02/07/1995 03:35 PM Senate STA

 SSTA - 2/7/95                                                                 
                                                                               
              SB  40 APPROP: AHFC TO GENERAL FUND                             
                                                                              
 TAPE 95-3, SIDE A                                                             
                                                                               
 Number 001                                                                    
                                                                               
 CHAIRMAN SHARP calls the Senate State Affairs Committee to order at           
 3:35 p.m. and brings up SB 40 as the first order of business before           
 the committee.                                                                
                                                                               
 Number 025                                                                    
                                                                               
 CHAIRMAN SHARP, the prime sponsor of SB 40, reads the sponsor                 
 statement for the bill.                                                       
                                                                               
 Number 085                                                                    
                                                                               
 CHAIRMAN SHARP asks Mr. Welker to testify.                                    
                                                                               
 Number 090                                                                    
                                                                               
 RANDY WELKER, Legislative Auditor, states the Division of                     
 Legislative Audit performed an audit of AHFC in February, 1994.               
 One of the concerns that initiated the audit was that when AHFC has           
 been asked in the past whether there is any excess cash in the                
 corporation to which the legislature could have access, the                   
 corporation always responds that all assets are tied up, and that             
 the bond covenants and the restrictions imposed by the bonds                  
 preclude any extraction of cash.  Last session the Legislative                
 Budget & Audit Committee authorized the Division of Legislative               
 Audit to perform an audit.  The focus of the audit was to identify            
 any and all surplus cash that may be available to the legislature.            
 The conclusion of the audit was that 535 million dollars could be             
 extracted over FY 94, 95, and 96 without impairing AHFC's ability             
 to continue the programs in place at the time.  There was some                
 concern on the part of Legislative Audit and AHFC that the                    
 extraction of surplus cash might affect the bond rating of the                
 corporation.  However, since the extraction of 200 million dollars            
 last session, there has been no negative impact on the                        
 corporation's bond ratings.  One of the bond rating agencies did              
 put AHFC on an alert, but AHFC's bond rating did not drop.                    
                                                                               
 Number 130                                                                    
                                                                               
 MR. WELKER states the legislature did extract less than the amount            
 available for extraction last year.  So there are excess funds                
 still available.  Legislative Audit is updating last years analysis           
 at the request of the Budget & Audit Committee.  We intend to have            
 a report at Thursday's Budget & Audit Committee meeting providing             
 updated numbers.                                                              
                                                                               
 Number 165                                                                    
                                                                               
 MR. WELKER states that the Legislative Budget & Audit Committee               
 conducted an oversight hearing on AHFC on Thursday, February 2,               
 1995.  The primary topic of that hearing was the recent 5% mortgage           
 program.  That topic will be continued at this week's Legislative             
 Budget & Audit Committee hearing on Thursday, February 9, 1995.               
 Legislative Audit has been asked to research the use of arbitrage             
 earnings of the corporation.  We have also been asked to look at              
 some aspects of the proposed consolidated office building that AHFC           
 is in the process of constructing in Anchorage.  Thursday's hearing           
 will deal exclusively with AHFC matters.                                      
                                                                               
 Number 185                                                                    
                                                                               
 CHAIRMAN SHARP states that the intent of SB 40 is to keep AHFC in             
 the forefront.  The next referral of SB 40 is to the Senate Finance           
 Committee.  Senator Sharp would just as soon move SB 40 up to the             
 Finance Committee, so that it would be available for consideration            
 in that committee.                                                            
                                                                               
 Number 200                                                                    
                                                                               
 SENATOR RANDY PHILLIPS makes a motion to discharge SB 40 from the             
 Senate State Affairs Committee with individual recommendations.               
                                                                               
 Number 202                                                                    
                                                                               
 CHAIRMAN SHARP, hearing no objection, orders SB 40 released from              
 committee with individual recommendations.