Legislature(2013 - 2014)HOUSE FINANCE 519
04/09/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Alaska Mental Health Trust Authority - John Mcclellan | |
| HB379 | |
| HB316 | |
| HB308 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 316 | TELECONFERENCED | |
| + | HB 308 | TELECONFERENCED | |
| + | HB 214 | TELECONFERENCED | |
| + | SB 191 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 379 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 9, 2014
8:35 a.m.
8:35:25 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 8:35 a.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Lindsey Holmes
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Benjamin Nageak, Sponsor; Jacob Adams, Chief
Administrative Officer, North Slope Borough, Barrow; Angela
Rodell, Commissioner, Department of Revenue; Anna Latham,
Staff, Representative Kurt Olson; Barbara Huff Tuckness,
Director, Governmental and Legislative Affairs, Teamsters;
Ward Hurlburt, Chief Medical Officer and Director, Division
of Public Health, Department of Health and Social Services;
Don Etheridge, Alaska AFL-CIO, Juneau; Representative Pete
Higgins; Representative Andy Josephson.
PRESENT VIA TELECONFERENCE
John McClellan, Alaska Mental Health Trust Authority,
Anchorage; Matt Fonder, Director, Tax Division, Department
of Revenue, Anchorage; Leeanne Carrothers, President,
Alaska Physical Therapy Association, Anchorage; Juliana
Ament, Alaska Physical Therapy Association, Fairbanks;
Karen Purdue, President and CEO, Alaska State Hospital and
Nursing Home Association, Fairbanks; Rachel Petro,
President and CEO, Alaska Chamber of Commerce, Anchorage;
Kevin Anselm, Director, Division of Banking and Securities,
Department of Commerce, Community and Economic Development,
Anchorage; Allan Johnston, Regional Manager, Team Network,
Inc., Anchorage.
SUMMARY
HB 214 MENTAL HEALTH PATIENT RIGHTS & GRIEVANCES
HB 214 was SCHEDULED but not HEARD.
HB 308 ALASKA SECURITIES ACT EXEMPTIONS
HB 308 was REPORTED out of committee with a "do
pass" recommendation and with one previously
published fiscal impact note: FN1 (CED).
HB 316 WORKERS' COMPENSATION MEDICAL FEES
HB 316 was HEARD and HELD in committee for
further consideration.
HB 379 OIL & GAS PROPERTY TAX
CSHB 379(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one new
indeterminate fiscal note from the Department of
Revenue.
CONFIRMATION HEARING: ALASKA MENTAL HEALTH TRUST AUTHORITY
- JOHN MCCLELLAN
8:36:33 AM
^CONFIRMATION HEARING: ALASKA MENTAL HEALTH TRUST AUTHORITY
- JOHN MCCLELLAN
JOHN MCCLELLAN, ALASKA MENTAL HEALTH TRUST AUTHORITY,
ANCHORAGE (via teleconference), discussed his professional
background. He had started three engineering companies in
Alaska. Additionally, he had run several companies for NANA
and other. He did not have experience with mental health;
however, he did have experience in finance. He was
interested in resource development growth and the finance
portion of the trust.
Co-Chair Stoltze surmised that Mr. McClellan's role was in
making money for the trustees instead of spending it. Mr.
McClellan replied in the affirmative.
Representative Gara asked if the board of trustees did any
mental health work. Mr. McClellan replied that the trustees
reviewed and approved the mental health programs based on
staff recommendations.
8:40:41 AM
Representative Gara wondered if Mr. McClellan had
experience related to alcohol abuse treatment and other
areas that the trust addressed. Mr. McClellan replied that
he did not have professional experience. He believed it
would be easier for him to earn a quick education on mental
health programs than it would be for a mental health
professional to gain 40 years' experience in finance.
Representative Gara asked if the board had the power to
review and reject projects presented by the staff. Mr.
McClellan replied that the board had the authority to
reject staff recommendations.
