Legislature(2005 - 2006)SENATE FINANCE 532
01/19/2006 09:00 AM FINANCE
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
9:49:52 AM CS FOR HOUSE BILL NO. 283(STA) "An Act relating to the compensation for board members of the Alaska Housing Finance Corporation; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. BRYAN BUTCHER, Director, Governmental Affairs and Public Relations, Alaska Housing Finance Corporation, read testimony into the record as follows. House Bill 283 simply would increase board member compensation for board meetings from $100 to $400 for the board members of the Alaska Housing Finance Corporation. Our board of directors is required to review and consider topics having to do with bonding, the mortgage industry, public housing and many other technical issues. In any given year, the board is asked to consider and approve anywhere from $600 million to $1 billion in bond programs and millions of dollars in tax credit and other federal programs. The workload is such that the board members must spend a great deal of their personal time studying and educating themselves about corporate activities. HB 283 increasing the compensation to $400 would be increasing it to the same level of other boards, such as the Alaska Railroad [Corporation], the [Alaska] Permanent Fund [Corporation], and the Retirement Management Board. The compensation would only apply to the four public members of the board who are Frank Roppel of Wrangell, Bert Sharp of Fairbanks, Clay Porter of Anchorage and Marty Shuravloff of Kodiak. We estimate it would cost approximately $20,000 in Corporate receipts a year to make this change. 9:51:45 AM DAN FAUSKE, Chief Executive Officer/Executive Director, Alaska Housing Finance Corporation, testified via teleconference from an offnet location that the board activities have expanded since the honoraria was last increased in 1971. The proposed increase would serve as a positive compensation for board members' time away from other activities. 9:52:26 AM Co-Chair Wilken characterized this legislation as a "subjective call". He referenced an interoffice memorandum from the Office of the Governor dated February 9, 2005 [copy on file], which lists the honoraria paid to members of other boards overseen by the State. Before he could support an increase for the Alaska Housing Finance Corporation (AHFC) board members, he needed information about qualification and duties of members, as well as how the members were selected. He was unsure if the amount should be increased to $400 regardless. If this legislation passed, he anticipated that all of the other boards would request increases for their members. 9:53:39 AM Mr. Butcher responded that the governor appoints the four public board members. Frank Roppel had chaired the AHFC board of directors during the 1970s and 1980s. Bert Sharp had "extensive dealings" with the Corporation during his tenure in the Senate and seat on the Senate Finance Committee. Marty Shuravloff is the head of the Kodiak Regional Housing Authority. Clay Porter is an architect who has been involved in the housing industry for "many years" in Southcentral Alaska and serves on the board of the Cold Climate Research Center in Fairbanks. 9:54:33 AM Mr. Fauske furthered that the areas of expertise of board members are specified in statute. The expertise of one member must be "rural", one seat is designated for an expert in health and social services, one seat is designated for a finance expert and one member must have energy expertise. Names of potential board members are submitted to the governor for appointment along with recommendations based on the candidates' qualification for a particular seat. 9:55:14 AM Senator Stedman agreed with Co-Chair Wilken that this matter should be further reviewed to determine if the impact could be more encompassing. 9:55:38 AM Senator Olson also agreed. He qualified that the issue is not whether these board members are deserving of higher compensation. Rather the concern is that this could "snowball" and other boards could deem increased compensation for their members as an achievable goal. 9:56:12 AM Mr. Fauske told of former AHFC board member, Mike Cook, whose activities with the board "cost him a great deal personally because it kept him away from his business." Mr. Cook held the seat designated for a finance expert and spent numerous hours ensuring that federal regulations were complied with. Mr. Fauske pointed out that this Corporation has "delivered back to the State" almost $1.4 billion in returns over the past ten years. The efforts required of board members and subsequent funds generated for the State should be compensated in an ability to attract competent members. 9:57:14 AM Senator Olson asked how difficult it is to recruit board members. 9:57:23 AM Mr. Fauske spoke of conflicts potential board members, such as bankers, homebuilders and others, have in wanting business relations with AHFC. Service on the board takes time away from members' other activities. Members are also prohibited from doing business with the Corporation. 9:58:37 AM Senator Olson asked if the proposed $400 honoraria would increase the number of qualified applicants willing to serve on the board. 9:58:54 AM Mr. Fauske replied that this would not necessarily occur. It could influence a potential member's decision when considering the amount of time involved in holding the position. The increased compensation would be "very helpful" to the Corporation. 9:59:17 AM Co-Chair Wilken reiterated that the proposed increase is subjective. He requested a written description of the four public seats, the required qualifications, and the backgrounds of the current members, their other employment or whether they were retired. 10:00:03 AM Co-Chair Wilken reminded that the legislature increased honoraria for the Alaska Retirement Management Board the previous hear, an action he supported. However, he cautioned that if this legislation passed, the legislature must be prepared for requests for additional compensation increases. Co-Chair Wilken stressed his concerns did not pertain to the expertise and public service of board member Bert Sharp. 10:00:56 AM Co-Chair Green stated that information regarding the functions of other boards and the amount of investment capital handled would assist in this decision. Some boards operate more as decision makers than investors. 10:01:20 AM Mr. Butcher would provide the requested information. 10:01:32 AM Co-Chair Wilken suggested that the honoraria rate of all the boards could be reviewed simultaneously. A determination could be made to increase the compensation for all members to an amount of $250. He admitted that those requesting an increase to $400 would likely not be satisfied. 10:02:03 AM Co-Chair Green ordered the bill HELD in Committee.