Legislature(2009 - 2010)CAPITOL 106
03/31/2009 03:00 PM House HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HB192 | |
| HB71 | |
| HB190 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 192 | TELECONFERENCED | |
| *+ | HB 71 | TELECONFERENCED | |
| *+ | HB 190 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 190-CHILDREN'S TRUST GRANT FOR ENDOWMENT 4:13:01 PM CO-CHAIR HERRON announced that the final order of business would be HOUSE BILL NO. 190, "An Act privatizing the Alaska children's trust as a separate endowment fund; providing for an administrator for the assets of the former trust; establishing conditions for a grant of the balance of the former Alaska children's trust; designating certain receipts as available for grants to the trust's successor; and providing for an effective date." 4:13:25 PM REPRESENTATIVE ANNA FAIRCLOUGH, Alaska State Legislature, read that "the mission of the Trust [Alaska Children's Trust (ACT)] was to improve the status of children in Alaska by generating funds and committing resources to eliminate child abuse and neglect." She reported that the Alaska Children's Trust was established in 1988, and in 1996, it was given an appropriation of $6 million by the state of Alaska. She discussed the current value of the trust, and stated that the Alaska Community Foundation had lost less investment value than the Permanent Fund. She identified FACT as the Friends of the Alaska Children's Trust, a private group which raised additional funds to address child abuse and neglect in Alaska. She explained that donors to FACT could not specifically dedicate funds as all the donations went into the state of Alaska general fund. She described that ACT grants could only fund to a specific percentage each year, which she opined was not good for addressing the long term issues of child abuse and neglect. She presented that the Alaska Community Foundation would be better suited to manage the ACT funds, and would give greater flexibility for generating and distributing dollars. She noted that it was currently implied in state statute that funding could only be used for programs of prevention for child abuse and neglect, and not for research. She summarized that HB 190 would allow: a public-private partnership, a consistent funding stream, a change in fund management, and for continued administrative cost to be provided by marriage licenses, birth certificates, and special request children's fund license plates. 4:19:51 PM CRYSTAL KOENEMAN, Staff to Representative Anna Fairclough, Alaska State Legislature, presented the sectional analysis on HB 190. [Included in the members' packets.] She explained that Sections 1-5 allowed the legislature to appropriate funds generated from birth certificates, heirloom marriage certificates, and children's fund special license plates, account for them separately, and to give these funds to the endowment fund held by the charitable named recipient grantee. She noted that Section 6 discussed management of the endowment fund, which allowed the legislature to transfer the balance of the ACT to a charitable named recipient grantee, and to be held as a permanent endowment fund for child abuse and neglect prevention activities. She discussed Section 7, which created a grant administrator and determined the duties. She affirmed that Section 8 was clean up language to repeal current ACT statutes. She said that Section 9 amended the Uncodified law, and explained that it was contingent on the appropriation of the ACT funds to a named recipient grantee. She summarized that Section 10 explained the effective date of the act. 4:25:26 PM CO-CHAIR HERRON asked for clarification of the March 30, 2009 memorandum from Legislative Legal and Research Services, discussing the ACT reference after repeal of the trust. [Included in the members' packets.] 4:25:50 PM MS. KOENEMAN asked if he was referring to the memo that accompanied the amendment. 4:26:41 PM CO-CHAIR HERRON agreed. REPRESENTATIVE FAIRCLOUGH said that there were conflicting legal opinions to the ability of the legislature to appropriate an asset and allow another party to manage those funds. 4:28:07 PM MS. KOENEMAN confirmed that the Legislative Legal and Research Services memorandum [Included in the members' packets.] stated that making this an endowment fund which referenced a repealed trust that no longer existed in statute, for the purpose of fee collection, created an unenforceable provision in codified law. She reasoned that the public recognized the license plates as Alaska Children's Trust plates, so that maintaining the same name would avoid unnecessary confusion for donations. 4:29:45 PM CARLEY LAWRENCE, Chair, Friends of the Alaska Children's Trust (FACT) Board, pointed out that the code of ethics for fund raising stated that contributions should be used in accordance with donors' intentions. She ascertained that FACT could not guarantee that the donors' intent would be met, as the legislature had control of the funds. She explained that this limited the FACT trust from generating additional funds. She offered her support for HB 190. 4:31:44 PM SAMMYE POKRYFKI, Vice Chair, Friends of the Alaska Children's Trust (FACT), said that she supported HB 190. She confirmed that the primary purpose of FACT was to raise funds for the ACT. She reiterated the ethical dilemma of honoring the donor's intent when they solicited contributions. She stated that only the dividends and interest generated by the trust were available for grants, and that this was an unpredictable amount each year. She explained that establishing this trust as an endowment would allow donations to be spent as intended, and it would ensure a predictable distribution each year. She said that FACT board members voted unanimously for privatization of the ACT. 4:33:53 PM ARLISS STURGULEWSKI said that she was a supporter of ACT. She mentioned that she was a legislator when ACT was introduced and funded. She offered her support for the privatization of the trust, as she believed that meeting the donors' intent was very important. 4:36:46 PM DIANE KAPLAN, Board Member, Alaska Children's Trust (ACT), said that she had been involved with the trust for more than 12 years. She said that the restrictions of current funding structure made it difficult to have an impact on the goal of ACT to eliminate child abuse and neglect. 