Representative Holmes thanked Mr. McClellan for putting his
name in. She wondered if he had thoughts of a direction of
the trust. Mr. McClellan answered that he was semi-retired
and that acting as a board member would keep him fresh in
the field. He would like to see an outreach program, and
other new and innovative programs within the trust.
Co-Chair Stoltze thanked Mr. McClellan for his service. He
spoke about his experience on boards. He was happy to have
members with finance experience on the board. He
appreciated members who were interested in sustaining the
trust for beneficiaries.
Co-Chair Stoltze asked if there were any objections toward
the advancement of Mr. McClellan's name. He noted he wanted
to remove language in the report related to the reflection
of the intent of the members. He stressed that it was known
that individual votes were personal, so the language was
unnecessary. There being NO OBJECTION, it was so ordered.
8:47:08 AM
AT EASE
8:48:50 AM
RECONVENED
HOUSE BILL NO. 379
"An Act relating to the limitation on the value of
property taxable by a municipality; and providing for
an effective date."
8:49:02 AM
Co-Chair Stoltze stated that an amendment from Department
of Administration (DOA) had been incorporated into the new
committee substitute.
Vice-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 379, Work Draft 28-LS1633\U
(Bullard/Bullock, 4/8/14).
Co-Chair Stoltze OBJECTED for discussion.
REPRESENTATIVE BENJAMIN NAGEAK, SPONSOR, approved the
changes in the committee substitute.
JACOB ADAMS, CHIEF ADMINISTRATIVE OFFICER, NORTH SLOPE
BOROUGH, BARROW, agreed with changes in the committee
substitute.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
Representative Costello discussed the fiscal note -
indeterminate from Department of Revenue.
MATT FONDER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
ANCHORAGE (via teleconference), relayed that the change
made to the bill would not impact revenues. The change
would only help the department administer changes made in
the bill.
ANGELA RODELL, COMMISSIONER, DEPARTMENT OF REVENUE,
appreciated the addition of the clarifying language added
in the amendment.
Co-Chair Stoltze asked if there were any amendments.
Vice-Chair Neuman MOVED to REPORT CSHB 379(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 379(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one new indeterminate fiscal
note from the Department of Revenue.
8:53:29 AM
AT EASE
8:54:48 AM
RECONVENED
HOUSE BILL NO. 316
"An Act relating to workers' compensation fees for
medical treatment and services; relating to workers'
compensation regulations; and providing for an
effective date."
8:54:54 AM
ANNA LATHAM, STAFF, REPRESENTATIVE KURT OLSON, discussed
the bill and the Sectional Analysis (copy on file):
Section 1. Amends the physician, outpatient and
ambulatory surgical center, and inpatient hospital fee
schedules to be based on the federal Centers for
Medicare and Medicaid Services fees.
Section 2. Requires the Workers' Compensation Advisory
Board to annually review and adjust fees set under
Section 1. Requires the board to request and consider
recommendations from the Medical Services Review
Committee on setting the conversion factors and rates
specified in Section 1. Provides for maximum
reimbursement for fees rendered in another state.
Requires the board to set the rate for air ambulance
service. Requires the board to set the markup, and
reimbursement limits for durable medical equipment.
Requires the board to set the markup, dispensing fee,
and reimbursement limits for prescription drugs.
Requires a prescription drug dispensed by a physician
to include in an invoice the original manufacturer's
code from the National Drug Code Directory published
by the USFDA. Exempts critical access hospitals from
the fee schedules established in Section 1. Allows the
board to apply a geographic adjustment factor to fee
schedules in Section 1.
Section 3. Lists reference materials the department
may incorporate, including future amended versions,
into regulations.
Section 4. Section 1 and Section 3(j)-(0) are
effective on July 1, 2015.
Section 5. Excluding Sections 6 and 7 of the Act, this
Act is effective on July 1, 2014.
