03/16/2004 11:02 AM House EDU
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON EDUCATION
March 16, 2004
11:02 a.m.
MEMBERS PRESENT
Representative Carl Gatto, Chair
Representative Paul Seaton, Vice Chair
Representative Dan Ogg
Representative Peggy Wilson
Representative Kelly Wolf
Representative Les Gara
Representative Mary Kapsner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 333
"An Act relating to an endowment for public education; and
providing for an effective date."
- MOVED CSHB 333(EDU) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 333
SHORT TITLE: PUBLIC SCHOOL ENDOWMENT
SPONSOR(S): REPRESENTATIVE(S) OGG, COGHILL, HOLM
01/12/04 (H) PREFILE RELEASED 1/2/04
01/12/04 (H) READ THE FIRST TIME - REFERRALS
01/12/04 (H) EDU, HES, FIN
01/27/04 (H) EDU AT 11:00 AM CAPITOL 124
01/27/04 (H) <Bill Hearing Postponed>
03/02/04 (H) EDU AT 11:00 AM CAPITOL 124
03/02/04 (H) Heard & Held
03/02/04 (H) MINUTE(EDU)
03/09/04 (H) EDU AT 11:00 AM CAPITOL 124
03/09/04 (H) Heard & Held
03/09/04 (H) MINUTE(EDU)
03/16/04 (H) EDU AT 11:00 AM CAPITOL 124
WITNESS REGISTER
JOE BEEDLE, Vice President of Finance
University of Alaska
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 333.
BOB LOEFFLER, Director
Central Office
Division of Mining, Land and Water
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: During discussion of HB 333, answered
questions.
THOMAS BOUTIN, Deputy Commissioner
Office of the Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 333, answered
questions.
LAURA ACHEE, Research and Communications Liaison
Alaska Permanent Fund Corporation
Department of Revenue
Juneau, Alaska
POSITION STATEMENT:
ACTION NARRATIVE
TAPE 04-16, SIDE A
Number 0001
CHAIR CARL GATTO called the House Special Committee on Education
meeting to order at 11:02 a.m. Present at the call to order
were Representatives Gatto, Seaton, Ogg, Wilson, and Wolf.
Representatives Gara and Kapsner joined the meeting as it was in
progress.
HB 333-PUBLIC SCHOOL ENDOWMENT
Number 0119
CHAIR GATTO announced that the only order of business would be
HOUSE BILL NO. 333, "An Act relating to an endowment for public
education; and providing for an effective date."
[Before the committee is CSHB 333, Version 23-LS099\X, Bullock,
3/8/04.]
Number 0130
REPRESENTATIVE DAN OGG, Alaska State Legislature, sponsor of HB
333, announced that the intent of HB 333 is to use a land grant
vehicle in order to fulfill a land grant process and create an
endowment that would benefit the University of Alaska. The
original legislation created a new education trust fund and
transferred to the University of Alaska 1 percent of state land
in an undivided interest in "tenancy in common." Version X
[which is before the committee] accomplishes the same thing;
however, it creates a 4 percent interest in state land and gives
2 percent to the University of Alaska and 2 percent to K-12
public education. In the proposed CS the monies will flow to
the University of Alaska's land grant trust fund, which already
exists, while the other monies will flow to an education trust
fund which will benefit K-12 education. These monies will be
kept in principal and both funds will operate on a percent of
market value (POMV) method. Furthermore, both versions
[operate] under the premise that this would only be in regard to
new revenues and wouldn't impact existing revenue streams from
state lands. He reminded the committee that last week the
committee adopted a conceptual amendment addressing that point.
CHAIR GATTO inquired as to the money spent on K-12 versus that
spent on the University of Alaska.
REPRESENTATIVE OGG related his belief that last year there was
about $740 to $750 million spent on K-12 education. Under the
House version [this year] the state would spend over $800
million. The university spending will be at almost $230
[million] under the House version.
CHAIR GATTO announced for the record that Representative Gara
has joined the meeting.
