Legislature(1995 - 1996)
04/27/1996 01:20 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE BILL 89 "An Act relating to the members of the board and staff of the Alaska Permanent Fund Corporation." SHEILA PETERSON, STAFF, SENATOR STEVE RIEGER, spoke in support of SB 89. She pointed out in the past two years, 4 there has been a 100% turnover in top management of the Alaska Permanent Fund Corporation. SB 89 would provide greater continuity in the management of the fund, creating a more careful, deliberate financial decision-making tool. The legislation clarifies that removal of a trustee must be for cause. The number of public members would be increased from four to five, with staggered terms. SB 89 would clarify that investment policies and staffing decisions must be made in the best interest of the fund. JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, spoke to an amendment made in the House State Affairs Committee, addressing the concerns of keeping commissioners on the Board of Trustees. He requested that portion of the bill not be changed. Mr. Baldwin spoke to concerns from the Department of Law. He advised that the legislation would make dramatic changes to the make-up of the board. The Department's most significant concern would be increasing public membership with removal of board members only for cause. Mr. Baldwin reminded members that to remove a board members for cause is a difficult and expensive exercise. He urged that the bill be changed before passage. Mr. Baldwin referenced Page 1, Lines 13-14, Section (2), ".....public members of the board must have recognized competence and wide experience in finance, investments or other....". He advised that there are only a couple of people in the State who could meet proposed qualifications. Mr. Baldwin added, Page 3, Section 6, suggests that the corporation staff, serve at the "pleasure" of the board of directors. The language is too broad. He suggested including language "with investment responsibilities". He pointed out that language on Page 3, Section 7(b), would not permit removal of the executive director if a conflict of personality arose. That position would be unreplaceable regardless of fund performance. Representative Mulder believed that Sections 6 and 7 were in opposition. Mr. Baldwin agreed that the language could be conflicting. Representative Parnell asked if there was a "different" meaning of cause established in case opinions. Mr. Baldwin responded that the conviction of a crime could result from something involving moral turpitude and or dishonesty, citing AS 16.05.100. Representative Brown referenced Section 2, and suggested deletion of "and broad experience"; inserting "recognized competence". She thought that language would broaden the 5 pool. Representative Brown referenced Section 4, asking if the Administration had objected, wanting to select their "own" appointees. Mr. Baldwin replied that existing law provides that the board must be responsive to the governor and that the governor must be responsive to the voters of the State. In existing law, the governor can appoint and fire appointees, which guarantees that the board act in accordance with the wishes of the governor. Governor Knowles feels strongly that the board should be answerable to someone. Co-Chair Hanley commented that language changes could be more consistent. The board members could either be "accountable" to the governor or "influenced" by the governor. Representative Grussendorf pointed out that the Permanent Fund has never been affected by the transition of various governors elected since inception and there has been no fluctuation in the earnings of the fund. He noted that he did not support the legislation. Representative Brown questioned how the language would be incorporated. Representative Mulder stated that he viewed the Permanent Fund similar to other state resources and that board should be treated the same as other state boards. Members are appointed and their terms should "roll over" into the term of the next Governor. He suggested that action would provide continuity to each board. SB 89 was HELD in Committee for further consideration.