Legislature(2013 - 2014)HOUSE FINANCE 519
03/14/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB75 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 75 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 14, 2014
8:32 a.m.
8:32:51 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 8:32 a.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
Representative Alan Austerman, Co-Chair
Representative Lindsey Holmes
ALSO PRESENT
Representative Paul Seaton; Candace Winkler, CEO, Alaska
Community Foundation; Nancy DeCherney, Executive Director,
Juneau Arts and Humanities Council; Jordan Marshall,
External Affairs Manager, Rasmuson Foundation; Dan
DeBartolo, Permanent Fund Division Director; Mr. Chris
Christensen III, Associate Vice President for State
Relations, University of Alaska.
PRESENT VIA TELECONFERENCE
Mike Walsh, Vice President, Foraker Group.
SUMMARY
HB 75 CONTRIBUTION FROM PFD: AUDITS; UNIVERSITY
HB 75 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 75
"An Act repealing certain audit requirements for
entities receiving contributions from permanent fund
dividends; requiring each campus of the University of
Alaska to apply to be included on the contribution
list for contributions from permanent fund dividends;
and requiring a university to pay an application fee
for each campus separately listed on the contribution
list for contributions from permanent fund dividends."
8:33:46 AM
REPRESENTATIVE PAUL SEATON introduced the bill. He stated
that the bill changed the provision related to the Pick,
Click, Give campaign and the Permanent Fund. He noted that
the campaign had an audit provision for a non-profit
organization with a budget greater than $250 thousand. The
audit required a Certified Public Accountant (CPA), which
cost approximately $7 thousand to $12 thousand. Most non-
profit organizations did not earn the amount spent on the
audit participating in the campaign. He pointed out that
the federal requirements were different. He mentioned
problems encountered by non-profit organizations throughout
the state. He offered to answer members' questions.
Co-Chair Stoltze OPENED public testimony.
8:37:17 AM
MIKE WALSH, VICE PRESIDENT, FORAKER GROUP (via
teleconference), appreciated the efforts to allow greater
accessibility to the Pick, Click, Give campaign. He
advocated for the aspirations of HB 75 via the Foraker
Group. He wished to eliminate the barrier of the audit
requirement for smaller organizations. He appreciated the
value of the audit requirement, but hoped to eliminate the
obstacles related to state requirements. His group
advocated for tying the state requirement to federal
requirements; a federal audit would suffice the state
requirement in situations where an organization required
it.
8:40:00 AM
Co-Chair Stoltze clarified Mr. Walsh's name and position.
Mr. Walsh responded that he was the vice president of the
Foraker Group.
8:40:51 AM
CANDACE WINKLER, CEO, ALASKA COMMUNITY FOUNDATION, stated
her foundation had nine affiliates throughout the state.
She mentioned that the foundation housed and managed the
outreach and coordination for the Pick, Click, Give project
fund. She stated that the foundation served as a
beneficiary agency. She also served on the Foraker
operations board with other non-profit organization leaders
around the state. She spoke to the record participation
rates above 6 percent; the program was full of potential to
support all non-profit organizations around the state. She
concurred with Mr. Walsh regarding the audit requirements
and his suggestion related to the federal audit. She added
the potential for enhancements to the program offered by
the university system.
8:43:58 AM
Ms. Winkler discussed the Foraker operations board's survey
coordinating with participating non-profit organizations.
She noted the critical value of coordination and outreach
determined by the survey. She stated that the best strategy
for sustainability required a 7 percent fee accompanied by
donations that would help to support the program. The
strategy was deemed reasonable for sustaining the effort.
Co-Chair Stoltze noted that the Rasmuson foundation had a
three year commitment to administrate the campaign.
Ms. Winkler agreed and pointed out that the Rasmuson
foundation invested heavily in the first three years to
ensure that the state did not incur administrative expenses
for the program. The recent $250 filing fee was provided to
the state to manage the program.
Co-Chair Stoltze asked about sustainability. He wondered
about the threshold for supporting the campaign in
perpetuity.
Ms. Winkler replied that activity outside of the state was
supported by private philanthropy, which helped individual
non-profit organizations to build their individual donor
pool. She stressed that the corporate funders would
eventually move on, which was why the non-profit sector
must create a proactive mechanism to address the issue.
8:47:30 AM
Representative Gara was comfortable with private sector
management of the program. He asked about the portion of
donations required for non-profit organizations to help
fund the campaign.
Ms. Winkler explained that a 7 percent donation was
discussed. She pointed out that a website donation would
require a 3 percent charge for the transaction cost. The
current practice was no transaction cost for non-profit
organizations. She noted that most organizations recognized
that a cost was associated with fundraising or other
activities.
