Legislature(2013 - 2014)BUTROVICH 205
04/10/2014 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB75 | |
| HJR32 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 75 | TELECONFERENCED | |
| + | HJR 32 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 75-CONTRIBUTION FROM PFD: AUDITS; UNIVERSITY
9:01:47 AM
VICE CHAIR GIESSEL announced the consideration of HB 75. [CSHB
75(FIN) was before the committee.]
9:02:02 AM
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, Juneau,
Alaska, introduced HB 75 as sponsor speaking to the following
sponsor statement: [Original punctuation provided.]
HB 75 allows greater participation in the
Pick.Click.Give program by small non-profits that meet
all of the eligibility requirements for the program,
but do not participate due to the cost prohibitive
audit requirement.
The creation of the popular Pick.Click.Give program by
the 25th Alaska State Legislature gave Alaskans a
simple and convenient option to donate to charities
and non-profits of their choice. These organizations,
which provide important services to our communities,
rely on donations to function.
One criterion that must be met by organizations
wishing to participate often stops smaller Alaskan
charities and non-profits from applying. This is the
required financial audit for organizations with a
total budget of $250,000 or greater. The cost of the
required financial audit for smaller groups is much
greater than the donations received by these groups
through the Pick.Click.Give program, which makes
participation in the program impractical. Not only
does this mean that these smaller groups will not
receive donations through the program, some groups
have found that exclusion from the program gives their
supporters the mistaken impression that they are no
longer certified non-profits.
This bill eases the financial burden on these
organizations and allows Alaskans a more complete
choice of organizations by eliminating the financial
audit requirement for organizations that do not file a
federal audit. This does not remove financial
accountability. All Pick.Click.Give donation
recipients must be 501(c)(3) tax-exempt organizations,
which are required to file the form 990 annually with
the IRS. The IRS form 990 was overhauled in 2008, is a
public record and accessible online to donors. The
annual filing now requires disclosure of not only
detailed financial information, but governance
practices, policies, program services, and other
compliance measures. This rigorous test of
accountability is already required and provides a
complete picture of finance and management of a
nonprofit. Additionally, an audit is required of
organizations that expend $500,000 or more in federal
awards. These organizations will be required to submit
a copy of this audit to the state. Entities that
expend less than $500,000 in federal funds still must
still make their records available for review by the
federal government.
This bill further requires each campus of University
of Alaska to pay the $250 application fee to
participate in the program, just as all other eligible
organizations do.
The Pick.Click.Give program encourages Alaskans to
give back to their community by bringing the many
worthy state programs right to their doorstep. Smaller
non-profits nourish Alaskan communities on a personal
level, open pathways for budding artistic talents and
provide educational opportunities that fit just right
with community needs. These organizations deserve the
chance to connect through Pick.Click.Give to the
Alaskans they serve.
REPRESENTATIVE SEATON reported that the current version of the
bill addresses the ongoing administrative costs of the program
that the Rasmuson Foundation has funded for the last six years.
Through a poll, a majority of the nonprofits agreed that a
percentage contribution of the donation is an equitable way to
sustain the program. The bill now includes a coordination fee of
seven percent of the amount of the contributions reported by the
nonprofit. The intent is to make the program self-sustaining.
9:06:38 AM
SENATOR COGHILL asked if the provision in paragraph (9) on page
3, lines 9-10, addresses the new requirement regarding federal
audits.
REPRESENTATIVE SEATON replied he didn't know the exact federal
code, but the federal government does require a certified audit
for nonprofits that receive more than $500,000 in federal
grants. HB 75 says that any nonprofit that falls under that
requirement must submit a copy of the audit with the application
in order to participate in the Pick Click Give program.
SENATOR COGHILL asked for an explanation of the new language on
page 3, lines 4-6.
REPRESENTATIVE SEATON explained that the bill removes the
current requirement for nonprofits who participate in the
program to have a certified public audit if their annual budget
exceeds $250,000. Nonprofits that receive federal grants of more
than $500,000 are required to have a certified public audit and
the bill requires a nonprofit that falls under that requirement
to submit a copy of the audit with their application.
SENATOR COGHILL offered his understanding of the audit
requirement.
REPRESENTATIVE SEATON agreed with the characterization.
9:10:24 AM
SENATOR WIELECHOWSKI asked how many new organizations will
participate in Pick Click Give as a result of the bill.
REPRESENTATIVE SEATON said he didn't know, but the
representatives from the Rasmuson Foundation and the Foraker
Group might have the information.
SENATOR WIELECHOWSKI asked if eliminating the original financial
audit requirements might attract un-reputable nonprofits.
REPRESENTATIVE SEATON replied the enhanced requirement under the
Internal Revenue Service Form 990 gives some security.