8:58:42 AM
Ms. Latham relayed that the method was established in the
late 1980s, by a team of researchers from Harvard
University which included statisticians, physicians, and
economists. The relative value unit accounted for the
physician's work, practice expenses, and malpractice
insurance to provide medical service. The value was
multiplied by a fixed conversion factor set by the state to
determine the amount of payment, and the relative value
unit was adjusted by the geographic region to reflect the
variation and provide the costs. The methodology was the
basis for Medicare and Medicaid payments schedules, and 32
states' workers compensation systems. The American Medical
Association owned and updated the system periodically. She
stated that the legislation outlined three separate
conversion factors: one for a physician fee schedule; one
for an outpatient and ambulatory fee schedules; and one for
an inpatient fee schedule. The Workers Compensation Board
would be responsible for renewing and adjusting fees on the
fee schedules under advisement of the Medical Services
Review Committee. The reason that committee is the advisor
was because they have the medical expertise that the 18-
person Workers Compensation Board had. She stated that
there was an exemption in the legislation for critical
access hospitals, which were small hospitals in the state
that generally had less than 25 beds, an average stay of
less than 96 hours, and they were federally designated so
they had a different billing system.
Co-Chair Stoltze asked if it was a rural exemption. Ms.
Latham replied in the affirmative.
Ms. Latham stated that examples of the critical access
hospitals included Kodiak, Valdez, Ketchikan, and Cordova.
The legislation would be effective on July 1, 2014, and the
new fee schedules would be effective one year later.
Co-Chair Stoltze stated that the medical community needed
to determine whether the legislation was related to cost
control or market control. He stated that market controls
mostly led to shortages of access and providers.
Vice-Chair Neuman noted that Alaska had one of the highest
instances of workers compensation, because of the mining
and fishing and dangerous industries. He looked at Section
2, and queried the average anticipated cost changes in the
different fee schedules.
Ms. Latham replied with the document, "Top 25 Surgery
Procedure Codes Ranked by Paid Amounts for Alaska" (copy on
file). She stated that the intent of the legislation was to
align the fee schedules with the group health. There was a
desire for reasonable and fair rates that were charged by
the doctors. She remarked that the chart showed what the
Alaska Workers Compensation fee schedule currently paid
compared to Washington, Oregon, and Idaho. She stressed
that she did not have data on exactly how much of a
decrease would occur if the legislation were passed.
Vice-Chair Neuman announced that he was familiar with the
cost comparisons between Alaska and other states. He
stressed that it was difficult to analyze a bill, without
the outlined estimates.
9:04:49 AM
Representative Holmes agreed that the current rates were
not working. She wanted to ensure that the physicians were
adequately and people could get proper care. She asked for
more details regarding the legislation. Ms. Latham replied
that the baseline would be the centers for Medicare and
Medicaid. She remarked that 32 states had adopted the
methodology. The Workers Comp Board would set the
conversion factors for the three fee schedules.
LEEANNE CARROTHERS, PRESIDENT, ALASKA PHYSICAL THERAPY
ASSOCIATION, ANCHORAGE (via teleconference), spoke to
concerns related to the bill. The legislation had the
potential to affect many health care providers, especially
those who own small independent practices. She remarked
that physical therapists were highly educated, licensed
health care professionals who helped patients reduce pain
and improve or restore mobility after injury without
expensive surgery and often reducing the use of
prescription medications. In the case of workers comp, this
translates into an earlier return to work. Furthermore, an
18-month study of 32,000 patients with low back pain
revealed that physical therapy started within 14 days of
the initial patient physician encounter was associated with
reduced risk of subsequent surgery, injections, physician
visits, opioid use, along with a corresponding reduction in
overall love back pain related medical costs relative to
delayed treatment by a physical therapist. Total health
care costs for patients receiving early care from a
physical therapist were an average of $2736 lower. Because
of the vital role of the physical therapist in the early
management and recovery of individuals with work related
injuries, she believed that physical therapy should be
included in the process of determining the conversion
factors and rates that would be used to determine the
payment for physical therapy uses.