Number 0544
REPRESENTATIVE GARA related his assumption that a certain amount
of the proceeds from land would be devoted to the university and
K-12. Therefore, it seemed like a transfer of, essentially,
general fund (GF) money and a guarantee that the money would go
to the university or K-12. However, he said he just noticed
that the money going to the university will not be able to be
spent, but will have to be placed in a trust fund from which the
proceeds of the investment earnings could only be used. He
asked if that's how it will work.
REPRESENTATIVE OGG replied yes, that's how it would work for
both the university and K-12 funding.
REPRESENTATIVE GARA said that this approach would, in some
sense, increase the deficit because money that would otherwise
go into the GF is being taken. He posed a situation in which a
$100 million is taken and rather than allowing it to be spent,
it places it into a fund and only $8 million can be spent.
Therefore, it seems to add to the budget deficit. However, if
that money were merely given to the university and K-12, it
wouldn't change the budget deficit, he opined. However, the
[positive side] is that [with the trust] an endowment is built
up and there is a long stream of income going to these entities.
Number 0724
REPRESENTATIVE OGG pointed out that it isn't impacting revenues
right now. For instance, if the Bristol Bay gas lease sale
takes place, each of the entities would receive its 2 percent at
some point in the future. Therefore, the deficit gap wouldn't
be impacted now. Representative Ogg highlighted that this
legislation transfers a vested interest in property, and
therefore if the entities are given 2 percent of the land, it
comes out of the picture altogether because the land would go to
its entity. Again, there would be no impact because it would
basically be a gift of the land.
REPRESENTATIVE GARA noted his preference for the tenancy in
common concept rather than a land grant. However, he
anticipated that there will always be budget problems in the
state. Therefore, if this legislation is passed, then one must
realize that a certain amount of money that would've gone into
the general fund in the future would now go into a trust fund
and only perhaps an 8 percent portion of it can be spent, which
would result in the taxpayers having to make up the difference.
"I don't ... know that that's a bad idea, but ... it seems ...
to be the case," he remarked.
REPRESENTATIVE OGG agreed that one could view it that way if he
or she views it as a yearly appropriation. However, he pointed
out that the supreme court has ruled that once land is
transferred it isn't an appropriation. Once the title is
transferred, the land would be an asset belonging to the
university. An endowment process is being created, and
therefore the money isn't lost to the state because the money
goes toward funding the university and K-12.
REPRESENTATIVE GARA opined that it's a good policy, but
maintained concern with the ramifications that it will actually
cost something to do this.
Number 1016
REPRESENTATIVE SEATON noted that there is a proposal to increase
the percentage to 5 percent. Representative Seaton highlighted
that this would include the land as well as any money made off
the land, such as from oil revenues from new deposits.
Therefore, instead of having a constitutional mandate to take 25
percent of oil revenues and place in the permanent fund, this
legislation would mandate taking 30 percent of the oil revenues
with 25 percent being placed in the permanent fund and the other
5 percent in this new permanent fund. Representative Seaton
recalled that last year the legislature reversed a similar
situation created under HB 11. He expressed the need to
consider the impact of the aforementioned on future budgets.
REPRESENTATIVE OGG pointed out that wouldn't be an impact today
because this legislation only speaks to new revenues. He said
that it takes quite a while to reach the situation which
Representative Seaton has described, perhaps a generation or two
down the road. Representative Ogg highlighted that only one
other state has a smaller land grant to its education system
than Alaska. This legislation would fulfill the state and
federal governments' desire to fund Alaska's university system
via a land grant.
Number 1276
CHAIR GATTO surmised that what Representative Seaton is saying
is that the state operates on a revenue stream, and as the
existing revenue stream winds down and it is replaced by new
revenues. Under this legislation, if money is taken from the
new revenue stream as the old revenue stream is depleted, the
old revenue stream is compromised. "So that even if this is
something that will be productive in a generation or two, it is
financed through an existing revenue stream," he stated.
REPRESENTATIVE OGG reiterated that it wouldn't impact existing
revenue streams.