8:48:59 AM
Representative Gara recognized that the bill did not
implement the additional 7 percent for transaction costs.
He asked about the authority to impose the cost.
Ms. Winkler replied that the bill would require an
amendment imposing the transaction cost. She spoke in favor
of potential enhancements to the proposed legislation.
Representative Gara asked if the money would be routed to
the Permanent Fund.
Ms. Winkler suggested that when individuals donated through
the campaign, the Department of Revenue would receive an
aggregate amount along with the donation details and pass
the funds on to the United Way, who would provide the funds
to the various non-profit organizations. United Way would
assess the 7 percent for the project fund for the
continuation of the campaigns efforts. The goal was for
program sustainability, which might take another three to
five years.
8:50:35 AM
Co-Chair Stoltze imagined that the funds would not be
comingled with the state treasury.
Representative Edgmon asked about statistics related to
rural Alaska contributions.
Ms. Winkler was unsure about the rural Alaskan statistics.
Representative Edgmon understood that some of the non-
profit organizations originated from rural Alaska.
Ms. Winkler added that the non-profits profited because
affiliates in the rural areas profited.
8:52:06 AM
NANCY DECHERNEY, EXECUTIVE DIRECTOR, JUNEAU ARTS AND
HUMANITIES COUNCIL stated that her organization had not
benefited from the campaign, as their budget was slightly
over the amount required for an audit. She testified in
favor of the legislation.
Ms. DeCherney understood that the bill was heard in
committee in previous sessions.
Representative Munoz pointed out that if the financial
audit requirement were eliminated, the accountability
requirements would remain.
Ms. DeCherney understood that all of the non-profit
organizations required a 990 tax document with the Internal
Revenue Service for eligibility in the campaign. She stated
that the profit and loss were reviewed. She stated that the
cost for the audit would be $8 thousand for her
organization, which would be a greater cost than the
benefit received from participating in the campaign. She
mentioned that her organization would be happy to provide 7
percent of a donation for administrative needs.
8:55:00 AM
Representative Thompson asked if a 990 tax document filed
by a non-profit organization must be signed and approved by
a CPA.
Ms. DeCherney concurred.
8:55:39 AM
JORDAN MARSHALL, EXTERNAL AFFAIRS MANAGER, RASMUSON
FOUNDATION, stated that he helped implement the program. He
noted that the campaign contributors' names were held
anonymous, making it difficult to answer Representative
Edgmon's questions about contributions from rural Alaska.
He explained that the data available indicated equivalent
participation throughout the state.
Co-Chair Stoltze asked for a response to Ms. Winkler's
testimony.
Mr. Marshall noted that the Rasmuson foundation
participated in a Pick, Click, Give group with each partner
agreeing in the goal of sustainability. He recognized that
86 percent of participating organizations felt that the
statewide coordination and outreach contributed to the
success of the program.
8:58:34 AM
Representative Gara asked if a statute was necessary when
the United Way provided administration for the program.
Mr. Marshall replied that the collection of fees worked
most effectively as part of a statute.
Co-Chair Stoltze understood that dues were more difficult
to obtain.
Mr. Marshall credited the program for its efficient
operations.
Co-Chair Stoltze understood that the premise of the
campaign was similar to the process proposed by the
legislation and the discussed administrative fee.
Mr. Marshall agreed.
9:00:16 AM
DAN DEBARTOLO, PERMANENT FUND DIVISION DIRECTOR was
available to answer questions.
Co-Chair Stoltze asked about the application process and
the fiscal framework.
Mr. DeBartolo replied that the bill would have no effect on
the division's mission or operations related to
applications or dividends. He noted no fiscal impact from
the bill. The $250 fee collected during the application
process was routed to the Department of Revenue's account
for administrative costs related to the campaign. He stated
that programmers were not a component of the division's
purview. The division contracted with United Way who
received the program applications to vet the organizations,
tax documents and audit materials.
Mr. DeBartolo discussed the division's expenditure of $40
thousand for the contracted services from United Way. He
understood that the contract rate was scheduled to increase
in 2014. The division was authorized a portion of the fees
collected; the balance received was used for administrative
costs. The division spent the funds received on
programmers' hourly wages.
9:04:30 AM
Representative Costello asked about an organization that
was mistakenly left off of the list this year.
Mr. DeBartolo was unaware of an organization that was
mistakenly removed from the list. He stated that the audit
requirements were sometimes a problem and led to a decrease
in the listing of names. He stated that some organizations
missed the filing deadline.
9:06:03 AM
Representative Costello asked about the application
process.