Co-Chair Stoltze handed the gavel to Representative
Costello.
9:10:11 AM
JULIANA AMENT, ALASKA PHYSICAL THERAPY ASSOCIATION,
FAIRBANKS (via teleconference), spoke against the bill in
its current form. She spoke to the high costs of
recruitment and retention of medical providers. Cutting pay
to providers to may not be the answer. The proposed system
proposed was used by Medicare and paid for 65 percent of an
office visit. She spoke to an exodus of providers who would
simply treat patients with private insurance.
KAREN PURDUE, PRESIDENT AND CEO, ALASKA STATE HOSPITAL AND
NURSING HOME ASSOCIATION, FAIRBANKS (via teleconference),
agreed that reform was needed; however, there was one area
of the bill the association was concerned about related to
the conversion factor. He stressed that Alaska's hospitals
and nursing homes had a double-interest in the issue,
because they not only provided care, but were also large
employers. She stressed that health care also had workers
compensation costs. She felt that the idea of setting the
conversion factor to commercial rates was the intention of
the sponsor, but remarked that the Medical Services Review
Committee did not have a standard in statute to set against
the conversion factor. She stated that the low Medicaid
payment in Alaska provided discomfort for providers, in
terms of what the committee would decide upon.
Representative Gara looked at page 2 of the legislation, a
noted the language related to the schedule based on the
Federal Centers for Medicare and Medicaid. He understood
that Medicare did not pay family practice physicians at a
reasonable rate, as well as other areas. He wondered if
there was a fear that the rates from the federal level
would be initiated. Ms. Purdue responded she had those
concerns. She stated that the sponsor had relayed that the
conversion factor was the beginning, but there would be a
multiplier to the factor, however that multiplier was
unknown. The process was such the Medical Services Review
Committee would make the recommendation to the
commissioner. She felt that the sponsor's intent should be
codified to group health or commercial rates.
Representative Gara wondered if the multiplier was outlined
in the bill. Ms. Purdue replied in the affirmative, but
deferred to the sponsor for confirmation.
9:16:59 AM
BARBARA HUFF TUCKNESS, DIRECTOR, GOVERNMENTAL AND
LEGISLATIVE AFFAIRS, TEAMSTERS, spoke in support of the
legislation. She relayed that one year earlier the
Teamsters had implemented a medical tourism plan for over
$30 million, one-third was related to prescription drugs
and the remainder was associated with medical procedures.
The group was very supportive of the sponsor's effort on
the bill. She felt comfortable with the going through the
medical review committee. She noted that the committee was
made up of physicians and other. The recommendations would
be presented to the workers' compensation board and with
oversight by the commissioner. She understood the concern
about the fees and the perception of how it would work with
the medical review committee. The group had worked hard
with employers, but stressed that one of the group's
highest costs was workers' compensation. She relayed that
medical costs continued to rise.
9:21:47 AM
Representative Guttenberg asked if the group was concerned
that the change would result in fewer doctors covering
workers' compensation cases. Ms. Huff Tuckness responded
that she was more concerned that the option that was given
injured workers meant flying to the Lower 48 for treatment.
She did not believe it was in the best interest for the
state's long-term medical cost, and she looking at other
alternatives if nothing was done. She did not want benefits
to be reduced.
Representative Guttenberg wondered if a study had been done
on the actual cost of delivering service.
Ms. Huff Tuckness deferred the question to the director of
the Division of Workers' Compensation.
Representative Gara understood that costs of quality care
in the state were high. He was concerned with the Medicare
schedule, and pointed out that over 50 percent of the
family practice centers in Anchorage would not accept
Medicare because compensation was so low. He understood
that there was a multiplier that was not in the bill; he
was uncomfortable with that. Ms. Huff Tuckness understood
that there was a multiplier that would average it out. She
provided an example related to a hip injury. He did not see
where the fee changed the Medicare and Medicaid rates.