Number 1361
REPRESENTATIVE WILSON agreed with Chair Gatto's comments.
However, she opined that the concept of this legislation is very
important because the future is unknown. She further opined
that Alaska's university system and schools have been funded
inadequately. This legislation looks to the future and is an
important first step for education.
Number 1501
REPRESENTATIVE SEATON remarked that HB 333 seems to establish
two new permanent funds, the impact of which is unknown. If the
desire is to tap the revenue stream from oil and the permanent
fund, that should be done rather than creating two more
permanent funds. He suggested that it may be more cost
effective to tap into 2 percent of the earnings of the permanent
fund each year to fund [education]. Representative Seaton
clarified that he doesn't oppose the idea of an endowment.
However, current income money is being sequestered and the
earnings from that money is going to be used [to fund
education]. He questioned where such types of funds would end,
noting that he could see such a fund established for [Alaska
Department of Fish & Game]. He questioned whether this
legislation is really discussing a process to access the
earnings that are sequestered in a permanent fund or endowment.
This is a complicated way in which to have a dedicated revenue
stream for education, he summarized.
Number 1672
REPRESENTATIVE KAPSNER noted her excitement with regard to HB
333 because she believes there should be an endowment for
education, which is a constitutionally mandated requirement.
She opined that creating an endowment is a good use of the
state's resources. Representative Kapsner informed the
committee that she recently watched an interesting program on C-
SPAN which reported that there will be more technological
progress in the next 25 years than in the last 100 years. She
also informed the committee that before [the terrorist attacks
of September 11, 2001] there was a study regarding the greatest
threats to national security. The second threat to national
security was how far behind students are in math and science.
Therefore, she announced her strong support of this legislation.
CHAIR GATTO pointed out that the U.S. tries to educate all of
its children, and therefore the average scores are lower than
had the U.S. only educated its best and brightest. Therefore,
he opined that the U.S. isn't doing as bad a job as indicated by
some data.
REPRESENTATIVE KAPSNER remarked that generational advances are
being made. She acknowledged that it's expensive, but
highlighted that in the long term it will be beneficial. With
regard to resource development and comments that the gas line
will be on-line in six years, she pointed out that in six years
the current sixth graders will be in the work force, and
therefore [the state] should invest in those resources.
Number 1904
REPRESENTATIVE OGG acknowledged that this legislation is a
policy call with regard to a land grant for the university
system and K-12. He pointed out that the legislature has
established a land grant for the university in the amount of
250,000 acres. This legislation would rescind the
aforementioned because the discussions regarding getting to that
land have been fraught with difficulty. Therefore, this
legislation maintains the land grant policy and expands it to K-
12, but fulfills the policy by providing an undivided interest
and retaining management.
REPRESENTATIVE GARA opined that this is good legislation.
Although this legislation will cost money, it's a wise
expenditure in the short term for a long-term benefit, he said.
He announced that he will support the legislation, and expressed
the need for the legislature to get past the notion that only
legislation without a fiscal note can go forward.
CHAIR GATTO commented that the House Special Committee on
Education recently report legislation out of committee with a
seven digit fiscal note, so he does not agree with
Representative Gara's remark.
REPRESENTATIVE SEATON clarified that he isn't opposed to funding
education. However, he reiterated his concern that this
legislation sequesters an additional 5 percent of the state's
future income stream in addition to the 25 percent that is
already sequestered for the permanent fund. This is very
different than saying something will be done with land. These
funds will be placed in a bank somewhere where it is hoped
interest will be made which will then fund education. That is
where he has a problem, he stated. He reiterated that he has no
problem funding education.
Number 2229
JOE BEEDLE, Vice President of Finance, University of Alaska,
testified that the university supports HB 333.
REPRESENTATIVE WILSON inquired as to what Joe Beedle or Bob
Loeffler, Department of Natural Resources (DNR), see for the
next 20 years with regard to the state's revenue stream. She
mentioned looking forward to more resource extraction in the
state.