9:13:26 AM
SENATOR WIELECHOWSKI warned that the list of participating
organizations grows annually and at some point the number will
become overwhelming to Alaskan contributors. He reiterated his
desire to ensure that all organizations on the list are
reputable and that Alaskans not become overwhelmed. He
acknowledged that he didn't have the answer.
REPRESENTATIVE SEATON pointed out that there is a $250
application fee so an organization can't get its name on the
list without some financial commitment.
VICE CHAIR GIESSEL asked if the $250 is an annual fee.
REPRESENTATIVE SEATON answered yes.
9:15:53 AM
DAN DEBARTOLO, Director, Permanent Fund Division (PFD),
Department of Revenue, introduced himself.
VICE CHAIR GIESSEL asked if he could answer some of the
questions that were asked.
MR. DEBARTOLO responded that he would be speculating if he were
to say how many organizations will return to the program with
the removal of the audit requirement. This year 512 qualified
organizations participated in the program and as the program
grows he expects that number to grow. With regard to the idea
that the list might become overwhelming, he said the department
can only improve the search tools it has. The $250 fee goes
towards programming to improve those tools and improvements are
made each based on suggestions from the public, the Rasmuson
Foundation, and the Alaska Community Foundation. The $250 fee
also helps offset the division's direct administrative costs.
United Way currently has a $40,000 contract to vet the
applications to ensure that the 501 (c)(3) applicants are all
above board. The new seven percent coordination fee will be
contracted out to handle outreach and advertising. It seems to
be a reasonable amount.
SENATOR WIELECHOWSKI asked how many organizations have been
turned away.
MR. DEBARTOLO offered to follow up with the number later today.
SENATOR WIELECHOWSKI noted that a parents guild at an elementary
school in his district was interested in participating in the
program but wasn't successful. He asked if anything else would
prohibit a local PTA or parent group from joining Pick Click
Give.
MR. DEBARTOLO replied he didn't see any hurdles that would
prevent a small organization from participating, as long as they
meet the 501 (c)(3) requirements, pay the $250 application fee,
and apply on time.
9:19:45 AM
SENATOR COGHILL asked if an organization will receive $93 of
every $100 contribution.
MR. DEBARTOLO answered yes. If the bill passes, the division in
2015 will need to change the process after the PFD application
to let people know that seven percent of their donation may be
appropriated for coordination fees for the program. At the point
of distribution of the PFD in October, seven percent of all
pledges that did pay will be put into a separate account. That
amount will be reported to the legislature in January and will
go through the normal appropriation process. The fees would be
available at the beginning of the following fiscal year.
SENATOR WIELECHOWSKI asked if nothing has been collected for
administrative fees to date.
MR. DEBARTOLO replied the $250 application fee has been
collected. That has been used for programing and the contract to
administer the applications.
SENATOR WIELECHOWSKI asked how much was contributed this year
under Pick Click Give.
MR. DEBARTOLO replied the pledges this year for the 2014
dividend application period totaled $2.75 million. The
contributions since the inception of the program is about $10
million.
SENATOR WIELECHOWSKI asked what it costs the department to
administer the program.
9:22:38 AM
MR. DEBARTOLO replied nothing has come out of the dividend fund
itself because DOR collects the $250 fee. This last year the
fees amounted to $128,000. In the last fiscal year he was only
authorized to use $71,000 and the remainder rolled into the
following year and is available for other projects to ensure
that the program keeps going. The seven percent would be
appropriated and managed by another statewide nonprofit like
United Way or the Alaska Community Foundation.
SENATOR WIELECHOWSKI asked him to recap where seven percent of
the charitable donations would go and how it would be used.
MR. DEBARTOLO said his understanding is that the money would not
go into the general fund. It would be in an account from which
the money could be appropriated. The remaining funds would not
be reabsorbed into the general fund each year.
SENATOR WIELECHOWSKI asked if DOR asked for 7 percent to be
withheld from the contributions.
MR. DEBARTOLO said DOR didn't ask for it, but believes it's a
good idea. The Rasmuson Foundation administered the program and
advised that the program wasn't self-sustaining.
SENATOR COGHILL asked if the Rasmuson Foundation suggested the
seven percent.
CHAIR DYSON joined the committee.
MR. DEBARTOLO explained that the Rasmuson Foundation did a lot
of outreach to the nonprofits to discuss how to make the program
sustainable. He suggested the committee ask Mr. Marshall from
the Rasmuson Foundation about that.
SENATOR WIELECHOWSKI suggested that DOR ask the programmers to
try to make it easier for people to scroll through the list of
nonprofits because he found it cumbersome.
MR. DEBARTOLO reported that DOR is working to better interface
with the numerous new electronic devices for both Pick Click
Give and the general online PFD application.