9:28:03 AM
WARD HURLBURT, CHIEF MEDICAL OFFICER AND DIRECTOR, DIVISION
OF PUBLIC HEALTH, DEPARTMENT OF HEALTH AND SOCIAL SERVICES,
relayed that the bill was consistent with the
recommendations from the health care commission. He stated
that the high costs were a burden to the state. He noted
that discussions with Jeff Davis with Premera stated that
sending people outside was more economical. He remarked
that change was threatening, and the 90th percentile
requirement provided market control. As a steward of money
from the employers, the industry mandates market control.
Representative Costello handed the gavel back to Co-Chair
Stoltze.
9:32:43 AM
Co-Chair Stoltze wondered if Mr. Hurlburt felt that there
was a sort of Certificate of Need (CON) for healthcare
access. Dr. Hurlburt replied in the negative. He stated
that the methodology was common. The Medicare rates were
low, and established with a multiplier to pay. The state
paid higher on Medicaid than Medicare. Medicaid paid less
than worker's comp. The payer would have more of an impact
on the actual payments.
Dr. Hurlburt continued to discuss evidence based decision
making. Medical costs were lower than Alaska in Wisconsin.
He stressed that recent science was dictating the therapy
and treatment. Definition of success for the workman's
compensation program. Medical price inflation increased by
46 percent in Alaska compared to the rates nationwide.
9:36:13 AM
Co-Chair Stoltze wondered if it was better for the health
care funding to be in workers compensation or the public
health arena. Dr. Hurlburt felt that legislators made
mistakes when they become too prescriptive if a minutia and
the details of the coverage. He felt that the Alaska
legislator had done a proper job about recognizing the
risks. He stated that the current prescription for the 90th
percentile, which meant that if one controls 11 percent of
the marketplace, one could set its own rates, was fairly
unusual in Alaska. He remarked that the board was composed
of health care providers.
Vice-Chair Neuman spoke to the cost of prescription drugs.
He was concerned that DHSS received a rebate of
approximately $40 million annually from prescription drug
rebates. He wondered if part of the high cost was because
the state charged so much for pharmaceuticals. Dr. Hurlburt
responded that the rebates were a tool utilized by the
pharmaceutical industry to ensure that all of the drugs
were sold. He stressed that the state needed to take
rebates into consideration in looking at the bottom line
costs. When the Health Care Commission examined the pricing
Alaska, hospital and physician pricing was notably much
higher than the comparable states. The pharmaceutical
pricing, overall, was not much higher than comparable
states, particularly relating to workers compensation.
9:41:42 AM
Vice-Chair Neuman pointed to information provided by the
Department of Labor and Workforce Development, and some
supplemental information about procedural codes. He
remarked that Alaska was $2000 greater on a $374 injection
diagnostic for a therapeutic substance.
Representative Wilson noted that the bill addressed a
larger picture. She wondered if the state did not take
action similar to that proposed in the bill if it would
drive everyone out of the state, and pointed out the
different costs of doing business in the state. Dr.
Hurlburt agreed that more business would leave the state,
because of the higher costs. He stressed that health care
access should stay in Alaska, but the high costs put the
system in jeopardy.
9:44:55 AM
RACHEL PETRO, PRESIDENT AND CEO, ALASKA CHAMBER OF
COMMERCE, ANCHORAGE (via teleconference), spoke to an
updated letter from the Chamber dated April 8. The
legislation was a priority of the chamber. She thanked the
sponsor for the bill. She acknowledged that good changes
had been made in the bill. The chamber supported businesses
and providers being able to pay bills and make a profit.
There were a couple of items that the chamber believed
should be added including evidence-based treatment
guidelines and utilization review. She believed the change
would help provide a lasting change to the fee schedule.
The chamber also wanted to ensure that the bill's intent
was clear.