Number 2358
CLIFF STONE, Staff to Representative Dan Ogg, Alaska State
Legislature, noted that the committee packet should include
Legislative Research Report number 04.176 regarding revenue
projections from future resource development. The report
projects that in 2030, new resource development will be over $21
billion, which includes the gas line being in place. Mr. Stone
clarified that the aforementioned projection isn't an annual
rate, but rather an accumulation to that point. He noted that
the $21 billion is very conservative. In response to Chair
Gatto, Mr. Stone specified that new resource development
includes the gas line, Arctic National Wildlife Refuge
development, the undiscovered National Petroleum Reserve-Alaska
(NPR-A), the Beaufort Sea, and some central north satellites
that aren't currently on line. In addition to the oil and gas
[development], there would be minuscule resource development in
platinum, gold, or other ore extractions.
REPRESENTATIVE SEATON turned attention to the fiscal note from
DNR regarding which lands would be transferred. However, he
understood that the legislation wouldn't transfer any lands, but
would transfer between a 1 to 5 percent interest in all the
revenue generated from those lands under a tenancy in common
approach. Therefore, he questioned whether the fiscal note is
based upon the physical transfer of land or transfer of a
percentage of the amount of money made on those lands.
Number 2489
BOB LOEFFLER, Director, Central Office, Division of Mining, Land
and Water, Department of Natural Resources, explained that DNR
and the attorney general read the legislation to transfer
specific lands rather that a percentage of revenue from all the
lands. Therefore, [the fiscal note is based on] all the revenue
of all the lands. After discovering that isn't Representative
Ogg's intent, the department developed language that would make
the intent clear. However, that language isn't included in
version X, but once it's included in the legislation DNR's
fiscal note would drop to zero.
MR. LOEFFLER, in response to Representative Wilson, specified
that proposed AS 14.40.507 would merely require some minor
changes that would clarify that there is no conveyance of
individual parcels of land, but rather that there is an interest
in the revenue stream of all the lands.
CHAIR GATTO turned attention to page 26 of the Legislative
Research Report attachment entitled "Resource Development
Opportunities" from the Fall 2003 Revenue Sources Book, Alaska
Department of Revenue, which shows a sizable portion of
anticipated revenues to come from ANWR. He mentioned the
difficulty in predicting future revenues. On page 34 of this
attachment, the following statement is found:
In 2003, Korea signed a contract valued at $20 million
with Usibelli to resume importing coal from Korea.
CHAIR GATTO expressed confusion with regard to the
aforementioned statement.
MR. LOEFFLER clarified that Alaska is exporting coal to Korea.
CHAIR GATTO said he was aware of that, and therefore that
statement is of concern and causes him to question the validity
of the other data.
CHAIR GATTO likened this legislation to when parents of a
newborn set aside money for its education in the future. He
explained that the aforementioned means that money that would
ordinarily be available to spend today would be set aside for
future expenditures. Therefore, this legislation is no
different than a bank account.
MR. LOEFFLER agreed. He specified that a separate endowment is
being created and the earnings from that endowment is funding
the partial cost of education in Alaska.
CHAIR GATTO surmised that essentially what is being done is
taking the CBR [constitutional budget reserve] fund and setting
it aside for a future use, which is exactly what the CBRF is
for. "If we're going to borrow from the CBR to fund today's
expenses and we're going to borrow from ourselves to fund a
future expense, that means we have to take more out of the CBR,"
he surmised.
Number 2900
REPRESENTATIVE WILSON returned attention to page 26 of the
attachment to the Legislative Research Report. She pointed out
that it refers to developing new oil fields, and she noted that
the state will never reach the 2 million barrels a day of the
past. She highlighted that the state's natural resources aren't
unlimited, and therefore she emphasized the need to look ahead
and put something like this legislation in place.
CHAIR GATTO commented that such was done long ago and the state
would really be in a bind today without the permanent fund. He
reiterated his view that this legislation establishes a second
permanent fund.
MR. STONE acknowledged that everyone cares about education.
