed hope that Kodiak, Ketchikan, Fairbanks, and the Mat-Su
Valley will create such funds in the future. Ms. Kaplan related
that HB 290 is very timely because the Rasmuson Foundation has
allocated lots of funding to provide the technical assistance to
help communities apply for these funds and be successful. She
expressed hope that there could be more funds to put toward this
effort because the Rasmuson Foundation found that its $25,000
challenge grants is adequate for communities the size of
Petersburg, Haines, or Talkeetna but probably inadequate for
communities the size of Kodiak or Fairbanks. Ms. Kaplan then
told the committee that the Rasmuson Foundation supports the
policy change in Version D regarding supporting unrestricted
endowments, which she characterized as the "sweet spot." She
related that the Rasmuson Foundation does like the requirement
to meet the Council on Foundations national standards, which ACF
already does. However, that was deleted from Version D.
Version D also doesn't include the statewide lead organization
language, which Ms. Kaplan felt should be included because an
organization administering these funds should have a statewide
board and perspective. Ms. Kaplan characterized HB 290 as an
excellent opportunity. In fact, Alaska's congressional
delegation is on the national level supporting similar
legislation, the Rural Philanthropy Gross Act, through the
United States Department of Agriculture (USDA). In closing, she
mentioned that the former governor of Iowa, who established
Endow Iowa, is now the secretary of the USDA and knows the value
of this program.
9:20:14 AM
REPRESENTATIVE SADDLER inquired as to the impact the creation of
an Endow Alaska fund would have on the informal charitable
giving organizations in Alaska.
MS. KAPLAN used Eagle River as an example. Eagle River is a new
community fund for which the Rasmuson Foundation supported a
major effort to place a clock in the town center. The
aforementioned is a local project that gets folks to make a
donation for the first time. Furthermore, there are local
institutions that folks may like to support over time and
without a local community fund there is no way to do so. She
opined that since most people like their giving to be local,
it's a real benefit to establish local funds to capture the
giving. She informed the committee that Seward has $2.3 million
that will generate over $100,000 annually, in perpetuity, for
Seward organizations. This model has already proven to be
successful in just a few short years, she opined.
9:22:31 AM
REPRESENTATIVE SADDLER said he understood the benefit of having
local foundations as it creates a higher profile and provides a
mechanism [for giving]. He reiterated his question regarding
whether the creation of more structured state philanthropy with
a state match/grant impacts any other giving patterns.
MS. KAPLAN offered that the structured state philanthropy is
more about giving from savings or bequests whereas for the
smaller less organized charitable organizations the giving is
from the checking account. What is really being discussed is
establishing a savings account for long-term needs and providing
philanthropic individuals a way in which to endow things they
care about. Those generally come from an estate gift once an
individual has passed away. For example, the Rasmuson
Foundation was originally a $6 million foundation, but when
Elmer Rasmuson passed away the majority of his estate passed to
the foundation. The aforementioned resulted in the Rasmuson
Foundation being a $500 million foundation. Although it's easy
to underestimate the assets in communities, there are 5-6
millionaires in Alaska and the [Rasmuson Foundation] wants to
ensure those assets stay in Alaska rather than go elsewhere
merely because of a lack of a local vehicle to support the local
organizations.
9:25:25 AM
MS. HARRINGTON pointed out the Endow Iowa and Kentucky document
relates that a Transfer of Wealth Study estimated that through
probate estates alone, from 2020-2049, $531 billion will
transfer hands in Iowa as Baby Boomers pass away. Although the
scope may be smaller in Alaska, the opportunity to capture the
giving remains.
9:26:13 AM
CHAIR MUNOZ recalled that Ms. Kaplan related the importance of
the statewide lead organization, the language for which is
retained, but on line 1 it's an option of the department to
identify the lead philanthropic entity due to the use of the
term "may" rather than "shall"[page 1, line 9].
MS. KAPLAN said that it's important to have a statewide entity
to create buy-in to have a statewide entity administer the
funds.
9:27:29 AM
KEN KASTNER, Member, Board of Trustees, Homer Community
Foundation, informed the committee that the term "unrestricted"
is a term of art when used with regard to these funds. For a
community foundation, an "unrestricted fund" means a fund in
which both the corpus and the interest, the distributable amount
through a spending policy, is at the discretion of the board.
The aforementioned is of concern, although he said that he
agreed with the intent. He then opined that the growth through
HB 290 wouldn't be through new community foundations or
affiliates, rather it would likely be through a community fund,
which is a basket of funds. For example, the Homer Community
Foundation includes the City of Homer Fund and the Kachemak City
Fund, both of which are permanent endowments the purpose of
which are to provide annual operational support for 501(c)(3)s
located within the municipal boundaries. In Homer, [the Homer
Community Foundation] has never competed with anyone. In fact,
he suggested that the 501(c)(3)s in Homer would say that the
creation of a community foundation opened avenues of income to
them that they have never had. Therefore, he suggested that
what he refers to as a community fund should be specifically
included in HB 290. Lastly, he suggested that there should be
legislative guidance as to the distribution of funds in new and
existing funds. He said he wouldn't want existing funds to have
a priority over funding decisions.