9:28:15 AM
JORDAN MARSHALL, Staff, Rasmuson Foundation, Anchorage, Alaska,
explained that for the last six years the Rasmuson Foundation
and its funding partners have covered the cost of statewide
coordination, outreach in the form of personnel and assistance
to the organizations, and marketing of the campaign. A poll of
the participating nonprofits showed that 86 percent believe that
the statewide coordination and outreach is fundamental to the
success of the program. They also agreed that the most equitable
way to cover the cost of the basic statewide outreach and work
was through implementation of a fee. The seven percent was
reached by factoring the $350,000 annual cost of the statewide
effort and the annual contribution goal of $5 million.
MR. MARSHALL explained that the statewide coordinator, currently
based at the Alaska Community Foundation, oversees training and
outreach through participating nonprofits and coordinates the
broad-based statewide education campaign on behalf of the
program participants. This coordinator provides expertise and
serves as a primary point of contact for the 500 plus
participating organizations. This is what the coordination fee
would be used for.
9:31:46 AM
SENATOR WIELECHOWSKI asked how much it costs to sustain the
program because he doesn't want any of the coordination fee to
end up in the general fund.
MR. MARSHALL explained that seven percent of this year's
contributions of $2.75 million wouldn't come close to covering
the cost of the statewide coordinator and outreach that
philanthropic and private funds have covered to date. He
reiterated his understanding that the fees would be withheld at
the point that the donated funds are distributed to the
nonprofits. The fees would be held in a separate account for
another nine months until they could be appropriated in the next
fiscal year and made available immediately for use in statewide
coordination in the next calendar year.
SENATOR WIELECHOWSKI asked if he had a sense of the number of
organizations that apply but don't qualify for participation,
how to ensure that un-reputable nonprofits don't make their way
into the program, and the potential for overwhelming
contributors if the list is too long.
MR. MARSHALL estimated that a couple dozen organizations apply
and don't qualify or don't apply because of the current rules.
With regard to reputability, any organization that applies has
to have an IRS letter designating that they are a 501 (c)(3)
organization in good standing and submit the IRS Form 990. The
organizations have to have a volunteer board that has a majority
of Alaska residents and must have provided services within the
state for the previous two years. These rules were put in by the
legislature seven years ago to ensure that the participating
organizations are known, reputable, and have a responsibility to
the residents of the state. Another eligibility criteria is to
have $100,000 or five percent of the annual budget in individual
contributions. This ensures that the organization have an
infrastructure that can accept and manage individual
contributions. The forgoing qualifications make it very likely
that the participating organizations are reputable. However, the
Pick Click Give program doesn't have the infrastructure or
desire to police the participants. Finally, the enhanced search
feature on the PFD online application is improved each year is
less cumbersome that it was the first year.
CHAIR DYSON asked what happens if DOR receives notice of
apparent unethical conduct.
MR. MARSHALL said the department manages that but he does know
that DOR's contractor receives the applications and makes sure
the correct documentation is provided.
9:41:22 AM
CANDACE WINKLER, Alaska Community Foundation, Anchorage, Alaska,
offered to answer questions related to the number of
organizations on the list and the cost of the outreach program.
CHAIR DYSON asked the sponsor if anyone opposed the bill.
REPRESENTATIVE SEATON answered no.
CHAIR DYSON found no further questions and solicited a motion.
9:42:21 AM
SENATOR GIESSEL moved to report CS for HB 75(FIN), labeled 28-
LS0323\O, from committee with individual recommendations and
attached indeterminate fiscal note(s).
CHAIR DYSON found no objection and announced that CSHB 75(FIN)
is reported from the Senate State Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Audit Requirement Bullets v2 (3-12-14).pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-About Pick Click Give .pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Explanation of Changes.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Fiscal Note - University.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Legislation - Version O - HFIN CS.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Letters of Support.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Pick Click Give Application.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Sponsor Statement.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| Pick Click Give sustain survey 031014.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Alaska Statute 43 23 062.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Fiscal Note - University.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HB75-Fiscal Note - Revenue.pdf |
SSTA 4/10/2014 9:00:00 AM |
HB 75 |
| HJR 32 Sponsor Statement.pdf |
SSTA 4/10/2014 9:00:00 AM |
HJR 32 |
| CSHJR032B.pdf |
SSTA 4/10/2014 9:00:00 AM |
HJR 32 |
| HJR032A.pdf |
SSTA 4/10/2014 9:00:00 AM |
HJR 32 |
| CSHJR32-04-02-14.pdf |
SSTA 4/10/2014 9:00:00 AM |
HJR 32 |
| HJR 32 Summary of Changes.pdf |
SSTA 4/10/2014 9:00:00 AM |
HJR 32 |