TAPE 04-16, SIDE B
MR. STONE highlighted that at this point more money comes from
the permanent fund than from oil. However, there hasn't been
the political resolve to [use] the earnings reserve account to
fund what is constitutionally mandated. Therefore, another
revenue stream has to be found. In his personal opinion, Mr.
Stone said that HB 333 takes care of the land endowment, and
creates another "permanent fund." Although the aforementioned
will cost the state some money in the short term, more wealth is
created for the future. That wealth would come from this "new
permanent fund" that the legislature has the resolve to spend.
Number 2918
REPRESENTATIVE SEATON opined that it would probably be better to
have a separate account [for education] in the existing
permanent fund. In the aforementioned scenario there wouldn't
be any administrative costs. Representative Seaton reiterated
his concern that this legislation establishes two new permanent
funds. "If what we're trying to do is ... a revenue stream,
then what we need to do is account for that money within the
permanent fund, that money, under POMV, comes out of there and
it is directed to ... the recipients and that gets us there
without having the administrative burden of having separate
funds," he opined.
REPRESENTATIVE SEATON, in response to Chair Gatto, clarified
that what he is saying is that HB 333 establishes new education
funds and new mechanisms for managing it, when the only
management [necessary] is what is required of the permanent fund
endowment. Therefore, he suggested that the Permanent Fund
Board should manage this money as it does the permanent fund,
and the revenues stream of the POMV percentages would come out
and be distributed to the university and K-12 education. The
aforementioned would seem to simplify the concept.
Number 2801
REPRESENTATIVE OGG acknowledged that Representative Seaton's
suggestion could be used. However, he pointed out that the
university already has a land grant trust fund and the money
[generated under HB 333] would flow into that fund. This
legislation creates an education trust fund for the State Board
of Education. Representative Ogg explained that land grants do
something different than the permanent fund. Land grants
specify that land assets will be utilized to ensure that
education has a source of funding. Representative Ogg recalled
serving on the Board of Regents for the University of Alaska and
when it wanted to develop land, part of the constituency of the
university supporters didn't want certain land developed.
Therefore, in giving the land in the fashion [proposed under HB
333], the state's resources are being tied directly to the
state's education system. Perhaps, folks would realize that
development of the land would provide more funding to the
[education system], and over time would support development.
That direct linkage wouldn't be achieved with the permanent
fund, he said.
REPRESENTATIVE WILSON informed the committee that K-12 has land
that has been set aside for it. In fact, she believes that
those lands allowed for $7 million to be placed into the
foundation formula this year. The biggest reason to put forth
legislation such as this would be to establish an understanding
by the citizens of Alaska of the purpose of the fund, rather
than having a situation such as that with the permanent fund
dividend where people believe it was developed so that they
could receive a check each year. She highlighted that
generations to come will benefit from this legislation.
Number 2524
REPRESENTATIVE SEATON turned attention to page 4 of Version X,
which establishes an Education Trust Fund Board that he
characterized as a new administrative bureaucracy. The
aforementioned is problematic, he said. However, he noted that
he liked the notion of tenants in common because it discusses a
percentage of the income the state receives going to the trust
rather than development of specific lands, which is exactly what
is done with the permanent fund. He expressed the need to deal
with the revenue stream in the most efficient way possible.
MR. BEEDLE explained that when there is a transfer, even in a
tenants in common situation, it's still necessary for there to
be an owner representative, a trustee, and an administrator to
respond to the other owner, the State of Alaska represented by
DNR. The Education Trust Fund Board is charged with the
aforementioned function as well as reporting the uses, expense,
et cetera of the earnings of the fund as has the "University
Board" over some 40 years. Mr. Beedle informed the committee
that the University of Alaska Education Trust Fund has some $80
million in investments and combined with the University of
Alaska Foundation for a consolidated investment, and therefore
the university's [fund] exceeds $200 million. With regard to
the Education Trust Fund Board, Mr. Beedle pointed out that the
commissioner of the Department of Revenue will take care of [the
K-12 fund] for purposes of investment. He indicated that [the
Department of Revenue] has [in the past] either done it or used
the permanent fund [as an administrator].