9:49:20 AM
Co-Chair Stoltze asked Ms. Petro to work on formalizing the
changes suggested by the chamber.
Representative Gara spoke to the concept of evidence-based
coverage. He wondered if the definition could be defined in
a way that would allow a patient to do what was best. Ms.
Petro replied that the chamber was supportive of a
comprehensive change to the worker's compensation. She
believed that when a program was developed the goal was to
get workers healthy in a timely way. She did not profess to
be an expert in the area of care. She deferred questions
Dr. Hurlburt.
9:52:16 AM
DON ETHERIDGE, ALASKA AFL-CIO, JUNEAU, pointed to a letter
of support in members' packets from the organization. The
group was active in safety training and was decreasing
injuries. He stressed that safety came first. The group was
concerned that the fee schedule included the correct
numbers, but it had faith that the medical review board and
could determine the right detail. The group continued to
work with the sponsor on some of the issues.
REPRESENTATIVE PETE HIGGINS, spoke to the bill. He saw the
issue from two sides. He owned a couple of mines and agreed
that workers' compensation was high in the state. He
relayed that fees in the dental field were higher in the
state, but they were not three or four times higher. He
spoke in support of the legislation. He stressed that the
state had to bring down workers' compensation fees. He was
in the healthcare field, believed the bill was going in the
right direction. He spoke to Medicare fees, and remarked
that fee schedules were negotiated.
Co-Chair Stoltze CLOSED public testimony.
HB 316 was HEARD and HELD in committee for further
consideration.
9:59:25 AM
HOUSE BILL NO. 308
"An Act relating to the exemptions under the Alaska
Securities Act and to securities issued by Native
corporations; and providing for an effective date."
9:59:29 AM
REPRESENTATIVE LINDSEY HOLMES, SPONSOR, spoke to the bill.
She relayed that many changes in the bill were conforming.
The bill did three substantive things: 1) eliminated fee
and filing requirements for small or limited offering
exemptions from registrations, specifically to 25 or fewer
investors or to existing security holders; 2) increased the
division's time to review and offer to repay or rescission
offer; and 3) clarified that securities issued by the
Alaska Native Claims Settlement Corporation, in compliance
with federal law, were exempt from registration. While
removing the reporting requirements, the bill still
required the business issuing the securities to provide
required information to investors in compliance with the
Securities Act so that they could make an informed
investing decision. The bill kept the Act's consumer
protection language intact and did not inhibit the Division
of Banking and Securities from investigating violations or
the investor seeking damages through the court system The
bill further sought to clarify that stock issued by Alaska
Native Claims Settlement Act (ANCSA) corporations to Alaska
Natives born after December 18, 1971 or issued after the
original stock offering in compliance with federal law were
exempt from registering under AS 45.55.070.
Vice-Chair Neuman assumed that the issuance of stock
related to corporate law for corporations within the state.
Representative Holmes replied in the affirmative, but
furthered that it could also be a limited liability. She
stressed that it had to be an Alaska entity and Alaska
investors.
Vice-Chair Neuman wondered why the state required the
additional information. Representative Holmes deferred the
question to the department for further detail.
10:07:22 AM
Co-Chair Stoltze spoke about the issue of the exemption
from the record request. He understood that native
corporations had a different set of laws, but stressed that
there were some large corporations that were favored by the
existing law. He wondered if the legislation would
disenfranchise the shareholders from the process. He
initially felt that the legislation was fairly simple, but
felt that there was brevity to the analysis in the fiscal
note. Representative Holmes agreed that the Alaska Native
Claims Settlement Act (ANCSA) corporations held some
issues, but felt that the concerns were unrelated to the
legislation. She stressed that the bill was about filing a
form with the state, but did not change any practice. The
issue was related to where the information was filed, so
because there was a requirement to comply with federal law
one could only apply within that requirement. She pointed
out that there was never a realization that those files
should also be filed with the state. The general accounting
office noticed that the filing requirement needed to be
detailed in state law.