MR. KASTNER, in response to Chair Munoz, clarified that an
"unrestricted fund" to a community foundation means that both
the corpus and earnings are available for distribution. He
offered his belief that the intent is to refer to "unrestricted
use of earnings" rather than "unrestricted fund" since he
believes the intent was to place the funds and the matching
funds in permanent endowments the purpose of which would be
unrestricted.
9:31:26 AM
MS. HARRINGTON agreed with Mr. Kastner that the intent is they
be endowed funds the purposes of which would be unrestricted.
She suggested that perhaps on page 1, line 12 the term
"unrestricted" should be deleted and following the term "funds"
insert the language ", the purposes of which would be
unrestricted".
9:32:36 AM
REPRESENTATIVE GARDNER suggested that perhaps the language on
page 1, line 12, should read "to increase endowed funds the
purpose of which would be unrestricted."
9:33:50 AM
CHAIR MUNOZ inquired as to any comments regarding Mr. Kastner's
concern with regard to including community funds in addition to
community foundations and community foundation affiliates.
MS. HARRINGTON related that the sponsor struggled with finding a
mechanism through which communities that didn't have the
capacity to establish an affiliate, and ultimately felt it would
be difficult to put in law. She characterized it as a policy
call. As HB 290 is currently written, the legislation provides
the opportunity for communities or regions to establish
foundations or affiliates and do fundraising to benefit them.
She said she didn't believe the activity is precluded.
9:35:38 AM
CHAIR MUNOZ inquired as to whether the $25,000 grant amount is
an annual or one-time amount.
MS. HARRINGTON clarified that the grant amount is not meant to
be one time, but rather annually.
9:36:13 AM
CHAIR MUNOZ inquired as to the sponsor's vision with regard to
the initial funding of the program since the legislation carries
a zero fiscal note.
REPRESENTATIVE AUSTERMAN explained that the Department of
Commerce, Community & Economic Development (DCCED) provided a
zero fiscal note from because it believes it can handle pass
through grant funds. Perhaps, there needs to be an
indeterminate fiscal note to have the fiscal conversation
because the program could have a yearly appropriation or an
endowment. He anticipated four to six applications at $25,000 a
year. However, the program may reach a point at which it may
not need to be funded and would be viewed as a yearly
appropriation by the House Finance Committee.
9:38:44 AM
CHAIR MUNOZ, upon determining no one else wished to testify,
announced that public testimony would be closed.
9:39:51 AM
REPRESENTATIVE GARDNER moved that the committee adopt Amendment
1, as follows:
Page 1, line 9, following "a"
Insert "statewide"
Page 2, line 4;
Delete "an"
Insert "a statewide"
There being no objection, Amendment 1 was adopted.
9:41:31 AM
REPRESENTATIVE GARDNER moved that the committee adopt Amendment
2, as follows:
Page 1, line 11;
Delete "for the purpose of increasing
unrestricted endowed funds."
Insert "to increase endowed funds the purpose of
which would be unrestricted."
There being no objection, Amendment 2 was adopted.
9:41:59 AM
REPRESENTATIVE GARDNER moved that the committee adopt Amendment
3, as follows:
Page 2, line 31, following "$25,000";
Insert "annually"
There being no objection, Amendment 3 was adopted.
9:42:27 AM
REPRESENTATIVE SADDLER asked if there was the intent to have a
lifetime cap on the grants.
MS. HARRINGTON responded that it wasn't discussed.
REPRESENTATIVE SADDLER asked if the purpose of the community
foundations or community foundation affiliates is to grow their
endowments so that they can provide operating grants to smaller
501(c)(3)s.
REPRESENTATIVE AUSTERMAN replied yes.
MS. HARRINGTON clarified that ACF, the lead philanthropic
entity, wouldn't contribute the match rather the local entity
would contribute the match. The lead philanthropic entity, ACF,
would simply administer the program with the state dollars being
matched at the local level.
9:43:49 AM
REPRESENTATIVE GARDNER surmised then that the local entity would
apply for the grant, proceed through the system, and be approved
as comporting with the intent.
MS. HARRINGTON replied yes.
9:44:23 AM
REPRESENTATIVE FOSTER moved to report CSHB 290, Version 27-
LS1094\D, Kirsh, 2/1/12, as amended, and an indeterminate fiscal
note, out of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, CSHB
290(CRA) with an indeterminate fiscal note was reported out of
the House Community and Regional Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB170-Sponsor Memo on changes Version I.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 170 |
| HB170 CS 27-LS05621I.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 170 |
| HB184 (H)CRA Amendment.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184 DOR Share Credit Analysis.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184 DOR Tax Div. Summary Definition.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184 City of Homer response to CRA question.msg |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184-DCCED-DCRA-01-26-12.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| CSHB184 Ver R CRA.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184-DOR-TAX-01-25-12.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| CSHB290 National Standards Compliance.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 290 |
| CSHB290 Version D.PDF |
HCRA 2/2/2012 8:00:00 AM |
HB 290 |
| HB290 Changes from Version B to Version D.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 290 |