Number 2296
REPRESENTATIVE GARA related his understanding that money from
future lease revenue would be money that would've otherwise gone
to the general fund, not money that would've otherwise gone to
the permanent fund.
REPRESENTATIVE OGG explained that currently the university has
up to 250,000 acres and it will take the university some time to
select that land. [That land] comes out of the assets of the
state and is no longer part of the state's assets, and therefore
it's no longer money coming to the general fund or the permanent
fund.
REPRESENTATIVE GARA surmised that this legislation doesn't
impact any money that goes into the permanent fund. He asked if
that is correct.
REPRESENTATIVE OGG answered, "It affects the whole spectrum the
way it's written."
REPRESENTATIVE GARA surmised that such would require a
constitutional change.
REPRESENTATIVE OGG replied no, and specified that [a percentage]
of the land is being taken and becoming a vested interest in
either the university or [K-12]. "And it's no longer part of
the whole, in a sense. It's undivided in the whole but it's not
an obligation," he said.
REPRESENTATIVE GARA questioned whether that's correct. He
pointed out that the Alaska State Constitution specifies that 25
percent of all royalty money goes into the permanent fund.
Therefore, he said he doesn't believe establishing this proposal
under HB 333 would allow [the legislature] to touch those funds.
He surmised that this [legislation] is focusing on a portion of
the money left over that [would normally] go into the general
fund.
REPRESENTATIVE OGG responded, "If it's read the way you're
saying, then that's ... what's being done."
Number 2153
MR. LOEFFLER related his understanding that DNR would have to
meet both its constitutional obligations, 25 percent to the
permanent fund, and the obligation of this legislation.
REPRESENTATIVE GARA surmised then that the 4 or 5 percent
dedicated to the education trust fund would come from the future
general fund.
MR. LOEFFLER explained that it would come from the various funds
that it would otherwise go into, such as the land disposal
income fund. However, he agreed that it would be from the
general fund and not the permanent fund.
REPRESENTATIVE GARA asked if the intent is for this proposal to
impact money that would otherwise go into the permanent fund.
REPRESENTATIVE OGG said that isn't the intent.
Number 2076
REPRESENTATIVE GARA returned to Representative Seaton's concern
with regard to dual administration, and asked if the legislation
allows the commissioner of the Department of Revenue to manage
this money in conjunction with other money that is being
managed.
MR. BEEDLE opined that this legislation will allow either the
investments [to be managed] by the permanent fund board or [the
Department of Revenue] subject to the commissioner of Department
of Revenue's decision. The aforementioned wouldn't require
separate investment personnel.
Number 1982
THOMAS BOUTIN, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, clarified that a fiscal note to manage
this money is included. No matter who manages the money, it
costs money to do so. Although there wouldn't have to be any
new staff or organization to manage the money, the fiscal note
does include assumptions. Therefore the money management fees
were included related to those assumptions. If the assumptions
change, the fees change, he noted.
REPRESENTATIVE SEATON related his understanding that the
transfer of the 4 percent undivided interest in the land under
this legislation includes all new oil royalties. He posed a
hypothetical situation in which someone has ownership of that
land, and asked if the royalty percentages come out before the
25 percent of state royalties that are deposited into the
permanent fund. He surmised that the 4 to 5 percent of the
land, including its mineral wealth is transferred to the trust
funds, would come out before the state royalties that are
generated on the lands "they" own and thus would come out prior
to the permanent fund monies.
MR. BOUTIN said he read it as the sponsor did, although he
recognized that Mr. Loeffler read it differently. He deferred
to the representative from the Alaska Permanent Fund
Corporation.
Number 1784
LAURA ACHEE, Research and Communications Liaison, Alaska
Permanent Fund Corporation, Department of Revenue, said that she
was sent today to find out the answer to that question. If it's
determined that the 4 percent would be subtracted before the 25
percent is determined, it would impact future revenues coming
into the permanent fund. If it's determined that the 4 percent
would be subtracted from the portion that generally goes to the
general fund and other funds, it wouldn't impact future revenues
coming into the permanent fund.