Co-Chair Stoltze asked if the requirement was onerous.
Representative Holmes replied that the onerous part was
less affiliated with ANCSA corporations, but it was
redundant.
Co-Chair Stoltze pointed to the sponsor statement. He felt
that the information was available subject to a public
records request and served no interest of the department.
He did not want unintentional consequences. Representative
Holmes replied that the bill did not change any laws about
information to be provided to investors. She agreed that
she did not want unintended consequences.
10:12:49 AM
KEVIN ANSELM, DIRECTOR, DIVISION OF BANKING AND SECURITIES,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
ANCHORAGE (via teleconference), referred committee members
to a document titled "HB 308 Alaska Securities Act
Exemptions" dated March 31, 2014 (copy on file). She stated
that, generally, most securities must either be registered
or exempt from registration. The bill did not change those
requirements, but eliminated some of the paperwork and fee
filing with the division for the small offerings and
offerings to existing security holders. She shared that
there were three substantive changes: 1) eliminated fee and
filing requirements for small or limited offering
exemptions from registrations, specifically to 25 or fewer
investors or to existing security holders; 2) increased the
division's time to review and offer to repay or rescission
offer; and 3) clarified that securities issued by the
Alaska Native Claims Settlement Corporation, in compliance
with federal law, were exempt from registration. The small
offering exemptions were noted on page 2, line 21 and page
3, line 30 of the legislation. The small offering
exemptions were usually referred to as "friends and family
exemptions." Those transactions occurred because someone
has a business and invites friends or family to invest in
that business, and sales commissions were often involved.
The small offering exemptions were driven by the
entrepreneur, with no public solicitation or advertising.
Most states had small offering exemptions, and the filing
was required because filings were more prolific in the
original filing act. She noted that there were legends on
the securities that explain the limitations on the
securities resale; information was required, so investors
could make the appropriate decisions based on their own
needs; and the more investors there were, the more
prescriptive the requirements. She stressed that the only
change to the provisions was the filing of the form and fee
payment. She noted one other effected exemption in the bill
on page 4, line 19. The exemption was for securities issued
to existing shareholders, and only applied if there were no
commissions paid beyond a standby commission for the new
security issuance. Typically, the exemptions were used by
an existing business that were advancing. She stressed that
the division currently seldom receiving filings for this
particular exemption, but those that were filed were
usually unnecessary, because there was no commission paid
in the transaction.
10:20:47 AM
ALLAN JOHNSTON, REGIONAL MANAGER, TEAM NETWORK, INC.,
ANCHORAGE (via teleconference), spoke about his business
and angel investing networks. He felt that it was difficult
to navigate the technicalities of the laws related to the
legislation. He expressed respect for Ms. Anselm with her
work within the municipality to educate the people that
were attempting to create some of the programs. The
attorney fees in the private sector was unnecessary, so
there was friction and expensive that was counterproductive
on both sides. He pointed out that Alaska had the third
highest median family income in the United States, and
fiftieth in local risk capital.
Co-Chair Stoltze appreciated the testimony. He stated that
any time an ANCSA corporation was mentioned, there was an
assurance that the committee would be fully informed.
Co-Chair Stoltze CLOSED public testimony. He asked if there
were any amendments.
Representative Costello addressed the fiscal note from the
Department of Commerce, Community and Economic Development.
Representative Costello MOVED to REPORT HB 308 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 308 was REPORTED out of committee with a "do pass"
recommendation and with one previously published fiscal
impact note: FN1 (CED).
HOUSE BILL NO. 214
"An Act relating to mental health patient rights,
notifications, and grievance procedures."
HB 214 was SCHEDULED but not HEARD.
Co-Chair Stoltze discussed the future meetings.
ADJOURNMENT
10:26:22 AM
The meeting was adjourned at 10:26 a.m.