Mr. DeBartolo responded that the application process began
in the beginning of the year and was the same as the
dividend application window. If the applications were late,
they were removed from the list.
9:06:55 AM
Representative Thompson asked about programmers and
application fees. He asked about the hourly rate and
benefits.
Mr. DeBartolo replied that rate was based on the mean
programmer salary. The programmers tracked their hours and
multiplied them by the rate paid by the division. He was
unsure about benefits.
Representative Thompson requested an answer about benefits.
9:08:07 AM
Representative Wilson asked if the department supported the
bill.
Mr. DeBartolo replied yes.
Co-Chair Stoltze asked if the division was ready to absorb
the cost without the help of philanthropists.
Mr. DeBartolo replied that he was not authorized to provide
an answer.
Co-Chair Stoltze wondered about an estimated rate to
sustain the management of the program without
philanthropists. He asked if 7 percent would suffice.
Mr. DeBartolo replied that the division would require a
gross contribution of greater than 7 percent.
Co-Chair Stoltze appreciated the director's candor.
9:10:17 AM
Representative Gara thought that if the United Way was able
to administrate for less than 7 percent, they might provide
a better option.
Mr. DeBartolo agreed that the United Way was the best
entity to provide the administrative service.
9:11:24 AM
MR. CHRIS CHRISTENSEN III, ASSOCIATE VICE PRESIDENT FOR
STATE RELATIONS, UNIVERSITY OF ALASKA, appreciated the
university's ability to participate in the campaign. He
noted that the university raised approximately $6 thousand
to $28 thousand through the campaign. He pointed out that
ExxonMobil had generously offered to match the
contributions. The university foundation had agreed to use
private money to pay the application fees for participation
in the program for the first year.
Representative Gara asked if the bill required an
application fee for each campus.
Mr. Christensen replied that a fee was required from each
campus that chose to participate.
Representative Gara asked if the university would allow an
interested campus to participate.
Mr. Christensen believed that the application would be
allowed.
9:14:24 AM
Representative Edgmon asked about the Bristol Bay Campus.
He wondered if the money would flow through the Fairbanks
campus if the Bristol Bay campus chose to participate.
Mr. Christensen replied that he would provide the answer to
the committee at a later date.
Representative Wilson did not see the benefit in listing
individual universities.
Mr. Christensen replied that contributors appreciated the
ability to direct donations to individual programs or
campuses.
Co-Chair Stoltze recalled prior testimony related to
fundraising in a previous session.
Mr. Christensen stated that the contributions were directed
toward individual campuses.
9:17:08 AM
Representative Gara commented that the process might lead
to zero profit for the university.
Co-Chair Stoltze believed that appropriators viewed
donations as an endorsement rather than a detriment.
Representative Gara hoped that donations from the campaign
would not lessen university appropriations.
Mr. Christensen replied that such a practice would
discourage private giving.
9:19:07 AM
Co-Chair Stoltze CLOSED public testimony.
Representative Seaton supported most of the sustainability
ideas discussed in the hearing. He was unaware of an
organization refusing to participate if the 7 percent
administrative fee was implemented. He clarified that the
university would apply by campus. He noted 30 letters
supporting the bill, which were included in members'
packets.
Co-Chair Stoltze enjoyed the variety of testimony and
looked forward to working with the administration.
Representative Costello added that Bill Thomas was
instrumental in the program. She enjoyed the use of the
word "enhancement" versus "proposed amendment" by Ms.
Winkler during her testimony.
9:22:57 AM
Representative Thompson appreciated the bill's intent, the
updates and the sponsor's efforts. He stated that his wife
owned a CPA practice.
Co-Chair Stoltze believed that it was useful to declare the
issues and interests of committee members.
HB 75 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
9:24:47 AM
The meeting was adjourned at 9:24 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 75 About Pick.Click.Give..pdf |
HFIN 3/14/2014 8:30:00 AM |
HB 75 |
| HB 75 Alaska Statute 43.23.062.pdf |
HFIN 3/14/2014 8:30:00 AM |
HB 75 |
| HB 75 IRS Form 990 for tax-exempt organizations.pdf |
HFIN 3/14/2014 8:30:00 AM |
HB 75 |
| HB 75 Letters of Support - 2014 update.pdf |
HFIN 3/14/2014 8:30:00 AM |
HB 75 |
| HB 75 PickClickGive Application 2013.pdf |
HFIN 3/14/2014 8:30:00 AM |
HB 75 |
| HB 75 Sponsor Statement.pdf |
HFIN 3/14/2014 8:30:00 AM |
HB 75 |