CHAIR GATTO related his understanding that no one can affect the
25 percent that goes into the permanent fund.
MS. ACHEE agreed, but she highlighted that it's 25 percent of
the mineral revenues.
REPRESENTATIVE GARA concluded that the legislation will probably
face stumbling blocks if the legislation requires placing
revenue in this fund that would otherwise go to the permanent
fund. Therefore, he suggested that the language [be made] clear
that it is not the intent to impact money that would otherwise
go into the permanent fund.
Number 1630
REPRESENTATIVE WILSON moved Conceptual Amendment 2 "to make sure
that the bill language is changed to conform to the sponsor's
intent" specifically on page 6, proposed [AS 14.40].507.
REPRESENTATIVE OGG surmised that the language in proposed [AS
14.40].507 needs to be clear that this bill does not refer to
specific pieces of land. He said he has no problem with
Conceptual Amendment 2.
Number 1474
REPRESENTATIVE GARA objected and expressed the need to be more
specific with Conceptual Amendment 2. After trying to wordsmith
the amendment to Conceptual Amendment 2, Representative Gara
withdrew his amendment to Conceptual Amendment 2.
REPRESENTATIVE OGG stated [that Conceptual Amendment 2 should
result in language] "... that it is clear that the land granted
is tenancy in common and it's an undivided interest. And that
DNR and the university, ... they need to be satisfied that that
particular language says that." Representative Ogg commented
that the committee should decide whether the 25 percent comes
off the top of state land or is secondary.
REPRESENTATIVE GARA surmised his understanding that HB 333
doesn't require that the state sell or develop any particular
land, rather the university and the education community would
receive a certain portion of revenues received from the state's
lands.
REPRESENTATIVE OGG replied yes, and clarified that the intent is
that the [university and K-12] would receive an undivided
interest in the land and the revenues would flow from those
rights, but the [university and K-12] wouldn't have management
authority.
REPRESENTATIVE GARA withdrew his objection.
CHAIR GATTO, upon determining that there were no further
objections, announced that Conceptual Amendment 2 was adopted by
the House Special Committee on Education.
Number 1212
REPRESENTATIVE GARA moved that the committee adopt Conceptual
Amendment 3, as follows: "The revenues devoted to these trust
funds shall be calculated after the permanent fund receives it's
constitutional share of revenues and ... they should not affect
the amount of money that goes into the permanent fund." There
being no objection, Conceptual Amendment 3 was adopted.
REPRESENTATIVE SEATON requested a legal opinion regarding the
transfer of subsurface rights under this legislation. He
expressed the need to ensure that the transfer of subsurface
rights doesn't jeopardize the state under the Statehood Act and
doesn't allow a claim to revert those [lands] back to the
federal government.
MR. BEEDLE informed the committee that the University of Alaska
has received a considerable amount of land from the state and
enjoys the subsurface [rights]. The title is fee simple. The
determinations have consistently been that it doesn't violate
the Statehood Act.
CHAIR GATTO related his understanding that fee simple land
guarantees the subsurface rights. He asked if the university
has received land that wasn't fee simple.
MR. BEEDLE confirmed that the university has received land that
wasn't fee simple. In some cases, the transfer was only for
surface estate and thus the university didn't [enjoy the
subsurface rights]. In other cases the university has received
single rights to enjoy resource extraction, such as for timber
or gravel, which were restricted transfers and the university
didn't [enjoy the subsurface rights].
CHAIR GATTO surmised that it varies depending upon the property.
REPRESENTATIVE SEATON asked if, within the tenancy in common,
that it isn't a transfer but rather that it includes the mineral
rights as well as the surface estate.
REPRESENTATIVE OGG opined that it's clear.
CHAIR GATTO closed public testimony.
Number 0818
REPRESENTATIVE GARA moved to report CSHB 333, Version 23-
LS099\X, Bullock, 3/8/04, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 333(EDU) was reported from the
House Special Committee on Education.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Education meeting was adjourned at 12:29
p.m.
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