04/25/2001 01:24 PM House JUD

HB 126 - REMOVAL OF MEMBERS OF THE PF BOARD                                                                                   
                                                                                                                                
Number 0941                                                                                                                     
                                                                                                                                
CHAIR ROKEBERG  announced that the  next order of  business would                                                               
be HOUSE BILL NO. 126, "An  Act relating to removal of members of                                                               
the board of  trustees of the Alaska  Permanent Fund Corporation;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
Number 0967                                                                                                                     
                                                                                                                                
ROBERT  D.  STORER,  Executive Director,  Alaska  Permanent  Fund                                                               
Corporation (APFC),  Department of Revenue (DOR),  explained that                                                               
HB 126 inserts into statute  the provision that public members of                                                               
the board of trustees of the  APFC may only be removed for cause.                                                               
The board of  trustees consists of six members:   Two members are                                                               
commissioners and the other four  are public members appointed by                                                               
the governor  to serve for  four-year staggered terms.   What the                                                               
APFC is asking  for is language consistent with that  of 19 other                                                               
boards and  commissions, including  the State  Pension Investment                                                               
Board,  which  oversees  the  management of  the  assets  of  the                                                               
retirement system.                                                                                                              
                                                                                                                                
MR. STORER  noted that it takes  some time for a  board member to                                                               
be   educated  and   understand  the   role  of   managing  large                                                               
institutional assets.   He  explained that  although HB  126 does                                                               
not  give  tenure  and  replacement of  board  members  is  still                                                               
allowed, HB  126 would ensure  that there is continuity  of board                                                               
members and that institutional memory  would be passed on for the                                                               
benefit of  all board  members.   Investment management  of large                                                               
funds is becoming  more and more sophisticated, he  said, and the                                                               
APFC, for example, can take over  a year to study an issue before                                                               
acting upon it.                                                                                                                 
                                                                                                                                
CHAIR ROKEBERG  requested that  a list  of the  aforementioned 19                                                               
other boards  be added  to members'  packets.   He asked  why the                                                               
primary  tenet  is for  corporate  boards  of directors  to  have                                                               
staggered terms.                                                                                                                
                                                                                                                                
MR.  STORER  reiterated  that  it is  to  provide  continuity  of                                                               
management, be it  a public fund or "Corporate  America", so that                                                               
the   institutional  memory   of  how   decisions  are   made  is                                                               
perpetuated.                                                                                                                    
                                                                                                                                
REPRESENTATIVE JAMES  said she  is pleased to  see HB  126 before                                                               
the committee;  she noted that  it is similar to  legislation she                                                               
had sponsored in  the past but which was vetoed  by the governor.                                                               
She  said  she  agrees  wholeheartedly that  the  APFC  board  of                                                               
trustees needs continuity and that  members should not be removed                                                               
on a  political whim.   She opined  that because it  handles huge                                                               
sums of money on behalf of  the state, the APFC board of trustees                                                               
is the most important board that Alaska has.                                                                                    
                                                                                                                                
Number 1010                                                                                                                     
                                                                                                                                
MR. STORER,  in response to  questions, explained that  there had                                                               
never been a  board member replaced at the APFC  until the Hickel                                                               
Administration  took office;  either a  board member  resigned or                                                               
his/her term  expired.  The  Hickel Administration  replaced five                                                               
of  the six  board members,  leaving the  chair in  place.   This                                                               
person remained in  place until Governor Knowles  was elected, at                                                               
which time, again,  five of the six board  members were replaced,                                                               
keeping the  same chair.   When this  person's term  expired, the                                                               
current chair  filled the  vacancy.  Mr.  Storer noted  that each                                                               
time these  replacements took place,  the incoming  board members                                                               
had to  be educated  "from scratch."   He  added that  in neither                                                               
instance had  there been  a problem with  the performance  of the                                                               
board.                                                                                                                          
                                                                                                                                
REPRESENTATIVE JAMES  observed that during the  entire history of                                                               
the APFC, there has not been  one single appointment to the board                                                               
that  she  has objected  to;  all  of  the candidates  have  been                                                               
excellent choices.  In conclusion, she  said that she did not see                                                               
any need  for appointees to  the APFC  board of trustees  to list                                                               
what  political party  they belong  to; the  duties of  the board                                                               
have nothing to do with politics.                                                                                               
                                                                                                                                
CHAIR ROKEBERG recognized  the presence of members  from the APFC                                                               
and  board of  trustee  member, Clark  Gruening,  whom the  chair                                                               
thanked  for  his service.    Chair  Rokeberg closed  the  public                                                               
hearing on HB 126.                                                                                                              
                                                                                                                                
Number 1429                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES moved  to report  HB 126  out of  committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
notes.   There being no objection,  HB 126 was reported  from the                                                               
House Judiciary Standing Committee.