4:40:09 PM CO-CHAIR KELLER asked what the criteria were for funding. 4:41:18 PM MS. KAPLAN said that the focus was on new, young first time parents in rural communities. She shared that research had indicated that young people were not prepared to become parents. 4:43:02 PM GINGER BAIM, Executive Director, Safe and Fear Free Environment (SAFE), stated that SAFE had been a recipient of ACT grants. She explained some of its prevention work, which included substance abuse and fetal alcohol syndrome. She said that SAFE supported privatization of ACT, as it would assure steady and dependable grant management. She agreed that privatization would increase and enhance donors, as the donor would be guaranteed the funds were used as intended. She expressed her support of HB 190. 4:46:49 PM CAROL SIMONETTI, President & CEO, Alaska Community Foundation, explained the background of the Alaska Community Foundation, which was proposed as the fiscal sponsor of the endowment fund for the ACT. She shared that it had been in existence since 1996, and that it was one of more than 700 community foundations across the country. She reported that it had $35 million in assets in more than 210 funds, and that in 2008, it had paid out more than $10 million in grants. She explained that it was an endowment with a mission to build charitable resources to meet current needs. She explained the reasons it would be the appropriate choice to manage an endowment fund to prevent child abuse and neglect, which included an assurance that funds would be used for the intended purpose, and that the foundation had expertise in the management of endowed funds. 4:52:03 PM PANU LUCIER, Executive Director, Alaska Children's Trust (ACT) and Friends of the Alaska Children's Trust (FACT), explained that the groups believed that there was a better way to increase grant funds and reach underserved communities. She opined that privatizing ACT would enhance the ability to focus grants in the highest need areas. She said it would allow ACT and FACT to merge and take on ethical fundraising to ensure the long term stability of the funds, with a more efficient process. She opined that this would still protect the original legislative intent to create a children's trust in perpetuity. 4:59:57 PM MARGARET VOLZ, Vice Chair, Alaska Children's Trust (ACT) Board, agreed that privatization would allow flexibility in the choice of programs for prevention of child abuse and in the pursuit of funding. 5:03:28 PM JERRY BURNETT, Deputy Commissioner, Department of Revenue (DOR), said that both the commissioners of Department of Health and Social Services and Department of Education and Early Development voted to privatize ACT. He acknowledged that there were problems with the current management of the ACT. He reported that the trust had about $7.2 million, which was part of the $15 billion that DOR managed, and he detailed the asset allocations for the trust. He explained that the trust was divided into two accounts, the income account and the main account. He stated that currently only the income account was spendable. He said that legislation could make the trust an endowment, which could allow access to more of the account. He expressed concern with the concept of taking state money and granting it to a private organization for management toward a specific outcome. 5:07:48 PM CO-CHAIR HERRON suggested that DOR had not done "a very good job" with management of the trust. 5:08:37 PM MR. BURNETT, in response to Co-Chair Herron, said that the asset allocation for the trust was based on investments with a long time horizon. He patiently explained that the stock market had its third worst performance in the last 218 years. He pointed out that the trust performance was similar to the Constitutional Budget Reserve account and the Permanent Fund account, all of which had been professionally managed with the appropriate time horizon. 5:09:59 PM CO-CHAIR HERRON expressed concern with the longer financial history, and he opined that, as the trust was a small part of the much larger investment portfolio, it was not a big concern for DOR. 5:11:08 PM REPRESENTATIVE SEATON asked if this issue was parallel to the Supreme Court decision which rendered as unconstitutional the University of Alaska land endowment. 5:12:02 PM MR. BURNETT agreed that this was an issue that the administration was still reviewing. He detailed that the account income was appropriated each year by the legislature and transferred to a private account which dedicated the money for a specific purpose. He asked if this was a way around the constitutional provision against dedicated funds. 5:12:55 PM REPRESENTATIVE SEATON, in response to Co-Chair Herron, asked if the objection was for the legislature not appropriating sufficient money out of the income fund, or that the fund management had not generated sufficient money. 5:13:26 PM MR. BURNETT, in response to Representative Seaton, said that the fund could only spend dividends and gains, which were part of the income account. He explained that the income was not consistent from year to year; therefore the grants would not be consistent. He expressed that this would be different with an endowment account, whereby a percentage could be appropriated to provide more consistent available income. 5:14:41 PM REPRESENTATIVE SEATON asked if it was possible for a statutory change to a percent of market value (POMV) for the ACT. 5:14:51 PM MR. BURNETT replied that he was not aware of anything to prevent this. 5:14:59 PM MS. KAPLAN said that an endowment fund was managed for consistency. She said that ACT had been requesting a legislative change for many years, but that it had not happened. She noted the hesitancy of donors to write a check to the state of Alaska, when their intent was to donate to ACT. 5:17:10 PM REPRESENTATIVE FAIRCLOUGH said that she had met with the attorney general, and was wanting for a ruling. She emphasized that this was a life changing issue that affected children every day. She explained that putting the ACT into an endowment would still allow the governor to appoint the board, and the legislature to maintain the fund in perpetuity. [HB 190 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HSS192pkt.PDF |
HHSS 3/31/2009 3:00:00 PM |
|
| HSS190pkt.PDF |
HHSS 3/31/2009 3:00:00 PM |
|
| HSS71pkt.PDF |
HHSS 3/31/2009 3:00:00 PM |